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Article
Publication date: 11 July 2023

Patrick Velte

This paper aims to review empirical research on the relationship between institutional ownership (IO) and board governance (85 studies).

Abstract

Purpose

This paper aims to review empirical research on the relationship between institutional ownership (IO) and board governance (85 studies).

Design/methodology/approach

Based on agency and upper echelons theory, the heterogeneous monitoring function of specific types and the nature of institutional investors on board composition, compensation and chief executive officer (CEO) characteristics will be focused.

Findings

The author found that most studies have referred to archival studies, analyzed the impact of board governance on IO, focused on CEO characteristics, neglected IO heterogeneity and advanced regression models to address endogeneity concerns. In line with the theoretical framework, the relationship between total IO and board governance is heterogeneous. However, specific types such as foreign, dedicated and pressure-resistant institutions represent active monitoring tools and push for increased board governance.

Research limitations/implications

The author provided useful recommendations for future research from a content and methodological perspective, e.g. the need for analyzing the impact of IO on sustainable board governance and other characteristics of top management team members, e.g. the chief financial officer.

Practical implications

As many regulatory bodies implemented regulations to promote shareholder rights and board governance, this literature review highlights the connections of both corporate governance mechanisms. Managers should conduct a careful and timely investor analysis and change the composition and compensation of the board of directors in line with institutional investors’ preferences.

Originality/value

This analysis makes useful contributions to prior research by focusing on IO and board governance, whereas the author structured the heterogeneous variables and results within the structured literature review. The authors guides researchers, regulatory bodies and business practice in this corporate governance topic.

Details

Corporate Governance: The International Journal of Business in Society, vol. 24 no. 2
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 20 December 2023

Henry Xie and Jane Xie

This study aims to investigate the impact of equity ownership structure (i.e. CEO ownership, board chair ownership and institutional ownership) on internationalization of firms…

Abstract

Purpose

This study aims to investigate the impact of equity ownership structure (i.e. CEO ownership, board chair ownership and institutional ownership) on internationalization of firms. The moderating role of international experience of board chairs is also examined.

Design/methodology/approach

This study uses Compustat-Capital IQ data from Standard &Poor’s. The sample of this study includes 309 US multinational corporations representing different sectors. The parameters were estimated by using the ordinary least squares regression with the SPSS statistical package.

Findings

The finding of this study suggests that CEO ownership and board chair ownership have a significant, positive impact on the degree of internationalization of firms, whereas institutional ownership has a negative impact. The predicted moderating role of international experience of board chairs has found mixed results.

Originality/value

This study contributes to the literature by taking a holistic approach to examine the impact of equity ownership types (i.e. CEO ownership, board chair ownership and institutional ownership) on firms’ degree of internationalization. To the best of the authors’ knowledge, this research is also the first to investigate the impact of independent board chairs’ equity ownership and international experience on internationalization.

Details

Review of International Business and Strategy, vol. 34 no. 2
Type: Research Article
ISSN: 2059-6014

Keywords

Article
Publication date: 15 January 2024

Dhanushika Samarawickrama, Pallab Kumar Biswas and Helen Roberts

This study aims to examine the association between mandatory corporate social responsibility (CSR) regulations (CSR mandate) and social disclosures (SOCDS) in India. It also…

Abstract

Purpose

This study aims to examine the association between mandatory corporate social responsibility (CSR) regulations (CSR mandate) and social disclosures (SOCDS) in India. It also investigates whether CSR committees mediate the relationship between CSR mandate and SOCDS. Furthermore, this paper explores how business group (BG) affiliation moderates CSR committee quality and SOCDS.

Design/methodology/approach

This study uses a data set of 5,345 observations from the Bombay stock exchange (BSE)-listed firms over 10 years (2011–2020) to examine the research questions. Baron and Kenny’s (1986) three-step model is estimated to examine the mediating role of CSR committees on the relationship between CSR mandate and SOCDS.

