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Article
Publication date: 29 June 2023

Dipanwita Chakraborty and Jitendra Mahakud

This paper aims to examine the impact of chief executive officer (CEO) attributes on foreign shareholdings from the perspective of an emerging economy.

Abstract

Purpose

This paper aims to examine the impact of chief executive officer (CEO) attributes on foreign shareholdings from the perspective of an emerging economy.

Design/methodology/approach

This study examined Bombay Stock Exchange listed firms from the Indian stock market and applied a balanced panel data approach with fixed effect estimation technique during the period 2010–2019.

Findings

The study shows that CEOs’ financial education and a higher level of education positively affect foreign shareholdings. The age and experience of CEO have a positive and significant impact on foreign shareholdings. Firms with male CEOs are preferred more by foreign investors. The effect of CEO busyness and CEO duality is negative on foreign shareholdings. Foreign investors prefer to invest in firms with foreign nationality CEOs. Furthermore, the robustness test reveals that the influence of CEO attributes on foreign shareholdings is stronger for new, small and stand-alone firms than for old, large and group-affiliated firms.

Practical implications

The study will be beneficial for a diverse audience ranging from firms’ board of directors, regulators and policymakers who are entrusted with the CEO recruitment process. Additionally, firms seeking external financing should disclose CEO information adequately and improve the reporting quality to attract foreign investors, as they consider CEO characteristics as a valuable signal before making investment decisions.

Originality/value

In light of the current legislative reforms, this study can be recognized as one of the early studies that explore the relationship between CEO attributes and foreign shareholdings in the context of an emerging economy.

Details

Journal of Financial Reporting and Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1985-2517

Keywords

Open Access
Article
Publication date: 29 September 2022

Kumiko Nemoto

Building on the institutional theory perspective on corporate governance change and based on interviews with investor relations (IR) managers in large Japanese companies, this…

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Abstract

Purpose

Building on the institutional theory perspective on corporate governance change and based on interviews with investor relations (IR) managers in large Japanese companies, this study aims to examine Japanese IR managers’ perceptions of the influence of foreign shareholders on Japan’s corporate governance reform and stakeholder-based system. The paper examines tensions, conflicts and collaborations among different stakeholders involved in corporate governance changes in Japan, especially in the areas of firm ownership, employment relations and boards of directors. The paper explains why convergence does not happen in some large Japanese companies by investigating Japanese managers’ responses to and perceptions of foreign shareholders in multiple corporate contexts.

Design/methodology/approach

The author conducted in-depth interviews with ten IR managers at large, listed Japanese companies in Kyoto and Tokyo and two managers at foreign investment banks in Tokyo, between 2018 and 2021.

Findings

This paper explores five themes that emerged from my interviews: Chief executive officers’ (CEOs’) mixed perceptions of foreign investors, the effectiveness of CEO compensation and outside directors, managers’ reluctance to accept stock price-driven business strategies, foreign investors’ engagement vs investments in index funds and gender patterns, including the effectiveness of token female outside directors. The Japanese companies the author looked at incorporated foreign shareholders as consultants and adopted a few major shareholder-based customs, such as CEOs communicating with investors, having outside directors, increasing CEO compensation and slimming down unprofitable parts of the business via restructuring and downsizing. Simultaneously, they resisted a few major shareholder-based practices. Foreign shareholders’ pressure revealed tensions and contradictions between the Japanese stakeholder system and shareholder primacy-based customs.

Originality/value

This paper is one of the few qualitative studies that explores Japanese IR managers’ responses to and perceptions of foreign shareholders in corporate governance reform, with a particular focus on ownership, employment relations and board members. This paper provides examples of tension, conflict and cooperation between Japanese managers and foreign investors, as seen through the eyes of Japanese IR managers. Examining changes in Japan’s stakeholder-based system of corporate governance reform enables us to better understand the processes by which, with vigorous pressure from government and foreign shareholders, a non-western country like Japan may adopt shareholder-based customs and how such a change may also lead to institutional changes.

Details

Corporate Governance: The International Journal of Business in Society, vol. 23 no. 3
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 11 April 2016

Katharina Laufs, Michael Bembom and Christian Schwens

Using arguments from the upper echelons perspective this paper aims to examine the impact of CEO characteristics on small and medium-sized enterprises’ (SMEs’) equity foreign

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Abstract

Purpose

Using arguments from the upper echelons perspective this paper aims to examine the impact of CEO characteristics on small and medium-sized enterprises’ (SMEs’) equity foreign market entry mode choice and how these associations are jointly moderated by geographic experience of the firm and host-country political risk.

