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1 – 10 of over 41000Ebenezer Agyemang Badu and Kingsley Opoku Appiah
The purpose of this paper is to investigate the impact of board experience and independence on mitigating agency conflict between shareholders and managers.
Abstract
Purpose
The purpose of this paper is to investigate the impact of board experience and independence on mitigating agency conflict between shareholders and managers.
Design/methodology/approach
This paper uses a panel data of 137 firms listed on stock exchanges in Ghana and Nigeria over a period of seven years. System generalized method of moments and other estimation techniques were adopted for the study. Using agency and resource dependence theories, board experience and independence ignored in previous studies are selected for the study.
Findings
The findings of this paper indicate a negative and statistically significant relationship between board experience, board independence, and agency conflict. A further examination using an agency score computed from the principal factor analysis of the four main agency proxies indicates a significant and negative relationship between board independence and agency conflict, but a negative and statistically non-significant relation between board experience and agency conflict.
Practical implications
The authors’ evidence has important implications for countries that are currently or contemplating pursuing board reforms to recommend the appointment of more independent and experience directors to corporate board.
Originality/value
This paper introduces a new proxy for assessing human and social capital of directors to test the integration hypothesis of a unique data set from Ghana and Nigeria toward mitigating agency conflict.
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Mohammed Sulaiman Hassan Kasbar, Nicholas Tsitsianis, Androniki Triantafylli and Colin Haslam
The study aims to predict and understand the conditions under which the association between corporate governance and a company's financial performance is positive or meaningful by…
Abstract
Purpose
The study aims to predict and understand the conditions under which the association between corporate governance and a company's financial performance is positive or meaningful by empirically accounting for agency conflicts. This study is motivated by the fact that the separation between ownership and control creates agency conflicts between company owners and managers. Therefore, strong corporate governance systems are expected to align the interests of conflicting parties whereby companies become more likely to improve their financial performance. However, previous research did not yield consistent results in this regard.
Design/methodology/approach
Given the latent nature of corporate governance and agency conflicts, this study uses principal component and exploratory factor analyses to proxy for corporate governance and agency conflicts, respectively. Using dynamic panel data modelling, the authors estimate the change in the relationship between corporate governance and a company's financial performance as a function of the change in the level of agency conflict using data from the UK on 78 non-financial companies listed in the Financial Times Stock Exchange 100 (FTSE100) index between 1999 and 2014.
Findings
The corporate governance quality of companies is significantly differed. Moreover, companies operating at high levels of agency conflict outperform the companies' counterparts operating in low levels of agency conflict only when the former improves the corporate governance quality. This implies that financial performance improves by approximately 11% if companies improve corporate governance quality due to an increase in the level of agency conflicts.
Research limitations/implications
Lack of data on ownership structure for the study period (1999–2014) was the main reason the authors excluded it from the analysis. Additionally, the lack of reliable and quantifiable corporate governance data on small-medium sized enterprises limits findings on large non-financial companies.
Practical implications
The authors propose a framework/tool for the impact of the level of corporate governance compliance on financial performance conditional upon the level of agency conflicts whose importance has largely been neglected by the empirical literature. By providing the right “lens” to de-fragmentise the corporate governance mechanisms and estimate empirically the unobserved agency conflicts, researchers, practitioners and investors are able to get further insights on the composing elements of financial performance and evaluate it more objectively. Managers can allocate companies' resources more efficiently and thus improve financial performance. The auditors can get further background information when they compile their report on company's directors. The study's findings offer valuable suggestions for accounting and corporate governance regulators to further put forward and improve accounting standards so as to enhance existing regulations and internal mechanisms which, in turn, could decrease the scope for managerial opportunistic behaviour as the latter can be empirically estimated through our framework.
