scholarly journals Determinants of corporate financial performance relating to board characteristics of corporate governance in Indian manufacturing industry

2017 ◽  
Vol 26 (1) ◽  
pp. 67-85 ◽  
Author(s):  
G. Palaniappan
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Manufacturing Industry ◽  
Academic Research ◽  
Negative Relationship ◽  
Multiple Regression Model ◽  
Inverse Association ◽  
Board Size ◽  
Content Type ◽  
Board Characteristics

Purpose The purpose of this paper is to examine if certain board characteristics have an impact on the financial performance of manufacturing firms in India. Design/methodology/approach The study draws on data from 275 firms listed in NSE during from 2011 to 2015, using a multiple regression model. The present study examines the effect of board characteristics such as board size, CEO duality, independence and board activity devoted to the effectiveness of firms performance regarding market and accounting based financial performance measures. Findings The finding supports an inverse association between the extent of board characteristics and the firms’ performance indicators. The study also finds a statistically significant negative relationship between board size and Tobins Q, ROA and ROE. The evidence also shows that the board independence and meeting frequency moderate the relationship between return on equity and return on assets by enhancing these measures among corporate governance mechanisms. Research limitations/implications The present study does not include all possible board characteristics, i.e., large shareholders dominance on the board and promoter’s and institutional shareholding, to support firm’s performance. Further research might include the ownership structure of the board to improve firm’s performance. Originality/value The study focuses on the corporate governance issues such as size, duality, independence and activity of the boards and their influence on firm performance. The subject analyzes the possible impact of board characteristics and firm-related features that have received much attention from academic research, which has largely focused on studying the publications of corporate governance in India and Asian context.

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.

Is top-management remuneration influenced by board characteristics?

2015 ◽  
Vol 23 (1) ◽  
pp. 60-79 ◽  
Author(s):  
Sebastien Deschenes ◽  
Hamadou Boubacar ◽  
Miguel Rojas ◽  
Tania Morris
Keyword(s):  
Corporate Governance ◽  
Academic Research ◽  
Top Management Teams ◽  
Top Management ◽  
Management Compensation ◽  
Content Type ◽  
Board Characteristics ◽  
Good Corporate Governance

Purpose – The purpose of this article is to examine if certain board characteristics have an impact on the total remuneration of top management and the ratio of stock-based remuneration to total top-management remuneration. Design/methodology/approach – The study draws on data from the largest public Canadian companies, the constituents of the TSX/60 index. The study controls for firm size and profitability. Findings – The authors concludes that total remuneration of top management is directly linked to board-member total remuneration and the board average number of director-tenure years. The study also shows that the ratio of stock-based to total top-management remuneration is positively affected by the percentage of independent directors, total remuneration of board directors, the ratio of stock-based remuneration of directors to their total remuneration and the average number of tenure years of the board of directors. Practical implications – If regulators are determined to curb the excesses in top-management remuneration by means of promoting boards with certain characteristics, they should implement measures facilitating the control of directors’ remuneration and tenure, to discourage cronyistic behavior. Good corporate governance requires that the board act as a counterbalance to top management, ensuring that a substantial percentage of top-executive total compensation is variable, and not fixed. According to our findings, the boards that are the most likely to hold managerial avoidance of variable pay in check are those favoring director independence, variable director remuneration and longer director tenures. Social implications – The present article examines specifically the latter aspect, namely, the role of board characteristics (independence, size, compensation, board director ownership and tenure, etc.) in the determination of top-management compensation. This relationship is important because it allows us to further the analysis of corporate governance. If the above-mentioned traits of boards have a meaningful relationship with the compensation of the top management, one might conclude that certain practices in the composition of boards could influence good corporate governance practices. This is relevant for regulatory agencies, for investors and for corporations. Originality/value – The article adds to the extant literature in a number of ways. Firstly, it considers the role of the traits of the board in the determination of the compensation of the top-management teams, and not only of the chief executive officer, as is the focus of previous literature. Secondly, the article focuses on the power interplay between boards and managers, and, more particularly, on the ability of boards to be an effective mechanism of corporate governance. Finally, the article examines the potential impact of board traits in the determination of top-management compensation in the context of Canadian firms, a subject that has received less attention from academic research, which has mostly concentrated on analyzing the issue in the US context.

