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Article
Publication date: 18 October 2021

Umair Bin Yousaf, Irfan Ullah, Man Wang, Li Junyan and Ajid Ur Rehman

This study aims to examine the relationship between board capital and firm performance in the Chinese tourism industry.

Abstract

Purpose

This study aims to examine the relationship between board capital and firm performance in the Chinese tourism industry.

Design/methodology/approach

The study’s sample includes firms from the Chinese hotel, air transportation/travel and catering industries. This study explores the governance environment in tourism industries. This study estimates three dimensions of the board, including education, expertise and directors interlock. These dimensions are further grouped as human capital (i.e. education and expertise), social capital (interlocks) and board capital (sum of social and human capital). Ordinary least square regressions with multiple robustness tests are used to investigate the effect of board capital on firm value in Chinese listed tourism firms during 2005–2018.

Findings

This study finds that board capital positively impacts firm performance in its dimensions of human and social capital. This study also highlights the two important ownership contexts, namely, institutional investors and state-ownership, that shape the board capital-firm performance association in the Chinese tourism industry.

Practical implications

The findings suggest that board capital plays a significant role in corporate decisions. The results illustrate that higher board capital improves both governance mechanisms and resource provision roles of the board, resulting in higher firm value. The results further offer implications for managers and shareholders of tourism firms when electing directors as shareholders’ representatives.

Originality/value

The study has two important contributions. First, it extends the prior literature of firm value by considering the board’s human and social dimensions in the tourism sector. Second, contrary to prior research on board, this study takes three facets of board capital, education, expertise and interlocks that improve governance mechanisms and bring new resources in the shape of skills, knowledge and expertise.

Details

Corporate Governance: The International Journal of Business in Society, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 19 October 2021

Nadia Ben Farhat Toumi, Rim Khemiri and Yosra Fourati Makni

The aim of this paper is to examine the impact of directors' home regions on corporate social responsibility (CSR) disclosure. Specifically, the authors aim to determine…

Abstract

Purpose

The aim of this paper is to examine the impact of directors' home regions on corporate social responsibility (CSR) disclosure. Specifically, the authors aim to determine whether Anglo-American, European, French, other European and other regional directors' presence affects CSR disclosure differently.

Design/methodology/approach

This empirical study uses panel data analysis of all listed firms on the SBF 120 from 2008 to 2019. The environmental, social and governance (ESG) scores are collected from the Bloomberg database and indicate the extent of CSR information disclosure by French companies. The paper is based on a dynamic generalized method of moments panel estimator that makes it possible to control for unobservable heterogeneity and endogeneity and reduces estimation bias.

Findings

The findings of this study provide evidence that home region diversity and the presence of Anglo-Americans on a board are positively and significantly associated with ESG disclosure and environmental disclosure, whereas they are negatively associated with social and governance disclosure. Surprisingly, when directors come from European countries, they disclose less ESG and environmental information. Nevertheless, when only French directors are present, the company tends to divulge all dimensions of CSR. Indeed, while there is a significant positive influence of French directors on ESG disclosure, the presence of other European directors displays negative and statistically significant regression coefficients.

Research limitations/implications

This study may be interesting the French policy makers who can now pay more appropriate attention to directors' nationality or region. Thus, firms should identify the foreign directors who can support their strategy with relevant experience in terms of CSR. This could help to change the opinion of some companies that consider the internalization of the board as a constraint rather than an opportunity. These results will be useful for French-listed companies in setting the criteria for the appointment of foreign directors. It may be interesting to recruit directors across European boundaries.

Practical implications

This paper attempts to provide a better understanding of the effects of the home regions of directors on CSR disclosure in order to enlighten corporate managers whose companies operate in different cultures given that they have to deal with this aspect. In this international business environment, CEOs should increasingly consider the international CSR experience of directors to be a resource. In addition, this study may be of relevance to French market authorities, which constantly encourage firms to diversify the profiles of directors on their boards and recruit more international members.

Originality/value

This study is the first to evince that the disclosure of each CSR disclosure score differs depending on the directors' home regions. Unlike previous studies, the authors focused simultaneously on the resource-based view (RBV) and institutional theory.

Details

Journal of Applied Accounting Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0967-5426

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Article
Publication date: 15 October 2021

Chaiyuth Padungsaksawasdi, Sirimon Treepongkaruna, Pornsit Jiraporn and Ali Uyar

Exploiting an exogenous regulatory shock and a novel measure of asset redeployability, this paper aims to explore the effect of independent directors on asset…

Abstract

Purpose

Exploiting an exogenous regulatory shock and a novel measure of asset redeployability, this paper aims to explore the effect of independent directors on asset redeployability. In particular, the authors use an innovative measure of asset redeployability recently developed by Kim and Kung (2016). This novel index has been rapidly adopted in recent literature.

