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1 – 10 of over 3000Moataz El-Helaly, Nermeen F. Shehata and Reem El-Sherif
The purpose of this paper is to assess the association between country-level corporate governance and earnings management (EM). It aims to investigate whether the Governance…
Abstract
Purpose
The purpose of this paper is to assess the association between country-level corporate governance and earnings management (EM). It aims to investigate whether the Governance Metrics International (GMI; acquired by Morgan Stanley Capital International in 2014) rating for national corporate governance on a country level is a significant explanatory variable for the country-level EM score or otherwise.
Design/methodology/approach
In a sample of 280 country-year observations during the period from 2000 to 2009, the paper measures national corporate governance quality using GMI ratings scores and whether the corporate governance model is Anglo Saxon or otherwise.
Findings
The findings of this study show that corporate governance is a significant indicator of lower EM levels in a country.
Practical implications
Corporate governance rating firms play a vital role in public markets. GMI provides country-level corporate governance ratings to assess the quality of corporate governance in several countries. The findings of this study show preliminary evidence that GMI ratings of corporate governance provide good guidance to investors on the quality of corporate governance in a country.
Originality/value
This paper is the first empirical attempt to examine the association between country-level corporate governance, GMI ratings for country-level corporate governance and EM.
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Tahir Akhtar, Mohamad Ali Tareq, Muhammad Rizky Prima Sakti and Adnan Ahmad Khan
This study aims to provide a review of corporate governance and cash holdings because strong corporate governance is necessary for the efficient utilization of firm’s liquid…
Abstract
Purpose
This study aims to provide a review of corporate governance and cash holdings because strong corporate governance is necessary for the efficient utilization of firm’s liquid resources such as cash, to minimize the agency cost of high cash holdings and to improve the value of cash.
Design/methodology/approach
The authors provide a literature review of corporate governance and cash holdings through a conceptual and theoretical argument rather than empirical research.
Findings
The authors review an empirical and theoretical work surrounding key corporate governance variables and identify avenues for future research. The authors find that corporate governance mechanisms and cash holdings have received much attention during the past two decades. However, the significant role of corporate governance (both country-level and the firm-level) in controlling the entrenched behaviour of the managers is discussed separately in the literature. The combined effect of both country-level and the firm-level governance is lacking in the cash holdings literature. Additionally, this study has found that much attention is paid to the developed markets, while only a few focused on the developing markets regarding cash holding literature, although the agency problems are high in developing markets.
Originality/value
The study contributes to the growing literature on corporate governance and cash holdings and provides a further understanding of the role of governance in minimizing the agency cost to increase value by assuring that firms’ assets are used efficiently and productively in the best interests of investors and other stakeholders. In addition, it provides a new idea to the policymaker and future researchers where they need to do more work.
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Oren Mooneeapen, Subhash Abhayawansa and Naushad Mamode Khan
The purpose of this study is to investigate whether the corporate environmental, social and governance (ESG) performance of companies is influenced by the barriers and…
Abstract
Purpose
The purpose of this study is to investigate whether the corporate environmental, social and governance (ESG) performance of companies is influenced by the barriers and opportunities created by three factors characterising a country’s governance landscape: democracy, political stability and regulatory quality. Additionally, this study separately explains the influence of the three country governance factors on the ESG performance of companies and how they are affected by the profitability of the company.
Design/methodology/approach
Fixed effects multiple linear regression is performed on 6,035 firm-year observations drawn from 27 countries relating to 1,207 unique constituents of the S&P Global 1200 index for a five-year period from 2015 to 2019. Clustered standard errors robust to heteroscedasticity and serial correlation are estimated for a specification that includes Refinitiv ESG scores as the dependent variable, selected Worldwide Governance Indicators as the independent variables and several country- and firm-level controls.
Findings
The study finds that companies’ ESG performance is higher in countries with a lower level of democracy and political stability, and corporate governance performance is higher in countries with higher regulatory quality. A component-level analysis finds significant variation in the results across the different ESG pillars. Firm profitability moderates the relationship between country-level governance factors and companies’ ESG performance.
Practical implications
The study reveals that national governments can prompt companies to enhance their governance performance, invariably leading to greater engagement in sustainability by improving their regulatory environment and enforcement mechanisms. Thus, the implementation of regulations targeting corporate environmental and social performance is not always needed to prompt better corporate ESG performance.
Social implications
This study shows that internationalised companies proactively work towards achieving sustainability in countries where the country governance landscape is ineffective and inadequate to enable it.
Originality/value
This study addresses the association between country-level governance and firm-level ESG performance, in contrast to firm-level corporate social responsibility disclosure that has been the focus of prior research. As disclosures can be symbolic and may not reflect actual ESG performance, the results of prior studies examining the relationship between country-level governance performance and corporate social responsibility disclosure is inappropriate to explain the factors affecting the ESG performance of companies.
