Board restructuring and successful demutualization: the stock exchanges

2018 ◽  
Vol 31 (3) ◽  
pp. 598-618 ◽  
Author(s):  
Laura Padilla-Angulo ◽  
Faten Ben Slimane
Keyword(s):  
Corporate Governance ◽  
Positive Impact ◽  
Stock Exchanges ◽  
Board Composition ◽  
Content Type ◽  
For Profit ◽  
Fine Grained ◽  
The Board Of Directors ◽  
The Impact ◽  
A Company

Purpose The purpose of this paper is to study corporate governance restructuring strategies of companies to adapt to new market conditions following conversion into a for-profit structure. It focuses on the changes in the composition of the board of directors. Design/methodology/approach The paper conducts a field experiment using stock exchanges, which have become more international over time, and many of which have been forced to demutualize and convert to for-profit structures to compete more efficiently. The paper does a fine-grained analysis of restructuring in the composition of the board using the ANOVA technique. The paper also examines the impact of this board composition restructuring on the reputation of the exchanges using a regression technique. Findings The authors find that the stock exchanges restructured board composition and refocused them to create better value. Results suggest that the conversion of a company to a for-profit structure brings efficiencies when accompanied by changes in the governing bodies. The authors also find that converting to for-profit firms had a positive impact on the reputation of the exchanges. The positive impact was even greater when accompanied by changes in board composition. Research limitations/implications A stronger focus on the corporate governance dimension to understand the successful demutualization of stock exchanges is needed. Originality/value The authors analyze the corporate governance dimension during demutualization processes of an under examined sector. The financial performance of the stock exchanges the authors study significantly improved after their conversion to for-profit organizations and provide an example of successful corporate governance restructuring.

Ownership as a determinant of chairperson activity: a study of Nordic listed companies

2015 ◽  
Vol 7 (4) ◽  
pp. 412-428
Author(s):  
Tor Brunzell ◽  
Jarkko Peltomäki
Keyword(s):  
Working Hours ◽  
Chief Executive ◽  
Ownership Concentration ◽  
Content Type ◽  
Listed Firms ◽  
Concentrated Ownership ◽  
The Board Of Directors ◽  
The Impact ◽  
The Empirical Analysis ◽  
A Company

Purpose – The purpose of this study is to explicitly focus on the roles of ownership concentration, ownership by the board, the chief executive officer (CEO) and the chairperson in the involvement and capabilities of chairpersons and other governors in their work. Design/methodology/approach – In this study, the authors investigate the impact of the concentration of ownership, the ownership of the board, the CEO and the chairperson on the chairperson’s activity when the roles of the chairperson and the CEO are separated The empirical analysis of this study is based on a survey sent to Nordic listed firms. Findings – The results show that the ownership characteristics of a company are important in determining the chairperson’s working hours, the chairperson’s communication with the CEO and the performance of governance activity. In addition, the authors found that while the ownership of the chairperson and the board of directors and ownership concentration improve governance activity, CEO ownership may undermine governance activity. Research limitations/implications – The primary implication of the study is that both ownership by internal governors and ownership concentration play an important role in determining the involvement of internal corporate governors. Originality/value – The study provides unique evidence that ownership by the chairperson, concentrated ownership and ownership by the board can potentially mitigate the costs of separating the roles of the chairperson and the CEO.

Financial soundness of Islamic banks: does the structure of the board of directors matter?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Afef Khalil ◽  
Imen Ben Slimene
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Islamic Banks ◽  
Z Score ◽  
Data Set ◽  
Content Type ◽  
Additional Hypothesis ◽  
The Board Of Directors ◽  
Financial Soundness ◽  
The Impact

Purpose The purpose of this paper is to examine the Board of Directors’ characteristics and their impact on the financial soundness of Islamic banks. Design/methodology/approach Regression analysis is applied to test the impact of the Board of Directors’ characteristics on the financial soundness of Islamic banks, using a panel data set of 67 Islamic banks covering 20 countries from 2005 to 2018. The Z-score indicator is used to evaluate the Islamic banks’ soundness. To check the robustness of the results, this paper uses other dependent variables (CAMEL) than the Z-score. Findings The main results show that the presence of an independent non-executive director negatively impacts the financial soundness of Islamic banks, while the chief executive officer duality practice has a positive effect on it. Other characteristics of the Board of Directors do not significantly impact the financial soundness of Islamic banks (foreign director, institutional director, chairman with a Shari’ah degree, interlocked chairman and the Board of Directors’ size). Practical implications This study aims to fill the gaps in the literature that discuss the Board of Directors’ role in corporate governance and its impact on the financial soundness of Islamic banks. In other words, it shows the role played by the Board of Directors and improves the knowledge of the corporate governance-financial soundness relationship. Plus, managers, investors and regulators may gain evocative insights, particularly those looking to improve their Islamic banks’ soundness by restructuring their boards’ composition. Originality/value This study sheds new light on the literature on Islamic banking by clarifying the relationship between the Board of Directors and the financial soundness of Islamic banks. Contrary to previous research, this paper uses an additional hypothesis stating that a chairman with a Shari’ah degree (Fiqh Muamalt) has a positive impact on the financial soundness of Islamic banks.