Social implications
The findings point out the need for a revised framework accounting for the principal-agent (mis)alignment and the engrained information asymmetries. By acknowledging the level of corporate governance compliance and agency conflict, managers and shareholders should actively strive for the effectiveness of companies, the efficiency of the stock markets and the minimisation of the agency costs. Furthermore, policymakers can look into the development of a code of corporate governance to effectively regulate firms rather than enforcing rigid laws that may not be value relevant. With all these settings in place, the likelihood of corporate failures, corporate scandals as well as corporate violations with the ensuing penalties is set to be reduced. Hence, valuable resources, social capital and effort can be directed into more productive activities.
Originality/value
This study adds to the existing literature by offering empirical and explicit evidence on the dynamic association between corporate governance, agency conflicts and financial performance against a backdrop of high demand for strong corporate governance practices/codes. To the best of the authors' knowledge, there is no study that has yet empirically examined the moderating effect of the level of agency conflicts, given the level of corporate governance compliance on financial performance for listed and internationally aligned companies.
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Jill M. Purdy and Barbara Gray
This study evaluates an attempt to develop a mediation program within a state environmental agency. A number of concerns arose during the agency's efforts to use mediation…
Abstract
This study evaluates an attempt to develop a mediation program within a state environmental agency. A number of concerns arose during the agency's efforts to use mediation, including the neutrality of mediators, the types of cases mediated, the voluntary participation of parties, and acceptance of the mediated agreement. These issues were examined through a case study of a conflict that was mediated by the agency. Based on issues in the case, criteria are suggested which help guard against the problems that arise when government agencies serve a mediating role. These criteria may be useful to any organization that contemplates using mediation to help resolve conflict.
Ian Grant, Charlotte McLeod and Eleanor Shaw
The aim of this paper is to explore the tensions and basis for conflict within relationships that embed and connect networked companies involved in the planning of advertising…
Abstract
Purpose
The aim of this paper is to explore the tensions and basis for conflict within relationships that embed and connect networked companies involved in the planning of advertising, with broader relevance for professional service organizations.
Design/methodology/approach
Framed within a social network perspective, this interpretive study draws on 22 in‐depth interviews to discuss the emergence and consequences of conflict within relationships shared by advertising creatives, account managers, researchers and media planners located in Scotland.
Findings
The paper identifies four dominant themes which contribute toward relational conflict: the intensity of involvement in advertising planning, the emergence of role ambiguity, cultural stereotyping, and conflicts of interest.
Originality/value
The paper provides a valuable antidote to studies reliant on dyadic client‐agency perspectives. Adopting a network perspective, it recognizes the importance of the multiple, simultaneous relationships involved in advertising planning. It offers a critical perspective on advertising relationships, considering the emergence, characteristics and consequences of tension and conflict inherent. The discussion reveals ongoing struggles for control over the process of advertising planning, and considers the implications of overt and covert actions on perceptions of network trust. The paper provides a spectrum of outcomes, ranging from collaborative tension to intra‐organisational conflict. This study is most relevant to academics and managers involved in professional services.
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Mohammad Nisar Khattak, Noor Muhammad and David Robinson
This study determines the relationship between small and medium-sized enterprises (SMEs) and their support providers during three phases: pre-conflict environment, during conflict…
Abstract
Purpose
This study determines the relationship between small and medium-sized enterprises (SMEs) and their support providers during three phases: pre-conflict environment, during conflict environment, and the post-conflict (uncertain) environment with the reference to institutional theory in the northwest region of Pakistan where there is ongoing unrest between the authorities and the insurgents.
Design/methodology/approach
Using a qualitative approach, a total of 23 semi-structured interviews were conducted, 19 with the owner-managers of small manufacturing firms and 4 from small business support providers in the region.
Findings
The authors theorise the changing role of support agencies as differing institutional gaps, while conflict is destructive for SMEs and support agencies; paradoxically the crisis results in stronger relationships between the support providers and SMEs which was weaker in the pre-conflict environment. Such stronger relationship enhanced the cognitive pillar of institutional theory where entrepreneurship is supported by various groups including government agencies and SMEs to alleviate unemployment in the region which is one of the potential reasons of terrorism in the country.
