Search results
1 – 10 of over 32000Ayse Olcay Costello and Thomas G. Costello
To better understand the relationship between the headquarters and subsidiaries of multinational corporations, we introduce and test a theoretical framework that builds on and…
Abstract
To better understand the relationship between the headquarters and subsidiaries of multinational corporations, we introduce and test a theoretical framework that builds on and extends the positive agency theoretic corporate governance literature. Results indicate that there are three types of subsidiary bundles of corporate governance mechanisms that are used by multinational corporations. In addition, the following factors can help predict what type of subsidiary bundle a multinational corporation will use to align the interests of its headquarters with a particular subsidiary: the multinational corporation’s international strategy, its subsidiary’s importance, environmental uncertainty faced by its subsidiary, and its subsidiary’s age.
Details
Keywords
Abdul Hadi Zulkafli and Fazilah Abdul Samad
Corporate governance is regarded as a major issue during the post-financial crisis period in Asia. These countries have implemented corporate governance reforms to enhance the…
Abstract
Corporate governance is regarded as a major issue during the post-financial crisis period in Asia. These countries have implemented corporate governance reforms to enhance the protection of shareholders and stakeholders interests. Such reforms have affected the conduct of business of all corporations in the region as it allows for greater monitoring especially by the shareholders. Unlike earlier studies which focused on non-financial firms, this study analyzes the corporate governance of listed banking firms in nine Asian emerging markets. Corporate governance mechanisms that serve to monitor the banking firms can be classified into Ownership Monitoring Mechanism, Internal Control Monitoring Mechanism, Regulatory Monitoring Mechanism, and Disclosure Monitoring Mechanism. This paper suggests that there are differences in the monitoring mechanisms of banking firms and non-bank firms.
Marcellin Makpotche, Kais Bouslah and Bouchra B. M’Zali
The intensity of carbon emissions has led to the serious problem of global warming, and the consequences in terms of climatic disasters are gaining increasing attention worldwide…
Abstract
Purpose
The intensity of carbon emissions has led to the serious problem of global warming, and the consequences in terms of climatic disasters are gaining increasing attention worldwide. As the energy sector is responsible for most global emissions, developing clean energy is crucial to combat climate change. This study aims to examine the relationship between corporate governance and renewable energy (RE) consumption and explore the interaction between RE production and RE use.
Design/methodology/approach
The study adopts an econometric framework of a panel model, followed by the robustness check using alternative methods, including logit regressions. The bivariate probit model is used to analyze the interaction between the decision to use and the decision to produce RE. The analysis is based on a sample of 3,896 firms covering 45 countries worldwide.
Findings
The results reveal that appropriate governance mechanisms positively impact RE consumption. These include the existence of a sustainability committee; environmental, social and governance-based compensation policy; financial performance-based compensation; sustainability external audit; transparency; board gender diversity; and board independence. Firms with appropriate governance mechanisms are more likely to produce and use RE than others. Finally, while RE use positively impacts firm value and environmental performance, the authors find no significant effect on current profitability.
Originality/value
This study goes beyond previous research by exploring the impact of multiple governance mechanisms. To the best of the authors’ knowledge, this is also the first study examining the relationship between RE use and firm value. Overall, the findings suggest that RE transition requires, first of all, establishing appropriate governance mechanisms within companies.
Details
Keywords
Francisco Elder Escossio de Barros, Ruan Carlos dos Santos, Lidinei Eder Orso and Antonia Márcia Rodrigues Sousa
From the agency theory’s point of view, this paper aims to analyze corporate governance mechanisms about the characteristics of the companies quoted in the segments Bovespa Mais…
Abstract
Purpose
From the agency theory’s point of view, this paper aims to analyze corporate governance mechanisms about the characteristics of the companies quoted in the segments Bovespa Mais and Bovespa Mais 2 and their influence on the creation of value in preparation for the opening of the initial public offering (IPO).
Design/methodology/approach
A quantitative approach was adopted to achieve the proposed objective using the panel data with fixed effects and secondary data collected on the Comissão de Valores Mobiliários website, using statistical software Stata® 13.0 for statistical tests. The population comprises non-financial companies belonging to the Bovespa Mais and Bovespa Mais Level 2 groups, as the survey sample took into account the period of adhesion of the companies, totaled in 15 companies, which cover the period from 2008 to 2019. The selected variables correspond to the ownership structure’s characteristics, then the board’s composition and the fiscal council as the body responsible for supervising the administrators’ acts.
Findings
The main results indicate that the number of independent members on the board of directors and the supervisory board’s participation positively influence market performance. However, it also reveals that the concentration of ownership brings fundraising for other companies’ acquisitions, risk reduction concerning information asymmetry between investing powers.
Research limitations/implications
The main results indicate that the number of independent members on the board of directors and the supervisory board’s participation positively influence market performance. Despite this, it also reveals that the concentration of ownership brings fundraising for other companies’ acquisitions, risk reduction concerning information asymmetry between investing powers.