Design/methodology/approach

Relying on a quasi-natural experiment, the authors execute a difference-in-difference analysis based on an exogenous regulatory shock to board independence. To mitigate endogeneity and demonstrate causation, the authors also perform propensity score matching, instrumental-variable analysis and Oster’s (2019) approach for testing coefficient stability.

Findings

The difference-in-difference estimates show that firms forced to raise board independence have significantly fewer redeployable assets after the shock than those not required to change board composition. This is consistent with the managerial myopia hypothesis. Subject to more intense monitoring, managers behave more myopically, focusing more on assets that are currently useful to the firm and less on redeployability in the future.

Originality/value

The study makes key contributions to the literature. First, the study is the first to examine the effect of board governance on asset redeployability. Second, the authors exploit an innovative index of asset redeployability that has been recently constructed in the literature. Third, by using a natural experiment, the results are much more likely to reflect causality than merely an association.

Details

Corporate Governance: The International Journal of Business in Society, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1472-0701

Keywords

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Article
Publication date: 18 October 2021

Tao Wang

The purpose of this paper is to investigate the effect of board human capital diversity on corporate innovation. Moreover, it examines the moderating effect of internal…

Abstract

Purpose

The purpose of this paper is to investigate the effect of board human capital diversity on corporate innovation. Moreover, it examines the moderating effect of internal social capital on the relationship between board human capital diversity and corporate innovation.

Design/methodology/approach

The hypotheses are tested using a data set on Standard & Poor’s 1500 firms from 2000 to 2015. To overcome omit variable bias and reverse causality, this paper uses change-on-change regression by exploring the exogenous shock of the death of the directors.

Findings

Findings show that board industry diversity has a curvilinear relationship with corporate innovation. In addition, the board co-tenure experience, a key factor of internal social capital, can mitigate the risk of board industry diversity and improve corporate innovation.

Originality/value

Prior studies mostly considered the demographic dimension of diversity and, therefore, have overlooked how other dimensions influence firms. This paper considers the human capital dimension of board diversity and investigates the effect of board industry diversity on the firm’s innovation outcome. In addition, this paper also addresses the question of whether the interaction of different director attributes, namely, board human capital and board internal social capital, can complement each other to enhance corporate innovation.

Details

Corporate Governance: The International Journal of Business in Society, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 18 October 2021

Deepa Mangala, Neha Singla and Neha Singla

This study aims to investigate the role of corporate governance practices in restraining earnings management in Indian commercial banks.

Abstract

Purpose

This study aims to investigate the role of corporate governance practices in restraining earnings management in Indian commercial banks.

Design/methodology/approach

Estimation of earnings management is based on discretionary loan loss provision and discretionary realised security gains and losses using Beatty et al. (2002) model. The effect of corporate governance on earnings management is examined by performing two-way least square dummy variable regression. Data for a period of five years (2016–2020) is collected from the Centre for Monitoring Indian Economy ProwessIQ database, Reserve Bank of India website, annual report of banks, National Stock Exchange and bank’s website.

Findings

Regression results exhibit that number of board committees, size and independence of audit committee and joint audit are significantly effective in curbing earnings management. Other board-related variables (size, independence, meetings and diligence) and audit committee variables (meetings and diligence) are not effective in restraining earnings management in Indian banks.

Practical implications

The findings may prove to be helpful to regulators, board of directors and investors. It shows the weak area of corporate governance in India that is lack of autonomy to independent directors, which needs regulators attention and it also suggests that the number of independent auditors should be adequate for audit purposes. The board of directors must ensure the formulation of an adequate number of committees, which perform their own super specialised functions. This study brings an alarm to investors not to rely on reported earnings alone as they may be manipulated.

Originality/value

This paper substantiates the scant literature on the role of corporate governance practices in restraining earnings management in banks of emerging markets and to the best of the authors’ knowledge impact of joint audits on earnings management is previously unexplored in Indian banks, which are examined in this study.

Details

Journal of Financial Reporting and Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1985-2517

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Article
Publication date: 6 October 2021

Ayman Issa and Mohammad A.A. Zaid

Drawing on the multi-theoretical perspective, the primary purpose of this paper is to empirically investigate the inextricably entwined nexus between board gender…

Abstract

Purpose

Drawing on the multi-theoretical perspective, the primary purpose of this paper is to empirically investigate the inextricably entwined nexus between board gender diversity and corporate environmental performance within cross-country context.

Design/methodology/approach

Multiple regression analysis on a cross-country panel data analysis was used. Further, the authors applied static panel data estimator ordinary least squares (OLS) as a baseline model with different proxies of gender diversity. In addition, to control for the potential endogeneity problem and providing robust findings, the authors run two-stage least squares (2SLS) and lagged independent variables.

