scholarly journals How corporate governance and ownership affect banks’ risk-taking in the MENA countries?

2019 ◽  
Vol 29 (2) ◽  
pp. 182-198
Author(s):  
Luis Otero ◽  
Rafat Alaraj ◽  
Ruben Lado-Sestayo
Keyword(s):  
Corporate Governance ◽  
Risk Taking ◽  
Good Governance ◽  
Dynamic Panel Data ◽  
Set Covering ◽  
North African ◽  
Data Set ◽  
Content Type ◽  
Mena Countries ◽  
The Relationship

Purpose The purpose of this paper is to explore the relationship between corporate governance and risk-taking behaviour of banks operating in the Middle East and North African (MENA) countries. Design/methodology/approach In doing so, the authors use a data set covering 165 banks located in 13 MENA countries over the period 2005–2012 and apply dynamic panel data methodology. Findings The results show that good governance acting in the interests of shareholders could lead to excessive risk taking; in this sense, a conflict of interest between the stakeholders, interested in the solvency of the financial system, and shareholders, trying to maximise their benefit, may occur. The greater risk can be reinforced by the governance of the country and a strong macro governance framework can incentivise a higher risk exposure in banks, showing the influence of bank regulation and law enforcement on the risks taken by banks. Originality/value To the best of the authors’ knowledge, this is the first paper showing that corporate governance is relevant for explaining risk taking at the country and bank levels in MENA countries.

Can BRICS and ASEAN-5 emerging economies benefit from bank diversification?

2019 ◽  
Vol 27 (1) ◽  
pp. 43-69 ◽  
Author(s):  
Syed Moudud-Ul-Huq
Keyword(s):  
Risk Taking ◽  
Generalized Method Of Moments ◽  
The Other ◽  
Set Covering ◽  
Diversification Strategy ◽  
Data Set ◽  
Content Type ◽  
Diversification Benefit ◽  
The Impact ◽  
The Relationship

Purpose This paper aims to empirically investigate the impact of bank diversification on performance and risk-taking behavior. The analysis uses an unbalanced panel data set covering the period between 2007 and 2015 for a total of 1,397 banks from ASEAN-5 and BRICS economies. Design/methodology/approach Dynamic panel generalized method of moments (GMM) has been used primarily to examine the relationship between bank diversification on performance and risk-taking and later, validate the core results by incorporating two-stage least squares (2SLS). Findings Similar to the results of previous studies based on the developed economy, this study also confirms the hypothesis of the portfolio diversification. The key robust result is that the benefits from revenue and assets diversification are heterogeneous and the BRICS banks achieve higher benefit from using both diversification strategies. On the other hand, ASEAN-5 banks fail to show the significant advantage from assets diversification. Among the diverse sources of income, interest is not a major determinant of efficiency and bank’s stability, while ASEAN-5 banks should foster commission and others income as mechanisms for diversification benefit in the region. Originality/value A few studies are available in the current literature which examines the impact of revenue and assets diversification on either bank performance or risk-taking in the developed economy’s context. However, very few studies are found that examine the relationship between bank diversification, performance and risk-taking together. Moreover, to the best of the author’s knowledge, there is a dearth of literature on this topic that built on the comparative analysis between two regions, i.e. ASEAN-5 and BRICS. As a result, the empirical results of this research provide useful information to the stakeholders so that they can enhance bank diversification strategy and implement them successfully by considering the other factors.

Corporate governance, globalization and firm performance in emerging economies

2018 ◽  
Vol 67 (8) ◽  
pp. 1310-1333 ◽  
Author(s):  
Neha Saini ◽  
Monica Singhania
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Panel Data ◽  
Foreign Capital ◽  
Good Governance ◽  
Foreign Ownership ◽  
Foreign Firms ◽  
Content Type ◽  
Governance Practices ◽  
The Relationship

