Corporate governance and cost of capital in OECD countries

2019 ◽  
Vol 35 (4) ◽  
pp. 665-690 ◽  
Author(s):  
Aws AlHares
Keyword(s):  
Corporate Governance ◽  
Design Methodology ◽  
Cost Of Capital ◽  
Oecd Countries ◽  
Content Type ◽  
Analysis Techniques ◽  
Alternative Measures ◽  
Director Ownership ◽  
The Impact ◽  
New Evidence

Purpose This article aims to investigate the impact of corporate governance (CG) mechanisms on cost of capital (COC) in Organisation for Economic Co-operation and Development (OECD) countries. Design/methodology/approach Companies from 34 OECD countries were used between 2010 and 2017. Multiple regression analysis techniques is used to examine the relationships. The findings are robust to alternative measures and endogeneities. Findings The results show that CG index and director ownership are statistically negatively related to COC. In contrast, the results show that block ownership is statistically related to COC. Originality/value This study extends, as well as contributes to the extant CG literature by offering new evidence on the effect of CG mechanisms on COC. The findings will help regulators and policymakers in the OECD countries in evaluating the adequacy of the current CG reforms to prevent management misconduct and scandals.

Corporate governance and cost of capital in OECD countries

2020 ◽  
Vol 28 (1) ◽  
pp. 1-21 ◽  
Author(s):  
Aws AlHares
Keyword(s):  
Corporate Governance ◽  
Cost Of Capital ◽  
Oecd Countries ◽  
Ordinary Least Squares ◽  
Governance Mechanisms ◽  
Content Type ◽  
Corporate Governance Mechanisms ◽  
Anglo American ◽  
The Cost ◽  
The Impact

Purpose The purpose of this study is to investigate the impact of corporate governance mechanisms on the cost of capital in Organisation for Economic Co-operation and Development (OECD) countries. Design/methodology/approach A panel data of 240 companies from Anglo-American and European countries between 2010 and 2017 were used. The ordinary least-squares multiple regression analysis was used to examine the relationships. The results were also robust to alternative measures and endogeneities. Findings The results showed that the corporate governance index and director ownership were negatively related to the cost of capital. Moreover, the study also reports a positive correlation between block ownership and the cost of capital. Originality/value This study extended the corporate governance literature by offering new evidence on the effect of corporate governance mechanisms on the cost of capital. Our findings will help regulators and policymakers in the OECD countries to evaluate the adequacy of the current corporate governance reforms to prevent management misconduct and scandals.

Corporate governance mechanisms and R&D intensity in OECD courtiers

2020 ◽  
Vol 20 (5) ◽  
pp. 863-885
Author(s):  
Aws AlHares
Keyword(s):  
Corporate Governance ◽  
Risk Taking ◽  
Oecd Countries ◽  
Least Square ◽  
European Countries ◽  
Board Structure ◽  
Governance Mechanisms ◽  
Content Type ◽  
Anglo American ◽  
The Impact

Purpose This study aims to investigate the impact of ownership structure and board structure on risk-taking as measured by research and development (R&D) Intensity in OECD countries. Design/methodology/approach A panel data of 300 companies from Anglo American and European countries between 2010 and 2016 were used. The ordinary least square multiple regression analysis procedure is used to examine the relationships. The findings are robust to alternative measures and endogeneities. Findings The results show that institutional ownership, board size, independent directors and board diversity are negatively related to risk-taking, with greater significance among Anglo American countries than among Continental European countries. In contrast, the results show that director ownership is statistically insignificant. Originality/value This study extends and contributes to the extant corporate governance (CG) literature, by offering new evidence on the effect of ownership and board structure on risk-taking between two different traditions. The findings will help regulators and policy-makers in the OECD countries in evaluating the adequacy of the current CG reforms to prevent management misconduct and scandals. These findings are relevant for companies aiming to adopt the most suitable governance mechanisms to pursue their R&D objectives and for policymakers interested in promoting R&D investment.