Findings

The findings clearly unveiled that corporate environmental performance is positively and significantly affected by the level of gender diversity on board. This inextricable and intimate nexus is vastly attributed to the argument that female directors show greater concerns for eco-friendly activities.

Practical implications

The findings of this study provide useful and fruitful insights for regulatory parties and policymakers to mandate gender quota in electing boardroom members to ameliorate corporate environmental performance.

Originality/value

To the best of the authors’ knowledge, most of the prior studies have not yet provided a multi-theoretical analysis of the effect of board gender diversity on environmental performance. Thereby, this study handled this contemporary gap and went beyond the narrow perspectives by diving deep with cross-country analysis.

Details

International Journal of Accounting & Information Management, vol. 29 no. 4
Type: Research Article
ISSN: 1834-7649

Keywords

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Article
Publication date: 15 October 2021

Entissar Elgadi and Wafa Ghardallou

This paper aims to empirically assess the impact of gender diversity and board of directors’ size on Islamic banks’ performance.

Abstract

Purpose

This paper aims to empirically assess the impact of gender diversity and board of directors’ size on Islamic banks’ performance.

Design/methodology/approach

Hand-collected data set including 27 banks from 2005 to 2013 is used to investigate the effect of the above mechanisms on banks’ performance as measured by return on equities and return on assets. The study uses pooling regression, which requires estimating a single equation on different cross-sectional data. Specifically, ordinary least squares is used to estimate the model.

Findings

Obtained results suggest that the presence of women on the board of directors does not have a significant influence on banks’ performance. However, gender diversity in the management department is found to have a negative and significant impact. Besides, the findings prove that the board of directors’ size adversely affects banks’ performance.

Research limitations/implications

Findings of this study will enhance a better understanding of the interrelationships between performance measures and determinants, which can improve estimations of key inputs in the decision-making process. Such deeper understanding should provide policy and decision makers with an important part of the framework needed to provide quality outcomes. In addition, the results of this study provide some beneficial insights on performance determinants to the policymakers, industry leaders and bank managers. Accordingly, those parties could enhance the profitability of Sudanese Islamic banks by improving capitalisation and assets utilisation and by improving banks operation efficiency, leverage and by reducing the size of the board of directors. Industry leaders and bank managers could also benefit from the findings on bank age, which suggest that they can learn from the experience of newly established banks, as the latter are shown to be able to use their resources to generate more profits.

Practical implications

Results suggest that in the future, Islamic banks should focus on how to weaken the negative performance effect of female executives’ participation. Besides, banks should work to decrease labour market discrimination and increase long-term career commitment amongst women.

Originality/value

After reviewing the literature, the research objective was not accounted for by the existing empirical works. Indeed, the role of gender diversity and board of directors’ size on a bank’s performance was not examined in the case of Sudanese Islamic banks.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1753-8394

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Article
Publication date: 5 October 2021

Helmi A. Boshnak

This study examines the impact of board composition and ownership structure variables on dividend payout policy in Saudi Arabian firms. In particular, it aims to determine…

Abstract

Purpose

This study examines the impact of board composition and ownership structure variables on dividend payout policy in Saudi Arabian firms. In particular, it aims to determine the effect of board size, independence and meeting frequency, in addition to chief executive officer (CEO) duality, and state, institutional, managerial, family, and foreign ownership on both the propensity to pay dividends and dividend per share for Saudi-listed firms over the period 2016–2019.

Design/methodology/approach

The paper captures dividend policy with two measures, propensity to pay dividends and dividend per share, and employs a range of regression methods (logistic, probit, ordinary least squares (OLS) and random effects regressions) along with a two-stage least squares (2SLS) model for robustness to account for heteroscedasticity, serial correlation and endogeneity issues. The data set is a large panel of 280 Saudi-listed firms over the period 2016 to 2019.

Findings

The results underline the importance of board composition and the ownership structure in explaining variations in dividend policy across Saudi firms. More specifically, there is a positive relationship between the propensity to pay dividends and board-meeting frequency, institutional ownership, firm profitability and firm age, while the degree of board independence, firm size and leverage exhibit a negative relation. Further, dividend per share is positively related to board meeting frequency, institutional ownership, foreign ownership, firm profitability and age, while it is negatively related to CEO duality, managerial ownership, and firm leverage. There is no evidence that family ownership exerts an impact on dividend payout policy in Saudi firms. The findings of this study support agency, signalling, substitute and outcome theories of dividend policy.

Research limitations/implications

This study offers an important insight into the board characteristic and ownership structure drivers of dividend policy in the context of an emerging market. Moreover, the study has important implications for firms, managers, investors, policymakers, and regulators in Saudi Arabia.

