scholarly journals Relationship between gray directors and executive compensation in Indian firms

2019 ◽  
Vol 28 (3) ◽  
pp. 239-265 ◽  
Author(s):  
Krishna Prasad ◽  
K. Sankaran ◽  
Nandan Prabhu
Keyword(s):  
Executive Compensation ◽  
Empirical Evidence ◽  
Stock Exchange ◽  
Empirical Relationship ◽  
Positive Association ◽  
Board Structure ◽  
Minority Shareholders ◽  
Controlling Shareholder ◽  
Content Type ◽  
Governance Practices

Purpose The purpose of this paper is to examine the empirical relationship between gray directors (non-executive non-independent directors) and executive compensation among companies listed in India’s National Stock Exchange (NSE). The paper also examines the possible interplay of relationships between controlling shareholder duality (controlling shareholder being the CEO), ownership category and executive compensation. Design/methodology/approach A sample of 438 firms listed in the NSE of India was studied using data spanning five financial years, 2012–2013 to 2016–2017. Findings Empirical evidence suggests that there is a positive association between the proportion of gray directors on the board and executive compensation. The sensitivity of executive compensation to gray directors is found to be higher among family controlled firms. This research has also found that CEOs who belong to controlling shareholder groups received higher pay than professional CEOs. The authors conjecture that these results suggest cronyism and may contribute to lower levels of corporate governance practices in the country. Research limitations/implications The hybrid board structure, which India has adopted with the desire to bring the best of Anglo Saxon and Japanese board philosophies, has paradoxically led to self-serving boards. Exploration of alternative thinking to bring about changes in the regulatory framework is, therefore, necessary. Originality/value Serious problems are identified with the philosophy behind board composition mandated by Listing Requirements for Indian firms with empirical evidence showing how the existing rules generate cronyism and unfairness to minority shareholders.

Factors associated with the voluntary disclosure of the integrated report in Brazil

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ruhama Bezerra Fernandes ◽  
Alexandro Barbosa
Keyword(s):  
Voluntary Disclosure ◽  
Stock Exchange ◽  
Multinomial Logistic Regression ◽  
Positive Association ◽  
Cultural Dimensions ◽  
Board Structure ◽  
Integrated Reporting ◽  
Financial Reports ◽  
Content Type ◽  
Factors Associated

Purpose This paper aims to investigate the factors associated with the voluntary disclosure of integrated reporting (IR) in Brazil of the companies listed on the stock exchange – Brasil, Bolsa, Balcão. The cultural dimensions of a nation reflect different priorities in accounting practices. The Brazilian case, therefore, becomes significant, as Brazil is increasingly important in world markets. Design/methodology/approach As an explanatory econometric model, multinomial logistic regression was used (Y = 2 to describe the probability of the IR disclosure; Y = 1 to describe the occurrence of reports with practices similar to the IR and Y = 0 to describe the occurrence of non-disclosure of non-financial reports). Applied to panel data with random effects (chosen for best performance) in the period from 2016 to 2019. Findings Reveals the positive association of the company’s profitability and market-to-book with the probability of the IR disclosure. Regarding the board composition, it is suggested that size does not make a difference, with the greater participation of women and independence of directors associated with better probabilities of adopting the IR in Brazil. Originality/value This work is the first to characterize the Brazilian reality of voluntary disclosure, specifying the implementation of IR, compared to publishing reports similar to the IR and not reporting structured non-financial statements. It can also be considered the first study on the relevance of the board structure in the disclosure of IR by Brazilian companies. Finally, it contributes to the literature on IR adoption, bringing practical results in understanding the most favorable conditions in which the IR framework will be fully implemented.

Family involvement, corporate governance and dividends in Turkey

2019 ◽  
Vol 45 (5) ◽  
pp. 602-621 ◽  
Author(s):  
Pinar Sener ◽  
Elif Akben Selcuk
Keyword(s):  
Corporate Governance ◽  
Family Involvement ◽  
Positive Association ◽  
Family Management ◽  
Family Ownership ◽  
Board Structure ◽  
Minority Shareholders ◽  
Content Type ◽  
Dividend Payments

Purpose The purpose of this paper is to investigate the relationship between dividends and family involvement as well as corporate governance characteristics among Turkish public firms. Design/methodology/approach Using panel data on Turkish firms listed on the Borsa Istanbul 100 index for 2006–2014, three models are estimated. For the first two models, where the dependent variables are the dividend payout ratio and dividend yield, respectively, tobit regressions are run. The last model, which employs a dividend dummy as the dependent variable, is estimated with logistic regression. Findings There is a positive and concave relationship between family ownership and dividends. The existence of a family chairman reduces dividends. There is a positive association between board size and dividends and this relationship is weaker for firms with higher levels of family ownership. Finally, the ratio of independent directors on the board is negatively associated with dividends. Practical implications The findings imply that firms with substantial family ownership and active family participation in management are more likely to send a negative signal to minority shareholders by paying lower dividends. In addition, minority shareholders should pay attention to the board structure of firms in which they invest. Originality/value This study is one of the few to analyze the nonlinear relationship between family ownership and dividend payments as well as the role of family management in a developing country. Second, it investigates the role of board characteristics in explaining dividend payment decisions.