Design/methodology/approach

The empirical analysis draws on data gathered from German SMEs testing triple-interaction effects between CEO’s age, firm tenure and international experience, geographic experience of the firm (organizational level), and host-country political risk (environmental level).

Findings

Empirical findings validate that the influence of CEO’s age and firm tenure on SME foreign market entry mode choice varies by managers’ level of managerial discretion (i.e. latitude of action) as determined by the SME’s geographic experience and the level of political risks prevailing in the foreign market.

Practical implications

Empirical findings help SME owners and managers to understand how CEO’s age and firm tenure are related with individual’s risk-taking behavior and information-processing demands and how these contingencies vary by the context in which the individual CEO is nested.

Originality/value

This study contributes to the growing body of literature focussing on SME foreign market entry mode choice by emphasizing the important role of CEOs in the decision to internationalize. More specific, this study contributes by an examination of the interactive effect of CEO’s age, firm tenure and international experience, geographic experience of the firm and host-country political risk and, therefore, emphasizes the context and boundary conditions under which the association between CEO characteristics and foreign market entry mode choice is more or less pronounced.

Details

International Marketing Review, vol. 33 no. 2
Type: Research Article
ISSN: 0265-1335

Keywords

Article
Publication date: 2 June 2020

Kai Sun, Hung-Gay Fung, Yuping Zeng and Penghua Qiao

This paper aims to examine the effect of chief executive officers (CEOs’) global experience (GE) on the Chinese firms’ outward foreign direct investment (OFDI) and provides new…

Abstract

Purpose

This paper aims to examine the effect of chief executive officers (CEOs’) global experience (GE) on the Chinese firms’ outward foreign direct investment (OFDI) and provides new insights on how CEOsforeign study and education experiences may affect firms’ OFDI. Further, this paper examines whether CEO power and state ownership have a positive moderating effect on the relationship between CEOs’ GE and firms’ OFDI.

Design/methodology/approach

This study used panel data of Chinese manufacturing companies in 2007-2016 to examine different hypotheses. The authors tested them using a zero-inflated negative binomial regression model to shed light on the effect of CEOs’ GE on the firms’ OFDI.

Findings

This study found that CEOs’ GE generally promotes Chinese firms’ OFDI. CEOsforeign study experience has a stronger effect than foreign education experience. Further, CEO power and state ownership have a positive moderating effect on the relationship between CEOs’ GE and firms’ OFDI.

Research limitations/implications

The findings have two important implications for managers and policy-makers. First, globally experienced CEOs are vital for firms to succeed in today’s highly competitive global environment. Second, CEO power is important in firms’ OFDI decision-making.

Originality/value

The authors use path dependency and upper echelons theories to show that GE, particularly foreign study experience, enables CEOs to take advantage of available resources in the market and institutional environment to create a path for the firm to expand globally.

Details

Chinese Management Studies, vol. 15 no. 1
Type: Research Article
ISSN: 1750-614X

Keywords

Article
Publication date: 2 June 2023

Souhir Neifar and Silke Huesing

This paper aims to examine the effect of contractual factors and noncontractual factors on tax avoidance (TA).

Abstract

Purpose

This paper aims to examine the effect of contractual factors and noncontractual factors on tax avoidance (TA).

Design/methodology/approach

The sample comprises 400 firm-year observations of 67 companies listed on the HDAX during the period 2008–2017. The generalized least square panel regression is applied.

Findings

The study results confirm a significant effect of long-term chief executive officer (CEO) compensation incentives and CEO attributes on TA. Findings exhibit a significant impact of foreign CEO on TA, whereas an insider CEO mitigates TA. The results hold for several robustness tests, with lag effective tax rate as dependent variable and with splitting foreign CEO into European and non-European origin.

Research limitations/implications

First, the sample is limited to 400 firm-year observations and to the German context. For shareholders, the study provides first evidence on relationships between the geographical and internal versus external labor market for CEOs and TA. For researchers, the findings underline the importance of integrating behavioral approaches like place attachment theory and the rooting theory in the theory of TA.

Originality/value

To the best of the authors’ knowledge, this is the first study to examine the impact of both contractual determinants and behavioral determinants on TA in the German context as an emerged economy with a dualistic corporate governance. This study contributes to the existing literature regarding the scientific debates about the impact of CEOs and CEO attributes on TA. It also analyses the balance between the place attachment theory and the rooting theory in the face of the compensation outcomes of agency theory.

