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Article
Publication date: 2 August 2022

Ahmad Yuosef Alodat, Zalailah Salleh, Hafiza Aishah Hashim and Farizah Sulong

This study aimed to investigate the effect of sustainability disclosure (SD) as a mediator for the relationship between corporate governance (CG) and the performance of firms…

Abstract

Purpose

This study aimed to investigate the effect of sustainability disclosure (SD) as a mediator for the relationship between corporate governance (CG) and the performance of firms listed on the Amman Stock Exchange (ASE).

Design/methodology/approach

The study analysed 405 reports of firms listed on the ASE from 2014 to 2018. The direct and indirect impact of governance mechanisms on the firms' performance was examined using STATA 15. A four-step procedure for testing mediation was used to determine the mediating role of SD.

Findings

The results demonstrated that the board and audit committees' effectiveness positively and significantly influences the firm's performance. Additionally, the results demonstrated that SD partially mediates the relationship between CG and the firm's performance.

Research limitations/implications

Research implications – This study supported the assumptions of agency, resource dependence and stakeholder theories as the basis to explain the relationship among board’s effectiveness, audit committee’s effectiveness, sustainability report and firm performance in developing economies. In addition, the results suggested that CG helps to enhance the firm's performance and sustainability reporting. Firms providing sustainable report are deemed more responsible and attract more returns to firms. Research limitations – The study only focused on reports from five years for non-financial firms listed on the ASE to test the assumed relationship between the variables.

Practical implications

This study contributed to the body of knowledge by examining the mediating role of SD between CG and firm performance. Investors, managers and regulators can obtain further insights, especially those seeking to improve a firm's performance in the emerging markets, through a sound CG system and extensive sustainability reporting.

Originality/value

This study focused on the direct and indirect impacts of CG and firm performance in an emerging and developing economy. The study used SD as the mediating variable in examining the indirect effect.

Details

Management of Environmental Quality: An International Journal, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1477-7835

Keywords

Article
Publication date: 26 December 2023

Faozi A. Almaqtari, Tamer Elsheikh, Khaled Hussainey and Mohammed A. Al-Bukhrani

The purpose of this study is to examine the impact of country-level governance on sustainability performance, taking into account the effect of sustainable development goals…

Abstract

Purpose

The purpose of this study is to examine the impact of country-level governance on sustainability performance, taking into account the effect of sustainable development goals (SDGs) and board characteristics.

Design/methodology/approach

This study uses panel data analysis using fixed effect models to investigate the influence of country-level governance on sustainability performance while considering the effect of SDGs and board characteristics. The sample comprises 8,273 firms across 41 countries during the period spanning from 2016 to 2021. The sample is divided into two categories based on the score of SDGs.

Findings

The findings of this study show that countries with high SDGs score have better overall country-level governance and board attributes which have a statistically significant positive impact on sustainability performance. However, for those countries with low SDGs, political stability shows a statistically insignificant and negative impact on sustainability performance, while government effectiveness indicates a statistically insignificant positive impact on sustainability performance.

Originality/value

This study contributes to the literature by providing empirical evidence on the relationship between country-level governance, SDGs, board characteristics and sustainability performance. The study also highlights the importance of considering the effect of SDGs on the relationship between country-level governance and sustainability performance. The findings of this study could be useful for policymakers and firms in improving their sustainability performance and contributing to sustainable development.

Details

Studies in Economics and Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1086-7376

Keywords

Article
Publication date: 16 February 2024

Mahdi Salehi and Ali Hassanzadeh

This study aims to investigate the effect of the dynamics and potential of the board of directors on investment efficiency and the comparability of financial information in…

Abstract

Purpose

This study aims to investigate the effect of the dynamics and potential of the board of directors on investment efficiency and the comparability of financial information in companies listed on the Tehran Stock Exchange.

Design/methodology/approach

The number of observations for this study includes 1,218 observations from companies listed on the Tehran Stock Exchange during 2014–2020. The authors used econometric statistical methods such as multiple linear regression, the Chow and Hausman test and the Kendall correlation coefficient using Eviews software to conduct the research. To measure the board’s effectiveness, two variables are used, including board dynamics and potential.

