Corporate Governance and Innovation

2012 ◽  
Vol 47 (2) ◽  
pp. 397-413 ◽  
Author(s):  
Matthew O’Connor ◽  
Matthew Rafferty
Keyword(s):  
Corporate Governance ◽  
Least Squares ◽  
Instrumental Variables ◽  
Serial Correlation ◽  
Ordinary Least Squares ◽  
Innovative Activity ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
Unobserved Effects ◽  
The Relationship

AbstractWe use Tobin’s q models of investments to estimate the relationship between corporate governance and the level of innovative activity. Simple ordinary least squares (OLS) models suggest that poor governance reduces innovative activity. However, OLS results are sensitive to controlling for serial correlation, unobserved effects, or using instrumental variables to control simultaneity. Controlling for these effects substantially reduces or eliminates the relationship between governance and innovative activity.

Corporate governance mechanisms and corporate performance of firms in Nigeria and Ghana

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Martha Coleman ◽  
Mengyun Wu
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Financial Distress ◽  
Corporate Performance ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
Content Type ◽  
Structure Index ◽  
The Impact ◽  
The Relationship

PurposeThis study investigates the impact of corporate governance (CG) mechanisms with inclusion of compliance and diligence index on corporate performance (CP) of firms in Nigeria and Ghana. It further examines the moderating effect of financial distress on the relationship between CG and CP.Design/methodology/approachThe study used panel data of 102 nonfinancial listed firms of Nigeria and Ghana stock exchange for the period 2012–2016 with total observation of 510. The study first used OLS in estimating the influence of CG mechanisms on CP. Due to multicollinearity in the independent variables, ridge regression was employed.FindingsIt was revealed that ownership structure index and board compliance and diligence index, board size, board disclosure, ownership structure, shareholders' right and board compliance and diligence index had positive influence on ROA and ROE. Growth of Tobin's Q depends on board procedure and board compliance and diligence index. Also, financial distress (ZFS) negatively moderates the relationship between board structure index, board disclosure index, board procedure index, shareholders' right and performance (ROA and ROE) but negatively moderates between ownership structure index and Tobin's Q.Practical implicationsThis study provides interesting findings to policymakers in full implementation of CG codes as stated by OCED (2015) by West African firms with greater emphasis on compliance and diligence index since it positively influences all CP measures.Originality/valueThe study provides evidence of the importance of the introduction of the new index: compliance and diligence, which looks at disclosure of CSR activities. This has been overlooked by most researchers especially in Africa in assessing quality CG mechanisms.

scholarly journals Analisis Pengaruh Penerapan Good Corporate Governance terhadap Kinerja Perusahaan

2012 ◽  
Vol 3 (1) ◽  
pp. 141
Author(s):  
Rio Novianto Rossi ◽  
Rosinta Ria Panggabean
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Positive Influence ◽  
Operational Performance ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
Return On Equity ◽  
Good Corporate Governance ◽  
The Relationship ◽  
Ranking Index

This study describes the relationship between corporate governance with corporate performance and learns about the development and implementation of GCG in Indonesia. This study uses regression analysis to determine whether corporate governance has a positive influence. Sampling of Corporate Governance Perception Index (CGPI) for 2006 to 2009 from The Indonesian Institute for Corporate Governance (IICG) was used to measure the influence of corporate governance with Tobin’s Q on the performance of the enterprise market and Return On Equity (ROE) was used to measure the operational performance of the company. This study used a sample of 40 companies surveyed by IICG from 2006 to 2009 and included in the top 10 corporate governance ranking index released by IICG and the companies’ financial reporting are also listed on the BEI (Bursa Efek Indonesia) as well. The sampling method is purposive sampling. The result of this study indicate that there is no significant relationship between corporate governance with Tobin’s Q (market performance) but there is a significant positive relationship between corporate governance with ROE (operational performance).

