CFO financial expertise and corporate governance concerns

2015 ◽  
Vol 57 (6) ◽  
pp. 573-581 ◽  
Author(s):  
Li Sun ◽  
Grace Johnson ◽  
Fuad Rahman
Keyword(s):  
Corporate Governance ◽  
Master Of Business Administration ◽  
Certified Public Accountant ◽  
Governance Mechanism ◽  
Policy Makers ◽  
Content Type ◽  
Corporate Governance Mechanisms ◽  
Financial Expertise ◽  
Corporate Governance Mechanism ◽  
Equity Index

Purpose – The purpose of this study is to examine the association between the financial expertise of the chief financial officer (CFO) and concerns about corporate governance. Design/methodology/approach – Consistent with prior research, the authors used four variables, including certified public accountant (CPA) certification, Master of Business Administration degree, age of CFO and length of CFO tenure, to measure CFO’s financial expertise. The authors hypothesize a negative association between CFO expertise and concerns about corporate governance. Findings – Regression analysis revealed that the CPA certification is negatively associated with governance concerns at a significant level. The results suggest that stakeholders show less concerns about a company’s corporate governance mechanism when the CFO has a CPA certification. In particular, the results support the recommendation by the American Institute of Certified Public Accountants that a CFO of a public firm should have a CPA certification. Originality/value – The study is important in the following ways. First, the study delivers new evidence on the link between CFO financial expertise and corporate governance. This contributes to the CFO financial expertise literature and the corporate governance literature. Second, according to Standard and Poor’s, equity index investing has grown more popular over the past 30 years. The study delivers useful information to index investors who invest in S & P SmallCap 600 Index. Third, regulators have put a large amount of resources to discover ways to strengthen firms’ corporate governance. Thus, the results should be of interest to policy makers who design and implement guidelines on corporate governance mechanisms.

scholarly journals Corporate governance in practice: the role of practitioners' understanding in implementing compliance programs

2020 ◽  
Vol 33 (4) ◽  
pp. 887-911
Author(s):  
Riccardo Stacchezzini ◽  
Francesca Rossignoli ◽  
Silvano Corbella
Keyword(s):  
Corporate Governance ◽  
Governance Mechanism ◽  
Content Type ◽  
Case Study Analysis ◽  
Implementation Processes ◽  
Compliance Programs ◽  
Corporate Governance Mechanisms ◽  
Potential Benefits ◽  
Corporate Governance Mechanism

PurposeThis article investigates the implementation of a compliance programme (CP) in terms of how practitioners conceive of and execute the responsibilities arising from this corporate governance mechanism.Design/methodology/approachThis study involves a practice lens approach forms the case study analysis and interpretation, involving both interviews and documentary materials collected from an Italian company with prolonged compliance experience. Schatzki's (2002, 2010) practice organisation framework guides the interpretation of CP as a practice organised by rules, practical and general understandings and teleoaffective structures.FindingsCP practice evolves over time. A practical understanding of daily actions required to accomplish the CP and a general understanding of the responsibilities connected with the CP, such as the attitudes with which the CP is performed, are mutually constitutive and jointly favour this evolution. Dedicated artefacts – such as IT platforms, training seminars and compliance performance indicators – help spread both of these types of understanding. These artefacts also align practitioners' general understanding with the CP's teleoaffective structures imposed, including the CP's assigned objectives and the desired reactions to them.Research limitations/implicationsThe findings have theoretical and practical implications by revealing the relevance of practitioners' understanding of corporate governance mechanisms in their implementation processes.Originality/valueThis study reveals the potential benefits of practice lens approaches in corporate governance studies. It responds to the call for qualitative studies that demonstrate corporate governance as implemented in daily activities.

Firm, industry, and country level determinants of capital structure: evidence from Pakistan

2016 ◽  
Vol 5 (3) ◽  
pp. 362-384 ◽  
Author(s):  
Tanveer Ahsan ◽  
Man Wang ◽  
Muhammad Azeem Qureshi
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Economic Conditions ◽  
Governance Mechanism ◽  
Short Term ◽  
Policy Makers ◽  
Content Type ◽  
Financial Firms ◽  
Country Level ◽  
Corporate Governance Mechanism

