Internal governance mechanisms and the performance of decentralized financial systems in Niger

2018 ◽  
Vol 45 (4) ◽  
pp. 629-643 ◽  
Author(s):  
Hamadou Boubacar
Keyword(s):  
Social Performance ◽  
Successful Outcome ◽  
Governance Mechanisms ◽  
Financial Systems ◽  
Board Size ◽  
Internal Governance ◽  
Content Type ◽  
Internal Governance Mechanisms ◽  
Key Skills ◽  
The Impact

Purpose The purpose of this paper is to study the effect of internal governance mechanisms on the financial and social performance of Niger’s decentralized financial systems (DFS). Design/methodology/approach This paper investigated the impact of the board size and the CEO/chairman duality on financial performance and sustainability, respectively, measured by the return on assets (ROA) and operational self-sufficiency on one side and social performance measured by the size of loans granted and the percentage of female borrowers on the other side. Findings The results show that board size positively and significantly affects the ROA. The author also concludes that the duality of decision and control functions promotes the financial viability of the DFS. Regarding the impact of internal governance on social performance, the author finds that board size positively and significantly affects loan size. Research limitations/implications This study focuses on Niger’s 13 largest DFSs. However, an analysis that also includes smaller firms may show different results. Practical implications A board size of between 5 and 15 members is recommended. This would help to incorporate key skills and the active involvement of all members. Originality/value This research highlights the importance of including internal governance mechanisms, underscores an interesting problem and answers questions raised in the existing literature by invalidating or confirming the results that have been obtained thus far. As the players in the microfinance sector recognize that sound governance is an important factor for a successful outcome in any microfinance institution objective, the paper helps shed some light on the situation of DFS in Niger.

The impact of the Tunisian Revolution and internal governance mechanisms on the extent of voluntary information disclosure

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sameh Mekaoui ◽  
Emna Brahem ◽  
Hanen Moalla
Keyword(s):  
Ownership Structure ◽  
Information Disclosure ◽  
Governance Mechanisms ◽  
Internal Governance ◽  
Content Type ◽  
Internal Governance Mechanisms ◽  
The Board Of Directors ◽  
The One ◽  
Tunisian Revolution ◽  
The Impact

Purpose This study aims to investigate, on the one hand, the impact of the Tunisian Revolution and internal governance mechanisms (especially, the ownership structure and the board of directors structure on the extent of voluntary information disclosure [VID]) and on the other hand, the moderating effect of the Tunisian Revolution on the relationship between the internal corporate governance mechanisms and the VID. Design/methodology/approach A content analysis of 362 annual reports is used for determining the level of VID. This study covers a 10-year period (2007-2016) which is divided into two sub-periods (before and after the Tunisian Revolution). The generalized least squares regression model was used to investigate the effect of the Tunisian Revolution, ownership structure and the board of directors structure on the VID. Findings The Tunisian companies disclose less voluntary information after the Tunisian Revolution because of a decrease in the disclosure of information related to results, intangible assets, non-financial information and management’s discussion and analysis. The authors’ findings highlight the importance of the moderating effect of the revolution. After the Tunisian Revolution, a positive relationship was found, on the one hand, between institutional ownership, board size and board independence, and the VID on the other hand. Besides, companies with dual structures and with a high level of foreign ownership are less reluctant to the VID. Moreover, different governance mechanisms are related to different types of information disclosed. These relationships were affected by the Tunisian Revolution. Practical implications This piece of research could be useful for managers, investors and different stakeholders. It can help managers in improving their VID and thus their companies’ transparency, mainly in developing countries and in times of crisis. Moreover, it could be helpful for investors and stakeholders for their decision-making, especially in crisis periods. Originality/value This study contributes to the literature by investigating the VID in a developing country and in times of crisis. It widens knowledge by analyzing the types of voluntary information disclosed. It is one of the few pieces of research investigating this issue. Moreover, it is the first research analyzing the consequences on the VID of the revolutions in the Arab countries that have experienced an Arab Spring Revolution.