Findings

The study reveals that the CSR mandate positively impacts SOCDS in India due to coercive pressures. CSR committees mediate this relationship, with higher CSR committee quality leading to increased SOCDS. Furthermore, the authors report that SOCDS in India is positively related to CSR committee quality, and this relationship is stronger for BG firms. Finally, the supplementary analysis reveals that promoting CSR committee quality enhances firms’ likelihood of meeting CSR mandatory spending and actual CSR spending in India.

Originality/value

This research contributes to the academic literature by shedding light on the intricate dynamics of CSR mandates, CSR committees and SOCDS in emerging economies. Notably, the authors identify the previously unexplored mediation role of CSR committees in the link between CSR mandates and SOCDS. The creation of a composite index that measures complementary CSR committee attributes allows us to undertake a novel assessment of CSR committee quality. An examination of the moderating influence of BG affiliation documents the importance of CSR committee quality, particularly in governance, for enhancing SOCDS transparency within BG firms.

Details

Meditari Accountancy Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2049-372X

Keywords

Article
Publication date: 20 February 2024

Misal Ijaz, Abeera Zarrar and Farah Naz

The purpose of this study is to evaluate the synergy of corporate governance (CG) with intellectual capital (IC) and to assess the moderating effect of profitability indicator on…

Abstract

Purpose

The purpose of this study is to evaluate the synergy of corporate governance (CG) with intellectual capital (IC) and to assess the moderating effect of profitability indicator on the aforementioned synergy using agency theory, resource-based view theory and theory of financial ratios as conceptual frameworks.

Design/methodology/approach

The sample includes 72 companies with a six-year data set drawn from the KSE 100 Index companies of Pakistan. In addition, the study adopts Pulic’s model to compute the efficiency of IC. The research uses fixed-effect panel regression for analysis and two-stage least squares regression (2SLS) to address endogeneity issues in the estimation process.

Findings

The results showcased that chief executive officer duality possesses negligible impact on IC efficiency (ICE), while independent directors, audit committees and board size tend to attain a strong association with IC. Moreover, it postulates that the moderation of return on equity strengthens the path between all governance components and ICE significantly.

Originality/value

The research uses a 2SLS regression analysis to explore how CG practices take hold on the effectiveness of IC in Pakistan while taking into account the moderating impact of profitability. The findings add to the body of knowledge on the value that strong governance practices have on businesses and society.

Details

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

Keywords

Article
Publication date: 16 October 2023

Xiaojing Zheng and Xiaoxian Wang

This study aims to examine the effect of board gender diversity on corporate litigation in China’s listed firms. The key questions this study addresses are: what are the effect of…

Abstract

Purpose

This study aims to examine the effect of board gender diversity on corporate litigation in China’s listed firms. The key questions this study addresses are: what are the effect of board gender diversity on corporate litigation in terms of both the frequency and severity of consequence, is there any heterogeneous effects of the relationships across firm performance?

Design/methodology/approach

A sample consists of 25,668 firm-year observations from over 3,340 firms is examined using logistic regression analysis and negative binomial regression analysis. The authors also use event study method and ordinary least square (OLS) regression to explore female directors’ effects on reducing the negative consequences of litigation. The logistic regression and OLS regression are reestimated with interaction terms when examining the firm performance heterogeneity.

Findings

The authors document that firms with greater female representation on their boards experience fewer and less severe corporate litigations. Moreover, in high-performing firms, board gender diversity plays a more potent role in reducing the frequency and consequences of corporate litigation than low-performing firms.

Originality/value

This study is among the first to examine the relationship between board gender diversity and the comprehensive corporate litigations under Chinese context. It sheds new light on China’s boardroom dynamics, offering valuable empirical implication to Chinese corporate policymakers on the role of female directors.

Details

Gender in Management: An International Journal , vol. 39 no. 3
Type: Research Article
ISSN: 1754-2413

Keywords

Article
Publication date: 13 February 2023

Zubair Ahmad and Zeeshan Mahmood

This study seeks to deepen the understanding of the political process underlying the establishment and evolution of corporate governance (CG) regulations in a developing country.