Practical implications
This paper advances a comparative institutional perspective to explain capital market choice by firms making an IPO in a foreign market. This paper finds that internal governance characteristics (founder-chief executive officer, executive incentives and board independence) and external network characteristics (prestigious underwriters, degree of venture capitalist syndication and board interlocks) are significant predictors of foreign capital market choice by foreign IPO firms.
Social implications
While product market choices have been central to strategy formulation for firms in the past, financial markets’ integration makes capital markets an equally crucial strategic decision. This paper advances a comparative institutional perspective to explain capital market choice by firms making an IPO in a foreign market.
Originality/value
This situation generates value to shareholders and is perceived by the market and, ultimately, generates a direct relationship with the market performance of companies. While product market choices have been central to strategy formulation for firms in the past, financial markets’ integration makes capital markets an equally major strategic decision.
Details
Keywords
Hamdan Amer Al-Jaifi, Ahmed Hussein Al-rassas and Adel Ali AL-Qadasi
The purpose of this paper is to examine the impact of corporate governance strength on stock market liquidity in an emerging country, namely, Malaysia, by constructing a corporate…
Abstract
Purpose
The purpose of this paper is to examine the impact of corporate governance strength on stock market liquidity in an emerging country, namely, Malaysia, by constructing a corporate governance score that captures both internal monitoring mechanisms (board of directors’ characteristics, audit committee’s characteristics and internal audit function) and external monitoring mechanism (audit quality).
Design/methodology/approach
The study uses a sample of 2,020 yearly firm observations in Bursa Malaysia over the period 2009-2012. The ordinary least square regression and several estimation methods such as two-stage least squares using instrumental variables (IV-2SLS) and dynamic GMM are employed.
Findings
This study finds a significant positive association between corporate governance effectiveness and stock market liquidity. The finding is robust to alternative liquidity measurements, to alternative estimation methods, and to endogeneity bias.
Research limitations/implications
This result implies that the firms with effective monitoring mechanisms mitigate information asymmetry which leads to less adverse selection problems among traders.
Practical implications
This study provides implications for regulators to help design regulations that enhance stock market liquidity. This study could also help investors and traders to formulate their trading decisions, and enables firms to know the importance of strengthening the corporate governance monitoring mechanisms.
Originality/value
This study constructs a corporate governance effectiveness measure by combining both internal and external monitoring mechanisms. These mechanisms have not been constructed together in one score in the corporate governance literature and the impact of internal audit function, as an internal monitoring mechanism on liquidity, has yet to be examined.
Details
Keywords
María Sacristán-Navarro and Laura Cabeza-García
The purpose of this paper is to describe internal corporate governance mechanisms in family firms as well as conflicts that may arise among shareholders and family members in the…
Abstract
Purpose
The purpose of this paper is to describe internal corporate governance mechanisms in family firms as well as conflicts that may arise among shareholders and family members in the absence of specific corporate governance mechanisms.
Design/methodology/approach
After presenting theoretical concepts, the authors study the case of Spanish family firm El Corte Inglés to understand some of the corporate governance difficulties the company has experienced over the past few years.
Findings
This case illustrates how corporate governance problems can arise because the right mechanisms have not been used, leading to conflicts among family members, valuation problems and power struggles.
Practical implications
There is a need for family firms to employ suitable corporate governance mechanisms as governance complexity increases.
Originality/value
This study aims to contribute to the understanding of corporate governance problems among family members and their possible solutions.
Details
Keywords
Yousef Hassan, Rafiq Hijazi and Kamal Naser
The purpose of this paper is to examine the relation between audit committee (AC) and a set of other corporate governance mechanisms in one of the emerging economies, United Arab…
Abstract
Purpose
The purpose of this paper is to examine the relation between audit committee (AC) and a set of other corporate governance mechanisms in one of the emerging economies, United Arab of Emirates (UAE). In particular, the current study examines whether an effective AC can serve as a substitute or as a complement mechanism to board characteristics and ownership structure of Emirati listed non-financial companies.
Design/methodology/approach
Using substitution and complementary theories, a panel data from 48 nonfinancial companies listed on the UAE Stock Exchanges [Abu Dhabi Stock Exchange and Dubai Financial Market] during the period between 2011 and 2013 were used in the current study. A composite measure of four proxies has been used to measure the AC effectiveness, namely, AC size, independence, financial expertise and diligence. To test the hypotheses formulated for the study, a logistic regression model was used to identify the influence of a set of board characteristics and ownership structure variables on the effectiveness of the AC after controlling for firm size, auditor type, industry type and profitability.
Findings
While AC effectiveness appeared to be positively associated with board size and board independence, it is negatively associated with CEO duality. This points to a complementary governance relation. On the other hand, the negative relationship between AC effectiveness and each of institutional and government ownership suggests substitutive relations.
