Board independence and private information-based trading: evidence from Malaysia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jiunn-Shyan Khong ◽  
Chee-Wooi Hooy ◽  
Chun-Teck Lye
Keyword(s):  
Panel Data ◽  
Private Information ◽  
Audit Committee ◽  
Dynamic Panel Data ◽  
Independent Directors ◽  
Board Independence ◽  
Disclosure Quality ◽  
Board Diversity ◽  
Content Type ◽  
The Relationship

PurposeThis study investigates the effect of board independence on private information-based trading (PIBT) events. This study also examines the interaction effects of firm's disclosure quality and the statutory and demographic roles of independent directors and board diversity attributes, respectively, on the relationship between board independence and PIBT.Design/methodology/approachThis study uses panel data of 811 non-financial public listed companies in Bursa Malaysia for the sample period 2009–2017. The dynamic general method of moments (DGMM) is used for the dynamic panel data estimation and to address the potential endogeneity problem.FindingsThe results show that board independence has a negative effect on PIBT and the effect could be strengthened by firm's disclosure quality, women independent directors and board gender diversity, but attenuated by CEO duality. The overall result suggests that apart from independent audit committee, the statutory and demographic attributes of independent directors and board diversity, and firm's disclosure quality are complementary to board independence in preventing persistent PIBT.Originality/valueThis study augments the existing corporate governance and information-based trading literature from the perspectives of firm's disclosure quality, and the statutory and demographic roles of independent directors and board diversity attributes, by examining their effects on the relationship between board independence and PIBT.

Does board independence moderate the relationship between environmental disclosure quality and performance? Evidence from static and dynamic panel data

2019 ◽  
Vol 19 (3) ◽  
pp. 580-610 ◽  
Author(s):  
Mohammad Alipour ◽  
Mehrdad Ghanbari ◽  
Babak Jamshidinavid ◽  
Aliasghar Taherabadi
Keyword(s):  
Firm Performance ◽  
Panel Data ◽  
Dynamic Panel Data ◽  
Board Independence ◽  
Corporate Boards ◽  
Disclosure Quality ◽  
Environmental Disclosure ◽  
Dynamic Panel ◽  
Content Type

PurposeThis study aims to link environmental disclosure quality (EDQ) to firm performance and examine the moderating role of board independence in this relationship.Design/methodology/approachDrawing on agency theory and stakeholder theory, the authors developed and tested hypotheses using original survey data from 720 firm-year observations collected from 120 Iranian companies over six years between 2011 and 2016. In this paper, they conducted static and dynamic panel data analysis.FindingsAfter correcting for endogeneity bias, the results showed that there is a significant positive relationship between EDQ and firm performance. The results also showed that board independence significantly reinforces the positive effect of EDQ on performance, and firms with more independent board members are involved environmental disclosure for improved performance. This is consistent with agency theory, which posits that a more independent board of directors can better monitor the CEO and reduce incentives for pursuing personal interests, which in turn improves performance. The results are robust after performing sensitivity tests.Research limitations/implicationsThis paper takes the perspective of corporate governance to empirically examine the effect of EDQ on firm performance. This study makes a contribution to the literature by showing that board independence moderates the effects of EDQ on firm performance.Practical implicationsThe evidence supports the emphasis that recent policy statements have put on increasing the number of independent directors on corporate boards. This study offers insights to policymakers interested in enhancing the monitoring role of corporate boards.Originality/valueThe study adds value to the understanding of the effect of the EDQ on performance and how board independence influences this relationship, particularly in an emerging economy like Iran.

Board independence and firm performance: evidence from Kuwait

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mejbel Al-Saidi
Keyword(s):  
Firm Performance ◽  
Least Square ◽  
Independent Directors ◽  
Board Independence ◽  
Content Type ◽  
Listed Firms ◽  
Ordinary Least Square ◽  
Large Shareholders ◽  
The Relationship

Purpose This paper aims to reduce the knowledge gap by using a large sample and different regressions while controlling the endogeneity and causality issues. Design/methodology/approach This study used the ordinary least square (OLS) and two stage least squares (2SLS) regressions to control the endogeneity and causality problems; this estimation strategy allows for comparison of both estimates to identify any inconsistency and biases in the parameters. Findings General speaking, this study found that board independence negatively affected firm performance based on Tobin’s Q only and the relationship between the two variables ran from board independence to firm performance but not vice versa. Originality/value The current independent directors are not adding value to Kuwait’s listed firms. Some directors who represent large shareholders and the conflict between large shareholders and small shareholders could affect the role of independent directors in Kuwait. To best of the researchers’ knowledge, this study is the first to consider board independent after controlling the issues of endogeneity and causality in Kuwait; thus, the results could be useful for Kuwaiti firms, regulators and policymakers.