Findings

The results showed a positive and significant relationship between dynamics, board potential and investment efficiency. Also, no significant relationship was observed between the board dynamics and the comparability of financial information. Finally, a positive and significant relationship exists between the board’s potential and the comparability of financial information.

Originality/value

The importance of this research is the use of board proxies, including the dynamics and potential of the board. In addition, other variables of board characteristics, such as size, independence, ownership and gender, and the relationship between these variables with investment efficiency and comparability of financial information, have been examined in this study.

Details

Management Research Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2040-8269

Keywords

Article
Publication date: 21 June 2023

Nafisah Yami, Jannine Poletti-Hughes and Khaled Hussainey

The authors motivate this research on the gender diversity of the board because of the recent increases in the number of women in top executive teams (Francis et al., 2015), which…

Abstract

Purpose

The authors motivate this research on the gender diversity of the board because of the recent increases in the number of women in top executive teams (Francis et al., 2015), which has probably been the result of the adoption of legislation for gender quotas as well as the establishment of corporate governance recommendations for gender diverse boards in several countries. The purpose of this study is to consider the quality of board directors when examining the effect of female directors on earnings management.

Design/methodology/approach

The analyses follow the system generalized method of moment to address endogeneity concerns (e.g. a board with higher quality is more likely to have female directors on board and vice versa). Besides the lags of the endogenous variables, the authors use the female industry ratio as an additional instrument (Liu et al., 2014), as female directors might be inspired by other female directors according to industrial sectors (measured by the two-digit industry codes), where competitors are likely to follow gender diversity practices of other firms within the same industrial sector.

Findings

The authors’ findings show a negative and significant association between board gender diversity and earnings management (EM), suggesting that independent female directors are the drivers of such effect. High-quality boards decrease the incidence of EM but hinder the potential involvement from female directors towards reducing EM. The incumbent effect of high-quality boards on female director’s contribution on EM reverses with less powerful CEOs.

Originality/value

The authors contribute to the extant literature by recognizing that the effectiveness of a female director on decreasing EM is a function of the environment in which decision-making takes place (i.e. board quality/powerful CEOs).

Details

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

Keywords

Article
Publication date: 5 February 2024

Hasan Mukhibad, Doddy Setiawan, Y. Anni Aryani and Falikhatun Falikhatun

This study aims to investigate the effect of the diversity of the board of directors (BOD) and the shariah supervisory board (SSB) on credit risk, insolvency, operations…

Abstract

Purpose

This study aims to investigate the effect of the diversity of the board of directors (BOD) and the shariah supervisory board (SSB) on credit risk, insolvency, operations, reputation, rate of deposit return risk (RDRR) and equity-based financing risk (EBFR) of Islamic banks (IB).

Design/methodology/approach

The study uses 68 IBs from 19 countries covering 2009 to 2019. BOD and SSB diversity attributes data were hand-collected from the annual reports. Financial data were collected from the bankscope database. The robustness test and two-step system generalized method of moment estimation technique were used to address potential endogeneity issues.

Findings

This study provides evidence that diversity in the experience and cross-membership of board members decreases the risk. Gender diversity increases the risk, but the BOD’s education level diversity has no relationship with risk. More interestingly, influences in the experience and cross-membership of the SSB’s members positively influence risk. However, members’ education levels and gender diversity have not been proven to affect risk.

Practical implications

The paper recommends that Islamic banking authorities play a stronger role and make a greater effort in driving corporate governance reform. Also, determining individual characteristics of the board is a requirement to become a member of a BOD or an SSB.

Originality/value

This paper expands the commitment literature through the diversity of the BOD’s and the SSB’s members in terms of their education levels, experience, cross-membership and gender. This study expands the list of potential risks for IBs, by including the RDRR and EBFR.

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

Article
Publication date: 9 October 2023

Olayinka Erin, Johnson Ifeanyi Okoh and Nkiru Okika

In recent time, stakeholders have called on corporate organizations to develop risk governance (RG) model that could strengthen effective risk disclosure quality (RDQ). Based on…

Abstract

Purpose

In recent time, stakeholders have called on corporate organizations to develop risk governance (RG) model that could strengthen effective risk disclosure quality (RDQ). Based on this premise, the purpose of this study is to examine the influence of RG on RD quality of 120 corporate organizations.

