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Article
Publication date: 1 July 2019

Yuan George Shan

The extant literature reports mixed and inconclusive findings concerning the relationship between corporate governance mechanisms and firm performance. To provide…

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Abstract

Purpose

The extant literature reports mixed and inconclusive findings concerning the relationship between corporate governance mechanisms and firm performance. To provide incremental insight, this paper aims to investigate whether the bi-directional relationships among managerial ownership, board independence and firm performance are determined.

Design/methodology/approach

This paper uses a data set consisting of 9,302 firm-year observations of Australian listed companies during 2005-2015 and a three-stage least squares simultaneous equation model to test the bi-directional relationships.

Findings

The results indicate that both managerial ownership and board independence inversely affect firm performance and vice versa. In addition, board independence is negatively correlated with managerial ownership and vice versa.

Practical implications

The convergence-of-interests hypothesis can be achieved by manipulating managerial ownership through making contingent payments. Board independence, as a voluntary regime in Australia, can provide additional flexibility to corporate decision makers.

Originality/value

This study provides additional evidence by using the convergence-of-interests hypothesis vis-à-vis the entrenchment hypothesis to examine the relationship between managerial ownership and firm performance, and tests the association of board independence and firm performance using the explanation of agency theory vis-à-vis stewardship theory.

Details

Accounting Research Journal, vol. 32 no. 2
Type: Research Article
ISSN: 1030-9616

Keywords

Article
Publication date: 22 June 2022

Ella Guangxin Xu, Joey W. Yang, Yuan George Shan and Chris Graves

This study investigates effects of corporate governance on the financial performance of family-controlled firms and how these effects differ between common law and civil…

Abstract

Purpose

This study investigates effects of corporate governance on the financial performance of family-controlled firms and how these effects differ between common law and civil law jurisdictions.

Design/methodology/approach

This study applies a number of corporate governance measures to the largest 243 publicly listed family-controlled businesses worldwide from 2009 to 2018. The corporate governance measures include board independence, board gender diversity, corporate governance index (CGI) and the percentage of family ownership.

Findings

The empirical evidence indicates that board independence improves financial performance; this positive effect is more pronounced in common law than civil law jurisdictions. Board gender diversity has a negative impact on financial performance under common law but a positive impact in civil law jurisdictions. Moreover, the CGI and family ownership structure are positively associated with financial performance, and no difference is found between the two jurisdiction types. In addition, family ownership negatively moderates CGI in civil law countries only.

Originality/value

This study provides new insight on the relevance of considering jurisdictional differences when examining the effect of corporate governance on performance. The study also addresses important concerns in family business research relating to unobserved heterogeneity and endogeneity. Implications of these for research and practice are discussed in the paper.

Details

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

Keywords

Article
Publication date: 12 June 2020

Yuan George Shan and Indrit Troshani

The study improves current understanding concerning the implications of digital corporate reporting technology on the informativeness of accounting information.

Abstract

Purpose

The study improves current understanding concerning the implications of digital corporate reporting technology on the informativeness of accounting information.

Design/methodology/approach

It looks at how XBRL, an exemplar digital corporate financial reporting technology, affects value relevance of accounting information in the US and Japan, two key jurisdictions where XBRL has been mandated. We operationalise stock price and return value relevance models to assess and compare predicted associations between selected accounting measures and market value of equity in these countries.

Findings

We predict that the selected accounting measures are more value relevant after XBRL was mandated than before. We find evidence to support our prediction for the US sample. We also predict and find that the contribution of XBRL to the value relevance of the selected accounting measures is greater in the US than in Japan. Overall, our evidence provides support that digital corporate reporting technology enhances relevance and reliability of accounting measures.

Originality/value

The study appears to be the first to have examined the impact of XBRL on value relevance whilst comparing between two major jurisdictions. The study extends emerging but limited literature concerning the benefits of digital corporate financial reporting for enhancing the communication between firms and users of financial information. The findings are useful to both users of financial information and standard setters.

Details

International Journal of Managerial Finance, vol. 17 no. 2
Type: Research Article
ISSN: 1743-9132

Keywords

Article
Publication date: 4 April 2016

Yuan George Shan and Indrit Troshani

The purpose of this paper is to evaluate the impact of the International Financial Reporting Standards (IFRS) and eXtensible Business Reporting Language (XBRL) on audit…

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Abstract

Purpose

The purpose of this paper is to evaluate the impact of the International Financial Reporting Standards (IFRS) and eXtensible Business Reporting Language (XBRL) on audit fees based on evidence from listed companies operating in an emerging economy. Whilst IFRS constitute high-quality accounting standards, XBRL represents a technology standard that can enhance the usability of IFRS and overall financial reporting transparency.