Preliminary evidence on the relationship between corporate governance attributes and audit committee functionality in Egypt: beyond checking the box

2014 ◽  
Vol 14 (2) ◽  
pp. 197-210 ◽  
Author(s):  
Ahmed Abdel-Meguid ◽  
Khaled Samaha ◽  
Khaled Dahawy
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Stock Exchange ◽  
Preliminary Evidence ◽  
Audit Committees ◽  
Board Independence ◽  
Regulatory Requirements ◽  
Content Type ◽  
The Relationship ◽  
Egyptian Stock Exchange

Purpose – This exploratory study aims to provide preliminary evidence regarding the non-audit committee corporate governance determinants of audit committee functionality. Design/methodology/approach – The study is based on archival accounting, corporate governance data, and interviews of subjects of the top 100 companies listed on the Egyptian Stock Exchange (EGX100). A logistic regression is used to identify the non-audit committee governance attributes that affect the likelihood of of having a functional audit committee. Findings – Board size and board independence, (CEO-chairman duality) are positively (negatively) related to audit committee functionality, suggesting complementary governance relations. On the other hand, the authors document a negative relation between auditor type (Big4) and audit committee functionality indicating a substitutive governance effect. Originality/value – To the best of the authors' knowledge, this is the first study that explores the actual functioning of audit committees in Egypt beyond mere regulatory requirements. The study highlights the importance of assuring that the “spirit” of corporate governance laws and regulations is adhered to rather than the mere compliance with their “letter”.

scholarly journals Emerging policies and the effectiveness of corporate governance mechanisms on earning quality

2020 ◽  
Vol 9 (3) ◽  
pp. 157-164
Author(s):  
Mohammed Mahdi Obaid ◽  
Muneer Rajab Amrah
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Gulf Cooperation Council ◽  
Independent Directors ◽  
Board Independence ◽  
Governance Mechanisms ◽  
Corporate Governance Mechanisms ◽  
Earning Quality ◽  
The Relationship

Current study review extant empirical researches on the relationship between CG and EQ. However, the scope of the reviewed studies was shown to vary, most studies on CG and EQ are specific in focus, with different studies focusing on specific aspects or measures of CG. This study evaluates the role of emerging policies and the effectiveness of corporate governance mechanisms on earning quality within a conceptual framework for the Gulf cooperation council. This study concludes that the majority of companies with big board size, higher board independence, and more frequent meetings have improved EQ. Also, the result indicates companies with big audit committee size, a larger number of independent directors, more audit committee meetings and more experts tend to have an increase in EQ. Finally, this review emerged as a framework suitable for assessing the level of EQ disclosed and the relationship between CG and EQ base on GCC policies.

Tax Planning and Corporate Governance on Firm Value: Board Diversity as Moderating

2020 ◽  
Vol 11 (1) ◽  
pp. 52-52
Author(s):  
Amelia ◽  
Yulius Kurnia Susanto
Keyword(s):  
Corporate Governance ◽  
Firm Value ◽  
Audit Committee ◽  
Stock Exchange ◽  
Tax Planning ◽  
Board Independence ◽  
Board Meeting ◽  
Board Diversity ◽  
The Relationship ◽  
Female Member

This research is intended to analyse the influence of tax planning, CEO ownership, female member, board size, board independence, audit committee, and board meeting on firm value and the influence of board education background and board age on the relationship between tax planning and firm value in non-financial companies listed in Indonesia Stock Exchange. The population of this research are all non-financial companies consistently listed in Indonesia Stock Exchange from 2016 to 2018. This research uses 53 samples of non-financial companies selected through purposive sampling method resulting in 159 data to be analysed using moderating regressions analysis. The result of this research showed that audit committee has influence positive and significant on firm value. The board age has influence positive and significant on the relationship between tax planning and firm value. While tax planning, CEO ownership, female member, board size, board independence, board meeting have no significant influence on firm value. The influence of board education background on the relationship between tax planning and firm value has no significant. The increase in the size of audit committee will increase the value of firm, it is because the presence of audit committee that consists of independent members will reduce financial manipulation or fraud in the firms. Board age is strengthen the relationship between tax planning and firm value. Because the older the member of board directors, the more they obey their obligation to pay taxes, so the tax planning activities will be more effective and it will increase the value of the firm. Keywords: Firm Value, Tax Planning, Board Diversity, Corporate Governance