Design/methodology/approach

RG was measured by board risk committee size, board risk committee independence, board risk committee gender diversity, board risk committee expertise, board risk committee effectiveness, chief risk officer (CRO) presence and enterprise risk management (ERM) framework. This study has used both ordered logistic regression and probit regression to analyze the data set.

Findings

The number of members on the board risk committee, the proportion of women on that committee, the board expertise, the committee’s effectiveness, the presence of a CRO and the existence of an ERM framework were all found to have an impact on the quality of the risk information disclosed.

Practical implications

The study emphasizes the need for strong collaboration between the corporate board and external assurance in enhancing the quality of RD.

Originality/value

The findings contribute to growing literature in the area of RG and RD in Nigeria and by extension other sub-Saharan African countries.

Details

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

Keywords

Article
Publication date: 14 July 2023

Dorcus Kalembe, Twaha Kigongo Kaawaase, Stephen Korutaro Nkundabanyanga and Isaac Newton Kayongo

The purpose of this study is to establish the relationship between chief executive officer (CEO) power, audit committee effectiveness and earnings quality in regulated firms in…

Abstract

Purpose

The purpose of this study is to establish the relationship between chief executive officer (CEO) power, audit committee effectiveness and earnings quality in regulated firms in Uganda.

Design/methodology/approach

The authors employed cross-sectional and correlational research designs, based on a sample of 136 regulated firms in Uganda. Data were collected using a questionnaire survey from Chief Finance Officers and Chief Audit Executives. Data were analyzed using a Statistical Package for Social Sciences and Partial Least Squares Structural Equation Modeling.

Findings

Results indicate that CEO power causes negative variances in earnings quality. The results also reveal that audit committee effectiveness positively relates relatively similarly with earnings quality. In addition, CEO power and audit committee effectiveness are negative and significantly related. The results further indicate that CEO power and earnings quality are mediated by audit committee effectiveness.

Research limitations/implications

CEO power creates an opaque accounting environment which may leave the stakeholders unable to evaluate the true economic reality of the firm. Audit committee effectiveness is an important enabler for reporting high-quality earnings even in the presence of a powerful CEO.

Originality/value

This study contributes toward a methodological stance of using perceptions to understand earnings quality in regulated firms in Uganda. This is probably the first study that has specifically explored earnings quality using only the fundamental qualitative characteristics of accounting information (as proxies) as enshrined in the Conceptual Framework for Financial Reporting 2018 particularly in Uganda since Her adoption of International Financial Reporting Standards in 1998. Second, the indirect effect of audit committee effectiveness and CEO power is tested.

Details

Journal of Accounting in Emerging Economies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2042-1168

Keywords

Article
Publication date: 17 November 2023

Faris Shalahuddin Zakiy, Falikhatun Falikhatun and Najim Nur Fauziah

This paper aims to investigate the impact of sharia governance on organizational performance in zakat management institutions in Indonesia over the period 2017–2021.

Abstract

Purpose

This paper aims to investigate the impact of sharia governance on organizational performance in zakat management institutions in Indonesia over the period 2017–2021.

Design/methodology/approach

This study examined 33 zakat management organizations in Indonesia from 2017 through 2021 for 151 observations. Gross allocation ratio and growth of ZIS collection are used as organizational performance measures. The independent variables in this study are board of director size, educational background of the board of directors, sharia supervisory board size, sharia supervisory expertise, supervisory size and management size. Also, the study uses size, age and audit opinion as control variables to help measure the relationship between sharia governance and organizational performance.

Findings

This study shows that the board of directors and supervisory size positively and significantly affect organizational performance. Then, the educational background of board of directors has a negative and significant effect on organizational performance. In Model 1, sharia supervisory board size has a positive and significant effect on organizational performance, but in Model 2, sharia supervisory board size does not. Meanwhile, sharia supervisory expertise and management board size do not affect organizational performance.

Practical implications

The findings in this study illustrate the importance of transparency in the zakat management organization. Transparency helps minimize conflicts of interest and information asymmetry in the zakat management organization. In addition, sharia governance mechanism helps regulators and top management to make effective policies to improve and enhance organizational performance.

Social implications

Sharia governance is essential for zakat management organizations to increase accountability, credibility and public trust and support the practice of zakat management organizations.