scholarly journals Does the London Stock Exchange require an upstairs market? Evidence from block trades

2016 ◽  
Vol 43 (3) ◽  
pp. 447-457
Author(s):  
Andros Gregoriou
Keyword(s):  
Stock Exchange ◽  
Empirical Relationship ◽  
Positive Association ◽  
Market Liquidity ◽  
London Stock Exchange ◽  
Content Type ◽  
Bid Ask Spread ◽  
Block Trades ◽  
Econometric Tests ◽  
Block Sizes

Purpose – The purpose of this paper is to test if the empirical relationship between the size of trades and market liquidity can be pooled across different block sizes on the London Stock Exchange (LSE). Design/methodology/approach – The authors use pooling and non-pooling econometric tests in a panel framework. Findings – When the authors differentiate between various block sizes, the authors find that for trades in excess of 50,000 shares, there is a positive association between the size of the trade and the bid-ask spread, due to a lack of liquidity in the financial market. The results provide strong evidence that an upstairs market may be required in order to provide liquidity for large block trades on the LSE. Originality/value – This is the first study to directly test if the LSE requires an upstairs market to provide liquidity for large trade transactions.

scholarly journals CEO Characteristics and Real Earnings Management in Jordan

2020 ◽  
Vol 11 (4) ◽  
pp. 255
Author(s):  
Mohammad Abedalrahman Alhmood ◽  
Hasnah Shaari ◽  
Redhwan Al-dhamari
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Stock Exchange ◽  
Reporting Quality ◽  
Personal Characteristics ◽  
Positive Association ◽  
Real Earnings Management ◽  
Board Structure ◽  
Political Connection ◽  
Ceo Characteristics

The Chief Executive Officer (CEOs) tends to be the most influential member of a corporation as they exert control over corporate decisions such as financial disclosure, board structure, and company performance in ensuring enhanced corporate performance and earnings. The issue of earnings management (EM) that has captured the attention of researchers may be among the most critical factors that are linked to financial statement manipulation. Therefore, the current study explored the effects of the personal characteristics of CEOs on real earnings management (REM) practices in Jordan. Data of 58 companies listed on the Amman Stock Exchange for six years from 2013 to 2018 were utilised to achieve this study’s objectives. The results of this study revealed that CEOs’ experience had a significantly positive association with REM. Meanwhile, CEOs’ tenure had no impact on REM among Jordanian firms. Also, the results exposed the presence of a significantly negative association between CEO duality and REM. Finally, CEOs’ political connection was found to have a significantly positive association with REM. This study offers empirical evidence on the effect of CEO characteristics on REM and how such characteristics can lead to exploitation, which brings an impact on the financial reporting quality.

Family business governance: what’s wrong? What’s right? What’s next?

2019 ◽  
Vol 9 (1) ◽  
pp. 1-23
Author(s):  
Irfan Saleem ◽  
Faiza Khalid ◽  
Muhammad Nadeem
Keyword(s):  
Family Business ◽  
Generation X ◽  
Family Firm ◽  
Board Structure ◽  
Content Type ◽  
Academic Level ◽  
The Family ◽  
Governance Practices

Learning outcomes This case study can help the reader to understand how to build an effective board for family business, and why evolving board structure can help family firm to sustain for a longer period in Market. Reader can also learn about role of independent director, CEO's Succession process and ways to deal with duality issue that family owned enterprise may face during a transition from generation X to Y. Case overview/synopsis This teaching case study describes various decision-making situations using example of a Pakistani family firm and entrepreneurs who started the business few decades back in France. This partially disguised case is based on actual events. The data are collected based on discussions with family business owners and minutes of meetings. The objective of study is to make sense of the family business theories e.g. socio emotional wealth stakeholder and agency. Case readers can also learn about the family’s business governance practices using diverse scenarios presented in this case. Complexity academic level This study is suitable for graduate and undergraduate studies. Supplementary materials Teaching Notes are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes. Subject code CSS 7: Management science.

