Board independence and the quality of board monitoring: evidence from China

2015 ◽  
Vol 11 (3) ◽  
pp. 308-328 ◽  
Author(s):  
Xiaohui Wu ◽  
Hui Li
Keyword(s):  
Insider Trading ◽  
Boards Of Directors ◽  
Board Independence ◽  
Level Control ◽  
Firm Level ◽  
Content Type ◽  
Board Monitoring ◽  
The Impact ◽  
Monitoring Quality

Purpose – In 2001, the China Securities Regulatory Commission required that at least one-third of the members of corporate boards of directors come from outside the organization. The purpose of this paper is to investigate the impact of this change of regulation on corporate governance in China. In particular, the authors examine whether the increase in the proportion of outsider directors can increase the monitoring quality of the board. Design/methodology/approach – The basic empirical methodology is a logit regression in which the dependent variable is a binary variable that represents one of the three “negative events” identified as the indicators of poor monitoring quality. The independent variables are firm-level control variables. Findings – Using Chinese stock data from 1999 to 2005, the authors find that the resulting increase in board independence has reduced the occurrence of connected transactions and violations such as financial statement fraud, illegal insider trading, and asset misappropriation. However, this positive effect of board independence is not uniform across firms. The authors show that a higher degree of fundamental uncertainty in a firm impedes the effectiveness of board independence. The authors also document that the level of board independence is positively associated with firm performance, as measured either in stock market return or accounting return. Originality/value – In this paper, the authors aim to investigate the effectiveness of outsider directors in a more direct way than has previous research. The authors measure the improvement in the quality of board monitoring by the reduction of the likelihood of those corporate events that could reduce firms’ value. In particular, the authors examine the relationship between the board independence and the occurrence of “negative” corporate events in China. To the best of the knowledge, this is the first study that explores the link between board independence and the probabilities of these events.

Does location in a science park really matter for firms’ intellectual capital performance?

2014 ◽  
Vol 15 (4) ◽  
pp. 497-515 ◽  
Author(s):  
Francesco Schiavone ◽  
Antonio Meles ◽  
Vincenzo Verdoliva ◽  
Manlio Del Giudice
Keyword(s):  
Intellectual Capital ◽  
Firm Characteristics ◽  
Science Park ◽  
Firm Level ◽  
Policy Makers ◽  
Science System ◽  
Content Type ◽  
The Impact ◽  
Practical Implications

Purpose – The purpose of this paper is to investigate the effect of being located in a science park (SP) on the level of a firm's intellectual capital (IC) performance. Design/methodology/approach – Using a sample of 183 Italian firms (i.e. 61 tenant and 122 non-tenant firms), and through the GLS technique, the authors regress the firms’ IC performance across various explicative variables including a dummy that discriminates tenant and non-tenant firms. Findings – Consistently with expectations, the results show that the location of a firm in a SP leads to improved IC performance. Moreover, the authors find that some other firm characteristics, such as size, age, and leverage, are important predictors of its IC-based performance. Research limitations/implications – The sample is small and the impact on performance might be biased by factors related to the regional context (e.g. level of industrialization, quality of education, and science system). Practical implications – Implications for policy makers: support the growth of firms in SPs especially in those industries full of firms with scarce performance in IC. Implications for SP managers: they could “sell” (in terms of marketing) to both entrepreneurs to attract and policy makers this result. Implications for institutional investors: they should look at SPs with greater interest to find high-quality firms and improve their screening activity. Originality/value – This paper aims to extend literature about factors explaining the level of a firm's IC performance and the current understanding of the impact of SPs at firm level.

