The security market and the changing government role in Japan

2016 ◽  
Vol 5 (4) ◽  
pp. 388-407 ◽  
Author(s):  
Masao Nakamura
Keyword(s):  
Corporate Governance ◽  
Selective Adaptation ◽  
Security Market ◽  
Business Practices ◽  
Governance Mechanisms ◽  
Content Type ◽  
Security Markets ◽  
Corporate Governance Mechanisms ◽  
Corporate Governance Reforms ◽  
Governance Reforms

Purpose The purpose of this paper is to explain how current security market regulations in Japan have evolved following Japan’s corporate governance reforms, which began in the 1990s after the bursting of a massive financial bubble. As part of the reform, Japan aimed to introduce US-style corporate governance mechanisms. Design/methodology/approach This paper first explains the process behind Japan’s corporate governance reforms using the theory of selective adaptation. By doing so, the various changes that have taken place in the regulations of security markets are also explained. The paper concludes with a discussion of the limitations of transplanting US-style corporate governance mechanisms in Japan and the implications for the functioning of Japan’s security markets. Findings While applying a selective adaptation framework to Japan’s efforts to transplant US-style corporate governance mechanisms to its own markets, the author found that certain Japan-specific business practices, such as its heavy reliance on keiretsu corporate groupings, may interfere with the market-based business practices and free competition which characterize the US system. This in turn places limitations on the functioning of US-style security markets in Japan. Originality/value This paper explains the limitations of government regulation on security markets in Japan, which may be of interest to both public and private sector analysts. This paper focusses on Japan’s experience of transplanting US-style corporate governance mechanisms to Japan. The author expect that Japan’s experience will be of much interest to China, South Korea and other countries in East Asia, where pyramidal and other types of business groups play important roles in their economies.

scholarly journals Corporate Governance and Auditor Independence in Saudi Arabia: Literature Review and Proposed Conceptual Framework

2016 ◽  
Vol 9 (11) ◽  
pp. 1
Author(s):  
Seraj Hamed Bahrawe ◽  
Harashid Haron ◽  
Ali Nawari Bin Hasan
Keyword(s):  
Corporate Governance ◽  
Saudi Arabia ◽  
Board Of Directors ◽  
Audit Committee ◽  
Auditor Independence ◽  
Governance Mechanisms ◽  
External Audit ◽  
Corporate Governance Mechanisms ◽  
Corporate Governance Reforms ◽  
Governance Reforms

<p>This study aimed to propose a theoretical framework that explains the relationship between internal corporate governance mechanisms namely audit committee and board of directors, and auditor independence. It is a descriptive study that explored the Saudi corporate governance reforms and the Saudi auditing market. In recent years, Saudi Arabia has been pursuing corporate governance reforms, as evidenced by the setting up of the Capital Market Authority (CMA) in 2003 and the publication of the Saudi Corporate Governance Code (SCGC) in 2006. In the Saudi Organization for Certified Public Accountants (SOCPA), the accounting standards committee holds the responsibility of developing and reviewing accounting and auditing standards in the country. According to the agency theory, corporate governance mechanisms and external audit have a key role in improving the process of financial reporting. Basing the primary argument on the above premise, this study attempted to achieve the following objectives; 1) to explore the issue of auditor independence, and 2) to determine the extent of the effect of corporate practices in Saudi Arabia on the external audit independence. This conceptual work’s outcomes revealed that the regulatory authorities and the CMA have to expend more efforts to improve the awareness and appreciation level of effective corporate governance practices among major internal mechanisms (audit committee and board of directors) and external mechanisms (external auditors) of corporate governance in Saudi Arabia.</p>

Impact of corporate governance compliance and board attributes on operating liquidity in pre- and post-corporate governance reforms

2020 ◽  
Vol 20 (7) ◽  
pp. 1329-1347
Author(s):  
Javed Khan ◽  
Shafiq Ur Rehman
Keyword(s):  
Corporate Governance ◽  
Gender Diversity ◽  
Governance Mechanisms ◽  
Internal Governance ◽  
Content Type ◽  
Internal Governance Mechanisms ◽  
External Governance ◽  
The Impact ◽  
Corporate Governance Reforms ◽  
Governance Reforms