scholarly journals BOARD DIVERSITY AND FINANCIAL PERFORMANCE IN INDONESIA

2021 ◽  
Vol 2 (2) ◽  
pp. 86-95
Author(s):  
Werner Ria Murhadi ◽  
Deliana Azaria ◽  
Bertha Silvia Sutedjo
Keyword(s):  
Financial Performance ◽  
Board Of Directors ◽  
Firm Value ◽  
Independent Directors ◽  
Board Independence ◽  
Board Diversity ◽  
Company Value ◽  
Large Size ◽  
The Board Of Directors ◽  
The Relationship

Corporate governance has attracted many researchers to examine the relationship between board characteristics and financial performance. This study aims to determine the effect of board diversity, board size, and board independence on financial performance. This research is panel data with the number of observations reaching 1,355 years of observation. Financial performance is measured using accounting-based and market-based. It was found that the presence of female directors could not provide sound financial performance, even with a woman's prudence attitude would have an impact on decreasing the company's market value. The size of the board of directors does not affect financial performance, and the large size of the board of directors will have an impact on the decline in firm value. Independent directors are also not proven to be able to improve the company's financial performance; even the tendency of companies to carelessly fulfill the provisions of the rules regarding the existence of independent directors will bring a burden to the company so that it has an impact on the decline in company value.

Corporate governance, board ethnicity and financial statement fraud: evidence from Malaysia

2019 ◽  
Vol 32 (3) ◽  
pp. 514-531 ◽  
Author(s):  
Noorul Azwin Binti Md Nasir ◽  
Muhammad Jahangir Ali ◽  
Kamran Ahmed
Keyword(s):  
Audit Committee ◽  
Design Methodology ◽  
Logistic Regression Model ◽  
Positive Relationship ◽  
Financial Statement ◽  
Independent Directors ◽  
Financial Statement Fraud ◽  
Policy Makers ◽  
Content Type ◽  
The Relationship

Purpose This study aims to examine the relationship between the presence of a Malay director on the board and financial statement fraud in Malaysia. Further, the authors investigate whether financial statement fraud firms improve their governance mechanisms compared to non-fraud firms subsequent to the fraud year. Design/methodology/approach The authors use hand-collected data comprising 76 financial statement fraud and 76 non-fraud firms over a period of eight years from 2001 to 2008. Findings Using a univariate and logistic regression model, the results demonstrate a significant positive relationship between the proportion of Malay directors on the board and the financial statement fraud. The authors also find that fraud firms significantly increase the proportion of independent directors on their boards, increase the frequency of board and audit committee meetings and reduce duality subsequent to the detection of financial statement fraud compared to the non-fraud firms. Originality/value The findings of the study are useful to policy-makers, regulators, firms and investors.

Board characteristics, audit committee attributes and firm performance: empirical evidence from emerging economy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rifat Fariha ◽  
Md. Mukarrom Hossain ◽  
Ratan Ghosh
Keyword(s):  
Significant Relationship ◽  
Commercial Banks ◽  
Audit Committee ◽  
Banking Sector ◽  
Independent Directors ◽  
Board Independence ◽  
Content Type ◽  
Board Characteristics ◽  
Management Quality

