The Impact of Stock Exchange Rules on the Federalization of Corporate Governance

2018 ◽  
Author(s):  
Marc I. Steinberg
Keyword(s):  
Corporate Governance ◽  
Government Regulation ◽  
Stock Exchange ◽  
Codes Of Ethics ◽  
Stock Exchanges ◽  
Significant Component ◽  
Board Committees ◽  
Governance Practices ◽  
Nominating Committees ◽  
The Impact

This chapter focuses on the important role that the national stock exchanges play in the federalization of corporate governance. Responding to federal legislative and SEC directives and, at times, acting on their own initiative, the stock exchanges have promulgated meaningful rules that comprise a significant component of the corporate governance landscape. Although technically not government regulation, the national stock exchanges play a central role in the enhancement of sound corporate governance practices and policies. Examples include the emphasis by the exchanges on independent directors, board committees (including audit, compensation, and nominating committees), and corporate codes of ethics. Hence, when addressing the federalization of corporate governance, stock exchange regulation is to be given prominent status.

Relationship between Code of Corporate Governance and Corporate Financial Performance (An Empirical Study of Food Companies Listed on KSE)

GIS Business ◽  
2017 ◽  
Vol 12 (4) ◽  
pp. 01-09
Author(s):  
Asma Rafique Chughtai ◽  
Afifa Naseer ◽  
Asma Hassan
Keyword(s):  
Corporate Governance ◽  
Stock Exchange ◽  
Securities And Exchange Commission ◽  
Executive Directors ◽  
Agency Conflicts ◽  
Cross Sectional ◽  
Return On Equity ◽  
Governance Practices ◽  
Code Of Corporate Governance ◽  
The Impact

The crucial role that implementation of Code of Corporate Governance plays on protecting the rights of minorities, shareholders, local as well as foreign investors cannot be denied. Companies all over the world are required to implement their respective Code of Corporate Governance for avoiding agency conflicts between companies management and stakeholders and for assuring transparency in accountability. This paper aims at exploring the impact of implementation of corporate governance practices (designed by Securities and Exchange Commission of Pakistan) have on the financial position of companies. For explanatory variables of the study, composition of the board as per the Code of Corporate Governance that comprises of presence of independent, executive and non-executive directors has been taken into consideration. Return on equity has been taken as an indicator of firms profitability i.e. the dependent variable. For this study, companies listed on food producing sector of Karachi Stock Exchange have been screened for excogitation of the relationship. It is an empirical research based on nine years data from 2007–2015. Using Hausman Test for selecting the data analysis technique between Fixed or Random, Fixed Cross Sectional Panel Analysis has been used for analysis of the data collected. Findings indicate that presence of independent, executive and non-executive directors as per the code requirements levies a significant impact on the profitability of companies indicated by return on equity. It is, thus concluded that companies should ensure compliance with code of governance practices to reduce not only the agency issues but also to increase their profitability.

scholarly journals CORPORATE GOVERNANCE AND BUSINESS PERFORMANCE: EVIDENCE FOR THE ROMANIAN ECONOMY

2015 ◽  
Vol 17 (3) ◽  
pp. 458-474 ◽  
Author(s):  
Monica-Violeta ACHIM ◽  
Sorin-Nicolae BORLEA ◽  
Codruţa MARE
Keyword(s):  
Corporate Governance ◽  
Business Performance ◽  
Stock Exchange ◽  
Policy Makers ◽  
Governance Practices ◽  
Corporate Governance Practice ◽  
Corporate Governance Quality ◽  
The Impact ◽  
A Company

