Board of directors' size and performance in the banking industry

2009 ◽  
Vol 5 (2) ◽  
pp. 201-221 ◽  
Author(s):  
Mohamed Belkhir
Keyword(s):  
Board Of Directors ◽  
Boards Of Directors ◽  
Banking Industry ◽  
Poor Performance ◽  
Governance Mechanism ◽  
Past Performance ◽  
Board Size ◽  
Content Type ◽  
And Performance ◽  
The Relationship

PurposeThis paper aims to investigate the relationship between board size and performance in a sample of 174 bank and savings‐and‐loan holding companies, over the period 1995‐2002.Design/methodology/approachIn order to examine the relationship between board of directors' size and performance in the banking industry, the paper uses various statistical tools, including panel univariate analyses and panel data techniques.FindingsContrary to theories predicting that smaller boards of directors are more effective, increasing the number of directors in banking firms does not undermine performance. In contrast, the evidence is in favor of a positive relationship between board size and performance, as measured by Tobin's Q and the return on assets. The paper investigates whether this positive association is due to the fact that banks reduce the number of their directors in the aftermath of poor performance by testing for the relationship between board size and performance. The findings show that the number of directors leaving the board and the number of those joining the board for the first time increase following a poor performance, but the net change in board size is not affected by past performance.Research limitations/implicationsThe paper recognizes that a number of factors that are not controlled for in this study might be behind the positive empirical association between board size and the performance measures used.Practical implicationsThe results of this study suggest that the calls to reduce the number of directors in banks might have adverse effects on performance.Originality/valueThis paper contributes to the banking literature by investigating the relationship between an important governance mechanism, the board of directors, and performance in banking firms.

scholarly journals Corporate governance and Shariah non-compliant risk in Islamic banks: evidence from Southeast Asia

2019 ◽  
Vol 20 (2) ◽  
pp. 240-262 ◽  
Author(s):  
Rohaida Basiruddin ◽  
Habib Ahmed
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Boards Of Directors ◽  
Annual Reports ◽  
Islamic Banks ◽  
Governance Mechanism ◽  
Content Type ◽  
Country Level ◽  
The Board Of Directors ◽  
The Relationship

Purpose This study aims to investigate the relationship between corporate governance and Shariah non-compliant risk (SNCR) that is unique for Islamic banks. The study examines the roles of Shariah committee along with the board of directors in mitigating SNCR. Design/methodology/approach The paper empirically investigates the implications of characteristics of board of directors and Shariah committee on the SNCR by using a sample of 29 full-fledge Islamic banks from Malaysia and Indonesia over the period 2007-2017. All data is hand collected from the Islamic banks' annual reports with the exception of country-level data collected from the World Bank database. Findings The results show that banks with a smaller board size and higher proportion of independent board members are likely to have lower SNCR. The findings also indicate that the financial expertise and higher frequency of Shariah committee meetings reduces the SNCR. Collectively, the analysis shows that banks with strong corporate governance environments reduce SNCR. Practical implications The findings of the study shed light on the relationship between corporate governance practice, Shariah committee characteristics and SNCR. The results can be used by different stakeholders such as policymakers, boards of directors and senior management of Islamic banks to mitigate SNCR. Originality/value This study extends the literature on corporate governance and risk-taking by including additional dimensions of governance and risk type. The corporate governance mechanism at the board level is complemented by including the Shariah committee characteristics and SNCR which is relevant to Islamic financial institutions is examined.

scholarly journals The effectiveness of the internal corporate governance mechanism and the ownership of the government and agencies

Accounting ◽  
2021 ◽  
Vol 7 (7) ◽  
pp. 1655-1660
Author(s):  
Khaled Salmen Aljaaidi
Keyword(s):  
Board Of Directors ◽  
Negative Impact ◽  
Governance Mechanism ◽  
Board Size ◽  
Internal Governance Mechanisms ◽  
The Board Of Directors ◽  
The Government ◽  
Relationship Of ◽  
The Impact ◽  
The Relationship

This paper examines the impact of the government and its agencies’ ownership on the effectiveness of one the main internal governance mechanisms, namely; board of directors, for a sample of 140 energy and petrochemical Saudi listed firms over 2012-2019. The Saudi Arabia provides an interesting context due to the domination of government-linked corporations’ ownership. This setting arranges for the impact of such ownership on the board of directors’ monitoring and advisory roles. The board of directors’ effectiveness is measured as an interaction term of the board size and meetings of the board of directors. The study finds that government-linked energy and petrochemical corporations’ ownerships are inversely related to the board of directors’ effectiveness. This result is sensitive to the measurement of the board of directors’ effectiveness as each variable consisting of the board of directors’ effectiveness was examined individually. The study also finds that government-linked corporations’ ownership had a strong negative impact on the board size. In contrast, the proposed model does not provide any evidence supporting the relationship of the government-linked corporations’ ownerships with board meetings. Overall, the evidence supports the substitution hypothesis on the relationship of government-linked corporations and board of directors’ effectiveness.

