A hybrid of state regulation and self-regulation for remuneration governance in Australia

2016 ◽  
Vol 16 (3) ◽  
pp. 539-563 ◽  
Author(s):  
Zahid Riaz
Keyword(s):  
Corporate Governance ◽  
Social Practice ◽  
Self Regulation ◽  
Chief Executive ◽  
Holistic Approach ◽  
State Regulation ◽  
Content Type ◽  
Executive Remuneration ◽  
The Government ◽  
The Impact

Purpose This paper aims to explore an alternative approach to regulation for addressing governance problems relating to director and executive remuneration in publicly listed firms. The author investigates the development of hybrid regulatory framework, composed of state regulation and self-regulation, for remuneration governance in Australia. Design/methodology/approach The synthesis of constructs borrowed from agency and institutional theories and its contextual analysis examines the effectiveness of formal (state regulation) and informal (self-regulation) institutions for the development of a hybrid of regulation. Thereafter, the author examines the impact of hybrid regulation on remuneration disclosure behavior in Australia. Findings The author finds that improvement in disclosure is primarily driven by the establishment of remuneration committees and separate role of chief executive officer (CEO) and chairperson but weakened by the presence of CEO at remuneration committee and presence of remuneration consultant. Originality/value Global crises have called for greater transparency and protection of investors through state regulation alone. However, corporate governance, being a social practice that is shaped by diverse interests, calls for a holistic approach. A useful contribution of this study is that through an in-depth examination into the stages and actors of the government interventions involving the balancing of tension between conflicting forces, it provides insights for developing an effective regulatory hybrid which has greater acceptance for corporate governance. In conclusion, it implies the significance of priming the social arena through active engagement of diverse market forces prior to introducing state regulation.

scholarly journals Too much reciprocity?

2020 ◽  
Vol 14 (2) ◽  
pp. 473-491
Author(s):  
Zhe Sun ◽  
Qi Ai
Keyword(s):  
Social Exchange ◽  
Social Exchange Theory ◽  
Emerging Market ◽  
Chief Executive ◽  
Political Connections ◽  
Political Connection ◽  
Content Type ◽  
Chinese Multinationals ◽  
The Government ◽  
The Impact

Purpose Using the evidence of Chinese outbound mergers and acquisitions (M&As) enacted between 2006 and 2014, this study aims to investigate the role played by home political connections on the cost implications of Chinese multinationals. It also examines whether home political connections – at different levels and of different configurations – impact the operational cost of Chinese multinationals. Design/methodology/approach The data were analysed using a multivariate regression model. To examine their heterogeneous effect on Chinese multinationals, the political connection data were further split into higher and lower level political connections and in chief executive officer (CEO) and chairperson political connections. Findings This study implies the negative effect of home political connections on the internationalisation of Chinese multinationals. At the same time, the impact of lower-level political connections is stronger than that of their higher-level counterparts. Moreover, CEO political connections have a stronger effect on the operational costs of Chinese multinationals than their Chairperson equivalents. Originality/value By unravelling the “black box” of Chinese internationalisation from the social exchange perspective, through the informal political connection networking ties between Chinese firms and the government, this study advances emerging market multinational theory, contributes to the understanding of the heterogeneous nature of political connections and sheds new light on social exchange theory from the perspective of the emerging phenomenon of Chinese internationalisation.

State and self-regulation for better governance: an implication of collibration

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Irfan Saleem ◽  
Eric Lamarque ◽  
Rashedul Hasan
Keyword(s):  
Significant Role ◽  
Self Regulation ◽  
Seemingly Unrelated Regression ◽  
Unique Contribution ◽  
Board Size ◽  
Substantial Impact ◽  
Content Type ◽  
Executive Remuneration ◽  
The Impact ◽  
Governance Disclosure

Purpose The purpose of this study is to study the evolution of French corporate governance law in light of collibration approach and bring statistical evidence from French Companies Executive Compensation practices. Design/methodology/approach The study has used mixed methods. In the first part, the authors analyzed the French laws in the light of collibration. In the second part of the study, the authors used unbalanced panel data to test the hypotheses related to executive remuneration based on the theoretical underpinning of collibration. Data for 173 firms listed in the Euronext Paris Index is collected from the Bloomberg database. Seemingly unrelated regression (SUR) analysis is performed to investigate the impact of collibration on the governance disclosure of French-listed firms. Findings SUR results indicate that board size plays a significant role in the governance disclosure before collibration. However, the collibration model is found to be more effective in ensuring the desired level of governance disclosure. Under the collibration approach, executive remuneration, frequency of board meetings, executive directors in the compensation committee and independent directors play a significant role in governance disclosure. Board size, however, does not have a substantial impact on governance disclosure after the adoption of collibration mechanism. Research limitations/implications Results provided by this study can allow regulators to improve corporate disclosure regime in France, which could play a vital role in safeguarding the interest of stakeholder. Originality/value The authors study the impact of collibration on the extent of governance disclosure in the context of France. Empirical evidence on the implication of collibration as governance mechanisms to enhance stakeholder confidence is rare and allows this study to make a unique contribution to the governance literature.