Abstract

Purpose

This study seeks to deepen the understanding of the political process underlying the establishment and evolution of corporate governance (CG) regulations in a developing country.

Design/methodology/approach

Drawing on regulatory space concept (Hancher and Moran, 1989) and Oliver's (1991) typology of strategic responses, the authors identify which actor participated in and benefitted from the establishment of a new transnational CG regulation in Pakistan. Data were collected through interviews and from the published secondary sources.

Findings

The findings highlighted regulations are being influenced and shaped up by the political process of negotiation, bargaining, manipulation and domination between powerful and resourceful actors in a given regulatory space. National regulators and regulatees can be indeed fervent opponents to the transnational regulations when it comes to protecting their well-rooted national interests.

Originality/value

This study contributes to the accounting literature by illustrating political processes through which internationally recognised CG practices are resisted, negotiated and implemented in the developing countries. The regulator must pay attention that the outcome of the regulatory change process is the result of carefully crafted and conscious strategies of actors in the regulatory space.

Details

Journal of Accounting in Emerging Economies, vol. 14 no. 1
Type: Research Article
ISSN: 2042-1168

Keywords

Article
Publication date: 23 February 2024

Khurram Shahzad, Rizwan Ali and Ramiz Ur Rehman

This study aims to examine the nexus of corporate governance with firms' financial risk-taking behavior under the corporate social responsibility (CSR) disclosures in the context…

Abstract

Purpose

This study aims to examine the nexus of corporate governance with firms' financial risk-taking behavior under the corporate social responsibility (CSR) disclosures in the context of non-financial listed firms of an emerging economy.

Design/methodology/approach

This study investigates the relationship between corporate governance as evaluated by an index and several financial risks, including idiosyncratic, default and systematic risks. The connection of corporate governance with financial risks is also studied while considering the moderation of CSR disclosures. The data are collected from 2014 to 2018 of 73 top 100-index listed non-financial firms of Pakistan Stock Exchange (PSX). Panel regression fixed effect and 2-step generalized method of moments techniques are applied to confirm the hypothesis along with the diagnostic tests to confirm that all outcomes of models must be authentic and reliable.

Findings

The study’s findings confirm that enhancing the overall corporate governance measures resulted in an augment in the firm’s risk due to weak control and regulations prevailing in emerging economies. Moreover, CSR disclosures enhance stakeholder information, lessen information asymmetry about management policies and mitigate the risk associated with operational uncertainties.

Practical implications

This study has a practical implementation to policymakers that effective monitoring and controlling measures facilitate the corporate management for minimizing the financial risks. Further, the study’s findings shed light that implementing corporate governance measures is not enough to mitigate financial risks until supervisory measures in the form of CSR disclosures are not taken to analyse corporate governance effectiveness.

Originality/value

This paper enhances the key findings in the literature by examining the role of corporate governance measures with respect to firms’ financial risks considering the moderating role of CSR disclosures. Furthermore, this research adds to the body of knowledge regarding the implementation of monitoring measures that assist in the mitigation of firms’ financial risks hence firm value.

Details

Managerial Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 13 April 2023

Vidisha Gunesh Ramlugun and Lesley Stainbank

The aim of this study is to explore how a practice approach can provide an understanding of board diversity practices. Drawing from Schatzki's practice theory, this study…

Abstract

Purpose

The aim of this study is to explore how a practice approach can provide an understanding of board diversity practices. Drawing from Schatzki's practice theory, this study considered how board diversity is practiced from the doings and sayings of directors in Mauritius.

Design/methodology/approach

In this study, in-depth interviews with directors in listed companies from different industrial sectors were used to collect data.