Purpose This study aims to investigate the impact of corporate governance compliance, governance reforms and board attributes on operating liquidity of Pakistani listed non-financial firms. The study further tests how these relationships vary in the pre- and post-corporate governance reforms. Design/methodology/approach Fixed-effect regression model is used on 10 years panel data from 2007 to 2016 for a sample of 170 firms listed on the Pakistan Stock Exchange. Two-stage least squares model is used for addressing the endogeneity problem. Findings The findings reveal that governance compliance and governance reforms negatively affect operating liquidity. Among the board attributes, board meetings, directors’ remuneration, board foreign diversity and board gender diversity are significantly related to operating liquidity. Further exploration indicates that internal governance mechanisms are less effective to safeguard shareholders from expropriation during weak external governance. This suggests that strong external governance is inevitable to the effectiveness of internal governance mechanisms. Overall, the study findings support the agency theory. Practical implications The findings provide valid recommendations to policymakers interested in safeguarding the investors to focus on macro-level governance for making the micro-level governance effective. Further, the results provide the executives with an insight to improve the compliance level with the code of corporate governance. Originality/value Unlike prior studies, this study examines the impact of corporate governance compliance and novel board attributes – directors’ attendance at board meetings, number of board committees, directors’ remuneration and board foreign diversity on operating liquidity. Further, the study subdivides its sample period into pre- and post-corporate governance reforms to examine how external governance influences internal governance effectiveness.

scholarly journals Corporate governance and conglomerate diversification strategy – evidence from Vietnam

2018 ◽  
Vol 13 (6) ◽  
pp. 1578-1596 ◽  
Author(s):  
Thi Xuan Trang Nguyen
Keyword(s):  
Corporate Governance ◽  
Stock Exchange ◽  
Board Composition ◽  
Governance Mechanisms ◽  
Content Type ◽  
Unrelated Diversification ◽  
Corporate Governance Mechanisms ◽  
Control Devices ◽  
Interest Alignment ◽  
The Relationship

Purpose The purpose of this paper is to examine the impact of internal corporate governance mechanisms, including interest alignment and control devices, on the unrelated diversification level in Vietnam. Additionally, the moderation of free cash flow (FCF) on these relationships is also tested. Design/methodology/approach The study is based on a balanced panel data set of 70 listed companies in both stock markets, Ho Chi Minh Stock Exchange and Hanoi Stock Exchange, in Vietnam for the years 2007–2014, which gives 560 observations in total. Findings The results show that if executive ownership for CEOs is increased, then the extent of diversification is likely to be reduced. However, the link between unrelated diversification level and executive stock option, another interest alignment device, cannot be confirmed. Among three control devices (level of blockholder ownership, board composition and separation of CEO and chairman positions), the study finds a positive connection between diversification and blockholder ownership, and statistically insignificant relations between the conglomerate diversification level and board composition, or CEO duality. Additionally, this study discovers a negative link between diversification and state ownership, although there is no evidence to support the change to the effect of each internal corporate governance mechanism on the diversification level of a firm between high and low FCF. Practical implications The research can be a useful reference not only for investors and managers but also for policy makers in Vietnam. This study explores the relationship among corporate governance, diversification and firm value in Vietnam, where the topics related to effectiveness of corporate governance mechanisms to public companies has been increasingly attractive to researchers since the default of Vietnam Shipbuilding Industry Group (Vinashin) happened in 2010 and the Circular No. 121/2012/TT-BTC on 26 July 2012 of the Vietnamese Ministry of Finance was issued with regulations on corporate governance applicable to listed firms in this country. Originality/value This research, first, enriches current literature on the relationship between corporate governance and firm diversification. It can be considered as a contribution to the related topic with an example of Vietnam, a developing country in Asia. Second, the research continues to prove non-unification in results showing the relationship between corporate governance and conglomerate diversification among different nations. Third, it provides a potential input for future research works on the moderation of FCF to the effects of corporate governance on diversification.

Economic role of politics and corporate governance: reforms captured in Malaysia’s setting

2017 ◽  
Vol 59 (6) ◽  
pp. 839-853 ◽  
Author(s):  
Nurul Nazlia Jamil
Keyword(s):  
Corporate Governance ◽  
Emerging Market ◽  
Political Influence ◽  
Political Agenda ◽  
The Political ◽  
Content Type ◽  
Economic Role ◽  
Corporate Governance Reforms ◽  
Governance Reforms

