Triggering changes in corporate governance: before and after external whistleblowing

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nadia Smaili ◽  
Paulina Arroyo
Keyword(s):  
Corporate Governance ◽  
Chief Executive ◽  
Independent Directors ◽  
Governance Mechanism ◽  
Financial Statement Fraud ◽  
Content Type ◽  
Financial Crimes ◽  
Before And After ◽  
The Board Of Directors ◽  
Corporate Governance Mechanism

Purpose The purpose of this paper is to investigate whether a change of corporate governance occurs after financial crimes in Canada revealed through external whistleblowing. Design/methodology/approach Based on the methodology of Smaili and Arroyo (2019), the authors implement a qualitative research framework to examine 11 alleged Canadian corporate financial statement fraud cases publicly exposed during the 1995–2012 period. Findings The analysis suggests that firms had a weak traditional corporate governance mechanism before the external whistleblowing occurred. In almost every case, the chief executive officer (CEO) was also the chair of the board of directors. Although the reports by Dey and Saucier recommend that independent directors make up at least 75% of Canadian boards, we note that the percentage of independent directors was under 70% in six cases. Moreover, only two firms had a whistleblowing policy in place, and seven firms had a major shareholder. Regarding the consequences for corporate governance after whistleblowing, the analysis shows that the companies that survived the whistleblowing had enhanced their internal corporate governance by the third year after the whistleblowing. In fact, at all the surviving companies, the CEO was no longer the chair, and the percentage of independent directors had increased to 80%. However, for those survival companies that did not have a whistleblowing policy before the event, the situation did not change quickly, and they only implemented a policy after the enforcement of the new regulation in the year 2003. Originality/value This paper adds new insights to the research on financial crime by investigating the relation between corporate governance and whistleblowing.

scholarly journals PENGARUH GOOD CORPORATE GOVERNANCE TERHADAP NILAI PERUSAHAAN

2019 ◽  
Vol 1 (1) ◽  
pp. 7-20
Author(s):  
Yushita Marini ◽  
Nisha Marina
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Audit Committee ◽  
Stock Exchange ◽  
Financial Statements ◽  
Audit Committees ◽  
Independent Directors ◽  
Governance Mechanism ◽  
The Board Of Directors ◽  
Corporate Governance Mechanism

This study aimed to get empirical evidence regarding the corporate governance mechanism proxied by the size of the board of commisioners, independent directors, the size of the board of directors and audit committees that affect the value of the company. This study using purposive sampling method for collecting samples of the companies listed in Indonesia Stock Exchange that publish the complete annual financial statements for 2010-2014, have the data necessary corporate governance in research, the company has never delisted and present its financial statements in Indonesian Rupiah , From the analysis of the study showed that the size of the board of commisioners, independent directors, and the size of the board of directors affect the value of the company, while the audit committee does not affect the value of the company.

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.

Online transparency and corporate governance in Spanish governmental agencies

2019 ◽  
Vol 43 (4) ◽  
pp. 653-675 ◽  
Author(s):  
Vicente Pina ◽  
Lourdes Torres
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Previous Literature ◽  
Independent Directors ◽  
Political Dimension ◽  
Content Type ◽  
Eu Directive ◽  
The Board Of Directors ◽  
Practical Implications ◽  
Spanish Legislation

Purpose Online transparency has become a tool to increase legitimacy and trust in governments. The purpose of this paper is to study the online transparency of Spanish Central Government agencies and analyze whether their corporate governance (CG) structures influence their online transparency. Design/methodology/approach The information used for building an online transparency index and about the board of directors has been collected from the websites of the 168 agencies and from their statutes and activity reports. Ordinary least squares analysis is used. Based on a previous literature review and the requirements of the EU Directive and Spanish legislation, 108 items included in the websites have been analyzed. Findings The average information displayed through the website agencies is significantly less than the information considered as relevant in previous literature and in the Spanish legislation. The highest values are presented by the technical dimensions and the lowest by the organizational/political dimension. The presence of independent directors and women on the boards of directors are revealed as the most important explanatory factors of online transparency. Practical implications Practical implications to improve online transparency are related to the organizational/political dimension – including the positions and CVs of members of governing bodies, minutes, etc. and to the presence of independent directors and, to a lesser extent, of women, on the board of directors. Originality/value The contribution of this paper is the identification of some online transparency determinants in public entities under the same general legal framework. This is the first paper that analyzes the relationship between online transparency and CG in public agencies.

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.

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?