Findings

The authors' findings indicate that a country's board diversity practices are influenced by the country's unique social, economic and cultural environment. Whilst board diversity practices may appear as the practices that are motivated by compliance, a deeper look at the results reveals that the laws governing board diversity are interpreted very subtly in a way that benefits shareholders' self-interest. A low percentage of female directors on boards and some indications of shareholder-driven practices are also found. Whilst the corporate sector acknowledges the advantages of diversity, there are some practices that they are unwilling to abandon, demonstrating the importance of the teleoaffective structures and normativity in determining what really occurs. Members of boards resolving disagreement further demonstrates the teleoaffective structure.

Research limitations/implications

This research would be of interest to researchers because of the research's novel approach in studying board diversity which could be used by other researchers to experiment with a practice approach in exploring corporate governance phenomena in unique settings.

Practical implications

The findings are of relevance to policymakers and regulators who seek to strengthen corporate governance practices in similar settings.

Originality/value

This research contributes to the literature on board diversity by showing that analysing board diversity through a practice approach enables a more comprehensive understanding of practices. The authors' study confirms that practice theory has the potential to re-orient the way board diversity studies are undertaken.

Details

Journal of Accounting in Emerging Economies, vol. 14 no. 2
Type: Research Article
ISSN: 2042-1168

Keywords

Open Access
Article
Publication date: 12 June 2023

Tatiana Mazza, Katia Furlotti, Alice Medioli and Veronica Tibiletti

This study aims to test whether the introduction of a gender quota impacts functioning of boards of directors and internal committees thanks to female capacity in effort norms…

Abstract

Purpose

This study aims to test whether the introduction of a gender quota impacts functioning of boards of directors and internal committees thanks to female capacity in effort norms, cognitive conflicts and use of skills.

Design/methodology/approach

This paper uses a difference-in-differences method to trace the staggered mandatory adoption of gender quotas on boards on Italian listed firms, representing the regulative institution pillar of institutional theory.

Findings

This paper find that mandatory adopter firms have more frequent internal committee meetings and less frequent board of directors’ meetings after the introduction of the law. This confirms that the regulation re-prioritizes work in internal committees, thanks to women effort, capacity to resolution and use of skills.

Originality/value

This research provides empirical evidence on female contribution and on the impact that a specific mandatory regulation, as regulative institutional pillar, can have on board organization, showing how gender characteristics influence board functioning in terms of meetings.

Details

Management Research Review, vol. 47 no. 1
Type: Research Article
ISSN: 2040-8269

Keywords

Article
Publication date: 14 March 2023

Arifur Khan, Sutharson Kanapathippillai and Steven Dellaportas

The purpose of this study is threefold: to examine the impact of a remuneration committee (RC) on the level of chief executive officer (CEO) remuneration; whether firms with a RC…

Abstract

Purpose

The purpose of this study is threefold: to examine the impact of a remuneration committee (RC) on the level of chief executive officer (CEO) remuneration; whether firms with a RC, pay a premium to CEOs with different skill sets (general or specific); and whether a pay premium mitigates the potential for CEO turnover.

Design/methodology/approach

This study uses a sample of 5,305 firm-year observations on a data set drawn from companies listed on the Australian Securities Exchange for the period 2007 to 2014. The authors use ordinary least squares as well as logit regression techniques to test the formulated hypotheses. Difference in difference and propensity score matching techniques were undertaken to address the endogeneity concerns.

Findings

The findings show that firms with a RC pay a higher total remuneration to CEOs compared to firms without a RC. Furthermore, firms with a RC, value and reward CEOs with general skills by paying a premium not offered to CEOs with industry-specific skills. Paying a premium, in turn, mitigates CEO turnover by strengthening the CEO’s commitment to the organisation.

Originality/value

The study helps us to understand the critical role played by the RC in the remuneration of CEOs. The findings show that RCs act as an effective governance mechanism to deal with issues of executive remuneration and to retain skilled CEOs. Additionally, CEOs who acquire and develop general managerial skills will be able to extract higher pay from improved bargaining power. The findings will be of relevance to shareholders, regulators and company management who have an interest in executive pay and performance.

Details

Meditari Accountancy Research, vol. 32 no. 2
Type: Research Article
ISSN: 2049-372X

Keywords

1 – 10 of 376