Details

Journal of Financial Reporting and Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 17 January 2022

Sang-Youn Lee and Eun-Jeong Ko

This study aims to investigate how three critical governance decisions by foreign firms impacted their survivability post-initial public offerings (IPO): the choice of CEO

Abstract

Purpose

This study aims to investigate how three critical governance decisions by foreign firms impacted their survivability post-initial public offerings (IPO): the choice of CEO (founder vs non-founder); the power the founder CEO wields relative to the board in terms of CEO duality; and board size.

Design/methodology/approach

This study uses data from 86 foreign firms that completed IPOs in the US market between 2000 and 2008 and adopts a Cox proportional hazards model to examine how the founder, founder CEO duality and board size influence foreign firm delisting post-IPO.

Findings

A founder CEO or a founder CEO with duality (i.e. when a founder CEO is also chair of the board of directors) does not support a foreign firm’s survival post-IPO. Expectedly, board size has a negative impact on post-IPO firm survivability; however, founder CEO duality positively moderates this negative relationship. Therefore, founder CEO duality plays a positive indirect role in the context of post-IPO firms with large boards.

Originality/value

First, while the benefits of CEO duality have been empirically ambiguous, this study clarifies how founder CEO duality manifests its positive impacts in foreign listings. Second, by focusing on board cognition, this study confirms the negative impact of large boards, but highlights that this can be mitigated by governance leadership structure. Finally, despite organizational life-cycle theorists’ advocacy of the replacement of founder CEOs with professional CEOs in sizable ventures, this study shows the benefits of their retention when the board is large.

Details

Corporate Governance: The International Journal of Business in Society, vol. 22 no. 5
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 15 February 2021

Sawssan Jbir, Souhir Neifar and Yosra Makni Fourati

This paper aims to examine the impact of CEO (chief executive officer) compensation and CEO attributes on the level of tax aggressiveness of French companies.

Abstract

Purpose

This paper aims to examine the impact of CEO (chief executive officer) compensation and CEO attributes on the level of tax aggressiveness of French companies.

Design/methodology/approach

The sample comprises 180 firm-year observations of 40 companies listed on the CAC 40 during the period ranging from 2008 to 2018. For the purpose of overcoming the problems of heteroscedasticity and autocorrelation, the authors apply the generalized least square panel regression.

Findings

This study’s results corroborate the importance of CEO compensation and CEO attributes as determinants of tax aggressiveness. In addition, the authors come up with the fact that CEO compensation has a negative effect on tax aggressiveness, and that older CEOs and CEOs with accounting expertise are negatively linked with tax aggressiveness. The authors also find out that there is a positive relationship between the CEO tenure and tax aggressiveness. Moreover, the authors report that foreign CEOs are more likely to engage in tax aggressiveness practices than local CEOs.

Research limitations/implications

The unavailability of all annual reports and the use of only one proxy to measure tax aggressiveness present limitations. This study shows significant implications for shareholders, regulators and researchers. As a matter of fact, shareholders will observe the effect of appointing a foreign CEO on the tax aggressiveness level. This study may also provide regulators with new ideas regarding the role of the CEO and its impact on aggressive decision-making. And it brings forth new insight for researchers through adding a foreign CEO as a new determinant of tax aggressiveness.

Originality/value

According to the authors’ knowledge, this study is the first to provide empirical evidence regarding the effect of both CEO compensation and CEO attributes on tax aggressiveness. It also looks into the impact of a foreign CEO on tax aggressiveness.

Details

Journal of Financial Crime, vol. 28 no. 4
Type: Research Article
ISSN: 1359-0790

Keywords

Article
Publication date: 1 June 2015

Nereida Polovina and Ken Peasnell

The purpose of this paper is to explore the effects of appointing foreign directors on the foreign acquired Turkish banks. Based on the developments in the Turkish banking system…

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Abstract

Purpose

The purpose of this paper is to explore the effects of appointing foreign directors on the foreign acquired Turkish banks. Based on the developments in the Turkish banking system and the distinctive features of the Turkish market, the authors examine the appointment of foreign directors in three different levels: as a CEO, chairman and board member. The authors analyse how the appointments of foreign directors in each of these three levels affects the profitability and strategies of foreign acquired banks.

