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Article
Publication date: 28 September 2012

Jaana Lappalainen and Mervi Niskanen

The purpose of this paper is to investigate the impact that ownership structure and board composition have on financial performance in a sample of Finnish small to…

4825

Abstract

Purpose

The purpose of this paper is to investigate the impact that ownership structure and board composition have on financial performance in a sample of Finnish small to medium‐sized enterprises (SMEs).

Design/methodology/approach

The data for this study were collected through a private survey. The financial data were collected from the Voitto+ register and observations were made from 2000 to 2005. The authors employ panel data estimation and 2SLS methods in their analyses.

Findings

Results suggest that the ownership structure affects both the growth and the profitability of small private firms. Firms with high managerial ownership levels exhibit higher profitability ratios but have lower growth rates. Firms with high venture capital firm ownership ratios are found to grow faster and are less profitable. The results on board structure suggest that board structure has little impact on the performance of small firms. The only significant result in this context is that firms with outside board members have lower growth rates and are less profitable.

Practical implications

The results of this study can be interpreted to indicate that owner‐managers are risk averse and that venture capital firms seek investments with high growth potential. The results could also imply that outsiders are taken on as board members in badly‐performing firms on financiers' requests, or because it is thought that they can enhance performance.

Originality/value

The paper is one of the few that shed light on how corporate governance and ownership structures affect the performance of small private firms.

Article
Publication date: 5 October 2021

Helmi A. Boshnak

This study examines the impact of board composition and ownership structure variables on dividend payout policy in Saudi Arabian firms. In particular, it aims to determine…

Abstract

Purpose

This study examines the impact of board composition and ownership structure variables on dividend payout policy in Saudi Arabian firms. In particular, it aims to determine the effect of board size, independence and meeting frequency, in addition to chief executive officer (CEO) duality, and state, institutional, managerial, family, and foreign ownership on both the propensity to pay dividends and dividend per share for Saudi-listed firms over the period 2016–2019.

Design/methodology/approach

The paper captures dividend policy with two measures, propensity to pay dividends and dividend per share, and employs a range of regression methods (logistic, probit, ordinary least squares (OLS) and random effects regressions) along with a two-stage least squares (2SLS) model for robustness to account for heteroscedasticity, serial correlation and endogeneity issues. The data set is a large panel of 280 Saudi-listed firms over the period 2016 to 2019.

Findings

The results underline the importance of board composition and the ownership structure in explaining variations in dividend policy across Saudi firms. More specifically, there is a positive relationship between the propensity to pay dividends and board-meeting frequency, institutional ownership, firm profitability and firm age, while the degree of board independence, firm size and leverage exhibit a negative relation. Further, dividend per share is positively related to board meeting frequency, institutional ownership, foreign ownership, firm profitability and age, while it is negatively related to CEO duality, managerial ownership, and firm leverage. There is no evidence that family ownership exerts an impact on dividend payout policy in Saudi firms. The findings of this study support agency, signalling, substitute and outcome theories of dividend policy.

Research limitations/implications

This study offers an important insight into the board characteristic and ownership structure drivers of dividend policy in the context of an emerging market. Moreover, the study has important implications for firms, managers, investors, policymakers, and regulators in Saudi Arabia.

Originality/value

This paper contributes to the existing literature by providing evidence on four board and five ownership characteristic drivers of dividend policy in Saudi Arabia as an emerging stock market, thereby improving on less comprehensive previous studies. The study recommends that investors consider board composition and ownership structure characteristics of firms as key drivers of dividend policy when making stock investment decisions to inform them about the propensity of investee firms to pay dividends and maintain a given dividend policy.

Details

International Journal of Emerging Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 1 April 2003

Dorothy A. Feldmann and David L Schwarzkopf

We investigate the relationship between institutional shareholdings and the firm's corporate governance by looking at changes in the composition of the board of directors…

Abstract

We investigate the relationship between institutional shareholdings and the firm's corporate governance by looking at changes in the composition of the board of directors and audit committee while institutional ownership increases over time. Our comparison of 74 firms showing increased institutional ownership with a matched control group of 62 firms finds that increased institutional ownership is positively associated with a higher proportion of outsiders on the board and with audit committee and board members who are less entrenched. These factors are widely regarded as signs of a strengthened system of corporate governance and control, underscoring the important role that institutional ownership may play in the firm's corporate governance structure.

Details

Review of Accounting and Finance, vol. 2 no. 4
Type: Research Article
ISSN: 1475-7702

Article
Publication date: 26 October 2018

Mohammad Bassam Abu Qa’dan and Mishiel Said Suwaidan

This study aims to investigate the extent and nature of corporate social responsibility (CSR) disclosure in the context of Jordan. It also empirically examines the impact…

2320

Abstract

Purpose

This study aims to investigate the extent and nature of corporate social responsibility (CSR) disclosure in the context of Jordan. It also empirically examines the impact of board composition variables (size, independent [non-executive] directors, CEO/chairman duality, age and gender) and ownership structure variables (board ownership concentration, institutional ownership and foreign ownership) on CSR disclosure level.