What drives board committee structure? Evidence from an emerging market

2019 ◽  
Vol 35 (3) ◽  
pp. 373-397 ◽  
Author(s):  
Pornsit Jiraporn ◽  
Ali Uyar ◽  
Cemil Kuzey ◽  
Merve Kilic
Keyword(s):  
Corporate Governance ◽  
Audit Quality ◽  
Emerging Market ◽  
Panel Data Analysis ◽  
Positive Association ◽  
Developed Countries ◽  
Board Structure ◽  
Ceo Duality ◽  
Content Type ◽  
Board Committees

Purpose Board committees enable boards to function effectively, as committees improve the quality of corporate governance by fulfilling specific, assigned tasks. This study aims to explore how board structure, CEO duality and audit quality are associated with board committee structure in the context of an emerging market, namely, Turkey. Design/methodology/approach The sample consisted of 122 firms listed on the Industrial Index of Borsa Istanbul for the years between 2012 and 2014, inclusive, and this yielded 366 firm-year observations. To test the hypotheses, the panel data analysis method was used, which enabled the elimination of certain problems, such as multicollinearity and estimation bias, as well as specification of the time-variant association between the predictor variables and the output variable. Findings Board size, board independence and firm size had a positive association with the number and size of board committees, whereas CEO duality had a negative association with the number and size of board committees. Moreover, the appointment of female members on audit and corporate governance committees was more frequent in firms that had a high proportion of women on their boards. Finally, audit quality was positively associated with the existence of risk committee, the overall diversity of board committees and the diversity of corporate governance committees. Research limitations/implications The study is not free from limitations. It covers the time span between 2012 and 2014; thus, readers should be cautious about generalizing these results longitudinally, as a different time periods could possibly yield different results. The second limitation concerns the fact that only industrial firms were sampled; thus, these findings may not be valid in other sectors. Practical implications The paper shifts the attention of researchers from overall board structure to board committee structure. The results of the study provide insights for policymakers, boards and shareholders. Policymakers can formulate boards and committees by considering these findings. Boards can benefit from the conclusions of this study in shaping their own structure and sub-committee structures. Current and potential shareholders may find the results of the study instructive in making investment decisions. Originality/value This study investigates the factors associated with the structure of overall and specific board committees. Additionally, while most prior research on board committees has sampled firms that are domiciled in developed countries, this study examines the subject in an emerging country context, namely Turkey. Moreover, this study adds to the literature by examining the association between audit quality and board committee structure, which has been largely neglected in prior literature.

scholarly journals Family firm and analyst forecasts in an emerging economy

2017 ◽  
Vol 55 (9) ◽  
pp. 2018-2037 ◽  
Author(s):  
Xiaoxiang Zhang ◽  
Jo-Ting Wei ◽  
Hsin-Hung Wu
Keyword(s):  
Family Firms ◽  
Stock Exchange ◽  
Emerging Market ◽  
Population Sample ◽  
Analyst Forecasts ◽  
Analyst Forecast ◽  
Minority Shareholders ◽  
Content Type ◽  
Earnings Smoothness ◽  
Forecast Quality

Purpose The purpose of this paper is to examine how family firms affect analyst forecast dispersion, accuracy and optimism and how earnings smoothness as the moderating factor, affects these relationships in an emerging market context. Design/methodology/approach This paper uses the population sample of firms listed on the Taiwan Stock Exchange from 2009 to 2010 as the research sample, which includes 963 firm-year observations. Findings The findings show that analysts following family firms are more likely to have more dispersed, less accurate and more optimism biased forecasts than those following nonfamily firms. Earning smoothness is mainly used by nonfamily firms as a signaling strategy to improve analyst forecast quality. In contrast, earnings smoothness is mainly used by families as a garbling strategy, stimulating forecast optimism. Only earnings smoothness in family firms with a high level of family ownership concentration is likely to be signaling-oriented to improve analyst forecast accuracy and mitigate analyst optimism biases. Originality/value Emerging markets are not only featured by prevailing principal-principal conflicts but also have multiple levels of agency conflicts among large shareholders, minority shareholders and professionally hired managers. This research reveals the multiple governance roles of family owners in affecting analyst forecast quality, including their entrenchment role in extracting private benefits of control through opaque environments and market discipline distortion role in aligning interests between managers and families without prioritizing meeting or beating analyst forecasts, both at the cost of minority shareholders. This research further disentangles the intertwined signaling oriented and garbiling oriented incentives associated with earnings smoothness under family governance.

