Search results

This study aims to investigate the impact of family management and ownership structure, including foreign ownership and business group ownership, on corporate performance.

Using an agency perspective and a quantitative research methodology, this study examines listed firms in Pakistan from 2009 to 2018.

The results suggest that family management and concentrated leadership constrain, whereas family leadership, foreign ownership and group ownership strengthen monitoring effectiveness and corporate performance. These findings imply that the shareholder governance logic offers optimal solutions in an emerging economy, as relational governance may activate agency problems.

The findings are consistent with the relevance of relational governance mechanisms in the form of family leadership. However, the results suggest that emerging economies require a hybrid governance model to address their unique agency problems, thereby underlining context relevance in corporate governance scholarship. Furthermore, this research adopts a thick view of institutions to clarify institutional embeddedness and corporate governance contextuality in an emerging economy.

This study aims to analyze and explain the effect of financial architecture (with three dimensions: ownership structure, capital structure and corporate governance) and intangible assets on performance financial and corporate value in the Indonesian capital market.

This research was conducted on nonfinancial sector companies that were registered in the Indonesian capital market, namely Indonesia Stock Exchange (IDX) in 2015. This study used quantitative data and used secondary data sources, meaning that data were obtained, collected and processed from other parties. In this study, the hypothesis testing of the effect of financial architecture (included the dimensions of ownership structure, capital structure and corporate governance) and intangible assets on financial performance and corporate value using path analysis was performed.

The results of this study have provided findings that follow the research model that has been built (1) This research has been able to provide a theoretical model of the influence of financial architecture (with dimensions of ownership structure, capital structure and corporate governance), intangible assets, board processes on financial performance and company value in the Indonesian capital market. (2) To develop a theoretical model about the effect of corporate governance on financial performance in accordance with the two-tier system adopted by Indonesia. (3) An empirical study of the concept of financial architecture put forward by Myers (1999).

This research update lies in the research variable, which determines one value of the financial architecture variable comprehensively, combines the financial architecture variable and intangible assets to then be tested for its effect on company value and the use of the financial process variable as a board process as an intervening variable.

The purpose of this paper is to explore the role of corporate governance proxies by ownership structure on the likelihood of firms’ financial distress for a sample of 146 Pakistani public-limited companies listed at the Karachi Stock Exchange over the period of 2003-2012.

The dynamic generalized method of moments (GMM) estimator and panel logistic regression (PLR) are used to determine the impact of corporate governance on the financial distress. The ownership structure is used as a determinant of corporate governance, while the Altman Z-score is utilized as an indicator of financial distress, as it measures financial distress inversely. The smaller the values of the Z-score, the higher will be the risk of financial distress.

The authors find insignificant impact of ownership structure on firms’ likelihood of financial distress based on the dynamic GMM method. However, the PLR results indicate that foreign shareholdings have a significant negative association with firms’ likelihood of financial distress, in the case of Pakistan. An evidence of a negative and insignificant relationship between institutional ownership and financial distress was observed, which indicates the passive role of institutional investors in Pakistan. The results also reveal a positive and significant relationship between insider’s ownership and likelihood of financial distress. This finding is consistent with the entrenchment hypothesis which predicts that insiders are more aligned with their self-interest than outside shareholders’ interest when their shareholding increases in the business. Furthermore, the results also reveal insignificant association between government shareholdings and the probability of financial distress. The reason could be the social welfare objective of the government entities rather than profit maximization.

The findings of this study provide more insight to corporate managers and investors about the association between the quality of corporate governance and the degree of financial distress, with respect to Pakistani firms. Furthermore, this study contributes to the existing literature by adding new evidence from developing countries like Pakistan which are helpful for regulatory bodies and policymakers in the formulation of long-term corporate governance strategies to manage the financial distress. It is well established that strengthening the quality of corporate governance practices enhances the efficiency of capital markets and reduces the probability of financial distress.

The study extends the body of existing literature on corporate governance and the likelihood of financial distress with reference to Pakistan. The results suggest that policymakers may pay special attention to the quality of corporate governance, specifically ownership structure, while predicting corporate financial distress.

This study aims to examine the determinants of the female representations on Chinese listed firm’s boards. This study also investigates the effect of gender diversity on corporate social responsibility activities.

The Tobit regression model is used because the data is censored and using ordinary least square regression can give spurious results. For robust check, the authors also used Heckman’s (1979) two-stage self-selection model to remove the sample self-selection bias.

The authors find that the female representations on the corporate board are positively associated with firm age, firm performance, corporate governance, family ownership, institutional ownership and managerial ownership while negatively related to firm size and state ownership. This study also incorporates predictors of the critical mass of women on the Chinese listed firm’s board. The study also tests the female-led hypothesis and concludes that the female representation increases in firms with female chief executive officer (CEO) or female chairpersons. The Chinese listed firms with gender-diverse board are socially responsible.