Design/methodology/approach

A CSR disclosure index is constructed, and content analysis is used to analyze the extent and nature of CSR disclosure in the annual reports of Jordanian manufacturing companies listed on the Amman Stock Exchange (ASE) during the period (2013-2015). Regression analysis using panel data is undertaken to analyze the potential impact of board composition and ownership structure on CSR disclosure level.

Findings

The results reveal that, on average, a listed Jordanian manufacturing company has disclosed 30.8 per cent of the 42 items of CSR information included in the disclosure index. In addition, there was a very slight improvement in the CSR disclosure over the study period. These results suggest there is considerable room for improvement in CSR disclosure. The regression analysis identified board size to be significantly and positively associated with CSR disclosure level. On the other hand, the percentage of independent (non-executive) directors on the board, duality of CEO and chairman positions, director’s age, board ownership concentration and the percentage of shares outstanding held by institutional shareholders were found to have had a significant negative impact on CSR disclosure level.

Originality/value

The study contributes to the literature on CSR practice and disclosure in various ways. First, it demonstrates the extent to which listed companies in developing countries, such as Jordan, take their social role seriously. Second, the study adds to the existing literature on the potential impact of board composition and ownership structure on CSR disclosure by using new variables that have not been tested before using Jordanian data. Third, the study is anticipated to provide feedback to Jordanian regulators in the Jordan Securities Commission and the ASE on the adequacy of current regulations on corporate disclosure requirements in Jordan. Finally, the study raises some issues of interest to other researchers who are currently or intend to conduct research in this area.

Details

Social Responsibility Journal, vol. 15 no. 1
Type: Research Article
ISSN: 1747-1117

Keywords

Article
Publication date: 7 September 2012

Zhijian Xu and Libo Xu

The purpose of this paper is to study whether there is correlation between valuation in initial public offering (IPO) and board composition, the ownership dispersion of…

1135

Abstract

Purpose

The purpose of this paper is to study whether there is correlation between valuation in initial public offering (IPO) and board composition, the ownership dispersion of top management teams (TMTs) and their human capitals, in entrepreneurial firms of China's new growth enterprise market (GEM). Also, it aims to evaluate the relative importance of various factors in determining initial public issuing value.

Design/methodology/approach

The SPSS 16.0 statistical package was used to perform the analysis. The authors compute descriptive statistics, calculate correlation coefficients for all variables and use multiple regression analysis test the hypothesis.

Findings

The paper shows that IPO valuation has significant positive correlation with board composition, significant negative correlation with TMT ownership dispersion, but it does not show significant correlation with TMT human capital. The empirical results also show that: the influence of variable “CEO also Founder” on IPO valuation is significant, which indicates that investors are concerned with the leadership of firms in IPO. Also the influence of the variable “underwriter prestige” on IPO valuation is also significant, but weaker, which indicates that investors still keep confidence in the well‐known underwriters for their vision and ability of judging the firms.

Research limitations/implications

Based on the first batch of 28 entrepreneurial firms listed on Chinese GEM, the sample size is relative small. Also, the measure of TMT human capital, defined by the education degree level, is not an accurate rule in this paper.

Originality/value

Focusing on 28 new firms in China's new security market, this paper presents some interesting and new findings, by using data from the first batch of listed companies in China's GEM, which comprises many privately‐owned, high technology and entrepreneurial firms.

Article
Publication date: 2 March 2015

Mejbel Al-Saidi and Bader Al-Shammari

This paper aims to investigate the relationship between ownership structure (ownership concentration and ownership composition) and firm performance in Kuwaiti…

Abstract

Purpose

This paper aims to investigate the relationship between ownership structure (ownership concentration and ownership composition) and firm performance in Kuwaiti non-financial firms. To this end, it examines the relationship between firm performance and ownership concentration to determine whether the impact of this relationship is conditional on the nature of the large shareholders.

Design/methodology/approach

First, the relationship between ownership concentration and firm performance was tested using ordinary least squares regressions on 618 observations (103 listed firms) from 2005 to 2010; next, the ownership compositions were classified as institutional, government and individuals (families) and their impact on firm performance examined.

Findings

The overall concentration ownership by large shareholders showed no impact on firm performance. However, when the type of shareholders was introduced, only the government and individuals (families) ownership categories influenced firm performance. Therefore, certain types of shareholders are better at monitoring, and not all concentration by large shareholders is beneficial to Kuwaiti firms.

Research limitations/implications

This study examined only one important aspect of the corporate governance mechanisms, namely, ownership concentration. Thus, further study may include other mechanisms such as board variables, role of debt and shareholders rights in examining the firm performance. This study is limited to the Kuwaiti environment, and thus, next step can be very useful in case of comparing ownership concentration in the Gulf Cooperation Council (Kuwait, Bahrain, Qatar, Oman, United Arab Emirates and Saudi Arabia) or across different Arab countries.