Purpose This study aims to examine the economic role of politics on corporate governance reforms in one of emerging market, namely, Malaysia. Design/methodology/approach The paper is based upon a literature review analysis. Findings The Malaysian economic, political and social settings have resulted in undue state and detrimental political influence on business, and yet the corporate governance reforms undertaken seemed not be able to resolve the matter. It is suggesting that it would be beneficial for Malaysia to have more independent regulatory bodies representing a wide variety of stakeholders to improve the transparency and accountability to ensure that the reforms are effectively enforced without conflicting with the political agenda. Legal institutional reforms also may be needed to improve the structure, capacity and performance of judicial system, as it is capable to capture reliance of economic role of politics and promoting accountability in Malaysia. Research limitations/implications The economic role of politics on corporate governance reforms is merely to broaden the political strategy in the corporate sector as the change in politics can improve the effectiveness of corporate governance reforms. Moreover, the economic role of politics raises the tone of the corporate governance reforms, and it implies that policymakers need to have effective corporate governance strategy in dealing with the reforms initiatives in areas that have strong political interventions. Originality/value Regulatory and judicial implications are offered as a means to improve corporate governance in Malaysia.

Does audit committee substitute or complement other corporate governance mechanisms

2017 ◽  
Vol 32 (7) ◽  
pp. 658-681 ◽  
Author(s):  
Yousef Hassan ◽  
Rafiq Hijazi ◽  
Kamal Naser
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Audit Committee ◽  
Negative Relationship ◽  
Governance Mechanisms ◽  
Governance System ◽  
African Countries ◽  
Content Type ◽  
Board Characteristics ◽  
Corporate Governance Mechanisms

Purpose The purpose of this paper is to examine the relation between audit committee (AC) and a set of other corporate governance mechanisms in one of the emerging economies, United Arab of Emirates (UAE). In particular, the current study examines whether an effective AC can serve as a substitute or as a complement mechanism to board characteristics and ownership structure of Emirati listed non-financial companies. Design/methodology/approach Using substitution and complementary theories, a panel data from 48 nonfinancial companies listed on the UAE Stock Exchanges [Abu Dhabi Stock Exchange and Dubai Financial Market] during the period between 2011 and 2013 were used in the current study. A composite measure of four proxies has been used to measure the AC effectiveness, namely, AC size, independence, financial expertise and diligence. To test the hypotheses formulated for the study, a logistic regression model was used to identify the influence of a set of board characteristics and ownership structure variables on the effectiveness of the AC after controlling for firm size, auditor type, industry type and profitability. Findings While AC effectiveness appeared to be positively associated with board size and board independence, it is negatively associated with CEO duality. This points to a complementary governance relation. On the other hand, the negative relationship between AC effectiveness and each of institutional and government ownership suggests substitutive relations. Research limitations/implications The main shortcoming of the current study is that it examines the influence of a certain set of corporate governance factors on the effectiveness of AC. Other corporate governance mechanisms may, however, contribute to the effectiveness of AC. The findings of the study can be used by companies’ managements and regulators in the UAE to improve the corporate governance system. Originality/value To the best of researchers’ knowledge, this study provides the first evidence about the interaction among multiple governance mechanisms required by the code of corporate governance issued by the UAE Ministry of Economy in 2009. The current paper is expected to add to the limited AC literature in Middle East and North African countries in general and Arab World in particular.

The adoption of CSR practices in Egypt: internal efficiency or external legitimation?

2018 ◽  
Vol 9 (5) ◽  
pp. 642-665 ◽  
Author(s):  
Dina El-Bassiouny ◽  
Peter Letmathe
Keyword(s):  
Corporate Governance ◽  
Sample Size ◽  
Business Environment ◽  
Western World ◽  
Corporate Ethics ◽  
Corporate Accountability ◽  
Governance Mechanisms ◽  
Content Type ◽  
Corporate Governance Mechanisms ◽  
Internal Efficiency