PurposeThis study is designed and directed to analyze the effect of board characteristics and audit committee attributes on the firm performance of publicly listed commercial banks of Bangladesh.Design/methodology/approachThirty publicly listed commercial banks of Dhaka Stock Exchange (DSE) have been taken as sample for this study. Data have been collected from annual reports between 2011 and 2017 of the assessed banks. Pooled OLS model has been used for running regression model of this study.FindingsBoard independence has a negative and significant relationship with ROA and Tobin's Q. However, Board Independence has a positive and significant relationship with Stock Return. On the other hand, Board Diversity has a negative and significant relationship with ROA and ROE, which implies inefficiency of diversified board members in the context of Bangladesh. Family duality has a positive and significant relationship with ROA and a negative and significant relationship with Stock return. Board Meeting has a positive and significant relationship with ROA. Audit Committee Size has a negative and significant relationship with Tobins' Q. Independence of audit committee chairman has a negative and significant relationship with Tobin's Q and Stock Returns. Presence of non-executive directors and number of audit meetings have no significant relationship with any of the predicted variables.Research limitations/implicationsAmong all variables of the board characteristics, role of independent directors and participation of female directors have conflicting results in this study. This has raised a question about the fair appointment independent directors and their objective view on the board. Female directors' role is not convincing in the context of Bangladesh as most of the commercial banks are family-owned. Policymakers can tighten and supervise the appointment of independent directors to ensure good governance in the banking sector. Moreover, role of audit committee and independence of audit committee chairman have generated conflicting results in terms of market-based performance measure.Originality/valueBanking sector of Bangladesh experiences huge corruption in the form of excessive NPLs and poor management quality which results in low profit for the firm. This study has explored the problems of management quality and flaws of audit committee which is hampering overall growth of banking industry. Improvement of independent directors' appointment and audit committee formation and reporting will certainly help banking industry of Bangladesh to improve overall performance.

Inbound tourism and the marketization of China’s institutions

2016 ◽  
Vol 7 (4) ◽  
pp. 542-554
Author(s):  
Jing Ma ◽  
Shuo Liu
Keyword(s):  
Panel Data ◽  
Dynamic Panel Data ◽  
Economic Resources ◽  
Tourism Demand ◽  
Demand Model ◽  
Content Type ◽  
International Recognition ◽  
China Market ◽  
Inbound Tourism ◽  
The Relationship

Purpose The purpose of this paper is to examine whether the institutions play a role in tourism development and international recognition, specifically the influence of marketization on the international tourists’ inbound arrivals in different Chinese provinces. Design/methodology/approach This paper constructs a demand model of tourism and empirically analyzes the relationship between marketization and inbound tourism demand with the panel data of the provinces of China and NERI Index of Marketization. Findings Marketization does have an influence on inbound tourism demand of China. Specially, the relationship between government and market, the development of product market, the market intermediary organizations and the legal system environment can increase the demand of the foreign tourists to visit China, although the magnitudes are different. Practical implications This paper argues that the qualities of marketization intuitions are important in increasing inbound tourism, given that it can bring better tourism experience and improve the international recognition. Strengthening the legislation and protecting the legitimate rights and interests of consumers can attract more international travelers to China. Market distribution of competitive economic resources, reducing political intervention into corporate activities and relieving tax burdens of enterprises can improve the competitiveness and the service qualities of Chinese domestic tourism firms. Originality/value This paper leads the discussions of institutions and tourism. It combines the consumer theory and uses static and dynamic panel data models to analyze the influencing factors of Chinese tourism. It argues that Chinese inbound tourism shall develop with the systemic marketization progress in China.

Board diversity and corporate social responsibility in Jordan

2016 ◽  
Vol 14 (2) ◽  
pp. 279-298 ◽  
Author(s):  
Abdul Hadi Ibrahim ◽  
Mustafa Mohd Hanefah
Keyword(s):  
Corporate Social Responsibility ◽  
Data Analysis ◽  
Panel Data ◽  
Social Responsibility ◽  
Panel Data Analysis ◽  
Arab Countries ◽  
Board Diversity ◽  
Content Type ◽  
Csr Disclosure ◽  
Corporate Social

Purpose This study aims to investigate the impact of board diversity characteristics, namely, independence, gender, age and nationality of directors on the level of corporate social responsibility (CSR) disclosures. Design/methodology/approach Content analysis was used to determine CSR disclosure. This study used panel data analysis to investigate the influence of board diversity characteristics on CSR disclosures. Findings Panel data analysis show that the level of CSR disclosure has increased over the period of study. Results also reveal a positive and significant association between the level of CSR disclosure and board diversity variables. Research limitations/implications This study examined only companies listed on Amman Stock Exchange. Therefore, the generalisation of the results might be limited to the listed companies only. Practical implications Findings are relevant to policymakers, professional organisations and practitioners in Jordan and in other Arab countries. Social implications The role of women in the boardroom is important to ensure more CSR activities by the listed companies. Jordan being a Muslim country should take the initiative to introduce laws to increase the number of women to the board. Originality/value This study offers significant contributions to existing CSR literature in Jordan and in other Arab countries by introducing female directors. Findings are important to policymakers. They should implement quotas for women in the boardroom, and adopting such a policy will increase the participation of women in the decision-making process of the companies and reduce gender bias.

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