Board of directors’ effectiveness and monitoring costs

2019 ◽  
Vol 35 (4) ◽  
pp. 477-497
Author(s):  
Waddah Kamal Hassan Omer ◽  
Adel Ali Al-Qadasi
Keyword(s):  
Corporate Governance ◽  
Boards Of Directors ◽  
Internal Audit ◽  
Audit Fees ◽  
Least Square ◽  
Content Type ◽  
Executive Remuneration ◽  
Sensitivity Tests ◽  
Monitoring Costs ◽  
The Impact

Purpose Responding to the call for research into the behavior of family companies to provide better understanding of corporate governance, this paper aims to examine the impact of boards’ effectiveness on the investment in monitoring costs (i.e. audit fees, internal audit function budget and executive remuneration) and how this relationship is moderated by family control. Design/methodology/approach A sample of 2,176 firm-year observations of Malaysian listed companies is used. The ordinary least square regression is used to examine the associations. Additional sensitivity tests are performed. Findings The study finds that there is no relationship between boards’ effectiveness and the demand for monitoring costs for the full sample. However, the findings of sub-samples (family and non-family companies) indicate that a family company with an effective board is less likely to invest more in monitoring, suggesting that the complementary association between the board’s effectiveness and investment in monitoring is a more dominant relationship than the substitution relationship in non-family companies. These findings show that the boards of directors of Malaysian family companies perform a deficient monitoring role, where the presence of family controlling shareholders in management may reduce their independence and efficiency in performing their monitoring role. The findings remain robust after performing additional sensitivity tests. Originality/value This paper contributes to the literature on corporate governance in a unique setting (family companies), where conflict of interest is created between controlling insiders and minority shareholders (Type II agency problem). It provides insight for Malaysian policymakers in assessing the issue of expropriation in family companies and enhancing the policy related to its boards.

The effects of ownership structure on likelihood of financial distress: an empirical evidence

2017 ◽  
Vol 17 (4) ◽  
pp. 589-612 ◽  
Author(s):  
Shahab Udin ◽  
Muhammad Arshad Khan ◽  
Attiya Yasmin Javid
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Financial Distress ◽  
Generalized Method Of Moments ◽  
The Body ◽  
Content Type ◽  
The Government ◽  
The Impact

Purpose The purpose of this paper is to explore the role of corporate governance proxies by ownership structure on the likelihood of firms’ financial distress for a sample of 146 Pakistani public-limited companies listed at the Karachi Stock Exchange over the period of 2003-2012. Design/methodology/approach The dynamic generalized method of moments (GMM) estimator and panel logistic regression (PLR) are used to determine the impact of corporate governance on the financial distress. The ownership structure is used as a determinant of corporate governance, while the Altman Z-score is utilized as an indicator of financial distress, as it measures financial distress inversely. The smaller the values of the Z-score, the higher will be the risk of financial distress. Findings The authors find insignificant impact of ownership structure on firms’ likelihood of financial distress based on the dynamic GMM method. However, the PLR results indicate that foreign shareholdings have a significant negative association with firms’ likelihood of financial distress, in the case of Pakistan. An evidence of a negative and insignificant relationship between institutional ownership and financial distress was observed, which indicates the passive role of institutional investors in Pakistan. The results also reveal a positive and significant relationship between insider’s ownership and likelihood of financial distress. This finding is consistent with the entrenchment hypothesis which predicts that insiders are more aligned with their self-interest than outside shareholders’ interest when their shareholding increases in the business. Furthermore, the results also reveal insignificant association between government shareholdings and the probability of financial distress. The reason could be the social welfare objective of the government entities rather than profit maximization. Practical implications The findings of this study provide more insight to corporate managers and investors about the association between the quality of corporate governance and the degree of financial distress, with respect to Pakistani firms. Furthermore, this study contributes to the existing literature by adding new evidence from developing countries like Pakistan which are helpful for regulatory bodies and policymakers in the formulation of long-term corporate governance strategies to manage the financial distress. It is well established that strengthening the quality of corporate governance practices enhances the efficiency of capital markets and reduces the probability of financial distress. Originality/value The study extends the body of existing literature on corporate governance and the likelihood of financial distress with reference to Pakistan. The results suggest that policymakers may pay special attention to the quality of corporate governance, specifically ownership structure, while predicting corporate financial distress.