The impact of corporate governance code on earnings management in listed non-financial firms

2017 ◽  
Vol 7 (4) ◽  
pp. 428-444 ◽  
Author(s):  
Erick Rading Outa ◽  
Paul Eisenberg ◽  
Peterson K. Ozili
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Design Methodology ◽  
Explanatory Variable ◽  
Content Type ◽  
Listed Firms ◽  
Financial Firms ◽  
New Institutions ◽  
The Impact ◽  
Practical Implications

Purpose The purpose of this paper is to examine whether voluntary corporate governance (CG) code issued in 2002 constrain earnings management (EM) among listed non-finance companies in Kenya. Design/methodology/approach Using a panel data of 338-firm year’s observations between 2005 and 2014, the authors test the hypothesis that CG constrains EM in non-finance firms listed in Kenya. The authors regress discretionary accruals (DA) against a developed Corporate Governance Index (CGI). Findings The overall results show that DA is not significantly related to CG suggesting the voluntary CG code does not deter EM in non-finance companies in Kenya. Practical implications Evidence of income decreasing\increasing accruals implies EM still exists among the listed firms. This suggests that policymakers may need to consider radical actions including alternative or new CG approaches and new institutions to improve the effectiveness of CG. Originality/value This study extends existing studies by including composite CG as possible explanatory variable for constraining EM. The authors contribute to the debate by demonstrating that the voluntary CG code in Kenya is not effective in constraining DA and therefore the current initiatives by the regulator to change the current CG code are appropriately directed.

Corporate governance, the GFC and independent directors

2015 ◽  
Vol 30 (4/5) ◽  
pp. 324-346 ◽  
Author(s):  
Belinda Rachael Williams ◽  
Simone Bingham ◽  
Sonia Shimeld
Keyword(s):  
Corporate Governance ◽  
Design Methodology ◽  
Global Financial Crisis ◽  
Good Governance ◽  
Board Composition ◽  
Content Type ◽  
Effective Governance ◽  
Analysis Techniques ◽  
The Global Financial Crisis ◽  
Made In

Purpose – The purpose of this study is to understand how board composition and independent non-executive director (INED) disclosures have changed in light of the global financial crisis (GFC) from an accountability perspective. Design/methodology/approach – Content analysis techniques were undertaken on a random sample of 75 publicly listed companies across two time periods, 2005 and 2010. Findings – The findings highlighted increased INED board membership and increased skill and experience disclosure across all board positions, with the most significant increase being the INED position. The results support the notion that firms are attempting to restore their accountability relationships post-GFC through more transparent mechanisms of governance. However, concerns are also raised in the way individual companies are meeting the ASX Corporate Governance independence requirements. Research limitations/implications – The results raise questions as to whether firms have implemented these changes to ensure effective governance and accountability responsibilities, or simply to give the appearance of good governance. Originality/value – Little attention has been given in the literature to the characteristics of INEDs and whether board changes have been made in the wake of corporate and financial crises. The findings from this study contribute to an understanding of board composition and disclosures pre- and post-GFC.

The impact of financial safety act and corporate governance on the level of financial disclosure

2016 ◽  
Vol 58 (6) ◽  
pp. 618-633 ◽  
Author(s):  
Ali Ahmadi ◽  
Abdelfettah Bouri
Keyword(s):  
Corporate Governance ◽  
Design Methodology ◽  
Stock Exchange ◽  
Financial Disclosure ◽  
Content Type ◽  
Study Results ◽  
Before And After ◽  
The Subject ◽  
High Level ◽  
The Impact