Purpose The purpose of this paper is to find out firm, industry, and country level determinants of capital structure of Pakistani listed non-financial firms. Design/methodology/approach The authors use a fixed effects panel data model over a 39 years (1972-2010) unbalanced panel data of Pakistani non-financial listed firms to determine the factors that influence capital structure of these firms. Findings The authors find that Pakistani firms prefer retained earnings to finance their business projects, and debt is easily available for experienced firms. Moreover, socio-economic collusive networks, poor corporate governance mechanism along with weak legal system provide these firms an opportunity to pass on their risk to the creditors (banks). Research limitations/implications The data set does not contain factors characterizing inter-industry heterogeneity, therefore, the authors use mean industry leverage and mean industry profitability to explore if any relationship exists between leverage of firms, and their respective industry leverage/profitability. Practical implications Pakistani non-financial firms are highly leveraged increasing their probability to face financial distress in erratic economic conditions. As such, the policy makers need to develop capital markets of Pakistan to enable a resilient corporate capital structure. Further, erratic economic conditions of Pakistan create uncertain business environment yielding short-term opportunities and to finance them Pakistani firms use short-term debt as a main financing source. The policy makers need to improve corporate governance mechanism and strengthen legal system that will go a long way to develop Pakistani capital market on sound and sustainable footing. Originality/value This is the first study that uses an extended number of variables and discovers financial behavior of firms in a bank-based economy having limited financing options, and facing erratic economic conditions.

Corporate governance and investment efficiency in Indonesia: the moderating role of industry competition

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Irenius Dwinanto Bimo ◽  
Engelbertha Evrantine Silalahi ◽  
Ni Luh Gde Lydia Kusumadewi
Keyword(s):  
Corporate Governance ◽  
Generalized Method Of Moments ◽  
Investment Efficiency ◽  
Governance Mechanism ◽  
Content Type ◽  
Industry Competition ◽  
Corporate Governance Mechanisms ◽  
Corporate Governance Mechanism ◽  
The Relationship

Purpose This study aims to analyse the effect of corporate governance on investment efficiency and the moderating impact of industry competition on the relationship between corporate governance and investment efficiency. Design/methodology/approach The research sample includes a total of 36 publicly listed companies assessed by the Indonesian Institute for Corporate Directorship from 2012 to 2018. Testing is performed on full sample and overinvestment and underinvestment subsamples. Additional testing is further carried out using the generalized method of moments to address endogeneity problems and a robustness test is performed to assess the estimated investment efficiency. Findings Corporate governance can increase investment efficiency and the effectiveness of corporate governance is found to drop when the level of industry competition is higher. Practical implications The results of the present study corroborate the suggestion that companies need to implement corporate governance mechanisms. Furthermore, designing a corporate governance mechanism requires the scrutiny of the external environment, including industry competition. Originality/value The present study adds the profitability factor in the calculation of investment efficiency levels. This study also considers external factors that can influence the effectiveness of corporate governance in determining investment efficiency.

scholarly journals PENGARUH MEKANISME CORPORATE GOVERNANCE DAN UKURAN PERUSAHAAN TERHADAP KINERJA KEUANGAN (Survei Pada Perusahaan Manufaktur yang terdaftar di BEI )

2018 ◽  
Vol 2 (2) ◽  
pp. 010-031
Author(s):  
Animah Animah ◽  
Lukman Effendy ◽  
Alamsyah M. Thahir ◽  
Erna Widiastuty
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Firm Size ◽  
Sampling Technique ◽  
Partial Least Square ◽  
Least Square ◽  
Governance Mechanism ◽  
Governance Mechanisms ◽  
Corporate Governance Mechanisms ◽  
Corporate Governance Mechanism

The purpose of this research is to examine the effect of corporate governance mechanisms,  firm size of financial performance. The Population of this research is the company manufacturing  in BEI. The sampling technique used is purposive sampling. The analytical tool used is using partial least  square program. The independent variables in this research are corporate governance mechanism,  firm size  while the dependent variable is the performance of the financial. The result of the research shows that firm size  influence to financial performance, while other variables such as corporate governance mechanisms have no effect negative  to financial performance.

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

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

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

Investor protection: effects of takeover convergence

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jyoti Dixit ◽  
Poonam Singh ◽  
Arunima Haldar
Keyword(s):  
Corporate Governance ◽  
Common Law ◽  
Investor Protection ◽  
Critical Role ◽  
Emerging Economy ◽  
International Standards ◽  
Governance Mechanism ◽  
Content Type ◽  
Global Standards ◽  
Corporate Governance Mechanism

