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1 – 10 of over 1000The purpose of this paper is to review the developments in South African corporate governance since the end of apartheid, with a view to identifying themes and points of…
Abstract
Purpose
The purpose of this paper is to review the developments in South African corporate governance since the end of apartheid, with a view to identifying themes and points of convergence and/or divergence with other models.
Design/methodology/approach
The paper presents a critical review of South African corporate governance in the context of political and economic developments. Where relevant, aspects of corporate governance theory (in particular the stakeholder and shareholder debate) are considered in the South African context.
Findings
South African corporate governance can be seen to broadly follow Anglo‐American examples with the notable exception of the stakeholder approach of the two King reports. This approach emphasises the responsibilities of companies to various stakeholders and encourages stakeholder engagement as an integral element of company strategy. There has not, however, been any substantial incorporation of stakeholder interests into formal corporate governance structures such as board structure and financial reporting.
Practical implications
The ongoing consideration of corporate governance developments in South Africa is important for its continued development in the country and the region.
Originality/value
A review of South African corporate governance is timely given the probable release of the third King report in 2009, together with new company legislation.
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The purpose of this paper is to investigate the impact of CEO incentive-based compensation on earnings management, taking into account the influence of institutional settings and…
Abstract
Purpose
The purpose of this paper is to investigate the impact of CEO incentive-based compensation on earnings management, taking into account the influence of institutional settings and corporate governance systems.
Design/methodology/approach
Using archival data of 3,000 British, Australian, German, and Austrian firm-years between 2005 and 2014, the study applies fixed-effect estimator to reduce risks of endogeneity bias.
Findings
The findings reveal that institutional factors influence the relationship between CEO incentive-based compensation and earnings management. Particularly, firms from countries within the Anglo-American model (the UK and Australia), which provide greater protection for investor, stricter legal enforcement, and higher quality of corporate governance, tend to have lower level of earnings management. However, besides corporate governance quality, it is relevant to consider weaker investor protection and legal enforcement to motivate earnings management in firms from countries within the Euro-Continental model (Germany and Austria).
Originality/value
The study suggests that robust implementation of corporate governance, derived from either model, helps in restraining CEO opportunistic behavior. Importantly, more qualified institutions have higher impact on the relative adequacy of CEO incentive-based pay formulas in mitigating earnings management concerns. This can be extended by future research through comparative studies using other contexts or influential institutions.
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Purpose – The purpose of this paper is to understand the roles of corporate governance reforms in Malaysia following the 1997/1998 Asian crisis from the perspectives of corporate…
Abstract
Purpose – The purpose of this paper is to understand the roles of corporate governance reforms in Malaysia following the 1997/1998 Asian crisis from the perspectives of corporate managers.
Design/methodology/approach – The primary evidence used is drawn from a series of in-depth semi-structured interviews with Malaysian corporate managers involved in the overseeing of the governance structures within their companies.
Findings – This study shows that most interviewees believed that an appropriate corporate governance system could play a role in resolving the problems associated with the interlocking and concentrated corporate ownership structure in Malaysia. However, the effectiveness of the corporate governance reforms in dealing with this issue is questionable. It also reveals that Malaysian companies ‘changed’ their corporate governance practices predominantly to recover (foreign) investor confidence lost during the crisis and to fulfil the legal requirements enforced by the government, where the latter was under pressure from the international community (especially, the World Bank and IMF) to ‘improve’ the Malaysian corporate governance practices after the crisis.
Originality/value of paper – This paper adds to the literature on corporate governance, especially in the context of developing countries. Prior research investigating corporate governance issues in developing countries has been limited, particularly the lack of in-depth examination of corporate governance practices from the perspectives of corporate managers. This paper will be of great value to researchers and practitioners seeking to gain a better understanding of the roles of corporate governance in Malaysia.
A high quality of corporate governance practices is important for a sustainable development of an economy. The purpose of this paper is to analyze the convergence and adaption of…
Abstract
Purpose
A high quality of corporate governance practices is important for a sustainable development of an economy. The purpose of this paper is to analyze the convergence and adaption of corporate governance practices in emerging markets. It shows how Brazil, Russia, India, and China (BRIC) firms apply international standards of good corporate governance and which factors affect the quality of corporate governance practices in BRIC countries.