Board monitoring and audit fees: the moderating role of CEO/chair dual roles

2018 ◽  
Vol 33 (2) ◽  
pp. 217-243 ◽  
Author(s):  
Mohammad Jizi ◽  
Rabih Nehme
Keyword(s):  
Audit Committee ◽  
Banking Sector ◽  
Audit Fees ◽  
Audit Committees ◽  
Board Independence ◽  
Dual Roles ◽  
Content Type ◽  
Interaction Variables ◽  
Board Monitoring ◽  
The Impact

Purpose This paper aims to examine whether CEO/chair dual roles influence board monitoring-audit fees nexus. The impact of corporate governance on audit fees literature is lacking in the banking sector, which is subject to different regulations and reporting requirements to other sectors. The level and quality of external audit services are important not only to shareholders and customers but also for regulators’ reputations and public confidence. Design/methodology/approach Examining a sample of the US national commercial banks, this study fills the gap by empirically examining whether the attributes of internal corporate governance mechanisms, proxied by boards of directors and audit committee characteristics, are related to audit fees. We introduce two interaction variables to understand whether chief executive officer (CEO)/chair dual roles influence the relationships between board independence and audit fees on the one hand and between the audit committee and audit fees on the other hand. Findings We find that audit fees are positively associated with board independence, board size, CEO/chair dual role and audit committee financial experts. The results of the interaction variables indicate that boards with higher independence and more effective audit committees tend to demand higher audit quality, and consequently, pay higher audit fees to protect shareholders’ interests from potential power abuse by CEOs who also chair boards. Originality/value This study contributes to the literature by providing extensive understanding of the influence on audit fees of the independence of the board of directors and the effectiveness of the audit committees. The authors first examine the impact of each individual governance variable separately and then introduce two interaction variables. This study provides policymakers with insights into the existing relationships between audit fees and the banking sector governance structure.

Do disclosure and transparency affect bank’s financial performance?

2019 ◽  
Vol 19 (6) ◽  
pp. 1344-1361
Author(s):  
Isaiah Oino
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Financial Performance ◽  
Financial Institutions ◽  
Content Type ◽  
Loan Portfolios ◽  
Cent Level ◽  
Transparency And Disclosure ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of transparency and disclosure on the financial performance of financial institutions. The emphasis is on assessing transparency and disclosure; auditing and compliance; risk management as indicators of corporate governance; and understanding how these parameters affect bank profitability, liquidity and the quality of loan portfolios. Design/methodology/approach A sample of 20 financial institutions was selected, with ten respondents from each, yielding a total sample size of 200. Principal component analysis (PCA), with inbuilt ability to check for composite reliability, was used to obtain composite indices for the corporate governance indicators as well as the indicators of financial performance, based on a set of questions framed for each institution. Findings The analysis demonstrates that greater disclosure and transparency, improved auditing and compliance and better risk management positively affect the financial performance of financial institutions. In terms of significance, the results show that as the level of disclosure and transparency in managerial affairs increases, the performance of financial institutions – as measured in terms of the quality of loan portfolios, liquidity and profitability – increases by 0.3046, with the effect being statistically significant at the 1 per cent level. Furthermore, as the level of auditing and the degree of compliance with banking regulations increases, the financial performance of banks improves by 0.3309. Research limitations/implications This paper did not consider time series because corporate governance does not change periodically. Practical implications This paper demonstrates the importance of disclosure and transparency in managerial affairs because the performance of financial institutions, as measured in terms of loan portfolios, liquidity and profitability, increases by 0.4 when transparency and disclosure improve, with this effect being statistically significant at the 1 per cent level. Originality/value The use of primary data in assessing the impact of corporate governance on financial performance, instead of secondary data, is the primary novelty of this study. Moreover, PCA is used to assess the weight of the various parameters.

scholarly journals Knowledge sharing in open source software communities: motivations and management

2015 ◽  
Vol 19 (4) ◽  
pp. 791-813 ◽  
Author(s):  
Zilia Iskoujina ◽  
Joanne Roberts
Keyword(s):  
Knowledge Sharing ◽  
Open Source ◽  
Open Source Software ◽  
Online Communities ◽  
Descriptive Analysis ◽  
Online Questionnaire ◽  
Content Type ◽  
The Individual ◽  
The Impact