scholarly journals External Pressure, Corporate Governance, and Voluntary Carbon Disclosure: Evidence from China

2019 ◽  
Vol 11 (10) ◽  
pp. 2901 ◽  
Author(s):  
Pinglin He ◽  
Huayu Shen ◽  
Ying Zhang ◽  
Jing Ren
Keyword(s):  
Corporate Governance ◽  
Information Disclosure ◽  
Positive Impact ◽  
Listed Companies ◽  
External Pressure ◽  
General Manager ◽  
Analysis Process ◽  
The Board Of Directors ◽  
Heavy Pollution ◽  
The Impact

This paper uses manually collected data of carbon information disclosure for listed companies, from 2009 to 2015 in China, to measure corporate carbon information disclosure, and it explores the impact of external pressure and internal governance on carbon information disclosure through text analysis and a hierarchy analysis process. The results show that, firstly, the greater the external pressure is, the higher the level of carbon information disclosure will be; that is, when listed companies are state-owned enterprises or in heavy pollution industries, the level of carbon information disclosure is higher. Secondly, the higher the level of corporate governance is, the higher the level of carbon information disclosure will be; that is, when the board of directors is larger, the proportion of independent directors is higher, and the chairman and general manager positions are differentiated, the level of carbon information disclosure is higher. Furthermore, when listed companies are state-owned and in heavy pollution industries, the level of carbon information disclosure is higher; when the chairman and general manager are in the same position (lower governance level), the positive impact of government pressure on carbon disclosure is less significant, the positive impact of external pressure on carbon disclosure is less significant, and the positive interactive impact of government pressure and external pressure on carbon disclosure is less significant. The conclusions of this paper are still robust after Heckman two-stage regression, propensity score matching (PSM) analysis, sub-sample regression, and double clustering analysis.

scholarly journals Momentum investment strategies, corporate governance and firm performance: an analysis of Islamic banks

2017 ◽  
Vol 17 (2) ◽  
pp. 192-211 ◽  
Author(s):  
Tasawar Nawaz
Keyword(s):  
Corporate Governance ◽  
Human Capital ◽  
Positive Impact ◽  
Dominant Role ◽  
Market Value ◽  
Investment Strategies ◽  
Islamic Banks ◽  
Data Set ◽  
Content Type ◽  
The Impact

Purpose The purpose of this paper is to empirically examine the effect of investments in organisational resources and corporate governance features on market-based performance of Islamic banks (IBs). Design/methodology/approach The required data to calculate different constituents of banks’ investment strategies and governance mechanism were hand collected from 268 annual reports. Different regression models were used to determine the impact of investment in human and structural capital and corporate governance features on market performance of IBs. Findings The paper finds that investments in knowledge resources (human capital, in particular) have a significantly positive impact on the market value of IBs. The results further reveal that IBs’ strategy to rely on long-term human capital accumulation can be seen as idiosyncratic problem-solving knowledge capital. Based on market measure, the paper finds role duality to have a significant positive impact and the size of the advisory board to have the opposite effect on market value. Research limitations/implications This study includes IBs only and ignores other Islamic financial services providers such as Takaful (insurance) companies. The study leaves this chasm to be filled by future researchers. Practical implications The findings may serve as a useful input for both Islamic bankers and regulators to apply knowledge management in their institutions. Furthermore, the dominant role of human capital also provides insight to managers with respect to business performance levers. Originality/value The main contribution of this paper is to provide insight into the Islamic banking business model using a unique hand-collected data set, to identify the effect of investments in organisational resources and bank governance on market value in before, during and after financial crisis.

