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1 – 3 of 3Deepali Kalia, Debarati Basu and Sayantan Kundu
The study explores extant knowledge on the nature of the relationship between internal and external corporate governance mechanisms, particularly board characteristics and audit…
Abstract
Purpose
The study explores extant knowledge on the nature of the relationship between internal and external corporate governance mechanisms, particularly board characteristics and audit quality, respectively, while also investigating how the relationship varies across geographies.
Design/methodology/approach
The extant knowledge is synthesized using a meta-analysis, which is conducted using a sample of 56 empirical studies from publications of varying grades. The studies span over 25 years (1996–2021) and cover 147 empirical samples (343,787 firm-year observations) across more than 20 countries. The dependent variable is audit fees, and the independent variable captures 12 different measures of board characteristics.
Findings
Overall, the results reveal a positive association between board characteristics and audit fees, indicating complementarity between governance mechanisms. Effect size analysis shows board characteristics, like size and independence, are positively associated with audit fees. However, heterogeneity is noted for some characteristics, and further analysis by geography (developed vs emerging countries) explains the heterogeneity.
Practical implications
This study helps multiple stakeholders like firms, shareholders, boards, regulators and policymakers in designing and strengthening governance frameworks.
Social implications
Both governance and auditing literature benefit from identifying specific board characteristics that drive audit quality consistently across different institutional settings and samples. Heterogeneity analysis helps improve the understanding of contradictions documented in prior literature.
Originality/value
This meta-analysis is the first to explore the interplay between internal and external corporate governance mechanisms, with a focus on board characteristics and audit quality. The study provides valuable insights on how different governance mechanisms influence each other while highlighting, for the first time, how the interaction between governance mechanisms varies by a country's level of development.
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Deepali Kalia and Divya Aggarwal
Socially responsible and green investment options are gaining notable attention from multiple stakeholders, including individual investors and the government, across both…
Abstract
Purpose
Socially responsible and green investment options are gaining notable attention from multiple stakeholders, including individual investors and the government, across both developing and developed markets. The purpose of this study is to examine whether the three recently launched socially responsible indices of India, an emerging market, follow the martingale process. This study also explores the impact of market-wide uncertainty on the market efficiency of these indices.
Design/methodology/approach
Using a set of robust parametric and nonparametric tests, including the spectral analysis, the periodogram and the Fisher’s G test, the authors comment upon the market efficiency of Carbonex, Greenex and the environmental, social and governance indices, both in general and during periods of high uncertainty marked by the COVID-19 pandemic.
Findings
The results of this study confirm the presence of market inefficiency in socially responsible investments (SRI), both in general and during the COVID-19 crisis in the Indian context.
Practical implications
The results of this study have implications for investors as well as policymakers. Investors, speculators and arbitrageurs may devise profitable trading strategies by using these results. Asset managers and fund houses may use the benefits of reduced volatility of SRI to balance their portfolios and improve asset allocation; regulators and policymakers to strengthen the framework as market inefficiencies reduce investor confidence and hinder capital formation.
Originality/value
To the best of the authors’ knowledge, this is the first study to explore the market efficiency of multiple SRIs, which were previously unexplored Indian markets, and also the first to comment upon the behavior of SRIs during market-wide uncertainty.
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Deepali Kalia and Divya Aggarwal
This paper aims to investigate the effect of total and each individual component of environmental, social and governance score (ESG) on financial performance (FP) of healthcare…
Abstract
Purpose
This paper aims to investigate the effect of total and each individual component of environmental, social and governance score (ESG) on financial performance (FP) of healthcare companies.
Design/methodology/approach
Data for 468 health-care firms for the business year 2020 is sourced from Thomson Reuters to obtain ESG data. Correlation and multivariate regression analysis are done to investigate the relation between ESG activities and firm performance. The analysis has been done on overall data and subsample data to examine the relation across developing vs developed markets.
Findings
The results of the study suggest that relation between ESG score and FP cannot be generalized. The results show that performing ESG activities positively impact firm performance of healthcare companies in developed economies; however, this relationship would be negative or insignificant in the case of developing economies.
Practical implications
The results of this study have implications for both practitioners and policymakers. The authors suggest the specific setups in which the relationship between ESG activities and firm performance will be negative or insignificant. These results are beneficial to policymakers who seek to increase the active participation of firms in ESG activities.
Originality/value
To the best of the authors’ knowledge, this study is the first to explore the relationship of ESG score on FP through the lens of country-level development variables for health-care sector companies.
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