Design/methodology/approach
The authors use country and firm-level data from the BRIC countries and apply statistical models to identify the convergence of corporate governance practices. In all, 135 largest firms from Brazil, Russia, China, and India are analyzed.
Findings
The study shows that firms from BRIC countries adapt to international best practices in corporate governance beyond the official requirements by national corporate governance codes. International institutions positively influence BRIC firms to apply international standards of good corporate governance. National corporate governance regimes (Anglo-American, Continental-European, and mixed systems) follow path dependencies and lead to differences in corporate governance practices among firms in different regimes.
Research limitations/implications
Only a small number of 13 corporate governance best practices and a small number of countries have been selected and coded for this analysis. The presented results have to be interpreted with some caution.
Originality/value
The study concludes with practical and specific insights for investors, managers, and policy makers on the importance of national government regimes and international institutions on corporate governance practices. Investors in BRIC need to better understand the contrasting governance environments in emerging markets, and their effects on corporate governance practices in each country. The findings suggest that corporate governance should be studied by considering multilevel antecedents on a country-, industry-, and firm-level.
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Corporate governance has experienced numerous changes in chime with the exigencies of the time during which it has been introduced or the context in which it has been practiced…
Abstract
Corporate governance has experienced numerous changes in chime with the exigencies of the time during which it has been introduced or the context in which it has been practiced. Its gestation can be divided into three stages of development namely the traditional governance, the current transitional governance, and the upcoming sustainable governance. Traditional governance refers to the period hitherto the industrial revolution when corporations have not yet been formed, in today’s sense, but the governance structures were already in place in the existing entities at the time. Transitional governance refers to a period between the industrial revolution and the information age when corporations started to rise as a new economic entity. Reviewing the dominant corporate governance models are integral to understanding the transitional era. At the end of the transitional governance era, a transmogrification in corporate governance is underway to prepare itself for the coming age of sustainability. Sustainable governance integrates the principles of systems thinking and appreciates the complexity of decision-making environment, contrary to its former iterations that welcomed oversimplification of interactive messes (systems of problems). The objective of this chapter is to review corporate governance developmental transition toward sustainable governance and its role in the age of sustainability.
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This paper aims to examine whether corporate social responsibility (CSR) is associated with firms’ earnings quality (EQ) and how this association is context-specific. The authors…
Abstract
Purpose
This paper aims to examine whether corporate social responsibility (CSR) is associated with firms’ earnings quality (EQ) and how this association is context-specific. The authors consider specific institutional differences in strength of corporate governance (CG) attributes, quality of law enforcement and level of investor protection found between Anglo-American, European and South-Eastern Asian CG models to test the impact of above country-level factors on this association.
Design/methodology/approach
To test the association between CSR and EQ, the authors consider EIRIS (Ethical Investment Research Service) (2018) CSR issues of sustainability indicators as proxy to capture CSR. Following Rezaee and Tuo’s (2019) study, the authors classify EQ into innate earnings quality (IEQ) and discretionary earnings quality (DEQ). The authors investigate the innate (discretionary) EQ as to refer to firm’s inherent operating uncertainty (earnings management). Several dependency models for panel data applying the generalized method of moment (GMM) estimator of Arellano and Bond (1991) are ruled based on archival data of 4,206 non-financial international listed firms over the period 2012-2017.
Findings
Univariate and GMM multivariate cross-country analyses show that CSR is positively associated with EQ and that this association is more pronounced for firms within countries where good CG tools and higher investor right protection are preserved. The authors interpret the findings as evidence that the CSR-EQ association is shaped by the degree of monitoring role played by institutional features at the country level. The results are robust to a battery of robustness tests.
Originality/value
The originality of this research is twice. On the one hand, it examines whether CSR is a reflection of manager’s ethical opportunistic behavior resultant on earnings quality derived from a firm’s innate traits. On the second hand, it tests whether CSR is a reflection of discretionary earnings quality manifested by earnings management behavior. This paper is the first to support that institutional features significantly matter when investigating the association between CSR and EQ.
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Shahzad Uddin and Jamal Choudhury
The purpose of this paper is to provide an account of corporate governance practices in Bangladesh. This paper demonstrates that the traditionalist culture mediates the…
Abstract
Purpose
The purpose of this paper is to provide an account of corporate governance practices in Bangladesh. This paper demonstrates that the traditionalist culture mediates the rationalist/legalist framework of corporate governance in Bangladesh.