Our finding contributes towards the understanding of movements regarding the adoption of corporate governance practice in emerging countries such as Romania and its impact on business performances of a company. We have developed two econometric models to assess the business performances of the companies listed on Bucharest Stock Exchange, in order to point out the impact of corporate governance on business performances. Our results are inconsistent for the period 2001–2011, but if we consider only 2011, the results document a positive correlation between corporate governance quality and market value of companies, such it is reflected by Tobin’s Q. Therefore, our results contribute to the studies relating corporate governance and business performances, as it confirms a positive relationship between the two variables which appears once the Romanian emerging economy has began to adopt the best corporate governance practices. Firstly, our research has important implications for managers in order to know that the adoption of the best corporate governance practices could contribute to the financial success of the firm. Secondly, the results are useful for any investor who needs to consider the quality of corporate governance as a good predictor for the best rate of return of theirs investments. Moreover, our findings have also implications on policy-makers and regulatory authorities in European developing countries and offer them a barometer of adopting the best corporate governance practices in European space.

scholarly journals The Impact of Board Diversity, CEO Characteristics, and Board Committees on Financial Performance in the Case of Romanian Companies

2021 ◽  
Vol 15 (1) ◽  
pp. 7
Author(s):  
Bogdan Aurelian Mihail ◽  
Dalina Dumitrescu ◽  
Carmen Daniela Micu ◽  
Adriana Lobda
Keyword(s):  
Financial Performance ◽  
Audit Committee ◽  
Stock Exchange ◽  
Board Members ◽  
Board Diversity ◽  
Board Committees ◽  
Positive Effects ◽  
Governance Practices ◽  
The Impact ◽  
Ceo Characteristics

This paper examines the impact of board diversity, CEO characteristics, and board committees on the financial performance of the companies listed on the Bucharest Stock Exchange (BSE). In order to test the influence of these characteristics, detailed data on more than 70 firms are collected by hand, for the 2016–2020 period, and comprehensive regression models are estimated. The findings show that there are positive effects of board diversity especially with regard to the independent board members. In terms of the board committees, the audit committee is found to have a favourable influence. The regression coefficients imply that a 10% increase in the share of independent board members would be associated with a 0.93% increase in ROE. Based on these findings, it can be argued that improving the corporate governance practices of the companies listed on the BSE would increase the performance and the value of these firms.

Corporate board for innovative managerial control: implications of corporate governance deviance perspective

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Irfan Saleem ◽  
Mujtaba Nasir Ali Khan ◽  
Rashedul Hasan ◽  
Muhammad Ashfaq
Keyword(s):  
New York ◽  
Corporate Governance ◽  
Stock Exchange ◽  
Management Control ◽  
Corporate Board ◽  
Managerial Control ◽  
Governance Mechanisms ◽  
Content Type ◽  
Governance Practices ◽  
The Impact

Purpose Drawing from the firm’s entrepreneurial identity and ecology perspectives, this study aims to explain why the firms deviate from standard corporate governance practices and apply innovative management control. Design/methodology/approach The authors used a panel of 2,538 public companies listed with the New York Stock Exchange to explain the impact of corporate governance deviance on firm’s performance. The authors relied on unique governance variables extracted from the Bloomberg database to develop the governance deviance index. Findings Study unveils that deviance from governance practices influences firm’s performance. Consequently, it can be said that the firms which use innovative governance mechanisms, usually stay ahead of the market by leading the governance trends. The findings also generalise the firm’s entrepreneurial identity and organisational ecology perspectives. Research limitations/implications Research implies that the firm’s entrepreneurial identity demands innovative managerial control. This study is focused on the US financial market, but in future, researchers could revalidate the deviance index. Scholars can also use mixed methods to test the need for innovative governance mechanisms in emerging markets. Practical implications The firms should focus on innovative governance practices not only to safeguard the firm’s entrepreneurial identity but also to pursue the growth objectives. Such innovative mechanisms and managerial controls are helpful to deal with industrial transformations to satisfy key stakeholders. Originality/value The study contributed to governance and management control research by sharing insights and catering the potential endogeneity problem faced to measure corporate governance measures. The study also proposes an alternative testing tool to measure governance deviance to add methodological uniqueness and reduce knowledge gap.

scholarly journals Corporate Governance Mechanisms and Firm’s Performance: Evidence from Jordan