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Otuo Serebour Agyemang, Mavis Osei-Effah, Samuel Kwaku Agyei and John Gartchie Gatsi
This paper aims to examine how country-level corporate governance structures influence the level of protection of minority shareholders’ rights in the context of Africa.
Abstract
Purpose
This paper aims to examine how country-level corporate governance structures influence the level of protection of minority shareholders’ rights in the context of Africa.
Design/methodology/approach
Data are collected from the world competitiveness report for the period 2010-2015. To examine the validity of the study’s hypotheses empirically, the authors use ordinary least squares with correlated panel-corrected standards error (PCSE).
Findings
This paper offers additional empirical evidence on the level of protection of minority shareholders’ rights in Africa. It highlights that country-level corporate governance structures such as efficacy of corporate boards, strength of investor confidence, regulations of securities exchanges and the operation of the Big 4 accounting firms have significant positive impacts on the level of protection of minority shareholders’ rights.
Research limitations/implications
This paper fails to include all African countries because of non-availability of a report for some African countries. Thus, the findings on the level of protection of minority shareholders’ rights in a country are applicable to the countries used in this study.
Practical implications
This paper emphasizes on the relevance of country-level corporate governance structures to ensuring a reasonable level of protection of minority shareholders’ rights.
Originality/value
This paper partially fills the gap regarding the absence of an empirical cross-country study on how country-level corporate governance structures influence the level of protection of minority shareholders’ rights.
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Iman Shaat, Husam Aldamen, Kim Kercher and Keith Duncan
The paper examines the relationship between board effectiveness and audit fees for state-owned enterprises (SOEs). Furthermore, given the unique nature of SOEs, the paper assesses…
Abstract
Purpose
The paper examines the relationship between board effectiveness and audit fees for state-owned enterprises (SOEs). Furthermore, given the unique nature of SOEs, the paper assesses country-level influences, such as economic freedom, political democracy and protection of minority shareholders, which can impact board effectiveness and audit fees.
Design/methodology/approach
A combination of two-stage and ordinary least squares regression is used to examine the board characteristics-audit fee relationship for SOEs in a multinational setting during the period from 2016 to 2018.
Findings
The results indicate that board characteristics that represent a high level of effectiveness are associated with higher audit fees in SOEs. Furthermore, the findings suggest SOE's operating in countries evidencing medium levels of democracy and economic freedom and medium to high levels of protection of minority shareholders may be motivated to reduce agency conflicts by promoting accountability and transparency, thereby demanding increasing levels of corporate governance, monitoring and audit quality, thereby increasing audit fees.
Practical implications
The results provide further support for the OECD (2015) guidelines promoting the use of high-quality external audits in SOEs.
Originality/value
As a result of the scarceness of research in this area, the current study extends the literature by examining the role of corporate governance and audit fees in SOEs, while examining the influence of economic freedom, political democracy and protection of minority shareholders.
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Otuo Serebour Agyemang, Christopher Gbettey, John Gartchie Gatsi and Innocent Senyo Kwasi Acquah
The purpose of this study is to examine the link between country-level corporate governance and foreign direct investment in African economies for the period 2009-2015.
Abstract
Purpose
The purpose of this study is to examine the link between country-level corporate governance and foreign direct investment in African economies for the period 2009-2015.
Design/methodology/approach
The authors use annual panel data of 40 African economies over the period of the study and use the system generalized method of moments (GMM) to establish the relationship between country-level corporate governance and foreign direct investment.
Findings
The authors find that African economies characterized by firms with high ethical values tend to attract a great deal of foreign direct investment. In addition, they highlight that when an economy is associated with effective corporate boards, it tends to attract much foreign direct investment. Further, this study reveals that the level of minority shareholders’ interests’ protection in an economy has a significant positive relationship with foreign direct investment. Finally, they document a negative relationship between effectiveness of regulation of securities and exchanges and foreign direct investment.
Practical implications
It is advised that sound and implementable corporate governance structures devoid of political interferences should be put in place in African economies, if the aim of using foreign direct investment to mitigate poverty by 2015 as part of the Millennium Development Goals is to be attained.
Originality/value
Empiricists have devoted considerable effort to estimate the factors that influence the level of foreign direct investment into African economies without taking into consideration the corporate governance structures in these economies. However, this paper seeks to examine the relationship between country-level corporate governance structures and foreign direct investment in African economies.
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Abubakar Ahmed and Mutalib Anifowose
The purpose of this study is to investigate the relationship between corruption, corporate governance and sustainable development goals (SDGs) in Africa.
Abstract
Purpose
The purpose of this study is to investigate the relationship between corruption, corporate governance and sustainable development goals (SDGs) in Africa.