Purpose This study aims to focus on the factors triggering the adoption of corporate social responsibility (CSR) practices in a developing country context. The authors examine whether the adoption of CSR practices is triggered more by internal efficiency forces or external legitimation forces. As early adoptions of new systems are more likely driven by efficiency motives, the authors argue that CSR practices in developing countries at nascent stages are more likely adopted for efficiency rather than legitimation reasons. Design/methodology/approach A cross-sectional sampling design was used to collect data on the CSR practices of top listed Egyptian firms and multinationals operating in Egypt. The sample size is selected based on a purposive criterion sampling method. The final sample size consists of 110 companies operating in Egypt, which includes 54 local and 56 multinational companies. To examine the relationship between the explanatory variables of the study and CSR, multiple regression analysis was used. Findings Using data from 110 top listed local companies and multinational firms operating in Egypt, the results show a significant influence of internal corporate governance on CSR. Yet, the effects of external factors, specifically legal regulations and stakeholder pressures, on CSR are perceived to be insignificant. This finding contrasts studies from industrialized countries in the Western world where firms are often motivated to invest in CSR by external forces. Practical implications The results indicate that the adoption of CSR practices in large firms in Egypt is driven more by internal efficiency gains rather than external legitimacy pressures. The study thus presses the need for the effective enforcement of governmental laws and regulations to strengthen external institutional pressures and demands for socially responsible behavior. Social implications The results of the study indicate a perceived absence of stakeholder pressure for CSR practices. As such, raising awareness for corporate accountability amongst Egyptian consumers, employees and the general public would increase corporate incentives to improve their social and environmental performance. In addition, the concept of CSR must be cultivated in the organizational culture where high value is placed on corporate ethics and managerial values. Originality/value This study provides insights about the predominant drivers of CSR in Egypt on two different levels; the organizational and the business environment. Salient links between CSR, internal corporate governance mechanisms and external drivers such as external stakeholder and legal pressures are explored. The results of the study also emphasize the importance of internal corporate governance mechanisms and how it is perceived to be the main driver of CSR in Egypt as opposed to external influences.

Corporate governance and risk in cross-listed and Canadian only companies

2019 ◽  
Vol 57 (10) ◽  
pp. 2740-2757 ◽  
Author(s):  
Atreya Chakraborty ◽  
Lucia Gao ◽  
Shahbaz Sheikh
Keyword(s):  
Corporate Governance ◽  
Differential Effect ◽  
Composite Index ◽  
Governance Mechanism ◽  
Firm Risk ◽  
Governance Mechanisms ◽  
Content Type ◽  
Listed Firms ◽  
Corporate Governance Mechanisms ◽  
The Impact

Purpose The purpose of this paper is to investigate if there is a differential effect of corporate governance mechanisms on firm risk in Canadian companies cross-listed on US markets and Canadian companies not cross-listed (Canadian only companies). Design/methodology/approach Using a sample comprised of all Canadian companies included in the S&P/TSX Composite Index for the period 2009–2014, this study applies OLS and fixed effect regressions to investigate the effect of corporate governance mechanisms on firm risk. Interaction variables between governance mechanisms and the cross-listing status are used to examine if this effect is different for cross-listed firms. Findings Results indicate that the effect of board characteristics such as size, independence and proportion of female directors remains the same in both cross-listed and not cross-listed firms. CEO duality and insider equity ownership impact firm risk only in cross-listed companies, while institutional shareholdings, environmental, social and governance disclosure and family control affect firm risk in Canadian only firms. Overall, the empirical results indicate that some governance mechanisms impact firm risk only in firms that cross-list, while others are well-suited for Canadian only firms. Practical implications This study suggests that some of the differences between Canadian companies that cross-list and the Canadian companies that do not cross-list in US stock markets may change the impact of governance mechanisms on firm risk. Therefore, these findings have important implications for the design of governance mechanisms in Canadian firms. Since some of these differences are common to other economies, the conclusions can be extended to companies in other countries with similar governance structures. Originality/value Although previous studies have investigated the effect of governance mechanism on firm risk, this is the first paper that studies the differential effect for companies that cross-list in US markets. Specifically, differences in the ownership structure, firm control and in the regulatory and institutional environment, may explain this differential effect. Unlike most of the previous studies that focus on the effect of individual governance mechanisms, this study uses several mechanisms and their interactions at the same time.

Corporate governance and underpricing of small and medium enterprises IPOs in India

2020 ◽  
Vol 20 (3) ◽  
pp. 503-525
Author(s):  
Nischay Arora ◽  
Balwinder Singh
Keyword(s):  
Corporate Governance ◽  
Small And Medium Enterprises ◽  
Curvilinear Relationship ◽  
Board Structure ◽  
Governance Mechanisms ◽  
Content Type ◽  
Explanatory Variables ◽  
Corporate Governance Mechanisms ◽  
Medium Enterprises ◽  
The Impact

