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Board, audit committee, ownership and financial performance – emerging trends from Thailand

Omar Al Farooque (UNE Business School, University of New England, Armidale, Australia)
Wonlop Buachoom (Faculty of Accountancy, Rangsit University, Muang, Thailand)
Lan Sun (School of Business and Law, Central Queensland University, Sydney, Australia)

Pacific Accounting Review

ISSN: 0114-0582

Article publication date: 15 January 2020

Issue publication date: 14 January 2020

4328

Abstract

Purpose

This study aims to investigate the effects of corporate board and audit committee characteristics and ownership structures on market-based financial performance of listed firms in Thailand.

Design/methodology/approach

It applies system GMM (generalized method of moments) as the baseline estimator approach, and ordinary least squares and fixed effects for robustness checks on a sample of 452 firms listed on the Thai Stock Exchange for the period 2000-2016.

Findings

Relying mainly on the system GMM estimator, the empirical results indicate some emerging trends in the Thai economy. Contrary to expectations for an emerging market and prior research findings, ownership structures, particularly ownership concentration and family ownership, appear to have no significant influence on market-based firm performance, while managerial ownership exerts a positive effect on performance. Moreover, as expected, board structure variables such as board independence; size; meeting and dual role; and audit committee meeting show significant explanatory power on market-based firm performance in Thai firms.

Practical implications

These findings are important for policymakers in constructing an appropriate set of governance mechanisms in an emerging market context, and for corporate entities and investors in shaping their understanding of corporate governance in the Thai institutional context.

Originality/value

Unlike previous literature on the Thai market, this study is the first to use the more advanced econometric method known as system GMM estimator for addressing causality/endogeneity issues in governance–performance relationships. The findings indicate new trends in the explanatory power of ownership structure variables on market-based firm performance in Thai-listed firms.

Keywords

Citation

Al Farooque, O., Buachoom, W. and Sun, L. (2020), "Board, audit committee, ownership and financial performance – emerging trends from Thailand", Pacific Accounting Review, Vol. 32 No. 1, pp. 54-81. https://doi.org/10.1108/PAR-10-2018-0079

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited

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