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1 – 10 of 323Quyen Le, Alireza Vafaei, Kamran Ahmed and Shawgat Kutubi
This paper aims to examine the association between busy directors on corporate boards and accounting conservatism.
Abstract
Purpose
This paper aims to examine the association between busy directors on corporate boards and accounting conservatism.
Design/methodology/approach
The authors use a sample of 500 firms listed on the Australian Security Exchange from 2004 to 2019. The busyness of non-executive directors is proxied by three indicators. For accounting conservatism, the authors use both conditional and unconditional accounting conservatism via asymmetric timeliness of earnings, accrual-based loss recognition, cumulative total accruals and book-to-market ratio. The authors cluster the standard errors at the firm level to compensate for potential residuals’ dependency and heteroscedasticity, in addition to analysing the main models using year and industry fixed effects (Petersen, 2009). Separately, the authors look at the impact of female busy directors on firms’ adoption of conservative accounting methods. Both propensity score matching analyses and Heckman (1979) two-stage approach systematically address endogeneity issues.
Findings
The presence of busy directors on boards leads to greater unconditional conservatism and less conditional conservatism. The relationships between busy female directors with both conditional and unconditional conservatism remain consistent with the main findings.
Practical implications
This paper provides useful insights for shareholders, regulators and accounting standards setters to better evaluate busy directors’ effectiveness in monitoring firms’ financial reporting quality. Directors and the companies themselves can refer to the authors’ findings to decide the best structure for their boards and committees, considering their specific monitoring requirements. Given that no mandatory restriction has been legislated, improved policies or new ones will ensure that busy directors can effectively fulfil their duties.
Originality/value
This research contributes to the broader research theme by examining the influence of directors’ quality on financial reporting conservatism. It also contributes to the ongoing debate in the corporate finance literature regarding the experience and busyness hypotheses of directors with multiple directorships. Additionally, this research adds value to gender diversity research by finding evidence that female busy directors follow the same pattern of reporting conservatism as male busy directors.
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Hani Alkayed and Bilal Fayiz Omar
This study aims to investigate the determinants of the extent and quality of corporate social responsibility disclosure (CSRD) in Jordan. The study examines a number of factors…
Abstract
Purpose
This study aims to investigate the determinants of the extent and quality of corporate social responsibility disclosure (CSRD) in Jordan. The study examines a number of factors that influence the extent and quality of CSR disclosure, such as corporate characteristics, corporate governance and ownership structure.
Design/methodology/approach
A quantitative approach and a content analysis technique is used to measure the extent and quality of CSRD from annual reports. The sample is drawn from the annual reports of 118 Jordanian companies between 2010 and 2015. A CSRD index is constructed, which includes the disclosures of the following categories: environmental, human resources, product and consumers, and community involvement. This is the first study that presents a new measurement for CSR disclosure quality by using images and charts in a seven-point scale measurement.
Findings
The result reveals that the extent of CSRD is higher than quality in Jordan. Regarding the determinants of CSR disclosures, the following factors were found to have a significant relationship with both the extent and quality of CSRD: board size, non-executive directors, age of firm, foreign members on the board, number of boards meetings, the presence of audit committees, big 4, government ownership, size of firm and industry type. Non-executive directors was found to have a significant correlation with the extent of CSRD.
Research limitations/implications
The current study has some limitations; first, the study findings are limited to the Jordanian environment. Second, the study adopted a purely quantitative method, and future research could include interviews and questionnaires to gather data from financial managers and chief executive officers (CEOs). Third, the potential influences on the level and quality of CSR are not limited to the variables tested in this study. Future research can be done on new determinants, such as CEO interlocking and profitability. Finally, the sample included companies from two main sectors – the services and industrial sectors; thus, this limited the results to these two main sectors.
Practical implications
Practitioners, as firms, should develop new strategies and ensure that CSR is included in their reports. Thus, companies can achieve legitimacy for their products and activities. Policymakers must consider introducing new laws that mandate CSRDs since it has many advantages for companies and society. In addition, this research suggests amending the law to require companies to have 33% of their directors be non-executives since this will remove the negative effect on CSR disclosure. Investors must pay attention to the social activities of the companies they invest in, as CSR could have a positive effect on their market value.
Social implications
The study has indicated that Jordanian companies became increasingly more involved in CSR activities, as this growth in CSRD is linked with global increases in CSR. Moreover, the study has revealed that the highest category of CSR disclosures is related to products or services and employee information. On the other hand, the lowest category of CSR disclosures is related to community and other disclosures (extent) and environmental disclosures (quality). Furthermore, the results show that the services sector was found to have more disclosures regarding employees and community, whereas the industrial sector was more concerned about environmental and product information.