The importance of diversity in corporate boards has been demonstrated in light of the agency theory and the resource dependence framework. The results contribute to the previous literature by documenting the determinants of female representations on board, robust by alternative measures of gender diversity, firm size, corporate governance and estimation techniques.

The economic significance of gender diversity stirred the firms to increase female representation. The policymakers can understand the reasons for female underrepresentation in Chinese boards and can reform the regulation to enhance governance quality, non-state ownership and risk aversion among the listed firms.

This study contributes to the literature by providing empirical evidence on the key predictor of the world’s largest emerging economy, specifically the study focuses on the firm specific determinants, different governance attributes, ownership structure and firm risk measures. This study also seeks to answer if the presence of a female in the Chairperson or CEO position encourages the firms to hire more female directors or not?

This paper aims to compare the effect of ownership on firm performances in the 1997 and 2008 financial crises. More specifically, it investigates the effect of cash flow rights, control rights and cash flow rights leverage on firm performance. Two conditions motivated the study. First, the 2008 financial crisis happened quickly, so it was endogenous for firms. This setting is ideal to deal with endogeneity problems in a study that involves ownership and performance. Second, during the 2000s, awareness and implementation of corporate governance increased significantly. The authors believe that the markets learn these changes and incorporate them into prices, as suggested by an efficient market hypothesis.

The paper investigates and compares the effect of ownership structure on firm performance in the 2008 subprime crisis period to that in the 1997 financial crisis. Both crises happen unexpectedly, so the authors can expect that the crises are exogenous to firms. The authors use cash flow rights, control rights and cash flow right leverage for the ownership structure dimension. They also study time-series data to investigate the effect of ownership on a firm’s value.

The study finds that cash flow right and cash flow right leverage did not affect stock performance during the subprime crisis of 2008. It also finds that cash flow right leverage and cash flow right affected stock performance during the financial crisis of 1997. The study attributes this finding to the learning process and improvement of corporate governance during the period of the 2000s. Using time-series data, it finds that cash flow rights positively affect firm performance, suggesting an alignment effect. Ownership concentration improves firm performance. When the study split its sample, it found that the effect ownership on firms’ value is stronger for large firms.

The study’s main limitation is that it does not test directly the learning process hypothesis. The study contributes to the current literature by presenting more recent evidence on the effect of ownership structure on firm performance in a developing country. The authors argue that markets learn the improvement of corporate governance and incorporate this development into prices. Extending this research to other markets will provide confirmation whether the learning process is an international phenomenon.

The awareness and implementation of corporate governance should be maintained at least at this level. The positive relationship between ownership concentration and firm performance suggests that concentrated ownership performs monitoring more effectively. Investors should pay attention to ownership concentration.

The finding that prices already reflect corporate governance may suggest that market is monitoring this issue. This seems to be a good finding. Markets can be expected to discipline companies in the implementation of corporate governance. The awareness and implementation of corporate governance should be maintained at least at the current level.

The study contributes to the current literature by presenting additional evidence on the effect of ownership (using cash flow rights, control rights and cash flow right leverage) on firms’ performance in a more recent period and in a developing country. This period is characterized by a significant increase in awareness and the implementation of good corporate governance.

The purpose of this paper is to investigate the moderating effect of ownership on the links between corporate governance and financial performance in the context of Ghanaian banks.

The current study used a sample of 23 banks and the multiple regression method to analyze a panel dataset of 414 from banks over an 18-year period.

The findings revealed that audit independence, chief executive officer (CEO) duality, non-executive directors and banks size have a positive impact on performance. The findings also revealed that foreign ownership has an interacting effect between corporate governance and profitability.

The practical implications of the current study demonstrated that good corporate governance creates value and must be invigorated for the interest of all stakeholders. Foreign ownership has an interacting effect between corporate governance and performance. Policymakers should formulate policies for attracting foreign investors.

Interestingly, this study is the first of its kind that exclusively chose ownership structure to interact between corporate governance and bank performance in Ghanaian perspective. Such new insights on this relationship provide useful information to the government, academics, policymakers and other stakeholders. The growing economies of African countries, and the inadequate governance–performance literature in African context, have created a demand to appreciate the governance parameters in these countries and its influence on firm's performance.

The main purpose of the study is to examine the influence of family directors on the firm performance of public listed companies (PLCs) in Malaysia. This study provides empirical evidence on the agency problems between controlling shareholders and minority interests in the concentrated ownership setting.

Samples of the study are 112 PLCs in year 2006. Two measures of firm performance are used: return on assets (ROA) and Tobin’s Q. Managerial ownership refers to the percentage shareholdings of executive directors with direct and indirect holdings. It was further categorized into family ownership and non-family ownership.

In relation to ROA, managerial ownership is found positively significant. The results also show that the positive relationship between managerial ownership is contributed by the managerial-non-family ownership. In relation to Tobin’s Q, the results show a U-shape with turning point at 31.38% for managerial ownership and 28.29% for the managerial-family ownership. The results found significant and positive relationships between managerial ownership and both measures of firm performance which indicates that managerial ownership and family ownership yield greater efficiency.