Originality/value

This study discusses sharia governance and organizational performance in socioreligious organizations, especially zakat management organizations, which are still rarely carried out. Thus, this study broadens the insights of sharia governance and highlights the importance of performance appraisal in zakat management organizations.

Details

Journal of Islamic Accounting and Business Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0817

Keywords

Article
Publication date: 15 February 2024

Xin Huang, Ting Tang, Yu Ning Luo and Ren Wang

This study aims to examine the impact of board characteristics on firm performance while also exploring the influential mechanisms that help Chinese listed companies establish…

Abstract

Purpose

This study aims to examine the impact of board characteristics on firm performance while also exploring the influential mechanisms that help Chinese listed companies establish effective boards of directors and strengthen their corporate governance mechanisms.

Design/methodology/approach

This paper uses machine learning methods to investigate the predictive ability of the board of directors' characteristics on firm performance based on the data from Chinese A-share listed companies on the Shanghai and Shenzhen stock exchanges in China during 2008–2021. This study further analyzes board characteristics with relatively strong predictive ability and their predictive models on firm performance.

Findings

The results show that nonlinear machine learning methods are more effective than traditional linear models in analyzing the impact of board characteristics on Chinese firm performance. Among the series characteristics of the board of directors, the contribution ratio in prediction from directors compensation, director shareholding ratio, the average age of directors and directors' educational level are significant, and these characteristics have a roughly nonlinear correlation to the prediction of firm performance; the improvement of the predictive ability of board characteristics on firm performance in state-owned enterprises in China performs better than that in private enterprises.

Practical implications

The findings of this study provide valuable suggestions for enriching the theory of board governance, strengthening board construction and optimizing the effectiveness of board governance. Furthermore, these impacts can serve as a valuable reference for board construction and selection, aiding in the rational selection of boards to establish an efficient and high-performing board of directors.

Originality/value

The study findings unequivocally demonstrate the superiority of nonlinear machine learning approaches over traditional linear models in examining the relationship between board characteristics and firm performance in China. Within the suite of board characteristics, director compensation, shareholding ratio, average age and educational level are particularly noteworthy, consistently demonstrating strong, nonlinear associations with firm performance. Within the suite of board characteristics, director compensation, shareholding ratio, average age and educational level are particularly noteworthy, consistently demonstrating strong, nonlinear associations with firm performance. The study reveals that the predictive performance of board attributes is generally more robust for state-owned enterprises in China in comparison to their counterparts in the private sector.

Details

Chinese Management Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1750-614X

Keywords

Article
Publication date: 27 February 2024

Taha Almarayeh, Beatriz Aibar-Guzman and Óscar Suárez-Fernández

In light of the key role attributed to the board of directors as a monitoring tool to constrain earnings management practices, this study aims to examine the effect of some board…

Abstract

Purpose

In light of the key role attributed to the board of directors as a monitoring tool to constrain earnings management practices, this study aims to examine the effect of some board attributes on accrual-based earnings management and real earnings management in the Middle Eastern and North African (MENA) context, whose institutional, economic and legal environment is markedly different from that of most organization for economic cooperation and development countries.

Design/methodology/approach

The authors selected a sample of 161 nonfinancial companies from nine MENA countries between 2014 and 2021 (corresponding to an unbalanced data panel of 486 observations). The authors used the generalized least squares regression test to examine the relationship between board attributes and earnings management.

Findings

The authors found that three board attributes (size, independence and gender diversity) have no effect on both types of earnings management practices, while CEO duality has no effect on accrual-based earnings management but has a significant and negative effect on real earnings management. Overall, the results suggest that most board attributes do not play a crucial role in reducing earnings management.

Research limitations/implications

The results provide valuable insights into the universal role of corporate governance mechanisms and raise questions about the role of the board of directors in improving reporting quality in the MENA context.

Practical implications

Regulators should adapt corporate governance mechanisms to the characteristics of the institutional context in which they are inserted.

Originality/value

To the best of the authors’ knowledge, this study is the first to examine the effect of various board characteristics on both types of earnings management practices in the MENA context. It also provides the first empirical evidence of the relationship between board gender diversity and earnings management in the MENA region.

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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