Impact of corporate governance compliance and board attributes on operating liquidity in pre- and post-corporate governance reforms

2020 ◽  
Vol 20 (7) ◽  
pp. 1329-1347
Author(s):  
Javed Khan ◽  
Shafiq Ur Rehman
Keyword(s):  
Corporate Governance ◽  
Gender Diversity ◽  
Governance Mechanisms ◽  
Internal Governance ◽  
Content Type ◽  
Internal Governance Mechanisms ◽  
External Governance ◽  
The Impact ◽  
Corporate Governance Reforms ◽  
Governance Reforms

Purpose This study aims to investigate the impact of corporate governance compliance, governance reforms and board attributes on operating liquidity of Pakistani listed non-financial firms. The study further tests how these relationships vary in the pre- and post-corporate governance reforms. Design/methodology/approach Fixed-effect regression model is used on 10 years panel data from 2007 to 2016 for a sample of 170 firms listed on the Pakistan Stock Exchange. Two-stage least squares model is used for addressing the endogeneity problem. Findings The findings reveal that governance compliance and governance reforms negatively affect operating liquidity. Among the board attributes, board meetings, directors’ remuneration, board foreign diversity and board gender diversity are significantly related to operating liquidity. Further exploration indicates that internal governance mechanisms are less effective to safeguard shareholders from expropriation during weak external governance. This suggests that strong external governance is inevitable to the effectiveness of internal governance mechanisms. Overall, the study findings support the agency theory. Practical implications The findings provide valid recommendations to policymakers interested in safeguarding the investors to focus on macro-level governance for making the micro-level governance effective. Further, the results provide the executives with an insight to improve the compliance level with the code of corporate governance. Originality/value Unlike prior studies, this study examines the impact of corporate governance compliance and novel board attributes – directors’ attendance at board meetings, number of board committees, directors’ remuneration and board foreign diversity on operating liquidity. Further, the study subdivides its sample period into pre- and post-corporate governance reforms to examine how external governance influences internal governance effectiveness.

An investigation of the relation between ownership structure and management control in professional service organisations

2019 ◽  
Vol 15 (1) ◽  
pp. 147-168 ◽  
Author(s):  
Robyn King ◽  
Peter Clarkson
Keyword(s):  
Ownership Structure ◽  
Empirical Support ◽  
Professional Services ◽  
Management Control ◽  
Professional Service ◽  
Governance Mechanisms ◽  
Internal Governance ◽  
Content Type ◽  
High Performing ◽  
Internal Governance Mechanisms

PurposeThis study aims to examine the interplay between ownership structure (organisational form) and management control system (MCS) design as governance structures within Australian primary health-care organisations (PHOs), seeking support for the suggestion that professional services will be most efficiently and effectively provided in organisations that have internal governance that is matched to their ownership form.Design/methodology/approachThe analysis is based on a series of in-depth investigations into the MCS choices made by seven Australian PHOs. Arguing that the degree of information impactedness is inversely related to the level of general practitioner (GP) ownership, organisations where more than 50 per cent of the GPs working within the practice are owners are classified as “high ownership” (“low information impactedness”). The adoption by high-performing organisations of their predicted MCS archetype according to Speklé’s development is then interpreted as representing empirical support.FindingsThe findings provide uniform support for the importance of the match between ownership structure and internal governance mechanisms. As predicted, the two high-performing, high member-owned organisations reported MCS resembling exploratory archetypes, the three high-performing, low member-owned organisations reported MCS consistent with a boundary archetype and the two low-performing organisations reported little emphasis on any control.Research limitations/implicationsThis study provides evidence of the importance of the appropriate match between ownership structure and internal governance mechanisms for PHOs.Practical implicationsThis study has potential to assist managers, owners and advisors to optimise MCS design in professional services organisations where there is heterogeneous ownership by professionals.Originality/valueThis study is one of the few attempts to provide empirical support for the assertion of the importance of a match between ownership structure and MCS design. It also represents one of the few attempts to provide empirical support for Speklé’s (2001) control archetypes, here the boundary and exploratory archetypes, archetypes that are applicable within important sectors of the economy, notably the professional services sector.

Institutional investor preferences

2019 ◽  
Vol 42 (5) ◽  
pp. 641-659 ◽  
Author(s):  
Hamdan Amer Al-Jaifi ◽  
Ahmed Hussien Al-Rassas ◽  
Adel Al-Qadasi
Keyword(s):  
Institutional Investors ◽  
Audit Committee ◽  
Internal Audit ◽  
Institutional Ownership ◽  
Governance Mechanisms ◽  
Internal Governance ◽  
Content Type ◽  
Internal Audit Function ◽  
Internal Governance Mechanisms ◽  
Emerging Country