2020 ◽  
Vol 9 (2) ◽  
pp. 11
Author(s):  
Mohammad Abdullah Fayad Altawalbeh
Keyword(s):  
Corporate Governance ◽  
Stock Exchange ◽  
Board Members ◽  
Board Structure ◽  
Government Ownership ◽  
Governance Mechanisms ◽  
Financial Reports ◽  
Corporate Governance Mechanisms ◽  
Governance Practices ◽  
The Impact

The purpose of this study is to investigate the effect of corporate governance mechanisms on the firm’s performance. Corporate governance practices were divided into two groups; board structure and ownership structure. The sample of the study consists of 60 companies from industrial and service sectors that are listed on Amman stock exchange (ASE). Data was gathered manually through the annual financial reports for the period from 2012-2017 results in 366 year-observation. Stata statistical software was used to test the study hypotheses. The results revealed that board meetings frequency and government ownership positively and significantly impact the firm’s performance, these results suggest that board meetings frequency is considered an indicator of the board effectiveness that enhances decision making quality and thus the firm performance, the results suggest that government ownership is providing a helping hand that improves the firm’s performance. The findings also showed that board independence negatively and significantly impact the firm’s performance, this result suggests that independent board members do not guarantee to improve the performance of a firm, and it stays the firm’s responsibility to choose independent board members who are able to exercise effective oversight function for the purpose of enhancing the performance of a firm. This study contributes to the literature by providing empirical evidence from developing countries about the impact of corporate governance measures and practices on firms’ performance.

Does better corporate governance increase operational performance?

2017 ◽  
Vol 17 (3) ◽  
pp. 524-537 ◽  
Author(s):  
Renata Wandroski Peris ◽  
Eduardo Contani ◽  
José Roberto Ferreira Savoia ◽  
Daniel Reed Bergmann
Keyword(s):  
Corporate Governance ◽  
Regression Model ◽  
Stock Exchange ◽  
Control Variable ◽  
Principal Component ◽  
Operational Performance ◽  
Stock Exchanges ◽  
Content Type ◽  
Governance Practices ◽  
High Level

Purpose This study aims to examine the association between the adoption of corporate governance practices and operational performance in companies listed on the Brazilian Stock Exchange. Design/methodology/approach The sample comprises the 80 largest companies in market value present in the Brazil Stocks Index in 2014. Principal component and cluster analyses techniques are used to evaluate performance and capital structure, and a regression model is applied to identify the relationship between key variables. Findings The findings show that the incidence of a high level of corporate governance in Brazil occurs among smaller companies with less desirable operational performance, rather than the biggest (blue chip) companies. Using a regression model with the return on assets as a dependent variable, a dummy variable for “governance”, and the size of the companies as a control variable, the authors find no association with good practices of corporate governance and operational performance for the companies in the sample. Practical implications Newer companies are more likely to exhibit a higher level of corporate governance because of the actions of foreign investors who demand the adoption of stronger corporate governance practices. Although there is demand from wealthy local institutional investors, many older traditional firms could still restructure to achieve higher levels of governance, especially in the case of emerging economies with less mature stock exchanges Originality/value This study contributes to the recent debates in the literature by identifying evidence for an association between operational performance and corporate governance rather than a causal relationship.

scholarly journals The impact of foreign ownership on corporate governance: evidence from an emerging market

2019 ◽  
Vol 16 (2) ◽  
pp. 101-115
Author(s):  
Rawan Shubita ◽  
Moade Fawzi Shubita
Keyword(s):  
Corporate Governance ◽  
Firm Value ◽  
Stock Exchange ◽  
Emerging Market ◽  
Decisive Role ◽  
Foreign Ownership ◽  
Growth Opportunity ◽  
Governance Practices ◽  
Company Growth ◽  
The Impact

This research explores the influence of foreign ownership on non-financial public shareholding firms in the Amman Stock Exchange (ASE). The study involved an investigation into the connection between non-Jordanian ownership and the company growth opportunity, stock liquidity, leverage, dividend policy and business output. The results highlight that foreign ownership can provide improved corporate governance practices by playing a decisive role in increasing the growth opportunity and enhancing the firms’ market valuation, as measured by Tobin’s Q. Moreover, the findings indicate that companies with foreign board membership have better operating performance and higher firm value. The rewards were reaped by foreign investors based on their superior monitoring ability, which affects the decisions made and actions taken by management.