Board characteristics and microfinance institutions’ performance

2018 ◽  
Vol 8 (3) ◽  
pp. 369-386 ◽  
Author(s):  
Usman Shettima ◽  
Nazam Dzolkarnaini
Keyword(s):  
Corporate Governance ◽  
Information Exchange ◽  
Agency Cost ◽  
Microfinance Institutions ◽  
Board Size ◽  
Content Type ◽  
Board Characteristics ◽  
The Government ◽  
The Impact ◽  
Specific Country

Purpose The purpose of this paper is to examine the effect of board characteristics on MFIs performance in Nigeria. A specific country study is warranted given the results from pooled cross-country studies may be biased owing to a failure to control for country differences. It is also particularly challenging to generalize the outcome of these results into a specific country given that many factors about MFIs, ranging from the nature of governance, legal status, size and prudential regulations, are not similar across countries. Design/methodology/approach The relationship between board characteristics and microfinance banks performance in Nigeria is tested using a sample of 120 firm-year observations covering 30 MFIs in the periods from 2010 to 2013. The study extracted all microfinance-level data from the Microfinance Information Exchange database. Findings The authors document a positive and significant relationship between board size and MFIs performance. The authors also find negative relation between female directors and MFIs performance, but not significant. The results suggest that larger board size indicates good corporate governance practice, which leads to reduced agency cost. Research limitations/implications This study sheds new lights on the Nigerian MFIs’ board room dynamic. As the government is increasingly contemplating on the board structure and corporate governance policies, the study offers useful and timely empirical guidance to the Nigerian regulators. Originality/value Given the important role of microfinance industry in Nigeria, this is the first study of its kind analyzing the impact of board characteristics on microfinance performance among Nigerian MFIs.

scholarly journals Corporate governance, analyst following and firm value

2014 ◽  
Vol 14 (4) ◽  
pp. 453-466 ◽  
Author(s):  
Sulaiman Mouselli ◽  
Khaled Hussainey
Keyword(s):  
Corporate Governance ◽  
Firm Value ◽  
Ceo Compensation ◽  
Stock Exchange ◽  
Financial Analysts ◽  
Chief Executive ◽  
Analyst Following ◽  
Content Type ◽  
Large Sample ◽  
The Impact

Purpose – The purpose of this paper is to examine the impact of a firm’s corporate governance (CG) mechanisms on the number of financial analysts following UK firms. The potential effect of the number of analysts following firms in the UK on the association between CG mechanisms and firm value was also examined. Design/methodology/approach – Multiple regression models were used to examine the association between CG, analyst coverage and firm value for a large sample of UK firms listed in London Stock Exchange with financial year ends between January 2003 and December 2008. Findings – It was found that the aggregate level of CG quality is positively associated with the number of analysts following UK firms. In addition, the compensation score is the main component that affects the number of analysts following UK firms. The results suggest that financial analysts are particularly concerned with how much compensation executives and directors receive. This is consistent with Jensen and Meckling (1976) who argue that chief executive officer (CEO) compensation can be used as effective mechanisms for mitigating agency costs. Hence, higher levels of CEO compensation attract more financial analysts to follow the firm. Surprisingly, when the joint effect of both CG quality and the number of analysts following on firm value was examined, no significant effect was found for both variables on firm value. Originality/value – This paper contributes to prior research by providing the first empirical evidence on the impact of disaggregated levels of CG on analyst following and firm value for a large sample of UK firms.

Corporate governance mechanism and the ratings of Islamic and conventional mutual funds: Evidence from Pakistan

2020 ◽  
Vol 13 (5) ◽  
pp. 769-786
Author(s):  
Farrukh Naveed ◽  
Muhammad Kashif Khurshid ◽  
Shahnawaz Saqib
Keyword(s):  
Corporate Governance ◽  
Mutual Funds ◽  
Asset Management ◽  
Gender Diversity ◽  
Chief Executive ◽  
Governance Mechanism ◽  
Probit Regression ◽  
Content Type ◽  
Dynamic Panel Model ◽  
The Impact

Purpose This study aims to analyze the impact of different governance characteristics on the ratings of both Islamic and conventional mutual funds. Design/methodology/approach This study used panel data ordered probit regression model. Furthermore, to capture the mutual funds rating persistence effect and address the issue of endogeneity dynamic panel model is used and the results are estimated using the generalized method of the moment (GMM) technique. Findings The results indicated that amongst the corporate governance characteristics, board size, the board independence, directors and institutional ownership, and overall governance quality positively affect the ratings of both Islamic and conventional funds. However, chief executive officer (CEO) duality and board gender diversity did not show a significant impact on the ratings of these funds. Practical implications The current research provides input to the asset management firms as to how they can increase the fund ratings by implementing strong governance practises. Furthermore, the study also provides input to the rating agencies to account for governance characteristics along with financial indicators, when issuing the rating of any fund. Originality/value To the best of the author’s knowledge, this study is the first attempt to analyze the impact of corporate governance characteristics on the rating of both Islamic and conventional mutual funds and hence provides a significant contribution to the literature.