PurposeThe purpose of this paper is to examine relationship between corporate governance (CG) and firm performance for a set of 255 foreign-funded firms in the form of foreign direct investment (FDI) and private equity (PE). The authors employ a wide range of CG measures including board size, meetings, board gender and foreign ownership which are used as the proxy of globalisation and control variables like firm age, leverage, firm size and capital expenditure to arrive at a conclusion.Design/methodology/approachPanel data set of 255 (187 companies funded by foreign capital in the form of FDI, and 68 companies having foreign capital in the form PE) companies listed on Bombay Stock Exchange, for the period of eight years (2008–2015) are analysed by using static (fixed and random effects) and dynamic (generalised method of moments (GMM)) panel data specifications to examine the relationship among CG, globalisation and firm performance.FindingsThe empirical results of static model indicate the relationship between CG and performance of foreign firms, which are not very strong in India. This is due to the fact that most of the firms are not following the guidelines and regulations strictly in the initial period of sample years. Diversity in board is found as an important variable in accessing firm performance. And the authors also found that foreign firms are very particular about the implementation of CG norms. The results of GMM model highlight the interaction term of foreign ownership with governance indicators. CG is having a positive and significant impact over performance, inferring that higher foreign ownership (in the form of FDI and PE) in firm leading to positive effect on profitability.Practical implicationsThe investor’s preference of financing a unit is guided by the performance of a firm. Investors are more inclined towards high-performing firms, and hence higher profitability leads to higher inflow of capital. The result indicates that higher accounting and market performance may be achieved by good governance practices, in turn, leading to reduced agency costs. Countries with high governance scores attract more of foreign capital. Similar to the best governed countries, the companies having good governance practices attract more foreign inflows in the form of capital.Originality/valueWhile previous literature considered a single measurement framework in the form of a CG index, the authors tried to incorporate a range of CG indicators to study the effect of globalisation and CG on firm performance. The authors segregated foreign-owned funds into two parts, especially FDI and PE. This paper examined heterogeneity in the form of FDI-funded and PE-funded firms, as no prior literature is available which has evaluated different sets of foreign funds simultaneously on CG.

Income and healthcare financing system in the United States: an asymmetric analysis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mehdi Barati ◽  
Hadiseh Fariditavana
Keyword(s):  
The United States ◽  
Set Covering ◽  
Healthcare Financing ◽  
Financing System ◽  
Data Set ◽  
Content Type ◽  
Funding Sources ◽  
Distributed Lag ◽  
The Impact ◽  
The Relationship

PurposeThe purpose of this study is to first assess how the US healthcare financing system is influenced by income variation. Then, it examines whether or not the impact of income variation is asymmetric.Design/methodology/approachFor the analyses of this paper, the autoregressive distributed lag (ARDL) model is implemented to a data set covering the period from 1960 to 2018.FindingsThe results provide evidence that major funding sources of aggregate healthcare expenditure (HCE) respond differently to changes in income. The results also imply that the effect of income is not always symmetric.Originality/valueMany studies have attempted to identify the relationship between income and HCE. A common feature of past studies is that they have only focused on aggregate HCE, while one might be interested in knowing how major funders of aggregate HCE would be affected by changes in income. Another common feature of past studies is that they have assumed that the relationship between income and HCE is symmetric.

The predictive value of strategic orientation for ESG performance over time

2020 ◽  
Vol 20 (1) ◽  
pp. 123-142 ◽  
Author(s):  
Nicolas Chevrollier ◽  
Jianhong Zhang ◽  
Thijs van Leeuwen ◽  
André Nijhof
Keyword(s):  
Business Strategy ◽  
Fixed Effect Model ◽  
Strategic Orientation ◽  
Set Covering ◽  
Data Set ◽  
Content Type ◽  
Publicly Traded Companies ◽  
Strategic Orientations ◽  
The Relationship ◽  
Over Time

Purpose Despite the scholarly attention for the integration of sustainability within business strategy and processes, little is known about how strategic orientations of companies influence this integration. Drawing on stewardship theory, this paper aims to analyse the influence of strategic orientation of companies on their environmental, social and corporate governance (ESG) performance and the moderating effect of three different political models of economy (Rhine, British and American). Design/methodology/approach This paper creates a measurement for strategic orientations by using a coding scheme with a five-category evaluation matrix. The main empirical analysis is done by a fixed-effect model with a panel data set covering 179 publicly traded companies over the 2009-2016 period. Findings The conclusions of this paper present that – consistent over time – a stronger orientation on stewardship positively associates with higher ESG performance. Additionally, the political model of economy significantly alters the relationship indicating the effect of strategic orientation on ESG performance. The relationship is significantly stronger in the Rhine model and significantly weaker in the British model, when both compared to the American model. Originality/value The implications of this paper are vital to understanding corporate strategic orientation and its relationship to actual corporate behaviour and long-term performance. Implementing the elements of focus, motivation, commitment, support and communication linked to a stewardship orientation is fundamental to achieve higher levels of sustainability performance.