Purpose The purpose of the paper is to examine the impact of corporate governance mechanisms, i.e. board structure and ownership structure on the underpricing of small and medium enterprises (SME) IPOs in India. Design/methodology/approach Most of the extant empirical research studies have either pivoted on mainstream IPOs or SMEs IPOs in developed economies, but the present study examines 200 SME IPOs issued during Feb 2012 to April 2017. Multiple regressions have been used to examine the impact of the corporate governance mechanisms on raw return (RR). Furthermore, robustness of the results has been verified through the employment of market-adjusted excess return (MAER) as an additional proxy of underpricing. Findings The results highlight that board size, inverse of board committees, board independence, board age, board directorships positively, and top ten shareholding negatively influence RR. Further, direction of promoter ownership variable indicates curvilinear relationship with underpricing. Other explanatory variables used in model lack statistical validity. Similar results have been obtained when variables were regressed against MAER with related board members being additionally significant in model. Practical implications The findings suggest that Indian investors do take cues from board structure and ownership patterns for making investment decisions in small- and medium-sized firms. Further, the results are also helpful to top management in structuring their boards. Originality/value The present research enriches SME IPOs underpricing literature because the impact of corporate governance mechanisms on unadjusted returns is relatively under explored particularly within the context of small- and medium-sized firms.

The association between disclosure of forward-looking information and corporate governance mechanisms

2014 ◽  
Vol 29 (7) ◽  
pp. 578-595 ◽  
Author(s):  
Basil Al-Najjar ◽  
Suzan Abed
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Annual Reports ◽  
Governance Mechanisms ◽  
Cross Sectional ◽  
Content Type ◽  
Corporate Governance Mechanisms ◽  
Computerized Content Analysis ◽  
Forward Looking

Purpose – This paper aims to witness the importance of corporate governance mechanisms and investigates the relationship between the quality of disclosure of forward-looking information in the narrative sections of annual reports and the governance mechanisms for non-financial UK companies. Design/methodology/approach – Computerized content analysis using QSR NVivo 8 is used to measure the extent of forward-looking information in the narratives of the annual reports for 238 companies listed in the London Stock Exchange. Cross-sectional regression analysis is used to examine the impact of the corporate governance mechanisms on forward-looking information. Findings – The results show that board size and the independence of the audit committee are associated with the level of voluntary disclosure of forward-looking information. Research limitations/implication – One limitation of this study is that in controls for the effect of the financial crisis period, by selecting a representative year for a five-year period, 2006. The authors argument in using this year is based on the fact that the main variables of interest do not vary significantly with time, the cross-sectional analysis of the selected period will provide a fair view of the last five year-period. Practical implications – The authors report the importance of some governance practices in the UK, such as the role of the board members as well as the importance of audit committee independence. Originality/value – This paper contributes to the literature by using computerized content analysis to examine the relation between corporate governance mechanism and disclosure quality of forward-looking information using sample of companies before financial crisis period. The authors also examine governance mechanisms that are under-researched in the field of forward-looking disclosure.

The impact of external and internal corporate governance mechanisms on agency costs

2019 ◽  
Vol 19 (1) ◽  
pp. 1-22 ◽  
Author(s):  
Jonas Schäuble
Keyword(s):  
Corporate Governance ◽  
Agency Costs ◽  
Governance Mechanisms ◽  
Content Type ◽  
Frontier Analysis ◽  
Audit Firm ◽  
Audit Market ◽  
Corporate Governance Mechanisms ◽  
The Us ◽  
The Impact

Purpose The purpose of this paper is to investigate the impact of external and internal corporate governance mechanisms on agency costs. Design/methodology/approach The author uses data from German firms that were listed in the regulated market of the Frankfurt Stock exchange during 2006-2011. Agency costs were measured using stochastic frontier analysis, a relatively new approach to estimate agency costs. The regression analysis is applied to test the model. Findings The results indicate that an industry specialized audit firm, the presence of a large audit firm, abnormal audit fees, management ownership and variable management compensation are significantly negatively associated with the level of a firms’ agency costs. In contrast, this seems not to be true for the existence of an audit committee for which the results of the paper document a non-significant association. Originality/value The paper contributes to the existing literature in several ways. First, the research design is to the best of the authors’ knowledge the first that investigates the influence of different corporate governance mechanisms on the level of agency costs. Second, previous studies are mainly focused on the US audit market. This focus on the US audit market leaves uncertainties regarding the direction and magnitude of the empirical relationship in the European and German environmental context. Finally, the paper provides initial empirical evidence for a sample of German IFRS listed companies (IFRS – International Financial Reporting Standards).

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