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Article
Publication date: 21 November 2022

Maria Elisabete Neves, Catarina Proença and Beatriz Cancela

This paper aims to analyze the corporate governance and corporate social responsibility (CSR) determinants of the Portuguese listed companies’ performance, considering a…

Abstract

Purpose

This paper aims to analyze the corporate governance and corporate social responsibility (CSR) determinants of the Portuguese listed companies’ performance, considering a different point of view by managers, shareholders and other external stakeholders and investors.

Design/methodology/approach

To achieve this aim, the authors have used a sample of 34 nonfinancial listed companies in Euronext Lisbon between 2015 and 2020. The authors use the panel data methodology to test the hypotheses formulated according to the literature review, specifically the generalized method of moments (GMM) system estimation model proposed by Arellano and Bond (1991).

Findings

The main results point out that the determinants of the corporate performance vary depending on the dependent variable considered. From the managers’ perspective, the existence of an audit committee and expenses with the environment increase costs and reduce results, negatively influencing corporate performance, but the company’s maturity adds synergies in resource management and positively influences performance. Shareholders consider that gender diversity and board independence positively influence performance, whereas, for external stakeholders and long-term investors, gender diversity and the social responsibility committee harm the performance of Portuguese companies. However, environmental and social expenditures have a positive effect, showing that the market’s perception is that, in the long run, it is essential to eradicate poverty and protect the environment.

Originality/value

To the best of the authors’ knowledge, this study is the first one to analyze corporate governance and CSR determinants on the performance of listed Portuguese companies. This study shows that in a small banking-oriented country, there is still a long way to go in terms of increasing social responsibility and governance among different stakeholders. It is essential to promote actions that lead to effective governance and awareness of social responsibility.

Details

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

Keywords

Book part
Publication date: 1 January 2014

Filip Fidanoski, Kiril Simeonovski and Vesna Mateska

Many organizations around the world currently are facing board diversity issues and challenges. Hence, this empirical paper investigates the relationship between board…

Abstract

Many organizations around the world currently are facing board diversity issues and challenges. Hence, this empirical paper investigates the relationship between board diversity and firm’s financial performance. We use a sample of 35 companies from five countries in Southeast Europe (Macedonia, Croatia, Serbia, Bosnia and Herzegovina, and Greece) for the period between 2008 and 2012 to find that, on average, companies with well-educated board members are more profitable and overvalued on the market. When running the regression again to test the levels of heterogeneity, we also find that the companies with more women on board tend to be overvalued on the market, while those with more foreigners on board are subject of undervaluation. The paper mostly contributes to the literature on corporate governance and board diversity. First, we postulate the impact of each of the board diversity variables on the financial performance and then show the extent of this impact and its economic interpretation. Our findings have important practitioners’ implications for corporate regulators and policy-makers since the demonstrated positive impact of the well-educated board members on firm’s financial performance gives a new impetus in building a corporate strategy that will intend to engage more people holding PhD on board.

Details

Corporate Governance in the US and Global Settings
Type: Book
ISBN: 978-1-78441-292-0

Keywords

Book part
Publication date: 1 January 2008

Ahmed Kholeif

Purpose – This paper aims at re-examining the predictions of agency theory with regard to the negative association between CEO duality (i.e. the Chief Executive Officer…

Abstract

Purpose – This paper aims at re-examining the predictions of agency theory with regard to the negative association between CEO duality (i.e. the Chief Executive Officer, CEO, serves also as the board chairman) and corporate performance. It also examines the role of other corporate governance mechanisms (board size, top managerial ownership and institutional ownership) as moderating variables in the relationship between CEO duality and corporate performance.

Methodology/approach – This paper uses the financial statements for the year 2006 of most actively traded Egyptian companies to examine these predictions of agency theory. Moderated Regression Analysis is used to analyse the empirical data.

Findings – The findings indicated that the hypothesized relationships between CEO duality, the moderating variables and corporate performance have changed. For companies characterized by large boards and low top management ownership, corporate performance is negatively affected by CEO duality and positively impacted by institutional ownership.

Research limitations/implications – A limitation of this study is the use of accounting-based performance measures because of the expected earnings management behaviours by CEOs.

Practical implications – The Egyptian Capital Market Authority should adopt a reform programme to encourage Egyptian listed companies to modify their governance structures by increasing top management ownership and reducing board sizes before incorporating the new governance rules into the listing requirements.

Originality/value of paper – The paper contributes to the literature on corporate governance and corporate performance by introducing a framework for identifying and analysing moderating variables that affect the relationship between CEO duality and corporate performance.

Details

Corporate Governance in Less Developed and Emerging Economies
Type: Book
ISBN: 978-1-84855-252-4

Book part
Publication date: 7 May 2019

Carolina Herrera-Cano and Maria Alejandra Gonzalez-Perez

This chapter aims to evaluate the relationship between the representation of women on corporate boards of directors and its impact on firm financial performance.

Abstract

Purpose

This chapter aims to evaluate the relationship between the representation of women on corporate boards of directors and its impact on firm financial performance.