scholarly journals Corporate governance and dividend pay-out policy in UK listed SMEs

2017 ◽  
Vol 25 (4) ◽  
pp. 459-483 ◽  
Author(s):  
Mohamed H. Elmagrhi ◽  
Collins G. Ntim ◽  
Richard M. Crossley ◽  
John K. Malagila ◽  
Samuel Fosu ◽  
...  
Keyword(s):  
Corporate Governance ◽  
Fixed Effects ◽  
Audit Committee ◽  
Gender Diversity ◽  
Negative Relationship ◽  
Corporate Board ◽  
Board Size ◽  
Content Type ◽  
Board Gender Diversity ◽  
Alternative Investment

Purpose The purpose of this paper is to examine the extent to which corporate board characteristics influence the level of dividend pay-out ratio using a sample of UK small- and medium-sized enterprises from 2010 to 2013 listed on the Alternative Investment Market. Design/methodology/approach The data are analysed by employing multivariate regression techniques, including estimating fixed effects, lagged effects and two-stage least squares regressions. Findings The results show that board size, the frequency of board meetings, board gender diversity and audit committee size have a significant relationship with the level of dividend pay-out. Audit committee size and board size have a positive association with the level of dividend pay-out, whilst the frequency of board meetings and board gender diversity have a significant negative relationship with the level of dividend pay-out. By contrast, the findings suggest that board independence and CEO role duality do not have any significant effect on the level of dividend pay-out. Originality/value This is one of the first attempts at examining the relationship between corporate governance and dividend policy in the UK’s Alternative Investment Market, with the analysis distinctively informed by agency theoretical insights drawn from the outcome and substitution hypotheses.

The effects of corporate governance on financial performance and financial distress: evidence from Egypt

2015 ◽  
Vol 15 (5) ◽  
pp. 641-662 ◽  
Author(s):  
Tamer Mohamed Shahwan
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Financial Performance ◽  
Financial Distress ◽  
Emerging Market ◽  
Negative Relationship ◽  
Positive Association ◽  
Time Frame ◽  
Content Type

Purpose – This paper aims to empirically examine the quality of corporate governance (CG) practices in Egyptian-listed companies and their impact on firm performance and financial distress in the context of an emerging market such as that of Egypt. Design/methodology/approach – To assess the level of CG practices at a given firm, the current study constructs a corporate governance index (CGI) which consists of four dimensions: disclosure and transparency, composition of the board of directors, shareholders’ rights and investor relations and ownership and control structure. Based on a sample of 86 non-financial firms listed on the Egyptian Exchange, the effects of CG on performance and financial distress are assessed. Tobin’s Q is used to assess corporate performance. At the same time, the Altman Z-score is used as a financial distress indicator, as it measures financial distress inversely. The bigger the Z-score, the smaller the risk of financial distress. Findings – The overall score of the CGI, on average, suggests that the quality of CG practices within Egyptian-listed firms is relatively low. The results do not support the positive association between CG practices and financial performance. In addition, there is an insignificant negative relationship between CG practices and the likelihood of financial distress. The current study also provides evidence that firm-specific characteristics could be useful as a first-pass screen in determining firm performance and the likelihood of financial distress. Research limitations/implications – The sample size and time frame of our analysis are relatively small; some caution would be needed before generalizing the results to the entire population. Practical implications – The findings may be of interest to those academic researchers, practitioners and regulators who are interested in discovering the quality of CG practices in a developing market such as that of Egypt and its impact on financial performance and financial distress. Originality/value – This paper extends the existing literature, in the Egyptian context in particular, by examining firm performance and the risk of financial distress in relation to the level of CG mechanisms adopted.

scholarly journals Corporate governance and voluntary risk and forward-looking disclosures

2018 ◽  
Vol 19 (4) ◽  
pp. 592-607 ◽  
Author(s):  
Mohammed M. Elgammal ◽  
Khaled Hussainey ◽  
Fatma Ahmed
Keyword(s):  
Corporate Governance ◽  
Global Financial Crisis ◽  
Negative Impact ◽  
Annual Reports ◽  
Board Size ◽  
Content Type ◽  
Board Characteristics ◽  
Panel Regressions ◽  
The Impact ◽  
Forward Looking