Originality/value
To the best of the authors’ knowledge, this is the first study that presents a new measurement for CSR disclosure quality by using images and charts in a seven-point scale measurement. This new seven-point scale will be adopted to distinguish between poor and excellent disclosures. In addition, to the best of the authors’ knowledge, this is the first study in Jordan which examines the determinants of the extent and the quality of CSR for three categories, namely, corporate characteristics, corporate governance and ownership structure.
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This paper aims to investigate the impact of board characteristics on CEO turnover performance relationship (TPR) in Indian listed firms.
Abstract
Purpose
This paper aims to investigate the impact of board characteristics on CEO turnover performance relationship (TPR) in Indian listed firms.
Design/methodology/approach
A subset of the Standard and Poor’s Bombay Stock Exchange 500 (S&P BSE 500) Index companies was analyzed over the period 2015–2019 using the logistic (fixed-effects) regression model.
Findings
It was found that a weak relationship exists between CEO turnover and firm performance. With respect to board characteristics, board size was found to have a significant role in strengthening the TPR. However, other characteristics, such as board independence, multiple directors, board meetings and board gender diversity, played no role in influencing the TPR.
Research limitations/implications
First, the study period is limited to five years, during which several sample firms did not face any CEO turnover event leading to small sample size. Second, this study considers only the board’s gender diversity, whereas other types of diversity are omitted. Third, this study does not differentiate between insider and professional CEOs.
Practical implications
The findings suggest that regulators should focus on the effective enforcement of laws to strengthen the TPR and improve the monitoring role of boards, particularly in emerging economies like India, which face type II agency problems in addition to traditional principal–agent conflict. The results also offer implications for corporations, investors and academic researchers, highlighting areas that need considerable attention pertaining to corporate governance.
Originality/value
This study discerns the impact of several board-related characteristics on the TPR, particularly after the introduction of the new Companies Act 2013 in the emerging economy of India, where it has not been explored extensively.
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Nicholas Asare, Patricia Muah, George Frimpong and Ibrahim Ahmed Anyass
This study aims to examine the effects of board structures (BS) on the financial performance and stability of banks in Africa.
Abstract
Purpose
This study aims to examine the effects of board structures (BS) on the financial performance and stability of banks in Africa.
Design/methodology/approach
Using annual data of 366 banks from 26 African countries from 2007 to 2015, the study estimates growths in financial performance using net interest margin and risk-adjusted return on assets; bank stability using z-scores; and BS using board size, board independence and board gender diversity. The system generalized method of moments and ordinary least squares panel-corrected standard error estimation strategies are used to estimate panel regressions.
Findings
The study concludes that board independence has a negative and significant relationship with financial stability but has diverse relationships with financial performance. Board size and board gender diversity have insignificant relationships with financial performance and stability.
Research limitations/implications
The study has relevant implications for practitioners, policymakers and the academic community. The findings provide evidence of the extent to which BS have been instituted to influence the financial profitability and stability of banks in Africa.
Originality/value
This study offers robust evidence on the role of BS in the performance and stability of banks; using a multidimensional conceptualization of the performance and stability of banks in 26 countries in Africa.
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Juma Bananuka (RIP), Pendo Shukrani Kasoga and Zainabu Tumwebaze
The purpose of this chapter is to investigate the relationship between corporate governance and greenhouse gas (GHG) disclosures using evidence from the United States.
Abstract
Purpose
The purpose of this chapter is to investigate the relationship between corporate governance and greenhouse gas (GHG) disclosures using evidence from the United States.
Design/Methodology/Approach
The study is based on a sample of 168 firms listed on the New York Stock Exchange (NYSE) in the United States. Panel data are used covering a period from 2017 to 2020 involving 672 observations.
Findings
The results indicate that board size has a positive and significant effect on GHG disclosures while the effect of ownership concentration and insider ownership is negative and significant. The proportion of non-executive directors is not significant. In terms of control variables, firm size and financial slack have a positive effect on GHG disclosures.
Originality/Value
The study results add evidence to the already existing literature on the relationship between corporate governance and GHG disclosures using evidence from the United States.
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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.
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Debapriya Samal and Inder Sekhar Yadav
This study investigates the effects of elements of corporate governance along with firm specific variables on the financial leverage of listed Indian firms in the context of…
Abstract
Purpose
This study investigates the effects of elements of corporate governance along with firm specific variables on the financial leverage of listed Indian firms in the context of agency conflicts and new governance laws.
Design/methodology/approach
A series of panel ordinary least squares as well as fixed/random effects regression models of book and market value of financial leverage on variables of corporate governance (board size, board composition, board meeting, board attendance and board gender) along with a set of control variables (asset tangibility, firm size, growth, liquidity and profitability) were estimated by employing 113 listed Indian firms during 2010–2021. Dynamic panel generalized method of moments models were also estimated to check the robustness of empirical results. Further, the full sample of firms was divided into small and large board sized companies using the median approach to investigate differences between small and large board characteristics on financial leverage.