The study highlights the effects of corporate governance on ROA and Tobin’s Q are somewhat different. It provides some evidence on the need to use appropriate measure of firm performance. The significant relationship supports the argument of Chami (1999), Fama and Jensen (1983), and DeAngelo and DeAngelo (1985) and empirical evidence of Lee (2004) that family ownership enhances monitoring activities.

Differentiating the types of managerial ownership into family and non-family categories enriches our knowledge about who actually contributes to the improved performance.

The study analyzes the influence of corporate governance and ownership concentration levels on the cost of equity. Further, the authors extend the literature by investigating the moderating effect of ownership concentration levels (i.e. at 5%, 10% and 20%) on the relationship between corporate governance and the cost of equity.

The study applies several robust panel regression techniques to a sample of 114 active non-financial companies listed on the Pakistan Stock Exchange from 2011 to 2016. Corporate governance was measured through a unique index comprising 30 governance attributes. The cost of equity was measured through the capital asset pricing model. Further, the authors construct three variables for ownership concentration levels, i.e. at 5%, 10% and 20%. To address the endogeneity problem, the one-lagged variable model and GMM approaches were also applied.

The results indicate that better corporate governance reduces the cost of equity, while ownership concentration at high thresholds would increase the cost of equity. Further, the authors find that ownership concentration at the 20% threshold moderates the relationship between corporate governance and the cost of equity. Thus, the authors argue that firms can minimize the risk faced by shareholders by implementing substantive corporate governance mechanisms. In addition, effective corporate governance mechanisms at high ownership concentration levels are imperative for managing the cost of equity.

The study reports novel evidence that ownership concentration at a high threshold moderates the effect of corporate governance on the cost of equity.

The purpose of this paper is to examine the impact of ownership structure and corporate governance on corporate liquidity policy from a developing country perspective, Ghana Stock Exchange (GSE).

The authors adopt multiple regression analysis in estimating the relationship between ownership structure, corporate governance and corporate liquidity policy as well as the impact of corporate governance on insider ownership.

The authors find that foreign share ownership significantly predicts corporate cash holding on the GSE. The empirical result also portrays positive and statistically significant relationship between board size, financial leverage, firm size, profitability and corporate liquidity holding, and a negative and statistically significant relationship between board composition and corporate liquidity holding. The authors also document positive and statistically significant relationship between the various industry classifications namely manufacturing, distribution and the pharmaceutical industry and corporate cash holdings on the GSE but did not however find significant relationship between corporate governance and insider ownership on the GSE. The authors found positive relationship between Tobin's Q and inside ownership.

The main value of this paper is to analyze the relationship between ownership structure, corporate governance and corporate liquid policy from a developing country perspective.

The purpose of this paper is to examine the impact of corporate governance and ownership structure attributes on firm performance following the revised code on corporate governance in Malaysia. The study presents a longitudinal assessment of the compliance and implications of the revised code on firm performance.

Two data sets consisting of before (2006) and after (2008-2010) the revised code are examined. Drawing from the largest companies listed on Bursa Malaysia (BM), the first data set contains 92 observations in the year 2006 while the second data set comprises of 282 observations drawn from the largest companies listed on BM over a three-year period, from 2008-2010. Both accounting (return on assets and return on equity) and market performance (Tobin’s Q) measures were used to measure firm performance. Multiple and panel data regression analyses were adopted to analyze the data.

The study shows that there were still cases of non-compliance to the basic requirements of the code such as the one-third independent non-executive director (INDs) requirement even after the revised code. While the regression models indicate marginal significance of board size and independent directors before the revised code, the results indicate all corporate governance variables have a significant negative relationship with at least one of the measures of corporate performance. Independent chairperson, however, showed a consistent positive impact on firm performance both before and after the revised code. In addition, ownership structure elements were found to have a negative relationship with either accounting or market performance measures, with institutional ownership showing a consistent negative impact on firm performance. Firm size and leverage, as control variables, were significant in determining corporate performance.

One limitation is the use of separate measures of corporate governance attributes, as opposed to a corporate governance index (CGI). As a result, the study constructs a CGI based on the recommendations of the revised code and proposes for future research use.

Some of the largest companies did not even comply with basic requirements such as the “one-third INDs” mandatory requirement. Hence, the regulators may want to reinforce the requirements of the code and also detail examples of good governance practices. The results, which show a consistent positive relationship between the presence of an independent chairperson and firm performance in both data sets, suggest listed companies to consider appointing an independent chairperson in the corporate leadership. The regulatory authorities may also wish to note this phenomenon when drafting any future corporate governance codes.

This study offers new insights of the implications of regulatory changes on the relationship between corporate governance attributes and firm performance from the perspective of a developing country. The development of a CGI for future research is a novel approach of this study.