PurposeThe purpose of this paper is to examine the impact of corporate governance on risk and forward-looking disclosures in Qatar.Design/methodology/approachThe authors automatically measure levels of risk and forward-looking disclosures in the annual reports of Qatari firms for the period 2008–2014. The authors also use two ways clustered error pooled panel regressions to examine the determinants of these disclosures.FindingsThe authors find that firms with a higher percentage of foreign ownership disclose more forward-looking information; conversely, board size has a negative impact on the forward-looking disclosure. Financial firms tend to disclose less forward-looking information, however, they tend to disclose more forward-looking information after the 2008 global financial crisis. The authors also find negative relationships between the risk disclosure and both the number of non-executive members of the board of directors and duality role of the CEO.Research limitations/implicationsThe study uses the quantity of disclosure as a proxy for the quality of disclosure.Practical implicationsThe findings should help the users of corporate annual reports in Qatar to understand managerial incentives for reporting risk and forward-looking information. This should help regulators to set a proper set of disclosure rules. Moreover, this study increases our understanding of the behavior of international investors and the board characteristics (i.e. board size) in motivating risk and forward-looking disclosures in Qatari firms.Originality/valueThe authors provide the original empirical evidence on the impact of corporate ownership and board characteristics on risk and forward-looking disclosures for Qatari firms using two ways clustered error pooled panel regressions.

The impact of financial ratios on the financial performance of a chemical company

2014 ◽  
Vol 10 (2) ◽  
pp. 154-160 ◽  
Author(s):  
Halimahton Borhan ◽  
Rozita Naina Mohamed ◽  
Nurnafisah Azmi
Keyword(s):  
Financial Performance ◽  
Negative Relationship ◽  
Secondary Data ◽  
Multiple Regression Model ◽  
Profit Margin ◽  
Financial Ratios ◽  
Content Type ◽  
Chemical Company ◽  
Operating Profit ◽  
The Impact

Purpose – The purpose of this paper is to examine the impact of financial ratios on the financial performance of a chemical company: LyondellBasell Industries (LYB). Some selected ratios: current ratio (CR) and quick ratio (QR) represent the liquidity ratios, debt ratio (DR) and debt equity ratio (DTER) represent the leverage ratios, while operating profit margin (OPM) and net profit margin (NPM) represent the profitability ratios. LYB faced financial problems after its merger and the financial performance of the company shrank to negative due to the world financial crisis. However, this company has bounced back after a year and is now the world's third largest chemical company based on revenue. Design/methodology/approach – The financial ratios were measured from 2004 to 2011, quarterly. A multiple regression model has been used and secondary data has been analyzed. Findings – The results shows that CR, QR, DR and NPM have a positive relationship while DTER and OPM have a negative relationship with the company's financial performance. Among the six ratios, CR, DR and NPM show the highest significant impact on the company's performance. Originality/value – This research paper contributed the result of the impact of financial ratios on the financial performance of a chemical company as the previous studies with this focus are hard to find and some of the sources are not specifically related to the topic.

scholarly journals Corporate governance practices and comprehensive income

2018 ◽  
Vol 18 (3) ◽  
pp. 462-477 ◽  
Author(s):  
Erika López-Quesada ◽  
María-del-Mar Camacho-Miñano ◽  
Samuel O. Idowu
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Positive Impact ◽  
Negative Relationship ◽  
Multivariate Statistical ◽  
Main Hypothesis ◽  
Content Type ◽  
Comprehensive Income ◽  
Governance Practices ◽  
Governance Strategies

PurposeThe purpose of this paper is to analyze the effect of corporate governance practices on firms’ financial performance, as measured by comprehensive income (CI).Design/methodology/approachUsing a sample of 237 firms from the Standards & Poor (S&P) 500 index during the years 2004-2009, multivariate statistical analyses are conducted to confirm the authors’ main hypothesis.FindingsThe results indicate that having high levels of corporate governance culture has a positive impact on a measure of firms’ financial performance, namely, CI. Furthermore, they indicate a positive correlation between a higher percentage of external directors and financial performance, and a negative relationship between number of board meetings and financial performance.Originality/valueThe main contribution of this research is that good corporate governance strategies deliver superior financial performance for businesses in terms of CI. This serves as a method of value creation, which is the ultimate goal of a business. In addition to the use of CI as an indicator of financial performance, a unique measure of corporate governance level is tested.