Purpose Takeovers play a critical role as an external corporate governance mechanism to ensure investor protection. There is a long-standing debate on whether the convergence of corporate governance to global standards can enable emerging economies to ensure investor protection. This paper aims to analyse the evolution of the takeover code, namely, Securities Exchange Board of India’s Substantial Acquisition of Shares and Takeovers (2011) in India from the lens of investor protection. It then compares the takeover provisions in India, the USA, the UK, Singapore and Australia to examine the extent of convergence and its implications for investor protection. Design/methodology/approach Using a cross-national comparative analysis of takeover mechanisms in common law countries, the study analyses the extent and relevance of convergence in form. The focus of the comparison is on regulations governing offer size, offer price, creeping acquisition and initial trigger limit for the mandatory open offer. Findings The findings suggest that certain provisions such as the initial trigger threshold for the mandatory offer and the offer prices of the Indian takeover code are converging with the standards in common law countries. However, the offer price determination based on market prices may not reflect true market value in an inefficient market like India. Other provisions such as creeping acquisition and offer size are not only diverging from the international standards but are also inconsistent with the key objective of investor protections of the Indian regulator. Research limitations/implications Indian takeover regulation needs to converge to higher global standards to ensure adherence to improved investor protection. This needs to be done for the initial trigger limit for mandatory bid and offer prices, after accounting for the differences in institutional structure. The Indian regulators need to revisit provisions on the initial trigger, creeping acquisition to converge to the broader principle of investor protection. Originality/value This technical paper provides a comprehensive depiction of takeover mechanisms in an emerging economy context as a means of investor protection. Further using a comparative lens, it analyses the relevance of convergence of takeover laws. Thus, advances the theoretical knowledge of limited extant work on external corporate governance mechanism in an emerging economy context.

Corporate Governance in Islamic Banks

2021 ◽  
pp. 322-337
Author(s):  
Sami Ben Mim ◽  
Yosra Mbarki
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Supervisory Board ◽  
Islamic Banks ◽  
Governance Mechanism ◽  
Governance Mechanisms ◽  
Transmission Channels ◽  
Corporate Governance Mechanisms ◽  
The Board Of Directors ◽  
Corporate Governance Mechanism

This study investigates the efficiency of the Shariah supervisory board as a corporate governance mechanism in Islamic banks. The authors mainly seek to examine the effect of the Shariah board's composition (size and academic background of its members) on the performance of Islamic banks. They also try to highlight the transmission channels explaining this effect, and compare the efficiency of the Shariah board with that of traditional corporate governance mechanisms, namely the board of directors. The empirical investigation is based on a sample of 72 Islamic banks from 19 countries. Estimation results suggest that the Shariah board positively affects the Islamic banks performance through the number of Islamic Shariah scholars. This effect is mainly due to the size and cost transmission channels. These results are robust to different performance measures. On the other hand, results show that the board of directors' size produces a positive effect on a bank's performance, offering evidence for complementarity between traditional and Islamic governance mechanisms.

Corporate governance: institutional arrangement or market choice?

2014 ◽  
Vol 8 (4) ◽  
pp. 717-744 ◽  
Author(s):  
Mian Du ◽  
Siyan Chen ◽  
Huan Shao
Keyword(s):  
Corporate Governance ◽  
Firm Value ◽  
Institutional Arrangement ◽  
Listed Companies ◽  
Managerial Ownership ◽  
Governance Mechanism ◽  
Director Compensation ◽  
Content Type ◽  
Market Choice ◽  
Corporate Governance Mechanism

Purpose – The purpose of this paper is to investigate the relationship between corporate governance mechanism and firm value of the listed companies in China. Does the better corporate governance lead to the higher firm value? Or does the higher firm value make it easy to choose a better governance mechanism? Or they affect each other? In other words, this paper tries to answer whether the corporate governance mechanism is only decided by institutional arrangement, or by market choice according to firm value or performance or by the interaction of institutional arrangement and market choice? It tries to answer whether institutional arrangement maximizes the firm value, or an invisible hand pushes them to arrive at its maximum. Design/methodology/approach – This paper establishes an analytic framework of simultaneous equations based on causality, which includes five endogenous variables: ownership of larger shareholders, managerial ownership, director compensation, debt financing and firm value. It adopts 1,644 data samples from 274 Chinese listed companies in Shanghai and Shenzhen Stock Exchange during 2007- 2012 after the non-tradable shares reform. Ordinary least squares (OLS) estimation of single equation, 2SLS and 3SLS estimation of simultaneous equations are respectively done to show the differences of these three kinds of estimations. Findings – The empirical results show that differences exist among OLS, 2SLS and 3SLS estimation. Finally, 3SLS estimation should be adopted because the OLS and 2SLS estimation are biased. There are endogenous relationships between corporate governance mechanism and firm value. Through the 3SLS estimation, it is found that first, ownership concentration and firm value affect each other positively. Second, managerial ownership and firm value affect each other positively; third, director compensation and firm value affect each other negatively, while director compensation and firm performance affect each other positively. Finally, debt financing level and firm value are negatively related to each other. Practical implications – It means that ownership of large shareholders, managerial ownership, director compensation and debt financing in the Chinese listed companies are found to have a root in the interaction between institutional arrangement and market choice. It is also found that adverse selection occurs when creditors loan to the listed companies. Managerial compensation is positively related to accounting profit, but it is negatively related to firm value because managers increase profit due by earning management. This could only increase the accounting profits and obtain huge cash compensation, but not increase firm value and even harm the interests of shareholders. Originality/value – This paper not only shows the difference between OLS and 2SLS estimation but also compares the estimation of 2SLS and 3SLS in terms of empirical methods. It gives answers to the following questions: whether the relationship is one-way causality or bilateral causality between ownership concentration, managerial ownership, director compensation and firm value; whether governance mechanism affects firm value by institutional arrangement, or market drives both of them to strike a balance by an invisible hand. In other words, does it make them arrive at equilibrium through the competitive selection process when shareholders, directors, managers and creditors attempt to maximize themselves of their interests?