Purpose – This paper aims to add to the understanding of knowledge sharing in online communities through an investigation of the relationship between individual participant’s motivations and management in open source software (OSS) communities. Drawing on a review of literature concerning knowledge sharing in organisations, the factors that motivate participants to share their knowledge in OSS communities, and the management of such communities, it is hypothesised that the quality of management influences the extent to which the motivations of members actually result in knowledge sharing. Design/methodology/approach – To test the hypothesis, quantitative data were collected through an online questionnaire survey of OSS web developers with the aim of gathering respondents’ opinions concerning knowledge sharing, motivations to share knowledge and satisfaction with the management of OSS projects. Factor analysis, descriptive analysis, correlation analysis and regression analysis were used to explore the survey data. Findings – The analysis of the data reveals that the individual participant’s satisfaction with the management of an OSS project is an important factor influencing the extent of their personal contribution to a community. Originality/value – Little attention has been devoted to understanding the impact of management in OSS communities. Focused on OSS developers specialising in web development, the findings of this paper offer an important original contribution to understanding the connections between individual members’ satisfaction with management and their motivations to contribute to an OSS project. The findings reveal that motivations to share knowledge in online communities are influenced by the quality of management. Consequently, the findings suggest that appropriate management can enhance knowledge sharing in OSS projects and online communities, and organisations more generally.

Effect of female executives on Chinese cultural media enterprise efficiency

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ying Li ◽  
Yung-Ho Chiu ◽  
Tai-Yu Lin ◽  
Hongyi Cen
Keyword(s):  
Boards Of Directors ◽  
Company Performance ◽  
Tobit Regression ◽  
Female Executives ◽  
Two Stage ◽  
Content Type ◽  
Female Directors ◽  
The Impact ◽  
Cultural Media ◽  
Better Than

Purpose As more women are now being appointed to senior and top management positions and invited to sit on boards of directors, they are now directly participating in strategic company decision-making. As female directors have been found to provide new ideas, increase company competitiveness, efficiency and performance and bring a greater number of external resources to a company than male directors, this paper aims to put female directors as a variable into the data envelopment analysis (DEA) and statistical models to explore the effect of female directors on operating performances. The DEA first quantified and measured the company efficiencies, after which the statistical model analyzed the correlations between the variables to specifically identify the impact of female decision makers on the operating efficiencies in state-owned and private enterprises. Design/methodology/approach A novel two-stage, meta-hybrid dynamic DEA was developed to explore Chinese cultural media company efficiencies under optimal input and output resource allocations, after which Tobit Regression was applied to determine the effect of female executives on these efficiencies. Findings From 2012 to 2016, the overall efficiencies in Chinese state-owned cultural media enterprises were better than in the private cultural media enterprises. The overall technology gaps (TGs) in the state-owned cultural media enterprises were better than in the private cultural media enterprises. Originality/value Previous research has tended to focus on the causal relationships between female senior executives and business performances; however, there have been few studies on the relationships between female executives and company performance from an efficiency perspective (optimal resource allocation). This paper, therefore, is the first to develop a novel two-stage, meta-hybrid dynamic DEA to examine Chinese cultural media enterprise efficiencies, and the first to apply Tobit Regression to assess the effect of female executives on those efficiencies.

Shareholder risk-taking incentives in the presence of contingent capital

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mahmoud Fatouh ◽  
Ayowande A. McCunn
Keyword(s):  
Risk Taking ◽  
Banking System ◽  
Capital Requirements ◽  
Content Type ◽  
Basic Model ◽  
Conversion Rates ◽  
A Minor ◽  
The Impact ◽  
Practical Implications