Design/methodology/approach

Multivariate analyses are used on a sample of 1,798 firm-year observations between 2000 and 2011 from companies listed in the Shanghai Stock Exchange that were subject to XBRL and IFRS adoption mandates.

Findings

The main results suggest that XBRL has a main negative effect on audit fees which is weaker for larger firms. Additionally, the authors find that IFRS increases audit fees for all companies. Whilst this effect is positive for firms of different sizes, it is weaker for larger firms.

Research limitations/implications

Whilst the findings are applicable to the selected sample and may or may not be generaliseable to other economies, they can provide important implications for both regulators and companies that are undertaking IFRS convergence and XBRL implementation projects in developing economies around the world.

Originality/value

This study offers a timely assessment of the economic consequences of IFRS and XBRL on listed companies operating in an emerging economy, in addition to providing an important basis upon which further research can be designed in order to extend the analysis.

Details

International Journal of Managerial Finance, vol. 12 no. 2
Type: Research Article
ISSN: 1743-9132

Keywords

Article
Publication date: 26 November 2021

Ella Guangxin Xu, Chris Graves, Yuan George Shan and Joey W. Yang

The paper aims to examine the effect of corporate governance (CG) on innovation investment, with consideration of ownership types and legal jurisdictions.

Abstract

Purpose

The paper aims to examine the effect of corporate governance (CG) on innovation investment, with consideration of ownership types and legal jurisdictions.

Design/methodology/approach

The authors' empirical analysis is based on a sample of publicly listed family businesses (FBs) from the top-500-list that matched worldwide with non-family counterparts from 2009 to 2018. The study uses a holistic measure of CG to mitigate the conflicting impact of individual CG components found in prior studies. This measure is applied to examine the moderating role of firm ownership type and legal jurisdiction.

Findings

The authors' results demonstrate that CG positively influences innovation investment. This positive relationship is more pronounced in FBs than in non-family businesses (NFBs) and is more prevalent in civil law economies than in common law economies.

Originality/value

The study holistically examines the effect of CG, capturing the combination of all individual governance mechanisms and their influence on innovation investment. The study further shows that comprehensive CG has diverse impacts on innovation investment when considering family control and legal jurisdiction.

Details

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

Keywords

Article
Publication date: 9 September 2021

Yuan George Shan, Junru Zhang, Manzurul Alam and Phil Hancock

This study aims to investigate the relationship between university rankings and sustainability reporting among Australia and New Zealand universities. Even though…

Abstract

Purpose

This study aims to investigate the relationship between university rankings and sustainability reporting among Australia and New Zealand universities. Even though sustainability reporting is an established area of investigation, prior research has paid inadequate attention to the nexus of university ranking and sustainability reporting.

Design/methodology/approach

This study covers 46 Australian and New Zealand universities and uses a data set, which includes sustainability reports and disclosures from four reporting channels including university websites, and university archives, between 2005 and 2018. Ordinary least squares regression was used with Pearson and Spearman’s rank correlations to investigate the likelihood of multi-collinearity and the paper also calculated the variance inflation factor values. Finally, this study uses the generalized method of moments approach to test for endogeneity.

Findings

The findings suggest that sustainability reporting is significantly and positively associated with university ranking and confirm that the four reporting channels play a vital role when communicating with university stakeholders. Further, this paper documents that sustainability reporting through websites, in addition to the annual report and a separate environment report have a positive impact on the university ranking systems.

Originality/value

This paper contributes to extant knowledge on the link between university rankings and university sustainability reporting which is considered a vital communication vehicle to meet the expectation of the stakeholder in relevance with the university rankings.

Details

Meditari Accountancy Research, vol. 30 no. 6
Type: Research Article
ISSN: 2049-372X

Keywords

Article
Publication date: 8 February 2022

Yuan George Shan, Joey Wenling Yang, Junru Zhang and Millicent Chang

This study aims to examine the mediating role played by corporate governance (CG) in the relationship between corporate social responsibility (CSR) and analyst forecast quality.

Abstract

Purpose

This study aims to examine the mediating role played by corporate governance (CG) in the relationship between corporate social responsibility (CSR) and analyst forecast quality.

Design/methodology/approach

The authors raise three specific questions: Does CG play a mediating role in the relationship between CSR and analyst forecast quality? If so, is such mediation effect of CG reduced for firms with weak governance? Do firms with superior CSR performance experience higher analyst forecast quality through the mediation effect of CG?

Findings

The present results suggest that CG serves as a partial mediator that facilitates CSR’s positive influence on analyst forecast quality. However, further analyses show that in firms with a low governance score, CG does not have a mediation effect. Conversely, the authors find that firms with superior CSR performance have higher forecast quality through the mediation effect of CG. The authors also find that the mediation effect of CG is more pronounced for the environmental component than for the social component of CSR.