Purpose This research paper aims to identify and measure the contribution of the financial safety act (FSA) regulation in improving the level of financial disclosure of listed Tunisian firms. To answer the problems of the subject, the authors tried to hold accountable several determinants of the level of financial disclosure relating to the particular characteristics of the firm, and the adoption of the recommendations envisaged by the FSA, as likely to have an impact on the level of financial disclosure of Tunisian firms. Design/methodology/approach With a sample composed by 20 companies during the period from 2003 to 2010 (160 observations), the contribution of the FSA regulation in improving the level of financial disclosure of listed Tunisian firms was identified and measured. After that, the levels of financial disclosure before and after the FSA were compared. Findings The study results confirm the positive and significant effect of the FSA on the level of financial disclosure. This impact seems to appear through the improvement of the disclosure level during the years which follow the adoption of the new regulation. The results of this study also show that firms with a high level of financial disclosure are those which have an independent board of directors, auditor BIG and joint audit. Originality/value This paper is devoted to evaluate the impact of the FSA n°2005-96 and corporate governance on the level of financial disclosure. The empirical study relates to a sample of 20 firms listed on the Tunis Stock Exchange observed over the period 2003-2010.

scholarly journals Corporate governance and sustainability reporting in the Australian resources industry: an empirical analysis

2018 ◽  
Vol 16 (1) ◽  
pp. 1-14 ◽  
Author(s):  
Tricia Ong ◽  
Hadrian Geri Djajadikerta
Keyword(s):  
Corporate Governance ◽  
Design Methodology ◽  
Sustainability Reporting ◽  
Independent Directors ◽  
Content Type ◽  
Sustainability Performance ◽  
Multiple Directorships ◽  
Corporate Governance Mechanisms ◽  
Positive Correlations ◽  
The Impact

Purpose This study aims to evaluate the impact of corporate governance on sustainability reporting by investigating companies operating in the Australian resources industry. Design/methodology/approach This study investigates the relationships between the total sustainability disclosures and, separately, the three aspects of sustainability disclosures – economic, environmental and social – and corporate governance mechanisms proxy by various attributes of board composition. The sustainability disclosures were scored using Ong et al.’s (2016) index. Findings Significant positive correlations were found between the extent of sustainability disclosures and the proportion of independent directors, multiple directorships and female directors on the board. Originality/value Unlike traditional content analysis methods, this study adopts a newly developed Global Reporting Initiatives-based reporting index that identifies companies with good sustainability performance by aligning companies’ disclosures to their sustainability performance.

A view of the learning organization from a corporate governance perspective

2018 ◽  
Vol 25 (6) ◽  
pp. 434-442 ◽  
Author(s):  
Yusuf Sidani ◽  
Simon Reese
Keyword(s):  
Corporate Governance ◽  
Learning Organization ◽  
Design Methodology ◽  
Practical Application ◽  
Content Type ◽  
The Impact

Purpose This paper aims to provide an overview of the development of learning organization concepts from the perspective of Professor Bob Garratt and presents an interesting evolution toward his work on learning boardroom members. Design/methodology/approach Through a conversation with Professor Garratt, the authors capture several topics pertaining to his evolution of learning organization concepts, those who have differing views and ultimately what led him to develope his theories on the impact of the most senior members of an organization on the learning constructs. Findings The learning organization debate has many foundations that today have led to differing perspectives. Professor Garratt provides his particular background and how he developed his opinions, which he admits have not always been embraced in practice. Originality/value The discussion with Bob Garratt reveals his understanding of the learning organization concept and how it developed from a lifetime of practical application. Ultimately, the reader will understand, in Professor Garratt’s own words, where he was confronted with challenges and why his concepts evolved to where they are today.

Corporate governance guidelines compliance and firm financial performance

2016 ◽  
Vol 31 (8/9) ◽  
pp. 891-914 ◽  
Author(s):  
Erick Rading Outa ◽  
Nelson M. Waweru
Keyword(s):  
Corporate Governance ◽  
Life Cycle ◽  
Firm Performance ◽  
Financial Performance ◽  
Firm Value ◽  
Design Methodology ◽  
Content Type ◽  
Firm Financial Performance ◽  
The Impact ◽  
The Relationship

