Compliance and governance: evidence from financial institutions in Taiwan
Journal of Financial Regulation and Compliance
ISSN: 1358-1988
Article publication date: 22 September 2022
Issue publication date: 29 May 2023
Abstract
Purpose
The purpose of this study is to investigate whether financial institutions, which are highly regulated entities, experience fewer sanctions and have lower penalties (mandatory and regulatory) if they have better corporate governance performance (voluntary).
Design/methodology/approach
This study uses unique corporate governance data endorsed by the authorities and sanction information for financial institutions in Taiwan from 2014 to 2020 to examine whether regulatory compliance is associated with corporate governance for financial institutions. This study also examines the moderating effects of shareholding concentration, governmental shareholding and foreign institution shareholding on this relationship.
Findings
The positive association between compliance and governance is found. In addition, partial results show that the positive relationship is less profound when the shareholder concentration is higher and more profound when government shareholdings are higher.
Originality/value
The findings of this study support the premise that a well-structured, non-mandatory corporate governance evaluation mechanism, that is actively established and monitored by the appropriate authorities, may influence the compliance performance of financial institutions which is mandatory and minimum social requirements.
Keywords
Acknowledgements
We thank John Ashton (Editor) and two anonymous reviewers for many helpful comments. Hui-Yu Hsiao thanks Taiwan Cooperative Bank for providing research scholarship.
Citation
Liang, S.-H., Lin, H.-C. and Hsiao, H.-Y. (2023), "Compliance and governance: evidence from financial institutions in Taiwan", Journal of Financial Regulation and Compliance, Vol. 31 No. 3, pp. 298-315. https://doi.org/10.1108/JFRC-03-2022-0038
Publisher
:Emerald Publishing Limited
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