Purpose This paper aims to present a model of shareholders’ willingness to exert effort to reduce the likelihood of bank distress and the implications of the presence of contingent convertible (CoCo) bonds in the liabilities structure of a bank. Design/methodology/approach This study presents a basic model about the moral hazard surrounding shareholders willingness to exert effort that increases the likelihood of a bank’s success. This study uses a one-shot game and so do not capture the effects of repeated interactions. Findings Consistent with the existing literature, this study shows that the direction of the wealth transfer at the conversion of CoCo bonds determines their impact on shareholder risk-taking incentives. This study also finds that “anytime” CoCos (CoCo bonds trigger-able anytime at the discretion of managers) have a minor advantage over regular CoCo bonds, and that quality of capital requirements can reduce the risk-taking incentives of shareholders. Practical implications This study argues that shareholders can also use manager-specific CoCo bonds to reduce the riskiness of the bank activities. The issuance of such bonds can increase the resilience of individual banks and the whole banking system. Regulators can use restrictions on conversion rates and/or requirements on the quality of capital to address the impact of CoCo bonds issuance on risk-taking incentives. Originality/value To model the risk-taking incentives, authors generally modify the asset processes to introduce components that reflect asymmetric information between CoCo holders and shareholders and/or managers. This paper follows a simpler method similar to that of Holmström and Tirole (1998).

Board gender diversity: performance and risk of Brazilian firms

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mauro Mastella ◽  
Daniel Vancin ◽  
Marcelo Perlin ◽  
Guilherme Kirch
Keyword(s):  
Firm Performance ◽  
Boards Of Directors ◽  
Gender Diversity ◽  
Ordinary Least Squares ◽  
Firm Risk ◽  
Content Type ◽  
Study Approach ◽  
Female Presence ◽  
Board Gender Diversity ◽  
The Impact

Purpose This study aims to intend to check if female board representation affects performance and risk and to analyse the evolution of the demographic aspects of the presence of women on boards in Brazil. Design/methodology/approach The authors used a sample of 150 Brazilian publicly traded companies from 2010–2018, with different measures of firm performance, firm risk and women’s presence on the board. The study approach is based on a set of ordinary least squares, quantile and panel data regressions. Findings The presence of women on the board has a positive effect on all of our accounting and market performance measures. However, the result of the impact on risk is not conclusive. The study also found that the number of females on the board has a more significant effect at the lower levels of firm performance measured by return on equity, but at the higher levels when measured by Tobin’s Q. Regarding return on assets, the more significant effect happened on the extremes of the performance distribution. The study findings point that market investors place more value in female presence on the board than in director positions. Originality/value By estimating the impact of women’s presence on the boards of directors in firm performance and risk, this study aimed to verify this impact in different aspects of the company. In addition, the authors did so in a sample with many years, making it possible to evaluate the historical evolution of the feminine presence in the boards of administration as well as in the groups of directors, assisting Brazilian legislators with new evidence about the possible impacts of Draft Law 7179/2017.

Impact of embodiment on attitude strength

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sunaina Shrivastava ◽  
Gaurav Jain ◽  
JaeHwan Kwon ◽  
Dhananjay Nayakankuppam
Keyword(s):  
Undergraduate Students ◽  
Cognitive Process ◽  
Target Object ◽  
Attitude Strength ◽  
Quality Of Information ◽  
Content Type ◽  
Lab Experiments ◽  
Attitude Accessibility ◽  
The Impact

Purpose Traditionally, it has been held that strong attitudes are a result of the conscious cognitive process of elaboration where one engages in effortful issue-relevant thinking. The purpose of this study is to show that attitude strength can follow from processes not just limited to elaboration – as a function of certain embodied states. This study examines bodily manipulations that could alter perceptions about the quality of the information describing a target (e.g. notion of “hard/soft” evidence), and, find that such an embodiment leads one to have strong attitudes toward the target object. This study proposes an attitude-rehearsal-based mechanism to explain the phenomenon. Design/methodology/approach This study have relied on lab experiments as a methodology – undergraduate students and American residents served as participants. This study have conducted a pre-registered study as well. Findings In the work, the study shows that strong attitudes can result from processes not just limited to elaboration, as a function of certain embodied states. This paper examines bodily manipulations that could alter perceptions about the quality of information describing the target (e.g. notion of “hard vs soft”; “converging vs diverging” information), and, find that such an embodiment leads one to have strong attitudes toward the target. This study consistently observed that the bodily manipulations influence attitude accessibility, a direct and operational indicator of attitude strength. This study further validates an attitude-rehearsal-based mechanism to explain the observed phenomenon. Originality/value While much work has investigated the impact of embodiment on attitudes, little attention has been paid to whether, and, how embodied states can impact the “strength” of the attitude without impacting the attitude itself – to the knowledge, this paper is the first to document this. Moreover, traditionally, it has been held that strong attitudes are a result of the conscious cognitive process of elaboration where one engages in effortful issue-relevant thinking. This study however shows that attitude strength can follow from processes not just limited to elaboration – as a function of certain embodied states.