Effect of ownership structure and board structure on firm value: evidence from India

2017 ◽  
Vol 17 (4) ◽  
pp. 700-726 ◽  
Author(s):  
Rakesh Mishra ◽  
Sheeba Kapil
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Performance Measures ◽  
Board Structure ◽  
Tobin’S Q ◽  
Reverse Causality ◽  
Tobin's Q ◽  
Data Set ◽  
Content Type ◽  
The Relationship

Purpose This paper aims to explore the relationship of promoter ownership and board structure with firm performance for Indian companies. Design/methodology/approach Corporate governance structures of 391 Indian companies out of CRISIL NSE Index (CNX) 500 companies listed on national stock exchange (NSE) have been studied for their impact on performance of companies. Panel data regression methodology has been used on data for five financial years from 2010 to 2014 for the selected companies. Performance measures considered are market-based measure (Tobin’s Q) and accounting-based measure (return on assets [ROA]). Findings The empirical findings indicate that market-based measure (Tobin’s Q) is more impacted by corporate governance than accounting-based measure. There is significant positive association between promoter ownership and firm performance. It is also indicated that the relationship between promoter ownership and firm performance is different at different levels of promoter ownership. Board size is found to be positively related to ROA; however, board independence is not found to be related to any of the performance measures. Research limitations/implications Limitations of the study are in terms of data methodology and possible omission of some variables. It is felt that endogeneity and reverse causality might be better addressed using simultaneous equation methodology. Originality/value The paper adds to the emerging body of literature on corporate governance performance relationship in Indian context using a reasonably wider and newer data set.

scholarly journals Corporate governance and stock performance: Evidence from Canadian firms over the period 2005-2009

2011 ◽  
Vol 8 (3) ◽  
pp. 56-68
Author(s):  
Richard Cotter ◽  
Jeremy Dason ◽  
Jijun Niu ◽  
Peter Klein
Keyword(s):  
Corporate Governance ◽  
Stock Return ◽  
Tobin’S Q ◽  
Sample Period ◽  
Tobin's Q ◽  
Stock Performance ◽  
The Relationship

This paper examines the relationship between corporate governance and stock performance using a sample of Canadian firms over the period 2005 – 2009. We measure corporate governance using the Corporate Governance Quotient index, and stock performance using three variables: one-month stock return, three-year stock return, and Tobin’s Q. Overall, we find no evidence that corporate governance is associated with stock performance over our sample period.

Institutional antecedents of principle-based corporate governance practices

2014 ◽  
Vol 10 (1) ◽  
pp. 49-82 ◽  
Author(s):  
Krishna Reddy ◽  
Umesh Sharma
Keyword(s):  
Corporate Governance ◽  
Capital Market ◽  
Stock Exchange ◽  
Listed Companies ◽  
Ordinary Least Squares ◽  
Positive Influence ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
Content Type ◽  
Governance Practices

Purpose – This study aims to investigate the nature and extent of compliance to the principle-based corporate governance initiatives by the listed companies in the South Pacific Stock Exchange (SPSE) in Fiji. Three important questions are addressed: whether listed companies in Fiji have complied with the principle-based governance practices? Did compliance with principle-based recommendations lead to an improvement in the listed company's financial performance and legitimacy? How the institutional factors have contributed towards corporate governance practices in Fiji? Design/methodology/approach – Panel data for the SPSE companies over the period 2008-2011 are analysed using ordinary least squares (OLS) regression. Tobin's Q and return on assets (ROA) metrics are used as dependent variables. Findings – The findings indicate that listed companies have adopted the Capital Market Development Authority's (CMDA) recommendations by establishing subcommittees for audit and remuneration, having non-executive/independent directors on the board and separate chair and CEO positions in order to gain legitimacy from stakeholders. Results support the view that the CMDA recommendations of board sub-committees (audit and remuneration) have had positive influence on company performance measured by Tobin's Q. The findings of this study give support to the principle-based corporate governance practices adopted in Fiji to gain legitimacy. Originality/value – The study adds to the governance literature by focusing on the principle-based governance practices in a small remote island country, Fiji which has relatively small economy, capital market and company size. Finally, the study adds to institutional theory by showing how companies' corporate governance choices are affected by the severity of agency conflicts and the way corporate governance is regulated.

scholarly journals The Relationship and Impact between Board of Director Criteria towards Firm Performance for Companies Listed on Bursa Malaysia: Trading and Services Sector