Corporate governance, ownership structure and firms’ financial performance: insights from Muscat securities market (MSM30)

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abdelbaset Queiri ◽  
Araby Madbouly ◽  
Sameh Reyad ◽  
Nizar Dwaikat
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Financial Performance ◽  
Board Of Directors ◽  
Ownership Structure ◽  
Securities Market ◽  
Board Size ◽  
Content Type ◽  
Firm Financial Performance ◽  
Individual Ownership

Purpose The purpose of this study is to investigate the relationship between selected board characteristics and ownership elements and the performance of firms listed in the Muscat Securities Market (MSM30). The examination focused on how the firm financial performance was affected by the board size, the number of board meetings and the ratio of the independent board of directors along to the ownership concentration types (i.e. institutional, state and concentrated individual ownership). Design/methodology/approach Data were extracted from the annual reports available online on the MSM30 website over a period of seven years (2009–2015). The sample consisted of 14 firms belonging to the non-financial sector. The data were of a balanced type and there were 98 observations. The analysis was conducted using the ordinary least square in STATA with the use of the robustness technique of standard error. Findings The findings of this study provide evidence that the selected elements for board characteristics and ownership influence firm performance. Nevertheless, such influence has its interpretation that differs to some extent from other securities markets in the developing countries. For instance, the ratio of the independent board of directors, the number of board director’s meetings, state ownership and concentrated individual ownership were inversely affecting the firm performance. However, institutional ownership and board size were found to have a positive effect on firm performance. Originality/value Studies on the influence of corporate governance and ownership structures in the context of Oman are still scarce. MSM30 received little attention, even though such an index encompasses the most liquid and the most profitable firms. MSM30 is an important index for investors in Oman looking for capital gains. Accordingly, this present study contributes to the knowledge body by providing new findings related to Oman and compares it with the other markets within Gulf Council Countries (GCC) and around the world. This will provide more understanding of the Omani context. Moreover, the authors anticipate that the outcomes of this research, which so far is the most comprehensive study in the Omani context in terms of the impact of corporate governance and ownership structure on firm financial performance can significantly shape corporate governance discourse, practices and policies in Oman, in particular, and in other GCC countries in general, to improve financial performance and corporate sustainability.

Corporate governance and non-bank financial institutions profitability

2017 ◽  
Vol 59 (6) ◽  
pp. 854-875 ◽  
Author(s):  
Isaac Ofoeda
Keyword(s):  
Corporate Governance ◽  
Financial Institutions ◽  
Audit Committee ◽  
Gender Diversity ◽  
Negative Relationship ◽  
Governance Structures ◽  
Board Size ◽  
Content Type ◽  
Corporate Governance Mechanisms ◽  
Using Data

Purpose This study aims to investigate the influence of corporate governance structures of non-bank financial institutions (NBFI) on their profitability. Design/methodology/approach The analysis is performed using data derived from the Bank of Ghana database during a nine-year period, 2006-2014. Correlated panels corrected standard errors model is used to estimate the regression equation. The study uses board size, board independence, gender diversity, CEO duality and tenure and board meetings as proxies for corporate governance. Audit committee size, independence and meetings are used as measures of audit committee activity. The study also uses the return on assets as measures of NBFI profitability. Findings Results of the study show that there exists positive relationship among board size, audit committee size, meetings of the audit committee and profitability. However, board composition, gender diversity, board meetings and audit committee independence show a negative relationship with NBFI performance. From the findings of the study, it is evident that there are mixed results regarding corporate governance mechanisms and profitability of Ghanaian NBFIs. The results imply that the Ghanaian NBFI industry have unique characteristics and may react differently to corporate governance structures. Originality/value The value of this study is in its contribution to the extant literature on corporate governance and profitability of NBFIs.

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.

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