Purpose This study aims to examine the institutional investors’ preferences for internal governance mechanisms (internal audit function and audit committee effectiveness) in an emerging country like Malaysia. Design/methodology/approach A sample of 2,020 yearly firm observations in Bursa Malaysia over the period 2009-2012 is used. The two-stage least squares using instrumental variables (IV-2SLS) analysis is used to examine the relationships. To corroborate the findings of this study, a regression based on a one-year lag of the independent variables is used. Furthermore, ordinary least square regression and Generalized Method of Moments using instrumental variables (IV-GMM) are used. Findings Positive associations are found between the internal audit function and audit committee effectiveness and the institutional ownership. Research limitations/implications These findings imply that institutional investors gravitate to firms that have high investment in internal audit function and effective audit committee. These findings are consistent with the conjecture that institutional investors try to minimize monitoring and exit costs and meet their fiduciary responsibility by investing in better internal audit firms. Practical implications This study offers insights to policymakers interested in enhancing internal governance mechanisms to attract institutional investors. Originality/value Limited empirical studies have examined the relation between internal governance mechanisms (internal audit function and audit committee effectiveness) and institutional ownership. This study adds to the existing literature on the importance of internal governance mechanisms by documenting an association between internal audit function and audit committee effectiveness and institutional ownership in an emerging country like Malaysia.

scholarly journals How banks’ internal governance mechanisms influence risk reporting

2015 ◽  
Vol 12 (3) ◽  
pp. 55-72 ◽  
Author(s):  
Mohammad Jizi
Keyword(s):  
Risk Management ◽  
Financial Crisis ◽  
Governance Mechanisms ◽  
Internal Governance ◽  
Business Operations ◽  
Internal Governance Mechanisms ◽  
Corporate Governance Mechanisms ◽  
Recent Financial Crisis ◽  
Management Disclosures ◽  
The Impact

Banks were the center of the recent financial crisis that results in a sharp decline in security prices and banks’ market capitalization. The content of information in general, and risk information in particular, provided to capital markets was vital to reduce the uncertainly levels left in the markets and encourage trading. Examining the impact of the internal corporate governance mechanisms on the content of risk management disclosures using a sample of US national banks in the wake of the financial crisis shows that banks having larger board size and higher proportion of independent directors are more inclined toward disclosing wider content of risk management information. The results also suggest that CEO duality impacts positively on risk management disclosures content to provide signals toward CEO objectivity and judgment in running business operations aligned with shareholders’ interest.

The effectiveness of internal corporate governance and audit quality: the role of ownership concentration – Malaysian evidence

2018 ◽  
Vol 18 (2) ◽  
pp. 233-253 ◽  
Author(s):  
Adel AlQadasi ◽  
Shamharir Abidin
Keyword(s):  
Corporate Governance ◽  
Audit Quality ◽  
Audit Fees ◽  
Ownership Concentration ◽  
Supporting Evidence ◽  
Governance Mechanisms ◽  
Internal Governance ◽  
Content Type ◽  
Internal Governance Mechanisms

Purpose This study is motivated by the competing views on whether internal governance mechanisms complement or substitute for external auditing, and how this association is affected by ownership concentration. The complementary view predicts that good internal governance mechanisms are related to high-quality audit. On the other hand, corporate governance mechanisms may be substituted for each other, so more investment in governance mechanisms leads to less investment in external auditing. Therefore, this study aims to examine the association between internal governance mechanisms and the demand for audit quality. Design/methodology/approach Data from Malaysian listed companies during the period 2009 to 2012 are used. Ordinary least square (OLS) regression is applied to analyse the data. Findings Companies with a higher concentration of ownership are less likely to demand extensive auditing. In addition, the study provides supporting evidence for the complementary association between a company’s governance and audit fees. However, the ownership concentration plays a minor role in the positive association between internal corporate governance and audit quality. Further tests are conducted and support the main findings. Practical implications Significant implications are provided for the audit profession in emerging economies, where concentrated ownership is common, to help policymakers and regulators in determining the power of controlling shareholders on audit quality and firm’s governance. The study’s findings open up avenues for further research. Originality/value This is the first work to address the role of ownership concentration in the association between corporate governance and audit quality; it suggests that the ownership structure must be considered in examining the effectiveness of corporate governance. The study also provides a comprehensive combination of internal governance mechanisms.

scholarly journals The impact of internal governance mechanisms on financial and stock market performance of listed companies: Evidence from an emerging market