Practical implications
The study may have value for policymakers who need to know more about how small businesses and support providers develop a support network in difficult regions and give a comprehensive framework to other conflictual regions who face similar circumstances.
Originality/value
This research contributes to the previous literature in several ways. First, the study reveals the impact of conflict environment on small businesses and support providers where a little research has been undertaken. Second, the study shows the support mechanism in three different intervals pre-conflict, during the conflict and post-conflict and how the Talibanization in the region has a positive impact by strengthening the support structure among small businesses and support providers. Finally, the study contributes to the growing body of literature on entrepreneurship in conflict environments.
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Josh Bendickson, Jeff Muldoon, Eric Liguori and Phillip E Davis
Theories develop over time and are influenced by both events and people. Looking primarily at the applications between contracting principal-agent relationships, the purpose of…
Abstract
Purpose
Theories develop over time and are influenced by both events and people. Looking primarily at the applications between contracting principal-agent relationships, the purpose of this paper is to explore how agency theory emerged from a number of economic and social developments. In doing so, the authors explain how this once dominant theory comes up short regarding varying realms of entrepreneurship as well as with multiple modern business phenomena.
Design/methodology/approach
The authors first present a brief overview of agency theory. Second, the authors identify major events and people and address how they impacted the development of agency theory. Third, the authors provide insights on agency theory across three contexts (strategic entrepreneurship, social entrepreneurship, and family business). Implications, limitations, and future research directions are then offered.
Findings
The authors provide a deeper understanding of agency theory, thus broadening its underpinnings and enabling readers to more readily understand why agency theory is limited in its explanation of certain and modern business phenomena. The authors find that some of the seminal influences to agency theory are quite dated which has limited its explanatory power in terms of the modern day business and with more recent disciplines such as entrepreneurship.
Research limitations/implications
The authors are limited by their choices of major events that influenced agency theory at the expense of not being able to include everything that may have impacted the theory over time. These limitations, however, are offset by the research implications. As the authors highlight the underpinning of agency theory, the authors subsequently provide scholars and practitioners with five primary boundary conditions, each of which are in need of attention for agency theory to maintain relevant explanatory power.
Originality/value
A deeper understanding of agency theory can be gained by looking at its underpinnings. By presenting numerous principal-agent conflicts and demonstrating areas in which it has fallen short (i.e. entrepreneurship and more recent business phenomenon), we shed light on the obstacles agency theory must overcome in order to maintain its position as a prominent theory.
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Bennet Schierstedt and Maarten Corten
This study aims to examine the relationship between family firm characteristics and audit fees. It also examines the extent to which the family name is considered a red flag…
Abstract
Purpose
This study aims to examine the relationship between family firm characteristics and audit fees. It also examines the extent to which the family name is considered a red flag during the risk assessment of these firm characteristics.
Design/methodology/approach
Using an external panel data set that includes 1,252 firm-year observations of 204 private German firms with a time series from 2010–2016, regression analyses were conducted to test the hypotheses.
Findings
This study’s results indicate that family involvement in management and the supervisory board are negatively related to audit fees, suggesting less demand and supply of audit effort due to lower Type I agency conflicts. Family ownership is found to be positively associated with audit fees due to higher Type II agency conflicts. Moreover, the negative effect of family involvement in management on audit fees becomes weaker if the firm name contains the family name, indicating that it is considered a red flag by auditors during their risk assessment.
Originality/value
Prior studies that examined audit fees in family firms mainly compared family firms to non-family firms. However, auditors are not likely to look at firms in a dichotomous way during their risk assessment, especially as there are numerous definitions of family firms. Instead, they will assess the underlying characteristics regarding management, ownership and governance, although a firm name containing the family name may influence this assessment. This study contributes to the literature by accounting for the heterogeneity of family firms and examining how auditors will assess this heterogeneity.