Design/Methodology/Approach

This study utilized both a systematic review and a meta-analysis, using a sample of 40 published studies, which gleaned financial indicator and observation data from 28 different countries.

Findings

As indicated in previous studies, while positive, there was no significant correlation found between the number of women serving on the boards of directors and firm financial performance.

Research Limitations/Implications

The heterogeneity between the various studies analyzed may present difficulties in making general conclusions. The chapter could also be subject to publication bias, as the selection criteria included may indicate a need for further peer review. Future meta-analyses should include data associated with other financial indicators.

Practical Implications

This study shows how composition ratios of men/women serving on corporate boards should be addressed in terms of proving for a greater diversity of leadership perspectives.

Originality/Value

Previous systematic reviews and meta-analyses have analyzed country environments as moderators for the relationship between the representation of women on corporate boards and firm financial performance. The present study evaluates possible differences between the impact of the number of women serving on the board of directors on a variety of financial indicators (ROA, ROE, and Tobin’s Q).

Article
Publication date: 15 July 2022

Wonsuk Cha, Dongjun Rew and Joo Jung

The purpose of this study is to empirically explore the interaction between corporate philanthropy and firm performance through the mechanism of corporate strategies, such…

Abstract

Purpose

The purpose of this study is to empirically explore the interaction between corporate philanthropy and firm performance through the mechanism of corporate strategies, such as unrelated diversification and global strategic posture (GSP).

Design/methodology/approach

A theoretical framework was developed based on institutional theory to argue that GSP can play an important mediating role in the relationship between corporate philanthropy and firm performance. PROCESS macro for SPSS and SAS to test a mediation was conducted using data from 115 publicly traded US firms between 2010 and 2017.

Findings

This study verified that GSP acts as an indirect mediator that influences the relationship between corporate philanthropy and firm performance. However, unrelated diversification was not found to be a mediator of that relationship.

Research limitations/implications

This study has extended the current understanding of institutional theory to explain the relationship between corporate philanthropy and corporate strategies.

Practical implications

This study helps to provide corporate managers with a promising notion that corporate philanthropy can help firms with market entry strategies.

Originality/value

This study helps to provide empirical evidence on the relationships among corporate philanthropy, corporate strategies and firm performance. Specifically, the finding of this study indicates strategic conditions under which the firm’s philanthropic efforts are more likely to influence firm performance.

Details

Society and Business Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1746-5680

Keywords

Book part
Publication date: 6 September 2018

Wonlop Buachoom

As there is inclusive evidence on relationship between board characteristics and firm performance in the Thai context, and mixed findings of this relationship are usually…

Abstract

As there is inclusive evidence on relationship between board characteristics and firm performance in the Thai context, and mixed findings of this relationship are usually reported from previous studies, this study tries to clarify a reason for the mixed finding by determining the impact of board structures on different quantile levels of firm performance. Building on extant literature and using a developed econometric technique, the Quantile Analysis, on a sample of 446 listed firms in Thailand for a 15-year period ranging from 2000 to 2014, empirical evidence is provided which is consistent with prior studies that some characteristics of the board as the core mechanisms of corporate governance, i.e., board independence, board size, board meeting frequency, and dual role leadership on board, have significant influence on performance of Thai firms. In particular, when considering different quantile levels of firm performance, board structures are found to have different effects across quantile of performance distribution. Board independence and dual role leadership on board are found to have a significant influence on only moderate-performing firms, while board size and board meeting frequency are revealed as having significant impact on only firms with high-performance which need more effectiveness of the board in overseeing and supervising decision-making of the executives. Thus, these findings indicate that considering different quantile levels of firm performance for the board structures and performance relationship should be a reason of previous mixed findings. Moreover, the findings should be important information in encouraging better understanding an optimal governance system in Thailand for related stakeholders such as policymakers, corporate firms, and investors.

Details

Advances in Pacific Basin Business, Economics and Finance
Type: Book
ISBN: 978-1-78756-446-6

Keywords

Book part
Publication date: 12 March 2020

Marco Masip

Despite all the attempts developed so far to measure corporate social performance in the last decades, a standard metric for it is still missing. In this work, the author…

Abstract

Despite all the attempts developed so far to measure corporate social performance in the last decades, a standard metric for it is still missing. In this work, the author tries to understand why is this the case. To do so, the author has reviewed 69 relevant metrics developed in the literature since the 1970s until today, covering approaches based on social, reputational, and environmental ratings, as well as several others constructed ad hoc by reputated scholars. The author analyzes each of them through a double optics, checking if they meet the minimum requirements to be considered standard and truly social. The research reveals that the main factor that prevents such a standard is the lack of truly social orientation of the existing metrics.

Details

Non-Financial Disclosure and Integrated Reporting: Practices and Critical Issues
Type: Book
ISBN: 978-1-83867-964-4

Keywords

Book part
Publication date: 17 July 2014

Hasnah Kamardin

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…

Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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.

Research implications

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.