2020 ◽  
Vol 9 (4) ◽  
pp. 126-138
Author(s):  
Houcine Berbou ◽  
Oumaima Sadqi
Keyword(s):  
Corporate Governance ◽  
Stock Market ◽  
Emerging Market ◽  
Market Performance ◽  
Listed Companies ◽  
Governance Mechanisms ◽  
Internal Governance ◽  
Internal Governance Mechanisms ◽  
Stock Market Performance ◽  
The Impact

The aim of this paper is to empirically test the impact of internal governance mechanisms on the financial and stock market performance of Moroccan listed companies. Board of directors’ characteristics such as independence and transparency, concentration, and presence of employees in the ownership structure, as well as some cognitive aspects of governance, represent the basis for discussion. Secondary data of a sample of 44 listed companies in the Casablanca Stock Exchange was analyzed using multiple linear regression. The results of this empirical study revealed that the financial and stock market performance of the companies that are captured by the return on equity (ROE) and the market to book ratio (M to B) significantly correlate with the adoption of the hybrid corporate governance approach. The relevance of this study is to enrich researches that deal with corporate governance and its impact on business performance in the context of Moroccan listed companies.

The mediating effect of dividend payout on the relationship between internal governance and free cash flow

2018 ◽  
Vol 18 (4) ◽  
pp. 748-770 ◽  
Author(s):  
Moncef Guizani
Keyword(s):  
Corporate Governance ◽  
Cash Flow ◽  
Free Cash Flow ◽  
Mediating Effect ◽  
Governance Mechanisms ◽  
Internal Governance ◽  
Dividend Payout ◽  
Content Type ◽  
Internal Governance Mechanisms ◽  
The Relationship

PurposeThis paper aims to examine the mediating effect of dividend payout on the relationship between internal governance mechanisms (board of directors and ownership structure) and the free cash flow level.Design/methodology/approachLinear regression models are used to investigate such relationships applying data from a sample of 207 non-financial firms listed on the Gulf Cooperation Council countries’ stock markets between 2009 and 2016. To test the significance of mediating effect, the author uses the Sobel test.FindingsThe author finds a partial mediation effect of dividend on the relationship between both board independence and managerial ownership and the level of free cash flow. The results confirm the major role of outside directors in corporate governance. This governance mechanism contributes to the protection of shareholders’ interests through a generous dividend policy. However, the author finds that large managerial shareholdings increase the level of free cash flow through lower dividend payouts. This result suggests that powerful managers follow their preference of retaining excess cash to their own interests.Practical implicationsThis paper offers insights to policy-makers of emerging economies interested in the development of the corporate governance. This study provides guidance for firms in the construction and implementation of their own corporate governance policies.Originality/valueThe main contribution of the present paper is to examine the dividend payout as a potential mediating variable between internal governance mechanisms and free cash flow. Moreover, it highlights the issue of efficient management of substantial funds inSharia-compliant and non-Sharia-compliant firms.

The governance mechanisms of family-controlled REITs

2016 ◽  
Vol 6 (2) ◽  
pp. 122-142 ◽  
Author(s):  
Erick Paulo Cesar Chang ◽  
Magdy Noguera
Keyword(s):  
Family Involvement ◽  
Transaction Cost Economics ◽  
Governance Mechanisms ◽  
Internal Governance ◽  
Content Type ◽  
Internal Governance Mechanisms ◽  
Data Limitations ◽  
Long Term Performance ◽  
Term Performance

Purpose – The purpose of this paper is to analyze how founders of family-controlled Real Estate Investment Trusts (REITs) under bounded rationality implement internal governance mechanisms that may affect the long-term performance once the founder retires. These actions create a hurdle for successors to follow the founder’s success. Design/methodology/approach – The authors collected data on secondary sources of 36 family and 22 professionally managed REITs from 1999 to 2012 that resulted in an unbalanced panel data of 726 REIT-year observations. The authors use a series of multi-variate analyses to test the hypotheses. Findings – The findings confirm that founders of family-controlled REITs focus more on developing internal governance mechanisms to satisfy their personal goals. Long-term performance is negatively affected once the successor takes over especially when the successor is a family member. Research limitations/implications – The authors have data limitations about family involvement. The authors suggest future avenues of investigation such as combining perceptual with archival data. Practical implications – The authors expect that REIT managers and families can use the findings to develop viable and sustainable governance practices. Especially, being a publicly traded REIT implies to conform to the market expectations so there is a need to balance socio emotional wealth preservation with financial goals. Originality/value – The authors frame the paper on transaction cost economics and contribute to the literature by stating that the dominance of founders of family-controlled REITs are more aligned to keep the business under family control once the founder retires.

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