scholarly journals A Thematic Review on Composition of Board of Directors (BOD) and Its Impact on Performance

NCC Journal ◽  
2018 ◽  
Vol 3 (1) ◽  
pp. 65-70
Author(s):  
Dipti Dhungel
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Board Of Directors ◽  
Boards Of Directors ◽  
Corporate Boards ◽  
Corporate Governance Mechanisms ◽  
Thematic Review ◽  
And Performance ◽  
Main Component ◽  
The Relationship

This thematic paper has been prepared to find out how the composition of Board of Directors makes impact on performance of firms. To find this impact, the articles published in international journals have been reviewed. In addition to this detailed study of the legislator, the provision regarding composition of BOD in Nepal was made as stated in BAFIA and Company Act. The Board of Directorsis the elected members among the shareholders who could best represent the interest of each and every member. Corporate boards are one of the, if not the most important, internal corporate governance mechanisms that monitor and advise management in fulfilling the mandate to protect shareholder interests.There is still much debate as to the relationship between firm performance and boards of directors, which are arguably the main component of corporate governance.The thematic review concludes that the relationship between BOD and performance was not found on the basis of existing literature reviewed. Thus, the study opened the ground for the researcher to test this empirically.NCC JournalVol. 3, No. 1, 2018, Page: 65-70

Internationalization and performance of small and medium-sized enterprises from emerging economies

2020 ◽  
Vol 30 (5) ◽  
pp. 635-663
Author(s):  
Eva Cristina Manotas ◽  
Maria Alejandra Gonzalez-Perez
Keyword(s):  
International Business ◽  
Emerging Economies ◽  
Social Practice ◽  
High Reliability ◽  
Risk Function ◽  
Poor Performance ◽  
Content Type ◽  
Hazard Functions ◽  
And Performance ◽  
The Relationship

Purpose This paper aims to introduce the use of hazards functions for studying the relationship between internationalization and performance in small and medium-sized enterprises (SMEs) from emerging economies. Design/methodology/approach Hazards functions analysis is applied to a sample of 64 companies, previously grouped into two subsets of manufacturing SMEs from an emerging economy. The first group contains firms that have attained an accelerated internationalization. And the second one those that have followed a sequential internationalization. Findings The results show strong evidence that internationalization positively affects the probability of a better performance, and therefore more competitiveness of SMEs. Practical implications The proposed methodology is an invitation to use models other than linear regression to explain the relationship between internationalization and performance, studying the risk function of poor performance, whose characterization in the lifetime of SMEs. The result of this study clearly illustrates how internationalization affects the performance of SMEs for both those SMEs with accelerated internationalization and those with a sequential process of internationalization. Social implications The implementation of quantitative methodologies, such as the analysis of hazards, has implications in the social practice of research in international business, by inviting the return of data from primary sources, obtained from direct sources, which, although they are not large samples, they are representative, and therefore the results of the well-applied methodology offer powerful and high-reliability information. Irreproducible and non-replicable research results threaten the credibility, usefulness and the very basis of all scientific fields. Studies in entrepreneurship, management and in international business are not exempt from this problem that affects the ethics and credibility of research works. Originality/value A literature review is presented exposing the disadvantages of the use of traditional correlation methodologies and proposes the methodology traditionally used in industrial engineering studies of hazard functions as a simple option, free of previous assumptions about the relation between internationalization and performance. Finally, the methodology is subjected to triple testing of conceptualization and measurement of internationalization, performance and the relation between internationalization and performance.

Board of directors and financial transparency and disclosure. Evidence from Italy

2016 ◽  
Vol 16 (3) ◽  
pp. 593-608 ◽  
Author(s):  
Mariateresa Torchia ◽  
Andrea Calabrò
Keyword(s):  
Board Of Directors ◽  
Boards Of Directors ◽  
Listed Companies ◽  
Independent Directors ◽  
Board Composition ◽  
Governance Mechanisms ◽  
Board Size ◽  
Content Type ◽  
Financial Transparency ◽  
Transparency And Disclosure