Originality/value

This paper contributes to the existing literature by providing evidence on four board and five ownership characteristic drivers of dividend policy in Saudi Arabia as an emerging stock market, thereby improving on less comprehensive previous studies. The study recommends that investors consider board composition and ownership structure characteristics of firms as key drivers of dividend policy when making stock investment decisions to inform them about the propensity of investee firms to pay dividends and maintain a given dividend policy.

Details

International Journal of Emerging Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1746-8809

Keywords

Content available
Article
Publication date: 8 October 2021

Rifat Fariha, Md. Mukarrom Hossain and Ratan Ghosh

This study is designed and directed to analyze the effect of board characteristics and audit committee attributes on the firm performance of publicly listed commercial…

Abstract

Purpose

This study is designed and directed to analyze the effect of board characteristics and audit committee attributes on the firm performance of publicly listed commercial banks of Bangladesh.

Design/methodology/approach

Thirty publicly listed commercial banks of Dhaka Stock Exchange (DSE) have been taken as sample for this study. Data have been collected from annual reports between 2011 and 2017 of the assessed banks. Pooled OLS model has been used for running regression model of this study.

Findings

Board independence has a negative and significant relationship with ROA and Tobin's Q. However, Board Independence has a positive and significant relationship with Stock Return. On the other hand, Board Diversity has a negative and significant relationship with ROA and ROE, which implies inefficiency of diversified board members in the context of Bangladesh. Family duality has a positive and significant relationship with ROA and a negative and significant relationship with Stock return. Board Meeting has a positive and significant relationship with ROA. Audit Committee Size has a negative and significant relationship with Tobins' Q. Independence of audit committee chairman has a negative and significant relationship with Tobin's Q and Stock Returns. Presence of non-executive directors and number of audit meetings have no significant relationship with any of the predicted variables.

Research limitations/implications

Among all variables of the board characteristics, role of independent directors and participation of female directors have conflicting results in this study. This has raised a question about the fair appointment independent directors and their objective view on the board. Female directors' role is not convincing in the context of Bangladesh as most of the commercial banks are family-owned. Policymakers can tighten and supervise the appointment of independent directors to ensure good governance in the banking sector. Moreover, role of audit committee and independence of audit committee chairman have generated conflicting results in terms of market-based performance measure.

Originality/value

Banking sector of Bangladesh experiences huge corruption in the form of excessive NPLs and poor management quality which results in low profit for the firm. This study has explored the problems of management quality and flaws of audit committee which is hampering overall growth of banking industry. Improvement of independent directors' appointment and audit committee formation and reporting will certainly help banking industry of Bangladesh to improve overall performance.

Details

Asian Journal of Accounting Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2443-4175

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Article
Publication date: 18 October 2021

Chun Su, Xing Liu and Huan Shao

This paper aims to investigate the influence of over-allocation and under-allocation of family board seats on the corporate investment efficiency.

Abstract

Purpose

This paper aims to investigate the influence of over-allocation and under-allocation of family board seats on the corporate investment efficiency.

Design/methodology/approach

Based on the perspective of altruistic behavior, this paper theoretically analyzes the relationship between the preference of family board seats allocation and corporate investment efficiency, and designs the research. On this basis, we use STATA14.0 as an analysis tool to empirically test the relationship between the preference of family family board seats allocation and corporate investment efficiency, and consider the impact of different governance scenarios.

Findings

This study finds that firms with a higher over-allocation degree of family board seats invest more efficiently, evidenced by significantly suppressed over-investment rather than mitigated under-investment. However, we do not find evidence that the higher degree of under-allocation of family board seats contribute to lower corporate investment efficiency. Additionally, this study finds that the positive relationship between the over-allocation degree of family board seats and corporate investment efficiency is more pronounced for firms with higher separation of cash flow rights and control rights, and weaker regional law system environment. Our mechanism discussion shows that the higher over-allocation level of family board seats contributes to the mitigation of agency costs for family firms by reducing the tendency for non-family boards to vote “against board proposals” and the appropriation behavior of the controlling family, and eventually improving corporate investment efficiency.

Originality/value

This paper examines the relationship between the preference of family board seats allocation and corporate investment efficiency from the perspective of altruistic behavior. Unlike previous studies, this paper distinguishes the governance effects arising from over-allocation and under-allocation of family board seats. Additionally, different governance scenarios are incorporated into the decision-making mechanism of the board of family firms, and the influences of the divergence of cash-flow and control rights and a weaker regional law system on the governance effect of the preference of family board seat allocation are analyzed.

Details

Nankai Business Review International, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2040-8749

Keywords

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