Originality/value

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

Details

Ethics, Governance and Corporate Crime: Challenges and Consequences
Type: Book
ISBN: 978-1-78350-674-3

Keywords

Book part
Publication date: 19 June 2019

Ling-Foon Chan, Bany-Ariffin AN and Annual Bin Md Nasir

Corporate diversification is a strategy that enables corporations to expand their core business into other businesses. In Malaysia, corporate diversification continues to…

Abstract

Corporate diversification is a strategy that enables corporations to expand their core business into other businesses. In Malaysia, corporate diversification continues to represent a fundamental organizational structure. Some two-thirds of Malaysian firms are diversified. However, when compared to developed countries such as the US and the UK, we find that firms are moving toward non-diversification. The study is based on the population framework consisting of all of the public limited companies (PLCs) listed on the Bursa Malaysia stock exchange from 2007 to 2012. A dynamic panel model system generalized method of moments (GMM) was used to analyze the diversification and firm’s performance theories.

The empirical findings demonstrated that diversification is better than non-diversification firms for the curvilinear relationship between diversification and firm’s performance (ROA and Tobin-Q) when using the entropy index and relatedness is taken into consideration. The research further concluded that related and unrelated diversification also has a positive relationship with performance, but diversification must be the dominant (focused) and cannot be too broad in nature. Diversification that is too broad may cause a positive relationship to turn in to a negative relationship toward performance in both related and unrelated instances of diversification.

Details

Asia-Pacific Contemporary Finance and Development
Type: Book
ISBN: 978-1-78973-273-3

Keywords

Article
Publication date: 19 July 2022

Mohammed Sulaiman Hassan Kasbar, Nicholas Tsitsianis, Androniki Triantafylli and Colin Haslam

The study aims to predict and understand the conditions under which the association between corporate governance and a company's financial performance is positive or…

Abstract

Purpose

The study aims to predict and understand the conditions under which the association between corporate governance and a company's financial performance is positive or meaningful by empirically accounting for agency conflicts. This study is motivated by the fact that the separation between ownership and control creates agency conflicts between company owners and managers. Therefore, strong corporate governance systems are expected to align the interests of conflicting parties whereby companies become more likely to improve their financial performance. However, previous research did not yield consistent results in this regard.

Design/methodology/approach

Given the latent nature of corporate governance and agency conflicts, this study uses principal component and exploratory factor analyses to proxy for corporate governance and agency conflicts, respectively. Using dynamic panel data modelling, the authors estimate the change in the relationship between corporate governance and a company's financial performance as a function of the change in the level of agency conflict using data from the UK on 78 non-financial companies listed in the Financial Times Stock Exchange 100 (FTSE100) index between 1999 and 2014.

Findings

The corporate governance quality of companies is significantly differed. Moreover, companies operating at high levels of agency conflict outperform the companies' counterparts operating in low levels of agency conflict only when the former improves the corporate governance quality. This implies that financial performance improves by approximately 11% if companies improve corporate governance quality due to an increase in the level of agency conflicts.

Research limitations/implications

Lack of data on ownership structure for the study period (1999–2014) was the main reason the authors excluded it from the analysis. Additionally, the lack of reliable and quantifiable corporate governance data on small-medium sized enterprises limits findings on large non-financial companies.

Practical implications

The authors propose a framework/tool for the impact of the level of corporate governance compliance on financial performance conditional upon the level of agency conflicts whose importance has largely been neglected by the empirical literature. By providing the right “lens” to de-fragmentise the corporate governance mechanisms and estimate empirically the unobserved agency conflicts, researchers, practitioners and investors are able to get further insights on the composing elements of financial performance and evaluate it more objectively. Managers can allocate companies' resources more efficiently and thus improve financial performance. The auditors can get further background information when they compile their report on company's directors. The study's findings offer valuable suggestions for accounting and corporate governance regulators to further put forward and improve accounting standards so as to enhance existing regulations and internal mechanisms which, in turn, could decrease the scope for managerial opportunistic behaviour as the latter can be empirically estimated through our framework.

Social implications

The findings point out the need for a revised framework accounting for the principal-agent (mis)alignment and the engrained information asymmetries. By acknowledging the level of corporate governance compliance and agency conflict, managers and shareholders should actively strive for the effectiveness of companies, the efficiency of the stock markets and the minimisation of the agency costs. Furthermore, policymakers can look into the development of a code of corporate governance to effectively regulate firms rather than enforcing rigid laws that may not be value relevant. With all these settings in place, the likelihood of corporate failures, corporate scandals as well as corporate violations with the ensuing penalties is set to be reduced. Hence, valuable resources, social capital and effort can be directed into more productive activities.

Originality/value

This study adds to the existing literature by offering empirical and explicit evidence on the dynamic association between corporate governance, agency conflicts and financial performance against a backdrop of high demand for strong corporate governance practices/codes. To the best of the authors' knowledge, there is no study that has yet empirically examined the moderating effect of the level of agency conflicts, given the level of corporate governance compliance on financial performance for listed and internationally aligned companies.

Details

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

Keywords

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