Design/methodology/approach
The authors use panel data from 42 African countries over the period 2017–2020 and ordinary least square regression to test the research hypotheses. The authors also use alternative estimation techniques, including the fixed effect and random effect regressions and the generalized method of moment, to test the robustness of the results.
Findings
The results indicate that corruption negatively affects sustainable development (SD), whereas the effect of corporate governance is positive and significant. In addition, the positive influence of corporate governance on SD is stronger for countries with high corruption prevalence.
Practical implications
Policymakers may rely on the outcome of this study to formulate practical and implementable solutions around corruption and corporate governance that can help toward the achievement of the SDGs. Specifically, corporate governance mechanisms may be relied upon to achieve SD in countries with a high corruption prevalence.
Social implications
The social implication of this paper is that it demonstrates the adverse impact of corruption, which is rife in most African countries. Understanding corruption and the SDGs relationship will promote discussion with overarching implications for developing countries. Overall, the findings can sensitize society to the harmful effects of corruption and the positive effects of good corporate governance.
Originality/value
This paper contributes to literature and practice by demonstrating that corporate governance plays a significant role in the realization of national and global objectives such as the SDGs. This paper also provides novel evidence that corporate governance matters more in countries with a higher corruption incidence.
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Bilal Haider Subhani, Umar Farooq, Khurram Ashfaq and Mosab I. Tabash
This study aims to explore the potential impact of country-level governance in corporate financing structures.
Abstract
Purpose
This study aims to explore the potential impact of country-level governance in corporate financing structures.
Design/methodology/approach
A two-step system generalized method of moment was used due to the endogeneity issue. The whole sample comprises 3,761 firms in five economies – China, India, Pakistan, Singapore and South Korea – from 2007 to 2016.
Findings
The results indicate that the debt option for financing is not favorable under governments with an adequate governance arrangement. However, there is a direct and significant link between country governance and equity financing because in adequate governance arrangements, the possibilities of information asymmetry are minimal and businesses consider equity a more appropriate and safer financing instrument. In contrast, firms prefer to trade-credit financing in poor governance economies, which confirms an adverse link between trade credit and adequate governance.
Practical implications
The country’s governance should be considered a sensitive matter when deciding about corporate financing.
Originality/value
This arrangement of variables has not been previously analyzed in the literature, suggesting the study’s novelty.
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Evy Rahman Utami and Zuni Barokah
This study aims to investigate the determinants of anti-corruption disclosures by construction firms in Asia-Pacific countries.
Abstract
Purpose
This study aims to investigate the determinants of anti-corruption disclosures by construction firms in Asia-Pacific countries.
Design/methodology/approach
The sample comprises construction companies from seven Asia-Pacific countries from 2015 to 2019. The authors hand-collected data on anti-corruption disclosures by using content analysis.
Findings
This study provides empirical evidence that government ownership, country-level accounting competence and high-quality auditors increase companies’ anti-corruption disclosures. Meanwhile, this study finds that uncertainty avoidance does not affect companies’ anti-corruption disclosures.
Practical implications
This study has a number of implications. First, government and professional accountant organizations need to improve accountants’ knowledge and competence through education, training and continuous professional development. Second, public accounting firms need to ensure the quality of their auditors, particularly in the technical competence in financial and nonfinancial reporting. Finally, universities must improve and update their curriculum regarding nonfinancial reporting issues.
Originality/value
This study is among the first to examine anti-corruption disclosure practices in the most corrupted settings, i.e. the construction industry in Asia-Pacific countries. It uses the isomorphism perspective to explain the influence of government ownership, country-level accounting competence and high-quality auditors on anti-corruption disclosure transparency. The number of prior studies investigating this association is very limited. Moreover, disclosures of anti-corruption information are complex and sensitive; thus, coercive, normative and mimetic pressures are required to achieve higher transparency and sustainability.
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Sarah A. Humphries and Catherine Whelan
This study aims to investigate the relationship between national culture and best practices as recommended in country-level corporate governance codes.
Abstract
Purpose
This study aims to investigate the relationship between national culture and best practices as recommended in country-level corporate governance codes.
Design/methodology/approach
Measures for four corporate governance variables – board independence, gender composition, board leadership and meeting frequency – were collected from corporate governance codes for 55 countries. Scores from Hofstede’s cultural dimensions – power distance, individualism vs collectivism, masculinity vs femininity and uncertainty avoidance – were gathered for these same countries. Average scores on the cultural dimensions were compared for groups of countries based on each of the corporate governance variables.
Findings
Data analyses reveal significant relationships between Hofstede’s cultural dimensions and the four characteristics of corporate governance examined in this study. Results highlight the importance of understanding cultural influences on board characteristics for companies considering international expansions or partnerships.
Originality/value
While prior studies have focused on the influence of national culture at the company level, this study examines the relationship at the regulatory level through review of country-level corporate governance codes.
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