scholarly journals Does Adopting High-Standard Corporate Governance Increase Firm Value? An Empirical Analysis Of Canadian Companies

2011 ◽  
Vol 10 (9) ◽  
pp. 17 ◽  
Author(s):  
Jun Yang
Keyword(s):  
Corporate Governance ◽  
Private Information ◽  
Firm Value ◽  
Stock Exchange ◽  
High Standard ◽  
Relevant Information ◽  
The United States ◽  
Shareholder Protection ◽  
Governance Practices ◽  
The Impact

Research on the impact of corporate governance on firm value has provided inconclusive results. The findings vary depending on the sample, country of study (regulation, law, shareholder protection, market development, etc.) and methodology employed. Many studies are unable to detect significant connection between corporate governance and firm value. Unlike the United States, Canada adopts a principles-based approach in corporate governance regulation. Canadian companies are required to disclose whether they comply with the corporate governance guidelines set up by authorities (such as the Toronto Stock Exchange) or explain deviations from the guidelines. Using panel data from 2004 to 2008 in Canada the empirical analyses in this paper show that the finding on the connection between corporate governance and firm value is sensitive to the methodology employed. Controlling relevant information is crucial to the results. When the data is analyzed in a self-selection framework, it is found that some time-varying unobservable firm characteristics that make firms adopt high-standard corporate governance also increase firm value, and somewhat surprisingly, adopting better corporate governance practices per se seems to decrease firm value. The results support the view that firms use sound corporate governance to signal their favorable private information.

Corporate Governance Characteristics and Audit Fees

2019 ◽  
pp. 26-50 ◽  
Author(s):  
Ana Silva ◽  
Helena Inácio ◽  
Elisabete Vieira
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Stock Exchange ◽  
Audit Fees ◽  
Listed Companies ◽  
The Other ◽  
Stock Exchanges ◽  
External Audit ◽  
Governance Practices ◽  
The Board Of Directors

The purpose of this chapter is to analyze the effect that corporate governance measures have in external audit fees in two countries where this matter is not much developed: Portugal and Spain. The analysis includes a sample of 39 listed companies on the Portuguese Stock Exchange and 104 listed companies on the Spanish Stock Exchanges for the years 2013 to 2015 using an OLS regression model. For the Spanish sample, the results show that the capital hold by the Board of Directors influence negatively external audit fees. The results are in accordance with the supplier perspective which states that better corporate governance practices decrease the control risk and, consequently, audit fees. On the other hand, the Board of Directors' diligence also affected external audit fees but positively, that is, the greater the number of meetings the greater the demand for an audit with quality which result in higher fees charged (demand perspective). For the Portuguese sample it can be observed that corporate governance characteristics do not affect external audit fees.

scholarly journals The Impact of Corporate Governance on the Financial Distress: Evidence from Pakistani Listed Companies

2017 ◽  
Vol 5 (2) ◽  
pp. 49-53
Author(s):  
Ahmed Hassan Jamal ◽  
◽  
Syed Zulfiqar Ali Shah ◽  
Keyword(s):  
Corporate Governance ◽  
Financial Distress ◽  
Audit Committee ◽  
Positive Impact ◽  
Stock Exchange ◽  
Listed Companies ◽  
Board Composition ◽  
Explanatory Variables ◽  
Governance Practices ◽  
The Impact

This study intends to assess how corporate governance affects the financial distress in non-financial listed companies in Pakistan. Sample of 53 companies was obtained from non-financial institutes listed in Pakistani stock exchange. Regression analysis is used to estimate the impact of explanatory variables including size of board, composition of board, audit committee independence and duality of CEO on the financial distress. The findings show that size of board, composition of board and CEO duality has a positive impact on Z-score of Pakistani listed firms. This implies that better the corporate governance practices in companies, lower will be the financial distress and vice versa.

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