Corporate governance and firm performance: does sovereign rating matter?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Duterval Jesuka ◽  
Fernanda Maciel Peixoto
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Latin American ◽  
Audit Committee ◽  
Chief Executive ◽  
Random Coefficients ◽  
Multilevel Regression ◽  
Latin American Studies ◽  
Content Type ◽  
The Impact

Purpose This paper aims to investigate the impact of sovereign rating and corporate governance on performance of Latin American companies between 2004 and 2018. Design/methodology/approach This study performed a multilevel regression with fixed and random coefficients for 823 companies and verified the impacts of country, firm and time levels on the performance variation. The study alternated return on assets and Tobin’ Q as dependent variables and measured governance using the following variables: board size, chief executive officer/chairman duality, CEO/board member duality, dummy for the chairman as a former CEO, audit committee, independence and expertise of the audit committee. Findings Latin American companies performed better when their respective countries have a better sovereign rating and when they adopt better board of directors and audit committee mechanisms. Sovereign rating assumes distinct roles depending on the presence or absence of governance variables. Rating and governance may be substitute mechanisms to protect investors. Originality/value To the best of the authors’ knowledge, this paper is the first to investigate the impacts of sovereign rating on firm performance in the Latin American scenario. The use of governance metrics – for example, the audit committee expertise and the dummy for chairman as a former CEO – is innovative in Latin American studies.

Corporate governance and financial performance of banks in Ghana: the moderating role of ownership structure

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Christopher Boachie
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Ownership Structure ◽  
Positive Impact ◽  
Chief Executive ◽  
Foreign Ownership ◽  
African Countries ◽  
Content Type ◽  
The Government ◽  
Practical Implications

PurposeThe purpose of this paper is to investigate the moderating effect of ownership on the links between corporate governance and financial performance in the context of Ghanaian banks.Design/methodology/approachThe current study used a sample of 23 banks and the multiple regression method to analyze a panel dataset of 414 from banks over an 18-year period.FindingsThe findings revealed that audit independence, chief executive officer (CEO) duality, non-executive directors and banks size have a positive impact on performance. The findings also revealed that foreign ownership has an interacting effect between corporate governance and profitability.Practical implicationsThe practical implications of the current study demonstrated that good corporate governance creates value and must be invigorated for the interest of all stakeholders. Foreign ownership has an interacting effect between corporate governance and performance. Policymakers should formulate policies for attracting foreign investors.Originality/valueInterestingly, this study is the first of its kind that exclusively chose ownership structure to interact between corporate governance and bank performance in Ghanaian perspective. Such new insights on this relationship provide useful information to the government, academics, policymakers and other stakeholders. The growing economies of African countries, and the inadequate governance–performance literature in African context, have created a demand to appreciate the governance parameters in these countries and its influence on firm's performance.

Corporate governance, CEO turnover and say on pay votes

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ayishat Omar ◽  
Alex P. Tang ◽  
Yu Cong
Keyword(s):  
Corporate Governance ◽  
Chief Executive ◽  
Ceo Turnover ◽  
Content Type ◽  
Compensation Committee ◽  
Say On Pay ◽  
The Usa ◽  
The Impact ◽  
Female Member

Purpose The purpose of this study is to investigate how compensation committee structure or characteristic impacts say on pay (SOP) voting dissent and the impact of SOP dissent on chief executive officer (CEO) turnover. Design/methodology/approach The authors use corporate governance and SOP data to test the relationships amongst variables. Additional analysis is performed using one-to-one propensity-score matched samples. Findings The authors find that firm-years with at least a female member present on the compensation committee are associated with lower SOP dissent. The authors find mixed results of the impact of SOP dissent on CEO turnover. Practical implications This paper suggests that diversity on the compensation committee, particularly the presence of at least a female member on the committee, serves as an important determinant of SOP voting outcome in the USA. The paper provides policymakers and practitioners with insights into factors influencing SOP voting outcomes and implications of SOP dissent for firms. Originality/value The findings of this paper contribute to the corporate governance literature by enhancing the understanding of the role of the compensation committee as it relates to SOP dissent and effect of SOP dissent on CEO turnover.

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