Purpose The purpose of this paper is to examine the link between board of directors’ composition (independent directors’ ratio, board size, CEO-duality) and financial transparency and disclosure (T&D). Design/methodology/approach The paper analyzes board composition and financial T&D of Italian listed companies using multiple linear regression analysis. Findings The results of this paper show a significant link between board composition and the level of financial T&D. In particular, the authors found a positive and significant relationship between the independent directors’ ratio and the level of financial T&D and a negative relationship between board size and the level of financial T&D. Research limitations/implications While this paper focuses on a sample of 100 Italian listed companies, the authors acknowledge the importance of extending the results to other national context and to other type of firms (e.g. non-listed firms or SMEs). Moreover, while this paper concerns the amount of information disclosed by firms, it does not look at the quality or accuracy of disclosure. Practical implications This paper reveals the importance of evaluating the effectiveness of corporate governance mechanisms (such as board composition) in enhancing the level of financial T&D. Indeed, the authors provide some indications to firms to improve their internal governance mechanisms (e.g. the importance of high proportion of independent directors and of small- and medium-sized boards of directors). Originality/value This paper provides interesting insights to firms which are under pressure to improve the level of information to stakeholders. Moreover, has the level of information that is not legally required vary among companies and countries, the authors shed light on a context characterized by high level of ownership concentration, where firms can experience different types of conflict of interests.

scholarly journals Board, governance and firm performance: Are financial intermediaries different?

2011 ◽  
Vol 8 (2, Special issue) ◽  
pp. 60-68 ◽  
Author(s):  
Marina Brogi
Keyword(s):  
Firm Performance ◽  
Board Of Directors ◽  
Financial Intermediaries ◽  
Board Governance ◽  
Return On Assets ◽  
Board Size ◽  
Financial Firms ◽  
The Board Of Directors ◽  
And Performance ◽  
The Relationship

Drawing on Agency Theory this article investigates the relationship between board size and European firms’ performance. The focus is on the implicit differences between financial and non-financial firms. In particular the paper addresses the following questions: does board size influence firm performance? Is financial intermediaries’ corporate governance different from that of non-financial companies? The study analyses the governance of the largest listed European companies which make up the Eurotop 100 index. Companies come from 12 different countries and are subject to different regulatory and self-discipline codes. Referring to the Eurotop index the focus is on the relation between the overall size of the board of directors and the level of performance measured as Tobin’s Q and Return on Assets. Diverging results emerge depending on the typology of the firm. In particular, results suggest that for non-financial companies large boards negatively influence firm performance, whereas financial intermediaries seem to be different because of the non-relation between their board size and performance.

What matters most in achieving customer satisfaction in banking? A study from the perspective of employee characteristics

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Wajeeha Aslam ◽  
Kashif Farhat ◽  
Imtiaz Arif ◽  
Chai Lee Goi
Keyword(s):  
Customer Satisfaction ◽  
Banking Industry ◽  
Employee Performance ◽  
Partial Least Square ◽  
Mediating Effect ◽  
Equation Modeling ◽  
Content Type ◽  
And Performance ◽  
Employee Characteristics ◽  
The Relationship

PurposeThis study aims to identify the factors that influence customer satisfaction in the banking sector from the perspective of employee characteristics. More specifically, this study identifies the impact of employee etiquettes, employee performance, technical selling skills and customer-oriented behavior on customer satisfaction in the banking industry. The study also seeks to investigate the mediating effect of employee etiquettes, employee performance and technical selling skills on the relationship between customer satisfaction and customer-oriented behavior.Design/methodology/approachThe data were collected with the help of a Likert scale questionnaire from the active banking customers in Karachi, Pakistan, who visit bank branches once a month minimum. For 268 responses, partial least square-structural equation modeling (PLS-SEM) technique was employed for hypothesis testing.FindingsThe results showed a positive and significant relationship between customer-oriented behavior and employee etiquettes, technical selling skills and performance. The employee’s customer-oriented behavior, etiquettes, technical selling skills and performance were also found to be significantly related with customer satisfaction. Finally, the results revealed that technical selling skills, employee performance and employee etiquettes partially mediate the relationship between customer-oriented behavior and customer satisfaction.Practical implicationsIt is recommended that banking employees should adopt customer-oriented behavior in order to achieve and maintain customer satisfaction. The bank managers should also work on improving the etiquettes and performance of the employees and provide them detailed technical knowledge of the services and products offered by the bank.Originality/valueArguably, it is one of the first studies to examine the mediating effects of employees' technical selling skills and employees' performance on the relationship between customer orientation and customer satisfaction, specifically in the banking industry.