Does shareholder-oriented corporate governance reduce firm risk? Evidence from listed European companies

2018 ◽  
Vol 19 (2) ◽  
pp. 295-311 ◽  
Author(s):  
Leopold Djoutsa Wamba ◽  
Eric Braune ◽  
Lubica Hikkerova
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Good Governance ◽  
Systematic Risk ◽  
Principal Component ◽  
Firm Risk ◽  
Content Type ◽  
Synthetic Index ◽  
The Board Of Directors ◽  
The Impact

Purpose The purpose of this paper is to explore the impact of the mechanisms of corporate governance on the volatility of companies’ financial profitability. Design/methodology/approach For the period 2002-2014, the authors evaluate the relations linking various indices involved in corporate governance with the systematic risk supported by these companies for a sample of 355 firms domiciled in Europe. To empirically test these relationships, the authors calculated a synthetic index of corporate governance quality (QGI) based on the 53 items of assessment of the companies’ governance proposed by the database ASSET4. Following the method used by Boncori et al. (2016), the authors first reduced the number of dimensions of corporate governance by performing a principal component analysis of the sample, which resulted in the following five components: management’s shareholder commitment, shareholder rights, characteristics of the board of directors, transparency of the financial information and independence of the audit. Findings The results of the tests indicate that the synthetic index of governance that the authors have built is only significant at the 10 percent threshold. The impact of this variable on the systematic risk of the company is of the order of one-tenth of a point. The decomposition of this index into five variables shows that management’s commitment to shareholders and the effectiveness of the board of directors in carrying out its supervisory tasks are likely to reduce, but again to a limited extent, the risk borne by the company. Research limitations/implications This observation guides the future work in introducing variables that reflect the social responsibilities of the companies in the sample in order to distinguish the effects of social responsibility from those of purely shareholder-oriented governance on systematic risk. Practical implications This paper demonstrates the interest of good governance on the risk of firms and identifies certain characteristics upon which to act. Originality/value Although the relations between corporate governance mechanisms and profitability expectations have been the subject of numerous studies, few authors have examined the influence of governorship on the volatility of this profitability, particularly in Europe. To the best of the authors’ knowledge, the rare work on this topic relates to only a limited number of countries.

Board stoops to conquer the CEO: end of a power struggle

2018 ◽  
Vol 8 (2) ◽  
pp. 1-36
Author(s):  
P. Rameshan
Keyword(s):  
Corporate Governance ◽  
Strategic Management ◽  
Corporate Ethics ◽  
Senior Executives ◽  
Power Struggle ◽  
Content Type ◽  
Organizational Behaviour ◽  
Board Dynamics ◽  
The Impact ◽  
A Company

Subject area The case would be specifically useful in courses related to Corporate Governance, Board Dynamics, Leadership, Organizational Behaviour, Corporate Ethics and Strategic Management. Study level/applicability For Post-graduate/Doctoral and Executive Programme/Management Development Programme level courses in Corporate Governance, Board Dynamics, Leadership, Organizational Behaviour, Corporate Ethics and relevant areas of Strategic Management. Case overview The case relates to the imminent departure of Raamit Pell, the founding CEO of Xcelent Services, an educational service provider, to his parental organization at Kozerton after completing his current five-year term. Raamit had moved from Kozerton to become CEO of Xcelent Services. Many of Raamit’s senior executives at Xcelent were not happy about his decision to return. They felt that his departure at this moment might, on the one hand, slow down the ongoing major expansion plans and on the other aggravate a mutiny, under covert Board patronage involving a powerful clique of certain senior executives. The parental agency finally agreed to release him. On the day of Raamit’s farewell, where surprisingly even the clique members were present, many executives appeared sad. Observing the mood, Raamit wondered whether his decision to return to Kozerton was the right one. Expected learning outcomes To understand the internal governance, leadership and behavioural environment of a company. To understand the impact of internal power equations of a company on the morale of its people. To analyze both the inconsistency between the stated goals of the organization and the revealed actions of its top decision-makers; and the lack of restraint on the power struggle among the top actors of the organization. To identify effective strategies for addressing such issues in future so that their fallouts would be minimized. To relate the behaviour in an organization to the organizational behavioural theories related to leadership, corporate governance, corporate ethics, managerial behaviour and agency problems. Supplementary materials Teaching Notes are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes. Subject code CSS 11: Strategy.

scholarly journals The Impact of Corporate Governance on the Financial Distress: Evidence from Pakistani Listed Companies