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Lamia Jamel, Hanadi Eid Albogami, Mazen Abduljalil Abdulaal and Nuha Ahmed Aljohani
The purpose of this paper is to examine the impact of agency conflicts between managers and shareholders on corporate risk management and financial performance of Saudi firms…
Abstract
Purpose
The purpose of this paper is to examine the impact of agency conflicts between managers and shareholders on corporate risk management and financial performance of Saudi firms listed in the Saudi Stock Exchange Tadawul.
Design/methodology/approach
To investigate the effect of agency conflicts between managers and shareholders on corporate risk management and financial performance, we use a sample of 180 Saudi firms listed in the Saudi Stock Exchange Tadawul during the period from 2009 to 2018. Econometrically, we employ Vector Autoregressive (VAR) and General Linear Model (GLM) techniques as an appropriate methodology.
Findings
Our findings show that the risk level of the last year increase the corporate risk management and the performance of Saudi firm. We remark that the separation amongst control and ownership generates agency conflicts amongst managers and shareholders which can affect their behavior in decision-making and performance of the Saudi firms. Thus, the conflicts of interest arise from the differences among the work horizon, the risk assumed, the performance of enterprises, and the level of remuneration desired by the managers and shareholders in the case of Saudi firms.
Originality/value
The main contributions of our paper prove that the deepen the study of agency costs linked to a shareholding structure through the analysis of monitoring, obligation, and opportunity costs in the Saudi firms.
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Priscilla Murphy and Michael Maynard
This study tests the premise that conflict between advertising agencies and clients has a cognitive basis — that is, each group weighs decision factors differently, and…
Abstract
This study tests the premise that conflict between advertising agencies and clients has a cognitive basis — that is, each group weighs decision factors differently, and consequently evaluates campaigns differently. We identified five common decision factors in evaluating campaigns: market research, media planning, message/creativity, budget, and agency/client relationship. Based on these five variables, we used multiple regression‐based judgment analysis to create decision profiles for a group of 120 advertising agency professionals and clients. We compared agencies' and clients' judgments by six categories. Analysis affirmed that cognitive conflict differs by product type, longevity, and campaign purpose; but not by seniority or campaign budget. Clients had less cognitive disagreement with creatives than with agency management.
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Reza Hesarzadeh and Ameneh Bazrafshan
Chief executive officer (CEO) ability may have an effect on various corporate reporting decisions, and consequently, the CEO ability is subject to scrutiny by regulatory…
Abstract
Purpose
Chief executive officer (CEO) ability may have an effect on various corporate reporting decisions, and consequently, the CEO ability is subject to scrutiny by regulatory reviewers. However, theoretical literature provides mixed evidence on how the CEO ability affects the regulatory review risk. Thus, this study aims to empirically examine the effect of CEO ability on regulatory review risk.
Design/methodology/approach
To measure CEO ability, this study uses the CEO ability-score developed by Demerjian et al. (2012). Further, to measure regulatory review risk, the study uses the probability of receiving a comment letter from the Securities and Exchange Organization of Iran.
Findings
This study finds that the relationship between CEO ability and regulatory review risk is generally negative and statistically significant but not economically significant, i.e. the relationship is very small. In this regard, the study shows that the relationship is negative and also statistically and economically significant for firms with low levels of agency conflicts and high levels of corporate governance quality; and is positive and also statistically and economically significant for firms with high levels of agency conflicts and low levels of corporate governance quality. In addition, while the study finds no evidence that the regulatory reviewers’ workload compression influences the general relationship between CEO ability and regulatory review risk, it documents that low (high) regulatory reviewers’ workload compression weakens (strengthens) both the relationships stated above.
Originality/value
Collectively, the results suggest that the agency conflicts/corporate governance quality and regulatory reviewers’ workload compression are important factors in the analysis of the relationship between the CEO ability and regulatory review risk. The results offer insights into the opposing theoretical viewpoints about the relationship between CEO ability and regulatory review risk. Thus, the results will be of interest to boards of directors and other stakeholders involved in the regulatory review process.
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