scholarly journals MEKANISME CORPORATE GOVERNANCE DAN MANAJEMEN LABA MODEL LONG TERM DISCRETIONARY ACCRUAL PADA PERUSAHAAN GO PUBLIK DI INDONESIA

2019 ◽  
Vol 21 (1) ◽  
pp. 55-69
Author(s):  
Wiyadi Wiyadi ◽  
Rina Trisnawati ◽  
Ecclisia Sulistyowati
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Institutional Investors ◽  
Audit Committee ◽  
Governance Mechanism ◽  
Purposive Sampling ◽  
Discretionary Accrual ◽  
Corporate Governance Mechanisms ◽  
Corporate Governance Mechanism

Penelitian ini bertujuan menganalisis pengaruh mekanisme corporate governanceinternal dan eksternal terhadap manajemen laba dengan pendekatan long termdiscretionary accrual perusahaan go publik di Indonesia yang tergabung dalamindeks LQ45 dan JII selama periode 2011-2015. Sampel penelitian berjumlah 226perusahaan diambil secara purposive sampling. Mekanisme CorporateGovernance terbagi menjadi: Mekanisme Corporate Governance internal daneksternal. Mekanisme Corporate Governance internal diproksikan dengan komiteaudit dan dewan komisaris independen. Sedangkan corporate governanceeksternal diproksikan dengan konsentrasi kepemilikan dan investor institusi.Metode analisis data menggunakan regresi linier berganda. Hasil penelitianmenunjukkan bahwa konsentrasi kepemilikan berpengaruh terhadap manajemenlaba. Sedangkan komite audit, dewan komisaris independen dan investor institusitidak berpengaruh terhadap manajemen laba.This study aims to analyze the influence of internal and external corporate governance mechanisms on earnings management with the long term discretionary accrual approach of companies incorporated in the LQ45 and JII indices during the period 2011-2015. The research sample was 226 companies taken by purposive sampling. The Corporate Governance mechanism is divided into: Internal and external Corporate Governance Mechanisms. The internal Corporate Governance mechanism is proxied by the audit committee and independent board of commissioners. While external corporate governance is proxied by the concentration of ownership and institutional investors. Methods of data analysis using multiple linear regression. The results showed that ownership concentration had an effect on earnings management. While the audit committee, independent board of commissioners and institutional investors have no effect on earnings management

Corporate Governance Mechanisms on the Internal Relations Between Managers and Subordinates

2021 ◽  
pp. 202-212
Author(s):  
Qudsia Aziz
Keyword(s):  
Corporate Governance ◽  
Financial Markets ◽  
Social Group ◽  
Legal Framework ◽  
Governance Mechanism ◽  
Corporate Governance Mechanisms ◽  
The World ◽  
Internal Relations ◽  
Corporate Governance Mechanism ◽  
Governance Models

The concept of governance is as old as human civilization. However, recently the usage of this term has increased multifarious. A broader concept of corporate governance involves a set of relationships amongst the organization's stakeholders. A stakeholder is any person, organization, social group, or society at large that has a stake in the business. Recognizing the importance of corporate governance, most of the countries in the world have developed their own corporate governance mechanism known as corporate governance models. The mechanism of corporate governance depends upon various indigenous factors such as legal framework, regulatory framework, the pattern of shareholding, breadth, and depth of financial markets.

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