2017 ◽  
Vol 3 (1) ◽  
pp. 51-59
Author(s):  
Noorul Farha Mohd Jumali ◽  
Mohd Abdullah Jusoh ◽  
Syed Ismail Syed Mohamad
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Board Of Directors ◽  
Company Performance ◽  
Tobin’S Q ◽  
Governance Mechanism ◽  
Tobin's Q ◽  
Services Sector ◽  
The Board Of Directors ◽  
The Relationship

This research aims to investigate the relationship and impact between the board of directors criteria towards the company's performance. We hypothesized that the board of the directors criteria will increase the firm performance since board of the directors are viewed as one of the corporate governance mechanism that should be effective in monitoring and advice the management to protect the interest of shareholders. In this study, analysis of panel data has been used. The company's performance was measured by Return on Assets (ROA) and Tobin's Q. Using 159 listed firms in Trading and Services Sector from 2007 to 2013, our study exhibit that the size of the board of directors (BODSIZE) had significant and positive relationship on ROA and Tobin's Q. This shows when BODSIZE increases, the performance of the company will also increase. Next, CEO duality and independent board of directors (PERBODIND) had no significant relationship with ROA and Tobin's Q. Overall, good corporate governance is important to improve the company’s performance. The implication of this study is that it may affect various parties and include investors, financial institutions, academia, corporations, and governments in making judgments, decisions or improvements to corporate governance and company performance.

scholarly journals CEO Overconfidence and Corporate Investment: Moderating Role of Corporate Governance Practices

2020 ◽  
Vol 3 (1) ◽  
pp. 41-52
Author(s):  
Muhammad Sadiq Shahid ◽  
Usman Shahid
Keyword(s):  
Corporate Governance ◽  
Corporate Investment ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
Moderator Effect ◽  
Listed Firms ◽  
Governance Practices ◽  
Using Data ◽  
Relationship Of ◽  
The Relationship

This paper examines the relationship between CEO overconfidence, corporate investment and firm performance along with moderating effect of corporate governance (CG) between them. We collected the data of Pakistani listed firms from 2010-2018. The findings suggest that the relationship between CEO overconfidence and corporate investment is significant and the corporate governance also moderates the relationship of CEO overconfidence and corporate performance. In addition, the authors report a significant substantial relationship exists between Tobin’s Q and CEO overconfidence and between ROA and CEO overconfidence. The moderator effect is also significant in the case of CEO overconfidence and Tobin’s Q, and in case of ROA and CEO overconfidence. This is the first empirical paper on CEO overconfidence, corporate investment and governance practices using data for the Pakistan.

Audit committee characteristics and the moderating effect of Malaysian code of corporate governance on IPO liquidity

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Amal Mohammed Al-Masawa ◽  
Rasidah Mohd-Rashid ◽  
Hamdan Amer Al-Jaifi ◽  
Shaker Dahan Al-Duais
Keyword(s):  
Corporate Governance ◽  
Initial Public Offerings ◽  
Audit Committee ◽  
Ordinary Least Squares ◽  
Moderating Effect ◽  
Least Squares Regression ◽  
Content Type ◽  
Code Of Corporate Governance ◽  
The Impact ◽  
The Relationship

Purpose This study aims to investigate the link between audit committee characteristics and the liquidity of initial public offerings (IPOs) in Malaysia, which is an emerging economy in Southeast Asia. Another purpose of this study is to examine the moderating effect of the revised Malaysian code of corporate governance (MCCG) on the link between audit committee characteristics and IPO liquidity. Design/methodology/approach The final sample consists of 304 Malaysian IPOs listed in 2002–2017. This study uses ordinary least squares regression method to analyse the data. To confirm this study’s findings, a hierarchical or four-stage regression analysis is used to compare the t-values of the main and moderate regression models. Findings The findings show that audit committee characteristics (size and director independence) have a positive and significant relationship with IPO liquidity. Also, the revised MCCG positively moderates the relationship between audit committee characteristics and IPO liquidity. Research limitations/implications This study’s findings indicate that companies with higher audit committee independence have a more effective monitoring mechanism that mitigates information asymmetry, thus reducing adverse selection issues during share trading. Practical implications Policymakers could use the results of this study in developing policies for IPO liquidity improvements. Additionally, the findings are useful for traders and investors in their investment decision-making. For companies, the findings highlight the crucial role of the audit committee as part of the control system that monitors corporate governance. Originality/value To the authors’ knowledge, this work is a pioneering study in the context of a developing country, specifically Malaysia that investigates the impact of audit committee characteristics on IPO liquidity. Previously, the link between corporate governance and IPO liquidity had not been investigated in Malaysia. This study also contributes to the IPO literature by providing empirical evidence regarding the moderating effect of the revised MCCG on the relationship between audit committee characteristics and IPO liquidity.