Originality/value

To the best of the authors’ knowledge, this study is the first to investigate the role of CG as a mediator between CSR and analyst forecast quality and to reveal that the strength of this effect varies depending on firms’ CG level and CSR commitment.

Article
Publication date: 14 February 2022

Huifa Chen, Yuan George Shan, Qingliang Tang and Junru Zhang

This study aims to investigate why companies use the internal price of carbon (IPC) for carbon management.

Abstract

Purpose

This study aims to investigate why companies use the internal price of carbon (IPC) for carbon management.

Design/methodology/approach

The authors adopt sustainable transition management theory to design the research and explain the findings of empirical models. The sample includes companies that participated in the Carbon Disclosure Project (CDP) questionnaire survey, derived from 37 countries and regions for the period 2015–2018.

Findings

The results first reveal that transition management facilitates an upward adoption trend annually during the study period. Second, the authors find that the proxies for transition management are all correlated with the adoption of the IPC in the predicted direction. Third, the authors identify spatial patterns and driving factors for adoption of the IPC.

Originality/value

This study provides additional insight beyond the limited prior literature in this area. In particular, the findings regarding the influence of physical environment on climate-related decisions have not been documented in extant literature. IPC is expected to interact with and complement external price of carbon for climate change governance. Thus, the exploring results of the paper fill an important gap and pave the way for future study to examine emerging issues in the burgeoning field of carbon accounting for climate change.

Details

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

Keywords

Article
Publication date: 13 June 2016

Lei Xu, Ron P. McIver, Yuan George Shan and Xiaochen Wang

The purpose of this paper is to link literature on China’s real estate sector and the impact of governance, ownership and political connectedness on firm financial…

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Abstract

Purpose

The purpose of this paper is to link literature on China’s real estate sector and the impact of governance, ownership and political connectedness on firm financial performance. Whether these factors impact listed real estate firms differently to firms in other industry sectors is identified.

Design/methodology/approach

The paper uses pooled 2008-2013 data on A-share firms. Tobin’s Q captures firm financial performance. Explanatory variables include corporate governance, ownership, local government political connectedness, accounting data and ultimate control. Two-way interactions are estimated between real estate and ownership, governance, political connectedness and other variables. Three-way interactions are estimated between real estate, ownership, control and political connectedness. Year and industry fixed effects are absorbed.

Findings

Industry concentration and proportion of state ownership appear to positively impact performance. Firm size, gearing and greater foreign ownership appear to negatively impact performance. However, differences are identified for real estate firms, in which state control and gearing positively impact performance. Greater state and foreign ownership as well as supervisory board size negatively impact performance. Finally, state control in the presence of local government connections negatively impacts performance, while greater state ownership in the presence of local government connections positively impacts performance.

Originality/value

A lack of empirical evidence on the impact of corporate governance, ownership structures and political connectedness on firm performance in China’s real estate sector is addressed. Importantly, relationships among these factors and the financial performance of China’s listed real estate firms differ to those of firms in other industries.

Details

Managerial Finance, vol. 42 no. 6
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 21 September 2012

Yuan George Shan and Lei Xu

The purpose of this paper is to investigate whether the level of bad debt provisions of financial institutions is affected by internal governance mechanisms (IGMs) from…

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Abstract

Purpose

The purpose of this paper is to investigate whether the level of bad debt provisions of financial institutions is affected by internal governance mechanisms (IGMs) from the perspective of the Type II principal‐principal (PP) conflicts between the controlling shareholders and the minority shareholders.

Design/methodology/approach

The authors’ sample covers all listed financial institutions in China, comprising a panel data set of 139 firm‐year observations covering 1999 to 2009. Within China's two‐tier corporate governance context, the three IGMs – ownership structure, board of directors and supervisory board – are measured to examine the level of bad debt provisions.

Findings

The findings suggest that state ownership and legal person ownership are negatively related to the level of bad debt provisions, but board size reveals a positive association. Other factors including foreign ownership, independent directors, board meeting, supervisory board size and supervisory board meeting were found to have no impact.

Practical implications

The spirit of corporate governance reform has not been transferred to financial institutions sufficiently. The board of directors and supervisory board actually act the roles of “window dressing” or “rubber stamp” within the current two‐tier system. From the Type II PP perspective, the controlling shareholders are found to moderate the conflicts between other parties but they still expropriate the interests of minority shareholders and are the real beneficiaries of recent reforms. Thus, further financial reforms seem necessary in China.

Originality/value

The paper provides an empirical analysis of factors that underlie IGMs during an important period of regulatory change and organizational reform, and fills a literature gap concerning the effectiveness and efficiency of financial institutions.

Details

International Journal of Managerial Finance, vol. 8 no. 4
Type: Research Article
ISSN: 1743-9132

Keywords

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