Design/methodology/approach
A series of semi‐structured interviews were conducted. Observations and the personal working experience of one of the researchers, along with documentation, provided rich sources of information for the paper.
Findings
The findings show that families have a dominant presence in all aspects of corporate governance. Boards of directors in companies play a significant part in serving the interests of families rather than those of general shareholders.
Research limitations/implications
This study focuses on corporate governance practices in a traditional setting and shows how traditional culture and values are in conflict with the rational ideas imported from a different setting.
Originality/value
The paper adds to the literature on corporate governance, especially in the context of less‐developed countries. It will be of great value to researchers and practitioners seeking to gain a better understanding of corporate governance frameworks in various settings.
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Habib Jouber and Hamadi Fakhfakh
The purpose of this paper is to investigate whether or not there is a link between CEO incentive-based compensation and earnings management and to examine how institutional…
Abstract
Purpose
The purpose of this paper is to investigate whether or not there is a link between CEO incentive-based compensation and earnings management and to examine how institutional environment's features influence such link.
Design/methodology/approach
To test the predictions, the authors use a panel of 1,500 American, Canadian, British, and French firm-year observation over the period 2004-2008.
Findings
The authors find a significant association between earnings management and CEO incentive-based compensation. Moreover, the analysis provides evidence that institutional factors are strong determinants of this association. Specifically, the results show that firms from countries within the Anglo-American corporate governance model, which provides greater protection of shareholder rights, ensures strict enforcement of law, and scores high on board oversight, tend to have lower level of earnings management. The analysis shows however, that beside the formal corporate governance quality, it is relevant to consider weaker shareholder protection and lower law enforcement indexes to explain earnings management in firms from countries within the Euro-Continental corporate governance model.
Originality/value
This paper is the first to provide insights regarding the extent to which CEO incentive rewards imply management discretion and to indicate how much institutional features matter. The analysis contributes to two distinct strands of research. It extends prior research on the association between executive compensation and earnings management and adds to the literature demonstrating a relationship between institutional factors and financial decisions.
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Nada K. Kakabadse, Andrew Kakabadse, Alexander Kouzmin and Yvon Pesqueux
The purpose of this paper is to examine the critical assumptions lying behind the Anglo American model of corporate governance.
Abstract
Purpose
The purpose of this paper is to examine the critical assumptions lying behind the Anglo American model of corporate governance.
Design/methodology/approach
Literature review examining the concept of a nexus of contracts underpinning agency theory which, it is argued, act as the platform for neo‐liberal corporate governance focusing on shareholder wealth creation.
Findings
The paper highlights the unaddressed critical challenge of why eighteenth century ownership structures are readily adopted in the twenty‐first century.
Social implications
A re‐examination of wealth creation and wealth redistribution.
Originality/value
The paper is highly original due to the fact that few contributions have been made in the area of rethinking shareholder value.
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Mathew Tsamenyi and Shahzad Uddin
Purpose of paper – This paper sets out to introduce the special issue on corporate governance in less developed and emerging economies. It summarises and reflects on themes and…
Abstract
Purpose of paper – This paper sets out to introduce the special issue on corporate governance in less developed and emerging economies. It summarises and reflects on themes and findings raised in the papers in the volume.
Design/methodology/approach – The findings reported in the paper are based on desk research and review of the papers contained in the volume.
Findings – The paper finds that the adoption of appropriate corporate governance systems is becoming a central issue in less developed and emerging economies. Factors such as the 1997 Asian financial crisis, the adoption of international donor led reforms, and the globalisation of capital markets are among the factors that are driving corporate governance reforms in less developed and emerging economies.
Research limitations/implications – The pressure from international donors has compelled some less developed and emerging economies to adopt corporate governance models developed in the West with no modification. The paper argues that while it is imperative for less developed and emerging economies to reform their corporate governance systems, it is important that these systems are adapted to suite the specific needs of individual countries.
Originality/value of paper – The paper is a summary of studies exploring various corporate governance issues in less developed and emerging economies. The issues addressed in these studies are important to understand corporate governance issues in both the private and public sectors in less developed and emerging economies.