Findings
The evidence predominantly suggested that the governance variables have significant impact on leverage ratios of selected firms. Governance variables such as board size, composition, attendance and gender are significantly found to be reducing the financial leverage of firms indicating that in general these attributes in a way, through monitoring managers, put pressure on them to pursue lower financial leverage. Board meeting is found to be positive and significantly related with financial leverage suggesting that the frequency of meetings signals its monitoring ability that may influence lenders' risk assessment lowering borrowing cost. The results on small and large board sized companies indicate that firms with small boards relatively issue more debt compared to firms with large boards suggesting that small boards adopt high debt policy.
Practical implications
The main policy implication of the study is that elements of internal corporate governance is a significant governance tool that has the potential to reduce agency conflict between the managers and agents through monitoring and decision making that has tangible effects on critical corporate decisions such as capital structure choices.
Originality/value
This paper contributes to the existing literature by bringing new evidence relating to agency conflicts and capital structure decisions in an emerging market like India post adoption of new regulations related to corporate governance specified in Clause 49 of Securities and Exchange Board of India and Companies Act, 2013 as there is significant dearth of such empirical work.
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Ali I. El Saleh and Doureige J. Jurdi
Prior research shows that co-opted directors adversely impact many corporate outcomes, yet little is known about these directors' impact on CSR performance. The authors…
Abstract
Purpose
Prior research shows that co-opted directors adversely impact many corporate outcomes, yet little is known about these directors' impact on CSR performance. The authors investigate whether and how co-opted boards affect the firm's CSR score and component CSR scores.
Design/methodology/approach
The authors use panel regression models to investigate this study's research questions and address endogeneity concerns using the system generalized method of moments (system GMM) and a quasi-natural experiment.
Findings
The authors report new evidence showing that co-opted boards negatively impact CSR performance based on the CSR score. Results identify board characteristics that accentuate or moderate the effect of co-option on the CSR score and show that board independence, the presence of women on the board, and CEO duality positively and significantly impact the CSR score. These findings are robust across alternative measures of co-option and in the results of models addressing endogeneity concerns. An extended analysis utilizing CSR component scores reveals a significant negative impact of co-option on the environment component score using various measures of co-option and on employee relations, product quality, and human rights component scores using selected measures of co-option.
Practical implications
Findings have implications for board structuring and composition for firms aiming at improving their CSR score.
Originality/value
The study provides new evidence on the impact of co-opted boards on CSR performance. The results help inform stakeholders such as policymakers, executives and directors, shareholders, and capital market participants on how board composition affects socially responsible activities and performance and identify CSR component areas that require attention.
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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.
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Fatma Ehab Ahmed and Ahmed Gamal Mohamed
This paper aims to contribute to the political connection literature by investigating the impact of political connection on banks’ profitability in Bahrain.
Abstract
Purpose
This paper aims to contribute to the political connection literature by investigating the impact of political connection on banks’ profitability in Bahrain.
Design/methodology/approach
Exploiting the unique natural experiment of the 2017 Qatar blockade crisis, this study uses primary data of political connection. The study uses the difference-in-difference (DID) methodology to investigate the effect of political connections on banks’ profitability.
Findings
The main finding is that political connections have a positive effect on bank profitability in Bahrain. The paper finds that the ongoing GCC crisis has had a negative effect on the banking sector of Bahrain. During the Qatar blockade crisis, politically connected banks suffered more than their non-connected counterparts.
Practical implications
The result suggests that the Qatar blockade crisis has had a notable effect on the banking system throughout the region, including both the boycotting countries as well as Qatar. In the banking sector, politically connected banks are the most harmed by the crisis. Investors can enhance their hedging and investment decisions by exploiting knowledge of how political connections affected bank profitability during the Qatar diplomatic crisis and how that effect can be transmitted from one market to another. In addition, regulators could use insights about the association between political connections and profitability in Bahrain to undertake strategies to increase banks’ profitability and mitigate the transmission effect of a crisis by ensuring adequate regulation and supervision.
Originality/value
This paper offers four novel contributions to political connection literature as follows: Firstly, the study fills in an important gap in the literature as it is the first attempt to quantify the impact of political connections on bank performance in Bahrain. To the best of the authors’ knowledge, the role of political factors in Bahrain has not been studied about the banking system. Secondly, the study depends on primary data about political connections collected manually from various sources. Thirdly, this is the first study to investigate the effect of the Qatar blockade on the banking sector. Lastly, the evidence suggests that politically connected banks are more profitable than banks that lack political connections. However, the Qatar blockade crisis resulted in a sharp decrease in bank profitability, suggesting that the crisis significantly harmed the banking sector in Bahrain.
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