Accounting conservatism, corporate governance and political connections

2017 ◽  
Vol 25 (2) ◽  
pp. 288-318 ◽  
Author(s):  
Nor Farizal Mohammed ◽  
Kamran Ahmed ◽  
Xu-Dong Ji
Keyword(s):  
Corporate Governance ◽  
Emerging Market ◽  
Political Influence ◽  
Ordinary Least Squares ◽  
Accounting Conservatism ◽  
Political Connections ◽  
Board Independence ◽  
Political Connection ◽  
Content Type ◽  
The Relationship

Purpose The purpose of this paper is to examine the relationship between accounting conservatism, corporate governance and political connection in listed firms in Malaysia where political influence plays a significant role in the capital market and in many business dealings. Design/methodology/approach By utilizing 824 firm-year observations comprising large listed companies over a period of four years from 2004, this study uses ordinary least squares regression models to investigate the relationship between accounting conservatism, corporate governance and political connections in Malaysia. Multiple measures of conservatism developed by Basu (1997) and Khan and Watts (2009) are employed. Findings The results show evidence of accounting conservatism (bad news being recognized earlier than good news) in Malaysia. Further, the results reveal that better corporate governance structure in terms of board independence is positively associated with accounting conservatism while management ownership is negatively associated with it. However, political connection has a negative moderating effect on the positive relationship between accounting conservatism and board independence. The results also suggest political connections have a positive association with firm’s future performance. Originality/value This study is the first in investigating the effect of political connections on accounting conservatism in Malaysian context and how political connections negatively affect the monitoring role of the corporate boards. By directly measuring political connection and controlling for various corporate governance mechanisms and firm-specific attributes, this study contributes to enhance the authors’ understanding of the political influence in financial reporting quality and firm performance in an emerging market setting.

scholarly journals Corporate Governance Mechanisms, Ownership and Firm Value: Evidence from Listed Chinese Firms

2020 ◽  
Vol 8 (2) ◽  
pp. 20 ◽  
Author(s):  
Yusheng Kong ◽  
Takuriramunashe Famba ◽  
Grace Chituku-Dzimiro ◽  
Huaping Sun ◽  
Ophias Kurauone
Keyword(s):  
Corporate Governance ◽  
Firm Value ◽  
Ownership Concentration ◽  
Institutional Setting ◽  
Tobin’S Q ◽  
Governance Mechanism ◽  
Corporate Ownership ◽  
Firm Level ◽  
Tobin's Q ◽  
Negative Effect

This study analyzes corporate ownership as a corporate governance mechanism and its role in creating firm value. Previous research shows that there is no convergence on the firm-value corporate ownership relationship. Most research in this area takes a cross national approach ignoring the uniqueness of each institutional setting particularly those of emerging nations. Using a unique firm level dataset, we investigate how corporate control nature and ownership concentration affect the value of Chinese listed firms. First, non-state owned control is associated with a higher Tobin’s Q while a negative premium is found for state owned. Using the hybrid and the correlated random effects model we confirm a U-shaped non-linear relationship between ownership concentration and Tobin’s Q, implying that firm value first decreases and then increases as block holders own more shares. Further investigation reveals that the negative effect of ownership concentration is weaker when a firm equity nature is non-state owned enterprises (non-SOEs) compared to state-owned enterprises (SOEs). While ownership concentration appears to be an efficient mechanism for corporate governance its effect is weaker for SOEs compared to non-SOEs. The results support privatization of SOEs, sound reforms such as the split share structure reform as crucial for the development of China’s stock market.

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