Behavior of investor flows in Israeli provident funds

2019 ◽  
Vol 16 (3) ◽  
pp. 334-356
Author(s):  
Ofer Arbaa ◽  
Eva Varon
Keyword(s):  
Poor Performance ◽  
Fixed Effect ◽  
Fund Flows ◽  
Past Performance ◽  
Content Type ◽  
Fund Managers ◽  
The Usa ◽  
And Performance ◽  
The Impact ◽  
Provident Fund

Purpose The purpose of this paper is to study the sensitivity of provident fund investors to past performance and how market conditions, changes in risk and liquidity levels influence the net flows into provident funds by using a unique sample from Israel. Design/methodology/approach The study checks the impact of different levels of fund performance on provident fund flows using three alternative proxies for performance: raw return and the risk adjusted returns based on the Sharpe ratio and the Jensen’s α. The analysis relies on the time fixed effect and fund fixed effect regression models. Findings Results reveal that there exists an approximately concave flow–performance relationship and performance persistence among Israeli provident funds. Israeli provident fund investors are risk averse so they overreact to bad performance both in bull and bear markets. Moreover, liquidity is an important factor to influence the flow–performance curve. The investors’ strong negative response to poor performance and relative insensitivity to outperformance show that provident fund managers are not rewarded for their risk-shifting activities as in mutual funds. Originality/value The authors explore the behavior of investor flows in non-institutional retirement savings funds specifically outside of the USA, which is a topic not properly investigated in literature. Moreover, examining inflows and outflows separately gives the authors a richer understanding of investors in pension schemes. This study also enhances the understanding of the impact of fund liquidity on the flow–performance relationship for the retirement funds segment.

Moderating role of Shariah committee quality on relationship between board of directors effectiveness and the performance of Malaysian Takaful

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Monther Eldaia ◽  
Mustafa Hanefah ◽  
Ainulashikin Marzuki
Keyword(s):  
Board Of Directors ◽  
Positive Association ◽  
Moderating Effect ◽  
Board Effectiveness ◽  
Content Type ◽  
And Performance ◽  
High Level ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this study is to examine the effect of Board of Directors Effectiveness (BODE) on the performance of Malaysian Takaful companies licensed by the Central Bank of Malaysia. In addition, the study investigates the moderating effect of Shariah Committee Quality (SCQ) on the relationship between BODE and companies’ performance. Design/methodology/approach This study uses a sample of 11 Malaysian Takaful companies during the period of 2010-2017. While BDE and SCQ are measured using indices, performance is proxied using ROA and ROE. A panel fixed effect regression analysis is used to test the impact of the BDE on the financial performance of Malaysian Takaful companies and the moderator role of SCQ. Findings The main finding of this study shows a positive association between BDE and performance. More specifically, boards with a high presence of independent, Muslim and female directors positively contribute to the performance of Malaysian Takaful companies. Another interesting finding is related to the positive moderating effect of SCQ on the relationship between BDE and performance. This result indicates that a high level of SCQ combined with a high level of board effectiveness improve performance. Practical implications The finding is of great importance to stakeholders and policymakers to improve their board effectiveness and the quality of the Shariah committee to reduce agency costs and to improve the performance of Malaysian Takaful companies. Originality/value This study adds to the prior literature by investigating for the first time the relationship between BDE and performance and the interaction effect of SCQ on the performance of Malaysian Takaful companies.

scholarly journals Covid-19 and performance disclosure: does governance matter?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mahmoud Elmarzouky ◽  
Khaldoon Albitar ◽  
Khaled Hussainey
Keyword(s):  
Firm Performance ◽  
Gender Diversity ◽  
Annual Reports ◽  
Board Independence ◽  
Board Size ◽  
Content Type ◽  
Related Information ◽  
And Performance ◽  
And Gender ◽  
The Relationship

Purpose This paper aims to investigate whether Covid-19 related information is associated with a higher level of performance disclosure in the annual reports. Furthermore, it examines the moderating effect of corporate governance on the relationship between Covid-19 and the performance disclosure by using three governance mechanisms: board size, board independence and gender diversity. Design/methodology/approach The authors use quantitative content analysis. The authors applied an automated textual analysis technique to measure the level of Covid-19 information and performance disclosure for the UK Financial Times Stock Exchange all-share non-financial firms. Findings The authors found a significant positive relationship between the Covid-19 disclosure and the firm performance disclosure in the annual reports. The authors also find that both board independence and gender diversity moderate the relationship between the Covid-19 related information and the level of performance disclosure in the annual reports. The authors further run a robustness analysis, which confirms the main results. Practical implications The finding is beneficial for the regulatory setters to better understand whether firms provide generic or meaningful Covid-19 information linked to the firm’s performance. The unique findings of this paper are relevant to regulators, governments, management, shareholders and academics. Originality/value The authors contribute to the literature in a unique and core research area not researched previously. The paper links the Covid-19 disclosure with the firm performance from the corporate narrative perspective. The paper underlines governance factors as a moderating role in this relationship by considering three main mechanisms: board size, board independence and gender diversity.

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