Disclosure and corporate governance in developing countries: evidence from Ghana

2007 ◽  
Vol 22 (3) ◽  
pp. 319-334 ◽  
Author(s):  
Mathew Tsamenyi ◽  
Elsie Enninful‐Adu ◽  
Joseph Onumah
Keyword(s):  
Developing Countries ◽  
Corporate Governance ◽  
Firm Size ◽  
Ownership Structure ◽  
Developing World ◽  
Stock Exchange ◽  
Content Type ◽  
Market Capitalization ◽  
Governance Practices ◽  
Structure Dispersion

PurposeFollowing previous studies the paper seeks to use disclosure scores to examine corporate governance practices of Ghanaian listed firms. The study is motivated by the dearth of literature on corporate governance practices in the developing world despite the increasing interests in the topic in both the developed and the developing world.Design/methodology/approachThe data for the analysis are gathered from 22 listed companies on the Ghana Stock Exchange (GSE representing 95 percent of the Ghanaian market capitalization). The paper also examines the extent to which factors such as ownership structure, dispersion of shareholding, firm size, and leverage influence disclosure practices.FindingsConsistent with findings reported in studies from other developing countries the study finds that the level of disclosure in Ghana is low. Furthermore, ownership structure, dispersion of shareholding, and firm size (measured as total assets and market capitalization) all have significant effect on disclosure. However, the correlation between disclosure and leverage is insignificant.Research limitations/implicationsThe findings of the research will help policy makers and practitioners in formulating corporate governance policies. However, this research is limited because it focuses on only companies listed on the GSE. The results may therefore not be representative of all companies operating in Ghana.Originality/valueThe study is important because of the recent surge in international capital into the developing world (including Ghana) as a result of the ongoing World Bank and IMF led economic reforms. These reforms have emphasized transparency and accountability. There is therefore the need to understand corporate governance practices in these environments.

Dividend payment and earnings quality: evidence from Indonesia

2014 ◽  
Vol 22 (2) ◽  
pp. 103-117 ◽  
Author(s):  
Febriela Sirait ◽  
Sylvia Veronica Siregar
Keyword(s):  
Emerging Markets ◽  
Design Methodology ◽  
Manufacturing Industry ◽  
Stock Exchange ◽  
Earnings Quality ◽  
Positive Association ◽  
Significant Positive Association ◽  
Dividend Payment ◽  
Content Type ◽  
The Relationship

Purpose – This research aims to examine the relationship between dividend payment and earnings quality. Design/methodology/approach – The authors examine four dividend features: dividend-paying status, dividend size, dividend changes, and dividend persistence. The samples consist of 90 firms from the manufacturing industry in the years 2005-2009. Multiple regression is used for testing hypotheses. Findings – The results show that dividend-paying status, dividend increase, and persistence in dividend payment have significant positive association with earnings quality. However, the authors do not find evidence that larger dividend size is an indicator of higher earnings quality. Overall, the results show that dividend-paying status, increase in dividend size, and persistence in dividend payment are indicators or signals of higher earnings quality. Research limitations/implications – This study examines only the manufacturing firms listed on the Indonesia Stock Exchange. Further study based on different industries and/or different emerging markets is needed before generalizing results. Originality/value – Few studies have examined dividend payment in emerging markets. This study fills the void.

Does CEO duality give more influence over executive pay to the majority or minority shareholder? (A survey of Brazil)

2016 ◽  
Vol 16 (1) ◽  
pp. 96-115 ◽  
Author(s):  
Enoima Abraham ◽  
Gurcharan Singh
Keyword(s):  
Executive Compensation ◽  
Governance Structure ◽  
Minority Shareholder ◽  
Executive Pay ◽  
Minority Shareholders ◽  
Managerial Performance ◽  
Ceo Duality ◽  
Content Type ◽  
Conditional Effects ◽  
The Impact

Purpose The purpose of this paper is to focus on comparing the influence of majority and minority shareholders on executive compensation under conditions of CEO duality, examining majority and minority shareholder influences by measuring their investment and return activity. The paper seeks to uncover how CEO duality changes the impact the two categories of shareholders have on executive compensation, especially in an emerging nation. Design/methodology/approach In total, 30 corporations out of the 70 corporations listed on the BM&F Bovespa (a Brazilian stock market) were used for the paper. Quarterly data were collected on the companies from the Datastream database. The paper conducted a moderated regression analysis on the data to determine the conditional effects of majority and minority holders’ investment and returns on executive compensation. Findings There are incentives for executives meeting majority shareholder objectives, but minority shareholders’ influences act as a disincentive for executives. Only the influence of blockholders by their returns is affected by the separation of the roles of CEO and Chairman. The effect is such that firms with a separation of the roles have their executives rewarded in line with increments to the returns made to blockholders, but firms that have the roles merged pay a high wage that is inconsistent with managerial performance. Finally, the majority of variation in executive pay levels can be attributed to individual company traits. Research limitations/implications The paper’s sample is biased to firm which had publicly available data on the total compensation payable to their top executives. Practical implications Advocates of minority shareholder rights may need to exercise patience with the implementation of more formalised governance structure, as they are not providing protection for minority shareholders within the period studied. Originality/value The paper provides empirical evidence within the Brazilian context of minority shareholder effects on executive compensation and the effect of CEO duality on the relationship.

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