The interplay between digital transformation and governance mechanisms in supply chains: evidence from the Italian automotive industry

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Emilio Paolucci ◽  
Elena Pessot ◽  
Riccardo Ricci
Keyword(s):  
Digital Technologies ◽  
Digital Transformation ◽  
Development Effort ◽  
Governance Mechanisms ◽  
Relational Governance ◽  
Firm Level ◽  
Digital Interface ◽  
Content Type ◽  
Automotive Suppliers ◽  
The Impact

PurposeThis paper aims to investigate the effect of specific subsets of digital technologies and governance mechanisms (i.e. relational and contractual) on the efficiency of the automotive supply chain (SC).Design/methodology/approachBuilding on the Transaction Costs Economic (TCE) theory, and on the literatures on the governance and Digital Transformation of SCs, the research employs a multi-respondent survey on a sample of 101 Italian automotive suppliers. It analyses the interplay between investments in network and physical–digital interface technologies and buyer–supplier relationship governance models in a joint product development effort. The related effects on costs, from the automotive suppliers' perspective, are considered.FindingsThe results confirm the TCE assumptions on governance mechanisms being appropriate to enhance cost performance, but in particular show that digital technologies shape the governance of buyer–supplier relationships with different patterns. The features of synchronisation and accessibility, as ensured by network technologies, are found to strengthen the impact of contractual governance, while the adoption of physical–digital interface technologies, and their enhanced features of virtualisation and traceability, further enhance the impact of relational governance on the efficiency improvements of suppliers.Practical implicationsSC actors need to recognise the importance of long-term collaboration and superior coordination through investments in specific subsets of digital technologies, to ensure a higher product and production data codifiability, transparency and thus integration at both an intra- and an inter-firm level.Originality/valueThis study is one of the first to have considered Digital Transformation in SCs from the suppliers' perspective and its implications on the efficiency of relationship governance with buyers.

The model of HRM-trust-commitment relationships

2015 ◽  
Vol 115 (8) ◽  
pp. 1457-1480 ◽  
Author(s):  
Dagmara Lewicka ◽  
Katarzyna Krot
Keyword(s):  
Structural Equation ◽  
Affective Commitment ◽  
Content Type ◽  
Calculative Commitment ◽  
Starting Point ◽  
Research Findings ◽  
Organisational Trust ◽  
The Impact ◽  
The Relationship

Purpose – It is worth focusing on the examination of factors influencing the quality of the work environment. The purpose of this paper is to verify the influence of the HRM system and organisational trust on employee commitment. Design/methodology/approach – The survey was conducted in Poland among 370 employees in organisations from two sectors of the economy: services and industry. The verification of the theoretical model was performed based on structural equation modelling. Findings – Research findings made it possible to successfully verify the model of the relationship between the HRM system (practices, process), organisational trust and commitment. The starting point for trust in an organisation followed by commitment is the HRM system. It seems that the impact of the HRM process on creating organisational trust is higher. Research findings have also confirmed a relationship between each type of organisational trust and calculative commitment based on benefits, which is a strong determinant of affective commitment. Organisational trust is, therefore, an intermediary factor because the organisation must build trust in employees first before they become affectively committed. Originality/value – Current studies have not examined the issue of a mutual relationship between three constructs: perceived HRM practices and process, organisational trust and commitment. What is more, previous research was confined to the constructs analysed holistically without considering their complexity (different types of trust and commitment). In addition, the authors attempted to enrich Allen and Mayer’s (1991) model with a new aspect of the commitment – calculative, which is linked to the benefits received by employees. The authors also identified the mediating influence of the trust and calculative commitment onto the affective commitment.

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