The impact of Shari’ah and corporate governance on Islamic banks performance: evidence from Asia

2020 ◽  
Vol 13 (3) ◽  
pp. 483-501
Author(s):  
Imran Khan ◽  
Syeda Nitasha Zahid
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Good Governance ◽  
Islamic Banks ◽  
Corporate Boards ◽  
Sampled Data ◽  
Data Set ◽  
Content Type ◽  
Advisory Boards ◽  
The Impact

Purpose This study aims to investigate the impact of Shari’ah and corporate governance on Islamic banks performance in Asia. Design/methodology/approach The study uses hand collected data set on Shari’ah and corporate governance variables of 79 Islamic banks of 19 countries of Asia, for the period of 2011-2016. Augmented Mollah et al. (2017) composite corporate governance index into Islamic corporate governance (ICG) index by incorporate Shari’ah board’s (SBs) attributes. Two types of statistical analysis were performed; descriptive statistics, sample t-test and panel random effects regression. The analysis was further sub-sampled by considering the supervisory vs advisory, GCC vs non-GCC and large vs small effects of Shari’ah and corporate boards on Islamic banks performance. Findings The results of the baseline model reveal that Shari’ah governance-related variables are more influential in determining the financial performance of the Islamic banks. The sub-sampled data findings illustrated some interesting facts. Shari’ah supervisory vs advisory boards regression results show that the ICG index was found significant in both the models. However, when SBs are weak the general board dominates in determining the performance. GCC vs non-GCC results show a relatively good governance in non-GCC countries. While, in case of large vs small Islamic banks, banks having high total assets demonstrates sound governance characteristics. Research limitations/implications Independent, large and educated SB can play a significant role in removing the hurdles facing the Islamic banking industry and can also enhance stakeholders’ value. Originality/value This study enriches the understanding on Shari’ah governance, corporate governance and financial performance of Islamic banks in Asia.

scholarly journals Macroeconomic uncertainty, corporate governance and corporate capital structure

2018 ◽  
Vol 14 (3) ◽  
pp. 301-321 ◽  
Author(s):  
Yee Peng Chow ◽  
Junaina Muhammad ◽  
A.N. Bany-Ariffin ◽  
Fan Fah Cheng
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Good Governance ◽  
Policy Makers ◽  
Content Type ◽  
Corporate Capital ◽  
Macroeconomic Uncertainty ◽  
Corporate Capital Structure ◽  
Governance Quality ◽  
The Relationship

PurposeThe purpose of this paper is to examine how corporate governance moderates the relationship between macroeconomic uncertainty and corporate capital structure.Design/methodology/approachThis paper employs the two-step system generalized method of moments regression, considering a sample of 907 listed non-financial firms from seven Asia Pacific countries during the period 2004-2014.FindingsThis study finds that macroeconomic uncertainty has a significant negative impact on the capital structure decisions of firms. The results also reveal that the overall effect of macroeconomic uncertainty on capital structure among firms with better governance quality is significantly negative. The evidence suggests that corporate governance acts as an effective mechanism to curb the usage of leverage during times of high volatility. Further analysis shows that board independence, the separation between the roles of CEO and chairman of the board and blockholders’ ownership are effective governance mechanisms, whereas similar observations do not hold for board size and institutional ownership.Research limitations/implicationsThe findings of this study may be useful to policy makers to formulate appropriate policies to mitigate the adverse effects caused by macroeconomic uncertainty. This is important because macroeconomic uncertainty may have potential destabilizing effects on a country’s or region’s development by jeopardizing the firms’ ability to formulate sound investment, production and financing decisions. Additionally, the results suggest that good governance quality can act as a check and balance to ensure that firms use less leverage when they are facing volatility in the macroeconomic environment. These findings could help to reinforce the importance of good governance among policy makers of a country as well as managers of firms.Originality/valueThe authors make the first attempt to examine the moderating effect of corporate governance on the relationship between macroeconomic uncertainty and corporate capital structure.

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

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

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

Corporate governance structure and capital adequacy: implications to bank risk taking

2017 ◽  
Vol 13 (2) ◽  
pp. 165-185 ◽  
Author(s):  
Heba Abou-El-Sood
Keyword(s):  
Corporate Governance ◽  
Risk Taking ◽  
Good Governance ◽  
Balance Sheet ◽  
Governance Structure ◽  
Capital Adequacy ◽  
Outside Directors ◽  
Content Type ◽  
Bank Ownership ◽  
Capital Ratios

