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1 – 10 of over 18000Martin Stuebs and Li Sun
This chapter examines the association between corporate governance and environmental performance. The purpose of governance mechanisms is to build trust by ensuring that corporate…
Abstract
This chapter examines the association between corporate governance and environmental performance. The purpose of governance mechanisms is to build trust by ensuring that corporate responsibilities, including environmental responsibilities, are met. We obtain corporate governance data from the Investor Responsibility Research Center, Inc’s (IRRC’s) governance and director database and additional corporate governance and environmental performance data from Kinder, Lydenberg, and Domini’s (KLD’s) database. Our analyses document a significant positive association between corporate governance and environmental performance. Moreover, we find that corporate governance is positively related to environmental strengths, and negatively related to environmental concerns. Our findings contribute to and extend our understanding of the relationship between governance and performance and have important implications for policy makers, managers, investors, and others.
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Marty Stuebs and Li Sun
– This paper aims to draw on the stakeholder theory to examine the association between corporate governance and social responsibility.
Abstract
Purpose
This paper aims to draw on the stakeholder theory to examine the association between corporate governance and social responsibility.
Design/methodology/approach
This paper hypothesized that corporate governance is positively associated with corporate social responsibility (CSR), and good corporate governance also leads to good social responsibility in the following year. Corporate governance was measured by using the corporate governance index provided by Brown and Caylor (2006, 2009). CSR data come from Kinder, Lydenberg and Domini (KLD), Inc.
Findings
Regression analysis documents significant evidence to support a positive association between corporate governance and social responsibility. Evidence suggests that good governance leads to good CSR performance.
Originality/value
The results should interest managers who engage in behavior leading to or maintaining strong corporate governance mechanisms, financial analysts who conduct research on corporate governance and firm performance and policymakers who design and implement guidelines on corporate governance mechanisms. Moreover, results of this study can increase individual investors’ confidence in investing in companies with stronger corporate governance.
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Hamdan Amer Al-Jaifi, Ahmed Hussein Al-rassas and Adel Ali AL-Qadasi
The purpose of this paper is to examine the impact of corporate governance strength on stock market liquidity in an emerging country, namely, Malaysia, by constructing a corporate…
Abstract
Purpose
The purpose of this paper is to examine the impact of corporate governance strength on stock market liquidity in an emerging country, namely, Malaysia, by constructing a corporate governance score that captures both internal monitoring mechanisms (board of directors’ characteristics, audit committee’s characteristics and internal audit function) and external monitoring mechanism (audit quality).
Design/methodology/approach
The study uses a sample of 2,020 yearly firm observations in Bursa Malaysia over the period 2009-2012. The ordinary least square regression and several estimation methods such as two-stage least squares using instrumental variables (IV-2SLS) and dynamic GMM are employed.
Findings
This study finds a significant positive association between corporate governance effectiveness and stock market liquidity. The finding is robust to alternative liquidity measurements, to alternative estimation methods, and to endogeneity bias.
Research limitations/implications
This result implies that the firms with effective monitoring mechanisms mitigate information asymmetry which leads to less adverse selection problems among traders.
Practical implications
This study provides implications for regulators to help design regulations that enhance stock market liquidity. This study could also help investors and traders to formulate their trading decisions, and enables firms to know the importance of strengthening the corporate governance monitoring mechanisms.
Originality/value
This study constructs a corporate governance effectiveness measure by combining both internal and external monitoring mechanisms. These mechanisms have not been constructed together in one score in the corporate governance literature and the impact of internal audit function, as an internal monitoring mechanism on liquidity, has yet to be examined.
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The purpose of this paper is to examine whether analyst recommendations are influenced by the strength of corporate governance in emerging markets.
Abstract
Purpose
The purpose of this paper is to examine whether analyst recommendations are influenced by the strength of corporate governance in emerging markets.
Design/methodology/approach
It is expected that analysts take into consideration the corporate governance mechanisms when they set their recommendations because better‐governed companies are associated with less risk from management and have value improvement potentials. This hypothesis is tested with a sample of 805 firms in 26 countries from emerging markets. Corporate governance effectiveness is measured by the ratings compiled by Credit Lyonnais Securities Asia, which are based on a series of corporate governance characteristics.
Findings
Results show that analysts tend to issue favorable recommendations for firms with better corporate governance mechanisms. Furthermore, this evidence is concentrated in countries with a code law origin where investor protection is relatively weak.
Practical implications
This paper has important implications for financial analysts and investors by offering insights into how analysts help the market efficiently incorporate the quality of corporate governance in the code law countries of emerging markets. This paper is also of interest to companies by highlighting the significance of establishing good corporate governance mechanisms.