Purpose This paper aims to examine the impact of compliance with corporate governance (CG) guidelines during the period 2002-2014 on firm financial performance and firm value of Kenyan-listed companies. Design/methodology/approach Using panel data of 520-firm year’s observations between 2005 and 2014, the authors test the hypothesis that compliance with CG guidelines issued in 2002 by Capital Markets Authority (CMA) improved firm financial performance and firm value. Findings Compliance with CG Index which is an aggregate of all the CG guidelines is positively and significantly related to firm performance and firm value. Board evaluation is also positively and significantly related to firm performance. The findings suggest that CG guidelines are associated with firm financial performance and firm value. Originality/value The authors provide evidence on the relationship between CG practices and firm financial performance and firm value in Kenya. Second, the authors provide evidence on board evaluation which has not been tested before in a “comply or explain” environment. Finally, they evaluate how CMA 2002 CG guidelines steered firm financial performance and firm value over its life cycle from 2002 to 2014. These results are important to CMA and other CG regulators and boards in their efforts to improve CG practices in the region.

scholarly journals The UEFA Champions League: maintaining the status quo?

2015 ◽  
Vol 21 (5/6) ◽  
pp. 247-258 ◽  
Author(s):  
Daniel Plumley ◽  
Stuart W. Flint
Keyword(s):  
Data Analysis ◽  
Design Methodology ◽  
Status Quo ◽  
Current Paper ◽  
Competitive Balance ◽  
Content Type ◽  
Analysis Techniques ◽  
New Knowledge ◽  
The Status ◽  
The Impact

Purpose – The purpose of this paper is to examine the competitive balance of the UEFA Champions League group stages. There are numerous financial and commercial benefits to clubs that participate in this competition. The current paper examines whether the seeding system operated by UEFA is hindering some lower ranked teams from qualification and, thus, the associated benefits. Design/methodology/approach – Data were collected for all UEFA Champions League group stages between1999/2000 and 2013/2014. Data analysis techniques included Herfindahl-Hirschman Index to examine competitive balance and one-way ANOVAs to examine the impact of the current seeding system on club performance. Findings – The findings suggest that there are flaws in the ranking and seeding system used by UEFA, as results show that the competition is competitively imbalanced at the group stage. Additionally, clubs that are continually placed in the highest seeding pot historically tend to accumulate more points and finish in a higher position in the group, thereby giving them a better opportunity to progress further in the competition. Research limitations/implications – The study has implications for both the clubs competing in the Champions League, who will be affected by the seeding system, and UEFA themselves when considering the sporting integrity of their flagship competition. Originality/value – To the authors’ knowledge, this is the first paper of its kind to examine competitive balance in this competition, and the paper contributes new knowledge that extends the research undertaken in the field previously.

Corporate governance: mapping the change

2018 ◽  
Vol 60 (1) ◽  
pp. 19-33 ◽  
Author(s):  
Varnita Srivastava ◽  
Niladri Das ◽  
Jamini Kanta Pattanayak
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Design Methodology ◽  
Cost Of Capital ◽  
Research Papers ◽  
Content Type ◽  
Evolution And Development ◽  
Indian Context ◽  
Relationship Of ◽  
The Relationship

Purpose This paper aims to explore the relationship of corporate governance attributes with cost of capital and firm performance. This paper also tries to find some widely discussed corporate governance attributes that hold importance in Indian context. Design/methodology/approach This paper is based on literature survey of 241 research papers, both conceptual and empirical, which covers literature published over a period of three decades, ranging from 1986 to 2016. The literature includes those papers that studied the relation of corporate governance with cost of capital and firm performance, also it includes those research papers which discuss the evolution and development of corporate governance as a concept. Findings This study finds that the idea of corporate governance has shifted from the protection of shareholders’ rights to a firm’s need for survival. There is a dearth of literature studying the relation between corporate governance and cost of capital in India. It is observed that cost of capital is a better measure than Tobin’s q in Indian context. Research limitations/implications This paper mainly focuses on themes like cost of capital and firm performance therefore, some other firm-related measures which are also influenced by corporate governance may have been ignored. Originality/value This study enhances the literature on corporate governance especially in Indian context. Empirically testing the framework developed in this study will help in identifying the significance of various corporate governance attributes in Indian context.

Sign in / Sign up

Export Citation Format

Share Document