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Book part
Publication date: 16 October 2014

Martin 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.

Details

Accounting for the Environment: More Talk and Little Progress
Type: Book
ISBN: 978-1-78190-303-2

Keywords

Article
Publication date: 9 February 2015

Marty Stuebs and Li Sun

– This paper aims to draw on the stakeholder theory to examine the association between corporate governance and social responsibility.

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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.

Details

International Journal of Law and Management, vol. 57 no. 1
Type: Research Article
ISSN: 1754-243X

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Article
Publication date: 24 August 2017

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

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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.

Details

International Journal of Managerial Finance, vol. 13 no. 5
Type: Research Article
ISSN: 1743-9132

Keywords

Article
Publication date: 1 March 2011

Minna Yu

The purpose of this paper is to examine whether analyst recommendations are influenced by the strength of corporate governance in emerging markets.

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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.

Details

International Journal of Accounting & Information Management, vol. 19 no. 1
Type: Research Article
ISSN: 1834-7649

Keywords

Article
Publication date: 16 December 2019

Arjan Markus and Tim Swift

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.

Details

Journal of Strategy and Management, vol. 13 no. 1
Type: Research Article
ISSN: 1755-425X

Keywords

Article
Publication date: 19 April 2013

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…

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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.

Details

Pacific Accounting Review, vol. 25 no. 1
Type: Research Article
ISSN: 0114-0582

Keywords

Article
Publication date: 1 December 2021

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…

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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.

Details

Managerial Finance, vol. 48 no. 2
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 18 March 2020

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.

Details

Corporate Governance: The International Journal of Business in Society, vol. 20 no. 3
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 2 October 2017

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…

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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.

Details

Corporate Governance: The International Journal of Business in Society, vol. 17 no. 5
Type: Research Article
ISSN: 1472-0701

Keywords

Open Access
Article
Publication date: 1 March 2022

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…

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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.

Details

Journal of Business and Socio-economic Development, vol. 3 no. 2
Type: Research Article
ISSN: 2635-1374

Keywords

1 – 10 of over 18000