Purpose The purpose of this paper is to show the importance of policy discussions on the role of governance in limiting excessive risk-taking at times of turmoil. Design/methodology/approach Corporate governance measures are regressed on measures of risk taking using a sample of US bank holding companies (BHCs) during 2002-2014. Findings Results show that BHCs with more concentrated shareholders, more managerial ownership, smaller boards, and less outside directors undertake less risky investments with respect to total assets, loans, and off-balance-sheet items. Capital adequacy effect is overpowering pushing for more risky positions. Finally, banks with good governance push for less risky positions, even with larger capital ratios, during the financial crisis period relative to the precrisis boom. Practical implications This paper extends research on the association between bank ownership structure and risk taking. It adds to prior research by examining a key feature of banks, namely, their bank-specific capital adequacy. The relevance of this study stems from recent initiatives undertaken by the Basel Committee, the Group of Thirty (G30), and bank regulators to address deficient corporate governance structures that led to bank breakdowns. Originality/value One of the innovations of this paper is the use of risk-weighted measures to proxy for risk taking in banks, using risk weights used by bank regulators to adjust for operational risk, credit risk, and market risk.

The nexus between corporate governance and records management in private and public hospitals in Ghana

2014 ◽  
Vol 24 (1) ◽  
pp. 32-55 ◽  
Author(s):  
Monica Mensah ◽  
Musah Adams
Keyword(s):  
Corporate Governance ◽  
Information Security ◽  
Good Governance ◽  
Public Hospitals ◽  
Records Management ◽  
Governance System ◽  
Content Type ◽  
Significant Relationships ◽  
Private And Public ◽  
The Relationship

Purpose – The purpose of this paper is to examine the relationship between corporate governance and records management in private and public hospitals in Ghana, with the aim of finding out how the effective and efficient management of a hospital's records can facilitate its governance obligations, which includes but not limited to accountability, transparency and information security. Design/methodology/approach – The study was informed by the triangulation of the Stakeholders' and Records Continuum Theories. Data used for analysis were drawn from 90 respondents from four hospitals with the use of questionnaires and personal observations. A total of 82 questionaries' were returned in their complete forms and used for the analysis. Linear regressions were performed to establish the relationship between corporate governance and records management. Findings – The key finding of the study was that, the hospitals generated different types of records in the course of their business activities but existing records management standards, practices and systems were inadequate and undermined the contribution records could make in support of the governance function in the hospitals. Results of a linear regression also revealed that positive and significant relationships exist between corporate governance and records management. Furthermore, all variables used as predictors of corporate governance had positive and significant relationships with records management except information security. Research limitations/implications – Participants were from four hospitals in only one Region in Ghana, and as such the results could not be generalised to the whole country. Practical implications – The study has established the recognition of the essential but often ignored conditions necessary for an effective and efficient governance system for hospitals. Originality/value – The study has demonstrated that the effective management of hospital records is a critical factor in providing capacity for hospitals' efficiency, accountability, transparency, information security and indeed good governance. This research has also contributed towards bridging the theoretical gap identified in the study.

The myth of the “good governance code”: an analysis of the relationship between ownership structure and the comply-or-explain disclosure

2018 ◽  
Vol 18 (5) ◽  
pp. 809-838 ◽  
Author(s):  
Luigi Lepore ◽  
Sabrina Pisano ◽  
Assunta Di Vaio ◽  
Federico Alvino
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Good Governance ◽  
Ordinary Least Squares ◽  
Ownership Concentration ◽  
Equal Distribution ◽  
Content Type ◽  
Corporate Governance Code ◽  
The Relationship ◽  
Comply Or Explain

PurposeThe purpose of this paper is twofold: first, to assess the degree of disclosure about compliance with corporate governance code and the explanations provided by Italian firms and second, to analyze the relationships between this disclosure and different variables of ownership structure.Design/methodology/approachThe sample was composed of 75 non-financial companies listed in Italy in 2016. Content analysis of the corporate governance statement and ordinary least squares (OLS) multiple regression models were used to test the hypotheses.FindingsCompanies tended to comply with the corporate governance code and to disclose this information, but when they decided to not comply, they did not provide adequate explanations. Findings revealed a negative relation between ownership concentration and the disclosure analyzed. Results also highlight that a more equal distribution of shares among larger shareholders is beneficial for disclosure. Moreover, the presence of a dominant financial shareholder at a high level of ownership concentration creates inefficiency of the degree of adherence to the comply-or-explain principle.Originality/valueThis study examines in depth the underexplored issue of “explanation” and exceeds the issue of ownership concentration, which has already been examined extensively, raising the issues of counterweight power and shareholders’ identities, which remain underexplored. In this way, results presented contribute to explaining some causes of the diverse findings that research has found about the relationship between ownership concentration and voluntary disclosure, demonstrating the importance of counterweight power and largest shareholder’s identity. Consequently, when self-regulating initiatives are designed and implemented, legislators, regulators and managers should not ignore the characteristics of the firms’ ownership structure.

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