Research limitations/implications
The main shortcoming of the current study is that it examines the influence of a certain set of corporate governance factors on the effectiveness of AC. Other corporate governance mechanisms may, however, contribute to the effectiveness of AC. The findings of the study can be used by companies’ managements and regulators in the UAE to improve the corporate governance system.
Originality/value
To the best of researchers’ knowledge, this study provides the first evidence about the interaction among multiple governance mechanisms required by the code of corporate governance issued by the UAE Ministry of Economy in 2009. The current paper is expected to add to the limited AC literature in Middle East and North African countries in general and Arab World in particular.
Details
Keywords
Ruth Dimes and Matteo Molinari
This paper aims to develop a conceptual framework informed by a literature review. This framework aims to deepen and broaden the understanding of the relationship between corporate…
Abstract
Purpose
This paper aims to develop a conceptual framework informed by a literature review. This framework aims to deepen and broaden the understanding of the relationship between corporate governance mechanisms and non-financial reporting (NFR) through qualitative research approaches.
Design/methodology/approach
A review of corporate governance and NFR literature and existing research frameworks leads to the development of a conceptual framework to encourage future qualitative accounting research on the corporate governance mechanisms for NFR.
Findings
Few studies consider the complex interrelationships between NFR and corporate governance mechanisms. Quantitative studies using secondary data sources dominate accounting research on the topic. Of the small number of qualitative studies, many are theoretical and offer little new knowledge about the effectiveness of corporate governance mechanisms in practice. The research framework, developed from a literature review and consideration of multiple qualitative approaches, proposes numerous avenues for future research.
Research limitations/implications
This paper is based on a scoping review of the literature using peer-reviewed journal papers. Other researchers may have identified additional literature for inclusion, including grey literature.
Practical implications
More qualitative research into NFR and corporate governance mechanisms may help to guide practitioners seeking to incorporate sustainability into their governance practices.
Social implications
The critical relationship between NRF and corporate governance is under-explored in research yet has significant consequences for organisations pursuing sustainability.
Originality/value
The authors develop a conceptual framework for qualitative accounting research on NFR and corporate governance, addressing key outstanding questions in this area and considering different theoretical perspectives when approaching this critical topic. Although there is scope for further research in general in this promising area, including quantitative reviews and discursive studies, qualitative research would be of particular value. The authors also outline multiple directions for nurturing academic debate.
Details
Keywords
Constantinos Chalevas and Christos Tzovas
The purpose of this paper is to examine the effect of the mandatory adoption of corporate governance mechanisms on serious firm issues (earnings manipulation, management…
Abstract
Purpose
The purpose of this paper is to examine the effect of the mandatory adoption of corporate governance mechanisms on serious firm issues (earnings manipulation, management effectiveness and firm's financing).
Design/methodology/approach
Cross‐sectional analysis is employed to investigate the association between the corporate governance mechanisms that have been introduced by the L.3016/2002 and earnings manipulation, management effectiveness and firm's financing.
Findings
This study finds that the mandatory corporate governance mechanisms decrease firms' weighted average cost of capital, increase firm's financing and have no impact on firms' effectiveness and earnings manipulation.
Practical implications
This study provides insights regarding the extent to which the mechanisms of corporate governance provided by the L.3016/2002, improve the quality of financial statements prepared by Greek companies. The conclusions of the study are useful for the providers of equity and debt capital, the legislators and the shareholders.
Originality/value
The paper tests, empirically, the effect of the mandatory corporate governance mechanisms on earnings manipulation, management effectiveness and firm's financing.
Details
Keywords
This paper aims to identify and analyze the neoliberal, Anglo-American corporate governance mechanisms which embed shareholder value in Nigeria, and assess how they constitute…
Abstract
Purpose
This paper aims to identify and analyze the neoliberal, Anglo-American corporate governance mechanisms which embed shareholder value in Nigeria, and assess how they constitute major “practical barriers” to effective corporate social responsibility (CSR) in the country. While some of these mechanisms operate internally – performance-related pay (executive remuneration) – the use of non-executive directors – others operate externally – the markets for corporate control and the stock markets.
Design/methodology/approach
The paper adopts the doctrinal approach through a critical evaluation of concepts. Using existing literature in the subject area, it evaluates the nature of these mechanisms and argues that their operations amount to “practical barriers” to effective CSR in the country.
Findings
The paper finds that the existence of these mechanisms incentivizes corporate managers to maximize shareholder value and raise the share price of corporations as high as possible. It also leads to the financialization of corporate governance, rent seeking and the pursuit of short-term profits by corporations. In this context, within the Nigerian corporate governance framework, the existence and operations of these mechanisms amount to “practical barriers” to effective CSR.
Originality/value
The paper offers a fresh insight into the existence and operations of the neoliberal corporate governance mechanisms which embed shareholder value. By critically assessing the operations of these mechanisms in the Nigerian situation, it extends the body of knowledge in this area by showing how they amount to practical barriers to effective CSR in the country.
Details