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.

scholarly journals The Effect of Good Corporate Governance Mechanism On The Financial Performance of Banking Companies Listed In Stock Exchange Indonesia 2012-2016

2019 ◽  
Vol 3 (2) ◽  
pp. 273-287
Author(s):  
Desi Pipian Pujakusum
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Board Of Directors ◽  
Audit Committee ◽  
Stock Exchange ◽  
Governance Mechanism ◽  
Return On Assets ◽  
Good Corporate Governance ◽  
The Board Of Directors ◽  
Corporate Governance Mechanism

This study aims to examine the effect of good corporate governance mechanism on the financial performance of banking companies listed on the Indonesian Stock Exchange 2012-2016 period. The corporate governance mechanism is proxied by the size of the board of directors, the size of the board of commissioners, audit committee size, the board of director's education, and the board of commissioner’s education. The company's financial performance is proxied by return on assets (ROA). Samples were taken by using purposive sampling. The total number of samples used in this study amounted to 180 research samples. This study was tested with SPSS 20 program. Data analysis technique used in this research is simple regression analysis.  The results showed that the size of the board of directors, the size of the board of commissioners, and audit comitee size have a significant effect on return on assets. These three factors have a significant effect on return on assets, while the board of commissioners education and the board of director's education have no significant effect on return on assets.

scholarly journals Institutional shareholding as a corporate governance mechanism that drives Chief Executive Officer pay

2020 ◽  
Vol 23 (3) ◽  
pp. 217-233
Author(s):  
María Consuelo Pucheta-Martínez ◽  
Carlos Chiva-Ortells
Keyword(s):  
Corporate Governance ◽  
Chief Executive Officer ◽  
Chief Executive ◽  
Jel Classification ◽  
Governance Mechanism ◽  
Pressure Sensitive ◽  
Variable Pay ◽  
Ceo Pay ◽  
Corporate Governance Mechanism ◽  
The Impact

We explore the effect of institutional directors on Chief Executive Officer (CEO) pay (total, fixed, and variable compensation). We delve particularly into the impact of pressure-sensitive and pressure-resistant institutional directors, who, respectively, represent institutional investors who maintain and investors who do not maintain a business relationship with the firm whose board they serve on. Focusing on CEO total pay, the findings show that institutional and pressure-resistant directors on boards behave similarly, affecting CEO total pay in a nonlinear way: as the presence of institutional and pressure-resistant directors on boards increases, the monitoring hypothesis prevails, and subsequently, better corporate governance decreases CEO total pay. However, when their presence on boards exceeds a critical point, the entrenchment hypothesis holds, thereby leading to an increase in CEO total pay. Contrary to our predictions, pressure-sensitive directors do not affect CEO total pay. Regarding the CEO’s compensation structure (fixed and variable), the results suggest that institutional and pressure-resistant directors increase fixed compensation and reduce variable pay, while pressure-sensitive directors affect neither fixed nor variable compensation. This evidence supports the view that institutional directors should be considered as a heterogeneous collective. JEL CLASSIFICATION: G3, G34, M12

scholarly journals Effect of Corporate Governance Mechanism on Company Value with Company Performance as Intervening Variable

2021 ◽  
Vol 9 (12) ◽  
pp. 115-131
Author(s):  
NUR ADILA ◽  
Zaenal Arifin
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Audit Committee ◽  
Company Performance ◽  
Governance Mechanism ◽  
Company Value ◽  
The Board Of Directors ◽  
Long Time ◽  
Corporate Governance Mechanism

Corporate Governance is a system that regulates and controls a company which expected to give and increase Company Value to investors. With the existence of Corporate Governance, it is expected that Company Performance will give a good influence on the company. One of the cases is after Indonesia went through a prolonged crisis since 1998, the repairing process in the companies took a long time and it is caused by the weakness of Corporate Governance application in the companies, which will affect the companies’ performance and decrease the companies’ values. The purpose of this research is to analyze the effects of the Corporate Governance mechanism on Company Value with Company Performance as an intervening variable. The case study used in this research is the companies included in IDX BUMN 20 Tahun 2020 list. The result of this study is that Independent Commissioner doesn’t affect values and Company Performance, the board of directors affects Company Value positively, the board of directors doesn’t affect Company Performance. The Audit Committee doesn’t affect the Company Value. The Audit Committee affects the Company Performance positively. The Company Performance is not capable to mediate the independent commissioner’s effect on Company Value. The Company Performance can mediate the effect of the Board of Directors on the Company Value, the Company Performance can’t mediate the effect of Audit Committee on the Company Value.

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