Originality/value
Examining the association between analyst recommendations and the strength of corporate governance adds to the research on the association between corporate governance and analyst activity and therefore highlight the role analysts play in the valuation of corporate governance.
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The purpose of this paper is to determine whether the strength of corporate governance influences the firm’s ability to retain their key knowledge workers or inventors.
Abstract
Purpose
The purpose of this paper is to determine whether the strength of corporate governance influences the firm’s ability to retain their key knowledge workers or inventors.
Design/methodology/approach
This paper links agency and innovation theory to develop the hypotheses. Agency theory predicts that the interests of employees are counter to those of firm owners. The authors predict that as shareholder power grows as corporate governance strengthens, inventors who are highly productive, and those who pursue risky but valuable exploratory innovation will leave the firm. Given prior scholarship in innovation theory establishing the critical contributions that new knowledge creation and exploratory innovation make to firms’ competitive advantage, the authors consider whether stronger firm-level corporate governance leads to the erosion of the firm’s competitive advantage. The hypotheses are empirically tested using generalized least squares estimation on a data set that combines data on firms, their patents and the governance provisions these firms adopt.
Findings
Using a 10-year sample of publicly traded US firms, the authors find that stronger corporate governance erodes the very foundation of a firm’s innovation capabilities. Stronger corporate governance reduces management job security, which makes managers more risk-averse. This heightened “managerial myopia” results in increased departures of highly valuable inventors employed by the firm. The authors show that these departing inventors are more productive inventors than those who remain and engage in more exploratory R&D than the remaining inventors at the firm.
Originality/value
The findings raise questions on the appropriateness of the adoption of governance provisions strengthening shareholder rights in firms pursuing innovation.
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Poh‐Ling Ho and Grantley Taylor
The purpose of this paper is to investigate the impact of corporate governance on voluntary disclosure of different types of information in annual reports of Malaysian listed…
Abstract
Purpose
The purpose of this paper is to investigate the impact of corporate governance on voluntary disclosure of different types of information in annual reports of Malaysian listed firms.
Design/methodology/approach
A linear regression model is used to test the association between the level of voluntary disclosure of five key information categories and corporate governance. The sample consists of 100 firms over three different socio‐economic periods: 1996, 2001 and 2006.
Findings
There are significant increases in all the key information categories with better communication most pronounced between 1996 and 2001, and a noticeably lower level of communication growth between 2001 and 2006. The strength of a firm's corporate governance structure clearly influences the voluntary disclosure of information relating to corporate and strategic directions, directors and senior management, financial and capital markets, forward‐looking projections and corporate social responsibility in 2001 and 2006.
Research limitations/implications
The use of a governance index to arrive at an overall corporate governance score has the potential to mask major underlying relationships of individual governance attributes. The use of the self‐constructed disclosure indices may also omit certain information items that are employed in other prior studies. Moreover, the different categories of disclosures are solely constructed on the information disclosed in the annual reports without considering the alternative avenues.
Practical implications
The results will assist regulators and policy‐makers to better understand the impact of corporate governance on the voluntary disclosure of different types of corporate information in Malaysia.
Originality/value
This study generates evidence of the changing scene of management voluntary disclosure practices embedded in the corporate governance framework in a developing country with an emerging capital market.
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Taruntej Singh Arora and Suveera Gill
There is mixed evidence in the extant literature on the firm value implications of corporate tax aggressiveness in the developed economies. There are, however, limited studies…
Abstract
Purpose
There is mixed evidence in the extant literature on the firm value implications of corporate tax aggressiveness in the developed economies. There are, however, limited studies that discuss this relationship in the case of emerging economies. The present study aims to bridge this research gap by exploring the relationship between corporate tax aggressiveness and firm value in context of the Indian economy.
Design/methodology/approach
The sample comprises 547 S&P BSE 500 (Standard and Poor's Bombay Stock Exchange 500) Index companies for Financial Year (FY) 2009–10 through FY 2018–19. A fixed-effects panel model has been used to discern the impact of corporate tax aggressiveness on firm value with and without the moderating effect of a proxy for corporate governance strength.
Findings
The results highlight a significant negative relationship between corporate tax aggressiveness and firm value in India, whilst the analysis on the moderating effect of corporate governance strength on this relationship revealed a mix of significant and insignificant results. These results were robust to an alternate specification of the corporate governance strength proxy, the system GMM estimation employed to deal with endogeneity and a change in the Corporate Social Responsibility (CSR) regulation brought into effect by the Companies Act, 2013.