Practical implications

The results of this study have important implications for the regulators in Kuwait in their efforts to increase the efficiency of the rapidly developing capital markets and in protecting investors and keeping confidence in the economy. They may mandate a corporate governance code to protect minority shareholders. Investors may use the findings to understand Kuwaiti companies. Such findings may assist them to diversify their investment portfolios.

Originality/value

This paper extends literature review by investigating the role of large shareholders in the context of a developing country that is characterized by high level of ownership concentration and weak legal protection for investors as well as the absence of code that organized the corporate governance practices.

Details

International Journal of Commerce and Management, vol. 25 no. 1
Type: Research Article
ISSN: 1056-9219

Keywords

Abstract

Details

Governance-Led Corporate Performance: Theory and Practice
Type: Book
ISBN: 978-1-78973-847-6

Article
Publication date: 18 November 2020

Amneh Alkurdi and Ghassan H. Mardini

Adopting agency theory, the purpose of this study is to explore the impact of ownership structure and board of directors’ composition on the extent of tax avoidance strategies.

1304

Abstract

Purpose

Adopting agency theory, the purpose of this study is to explore the impact of ownership structure and board of directors’ composition on the extent of tax avoidance strategies.

Design/methodology/approach

The sample included all of the Jordanian first market companies listed on the Amman Stock Exchange from 2012 to 2017, comprising 348 observations.

Findings

The main finding of the paper is that tax avoidance is negatively related to managerial and institution ownership structures, which reduces the usage of tax avoidance strategies. Foreign ownership, however, has a positive relation that increases the likelihood of adopting tax avoidance strategies.

Practical implications

This study has policy implications for policymakers in relation to designing future tax systems to reduce the possibility of engaging in tax avoidance practices.

Originality/value

To the best of the authors’ knowledge, this study is the first of its kind that investigates the effects of the managerial, foreign and institutional ownership classes and board composition on tax avoidance for Jordanian listed companies.

Details

Journal of Financial Reporting and Accounting, vol. 18 no. 4
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 5 May 2022

Arshad Hasan, Doaa Aly and Khaled Hussainey

This paper aims to investigate the impact of corporate governance on financial reporting quality (FRQ) in Pakistan and the UK.

Abstract

Purpose

This paper aims to investigate the impact of corporate governance on financial reporting quality (FRQ) in Pakistan and the UK.

Design/methodology/approach

In this paper, three accrual-based models are used to analyse FRQ for a sample of 1,550 firm-year observations, including 78 Pakistani firms and 77 UK firms, for the period 2009–2018.

Findings

The analysis shows that board size has a negative impact on FRQ while foreign ownership has a positive impact for Pakistani and UK firms. It also shows that board independence has a positive impact on FRQ of Pakistani firms, while board meetings frequency and audit committee independence have a negative impact. We make no such observation for UK firms. In addition, the analysis shows that board gender diversity and ownership concentration negatively affect FRQ of UK firms. This study makes no such observation for Pakistani firms.

Research limitations/implications

Due to the study’s focus on Pakistani and UK firms, the findings may not be generalizable to other developed and emerging economies.

Practical implications

The findings provide valuable insight to policymakers, regulators and investors by suggesting that the impact of board composition on FRQ of both Pakistani and UK firms is weak. The findings suggest that board size and foreign ownership are the attributes that require regulatory focus to increase FRQ. The negative impact of audit committee independence on FRQ induces rethinking among the policymakers in Pakistan and calls for fully independent audit committees.

Originality/value

To the best of the authors’ knowledge, this is the first research endeavour to compare the context of a developed and an emerging economy regarding the impact of corporate governance on FRQ. It also contributes to the governance literature by using three measures of FRQ and a comprehensive set of corporate governance attributes.

Details

Corporate Governance: The International Journal of Business in Society, vol. 22 no. 6
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 1 February 1995

Deniz Erden

Explores the relationship between the firm characteristics and the control mechanisms in 85 multinational manufacturing companies operating in Turkey. Takes size, age and…

Abstract

Explores the relationship between the firm characteristics and the control mechanisms in 85 multinational manufacturing companies operating in Turkey. Takes size, age and country of origin as firm characteristics. Control mechanisms include ownership, board of directors, top management team and training. Size is more strongly associated with control mechanisms than age or country of origin. MNCs have majority ownership in nearly 70 per cent of the firms. Size is inversely related to ownership. Large MNCs have training programmes when small ones do not. Ownership significantly influences the composition of board of directors. The level of perceived control is related to the amount of ownership.

Details

Cross Cultural Management: An International Journal, vol. 2 no. 2
Type: Research Article
ISSN: 1352-7606

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