Design/methodology/approach

The authors use the difference-in-difference (DID) model where the authors compare two groups: foreign acquired banks vs domestic banks for a five-year period. By applying the DID model, the authors aim to remove the time invariant individual characteristics of the banks that could be due to the permanent differences between the two groups, as well as biases from comparisons over time that could be due to trends.

Findings

The authors find that the presence of the foreign chairman has a positive effect on the profitability of the foreign acquired bank and on the improvement of the income generated from interest activities, indicating that foreign chairman improves the monitoring of board of directors and brings new skills and experiences. Furthermore, foreign acquired banks are associated with an increase in the income generated from non-interest activities in the fifth year following their acquisitions, showing the introduction of new strategies. The change of the foreign acquired bank’s strategies in the fifth year after acquisition also suggests that it takes time to implement new strategies in a new environment.

Originality/value

Though the effects of foreign board membership on bank’s performance have been previously discussed in literature, this study differentiates in that it distinguishes among different positions, e.g. chairman or CEO when examining the effect of a foreign director on a foreign acquired bank’s performance. In addition, the use of foreign acquired Turkish banks in the sample in this context adds to the general academic literature.

Details

International Journal of Managerial Finance, vol. 11 no. 3
Type: Research Article
ISSN: 1743-9132

Keywords

Article
Publication date: 25 January 2024

Adhitya Agri Putra and Doddy Setiawan

This research paper aims to examine the effect of chief executive officer (CEO) characteristics on earnings management.

Abstract

Purpose

This research paper aims to examine the effect of chief executive officer (CEO) characteristics on earnings management.

Design/methodology/approach

Research samples are manufacturing firms listed in the Indonesian Stock Exchange 2015–2021. CEO characteristics include narcissism, gender, age, tenure, experience, nationality and founding family status. Data analysis uses random-effect regression.

Findings

The result shows that higher narcissism CEOs have aggressive characteristics so they will be more likely to engage in accrual and real earnings management. Female CEOs, foreign CEOs and founding-family CEOs have higher monitoring and business ethics characteristics so they will be less likely to engage in accrual and real earnings management. CEOs with higher education levels have higher thinking complexity so they will be more likely to engage in accrual earnings management with higher regulator and auditor monitoring barriers than real earnings management. CEOs with financial and accounting experience are familiar with accounting standards and auditor monitoring barriers so they will be more likely to engage in accrual earnings management than real earnings management. On the other hand, there are no effects of CEO age and tenure on earnings management.

Originality/value

This research contributes to providing evidence of the effect of CEO characteristics on earnings management in a specific industry such as manufacturing firms and emerging markets such as Indonesia with the majority group firms being family firms.

Details

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

Keywords

Article
Publication date: 8 May 2023

Suherman Suherman, Titis Fatarina Mahfirah, Berto Usman, Herni Kurniawati and Destria Kurnianti

The purpose of this study was to investigate how chief executive officer (CEO) characteristics, including age, education, nationality and particularly gender, influence firm…

Abstract

Purpose

The purpose of this study was to investigate how chief executive officer (CEO) characteristics, including age, education, nationality and particularly gender, influence firm performance in a developing Southeast Asian Country (Indonesia).

Design/methodology/approach

The study uses balanced firm-level panel data for 203 nonfinancial companies listed on the Indonesia Stock Exchange from 2010 to 2020. Return on assets, return on equity and Tobin’s Q were used to measure firm performance. The data were analyzed using panel data regression analysis, including a fixed effects model with clustered standard errors.

Findings

The results indicate that female CEOs, education and nationality enhance firm performance, while CEO age can either improve or reduce firm performance. Numerous robustness checks were performed; the results were consistent with those in the main analysis.

Research limitations/implications

Individual characteristics should be considered when appointing CEOs. Some CEO characteristics enhance firm performance. Female CEOs bring new perspectives, while older CEOs’ longer experience adds a competitive advantage. More educated CEOs have a better ability to deal with challenging intellectual activities, and CEOs from foreign countries better understand international market regulations. However, some characteristics may reduce firm performance, for example, older CEOs are more conservative and unable to adapt to changing business environments.

Originality/value

This study contributes to corporate governance studies by synthesizing CEO characteristics and investigating their relationship with firm performance. Moreover, it emphasizes that developing countries such as Indonesia have different economic, legal, social and cultural environments than developed countries, especially Western countries.

Details

Corporate Governance: The International Journal of Business in Society, vol. 23 no. 7
Type: Research Article
ISSN: 1472-0701

Keywords

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