Originality/value
The study reveals a firm value discount associated with corporate tax aggressiveness in India which is likely due to its ability to increase opportunities for wealth expropriation by managers. This can further be attributed to the ineffective corporate governance mechanisms that make agency problems more severe in the case of emerging economies like India.
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Tahira Awan, Syed Zulfiqar Ali Shah, Muhammad Yar Khan and Anam Javeed
The capital markets witness phenomenal shifts of corporate control. With the shift of world economy into a global one, there has been a rapid increase in the volume of…
Abstract
Purpose
The capital markets witness phenomenal shifts of corporate control. With the shift of world economy into a global one, there has been a rapid increase in the volume of acquisitions. The previous studies shed light on the motives behind acquisition and impact of acquisition on both bidding and target firms. The purpose of this study is to bridge a gap in literature by exploring the factors affecting the acquisition ability (AA) of the firms. The study has analyzed the role of financial strength, corporate governance and regulatory influence on AA of acquiring firm.
Design/methodology/approach
Cross-sectional data has been analyzed with respect to Pakistan stock exchange for a period of 2004-2017 by using logit regression.
Findings
Analysis indicates that firm-specific variables are important determinants in firm’s decision to acquire. Chief Executive Officer duality and presence of institutional shareholders on the board contribute to this important phenomenon in the life of the acquiring firms. Bidding firm’s financial strength is also another important consideration while going for corporate control transfer transactions. The empirical results indicate the better AA for firms characterized by minimum capacity usage, lower level of intangible assets, lower debt levels and lower advertising expenses. However, the regulatory factor has no significant role in firms’ AA. The findings of the study are helpful for managers, regulators and policymakers.
Originality/value
Analyzing the role of financial strength, corporate governance and regulatory influence on AA of acquiring firm is a rare study, especially in an emerging country such as Pakistan.
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Dirk Kiesewetter and Johannes Manthey
This paper aims to answer how corporate governance and corporate social responsibility (“CSR”) affect the relationship between value creation and tax avoidance. This study further…
Abstract
Purpose
This paper aims to answer how corporate governance and corporate social responsibility (“CSR”) affect the relationship between value creation and tax avoidance. This study further analyses the impact of the institutional environment, i.e. whether a country is rather a liberal or a coordinated market economy, on the relationship between CSR and tax avoidance.
Design/methodology/approach
The empirical analysis comprises a panel data set of 7,924 observations for the years from 2005 to 2014 for European companies. The relationship between value creation and tax avoidance is tested by grouping the sample in high and low CSR performers. Similarly, the impact of the type of market economy is analysed for the firms.
Findings
The research design does not find evidence that tax avoidance is creating value. The empirical findings reveal that there is a positive relationship between value creation and the effective tax rate for firms with low social and environmental characteristics. Further, this analysis could show that stronger corporate governance is associated with a lower effective tax rate in both coordinated and liberal market economies. The analysis identifies social strengths being associated with a higher effective tax rate for coordinated market economies.
Practical implications
It is proposed to encourage CSR disclosure. The creation of incentives for social strengths could increase tax revenue. Firms should reconsider whether the engagement in tax avoidance is worth it and pursue social responsibility to achieve higher value creation for their stakeholders.
Originality/value
The paper challenges the intuitive expectation that tax avoidance creates value. It is suggested that the governance and CSR culture, as well as the tax legislation in Europe, is different to the USA. Conclusively, tax avoidance is not generating value for the European sample.
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Nana Adwoa Anokye Effah, Michael Asiedu and Octavia Ama Serwaa Otchere
This work aims to analyze and observe the trends in the literature on corporate governance and disclosure. The study presents bibliometric analyses from the Scopus database for…
Abstract
Purpose
This work aims to analyze and observe the trends in the literature on corporate governance and disclosure. The study presents bibliometric analyses from the Scopus database for the period 1991–2020.
Design/methodology/approach
A bibliometric analysis is conducted on 1,697 studies on corporate governance and disclosure across several countries. The articles were assessed and visualized with Vosviewer based on the authors, sources and countries with the highest publication rate, journals with the most published research and highly cited articles and authors.
Findings
The analyses provide a comprehensive outlook of the field, and the results show the dominance of documents on corporate governance and disclosure in 2020. The results have been discussed with avenues for further research.
Originality/value
This paper focuses on corporate governance and disclosure research from the Scopus database to highlight the extensive and somewhat ignored areas in extant literature. This would aid upcoming researchers in identifying scholars in the field when exploring future research avenues to close ensuing gaps.
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