2017 ◽  
Vol 5 (2) ◽  
pp. 49-53
Author(s):  
Ahmed Hassan Jamal ◽  
◽  
Syed Zulfiqar Ali Shah ◽  
Keyword(s):  
Corporate Governance ◽  
Financial Distress ◽  
Audit Committee ◽  
Positive Impact ◽  
Stock Exchange ◽  
Listed Companies ◽  
Board Composition ◽  
Explanatory Variables ◽  
Governance Practices ◽  
The Impact

This study intends to assess how corporate governance affects the financial distress in non-financial listed companies in Pakistan. Sample of 53 companies was obtained from non-financial institutes listed in Pakistani stock exchange. Regression analysis is used to estimate the impact of explanatory variables including size of board, composition of board, audit committee independence and duality of CEO on the financial distress. The findings show that size of board, composition of board and CEO duality has a positive impact on Z-score of Pakistani listed firms. This implies that better the corporate governance practices in companies, lower will be the financial distress and vice versa.

scholarly journals Corporate governance and audit features: SMEs evidence

2018 ◽  
Vol 25 (1) ◽  
pp. 163-179 ◽  
Author(s):  
Basil Al-Najjar
Keyword(s):  
Corporate Governance ◽  
Positive Impact ◽  
Audit Fees ◽  
Logit Analysis ◽  
Governance Mechanisms ◽  
Content Type ◽  
Big 4 ◽  
Audit Firms ◽  
The Impact ◽  
Selection Of

Purpose The purpose of this paper is to investigate the effect of corporate governance factors on audit features, namely, audit fees and the selection of Big 4 audit firms within the UK SMEs context. Design/methodology/approach The author uses different regression models to investigate the impact of corporate governance characteristics on audit features, and employs cross-sectional time series models as well as two-stage least squares technique. In addition, the author has used logit analysis to examine the effect of corporate governance factors on the selection of Big 4 audit firms. Findings The author provides new evidence that governance mechanisms in SMEs affect different audit features. The results show that corporate governance mechanisms are important in determining audit fees. The author detects a positive impact of board independence, audit meeting and board size on audit fees. The author also reports evidence that governance factors determine the selection of Big 4 audit firms. In particular, the author reports that independent directors and audit diligence positively affect the decision to select Big 4 audit firms. Originality/value This paper investigates the under-researched relationship between audit features and corporate governance using UK SMEs. In so doing, the author aims to provide new insights into this relationship within the SMEs context.

Board composition and corporate risk-taking: a review of listed firms from Germany and the USA

2019 ◽  
Vol 20 (4) ◽  
pp. 526-542 ◽  
Author(s):  
Zahid Irshad Younas ◽  
Christian Klein ◽  
Thorsten Trabert ◽  
Bernhard Zwergel
Keyword(s):  
Corporate Governance ◽  
Risk Taking ◽  
Audit Committees ◽  
Board Composition ◽  
Corporate Boards ◽  
Content Type ◽  
Listed Firms ◽  
The Usa ◽  
Corporate Risk ◽  
The Impact

Purpose Corporate governance is a crucial factor when considering excessive corporate risk-taking. Since corporate boards play such an important role in corporate governance, the purpose of this paper is to empirically examine the impact of board composition and further board characteristics on excessive corporate risk-taking. Design/methodology/approach This study investigates listed firms from Germany and the USA from 2004 to 2015 based on data from Thomson Reuters Data Stream. The authors apply the fixed effect and random effect estimation method to demonstrate the impact of board composition on corporate risk-taking. Findings This study provides empirical evidence that an increase in the proportion of independent directors is associated with less corporate risk-taking. These effects are stronger among German firms. Lastly, the effects of board size and audit committee effectiveness (AUCE) on risk-taking have mixed results. Research limitations/implications The results favor continued efforts to strengthen the composition of corporate boards and improve the effectiveness of audit committees to curb unhealthy corporate risk-taking. The recommendations from the research will provide regulators and corporate management with the necessary information needed to design an appropriate independent board structure, and board size (BOSI). The research will, furthermore, fortify the indispensability of financial experts on audit committees. Originality/value This study contributes to the agency theory debate with these findings. Stronger board independence enables a better monitoring of the CEO, which leads to decision making based on a more appropriate level of risk.

Corporate governance, financial crises and bank performance: lessons from top Russian banks

2016 ◽  
Vol 16 (5) ◽  
pp. 798-814 ◽  
Author(s):  
Nurlan Orazalin ◽  
Monowar Mahmood ◽  
Keun Jung Lee
Keyword(s):  
Corporate Governance ◽  
Financial Crisis ◽  
Financial Crises ◽  
Positive Impact ◽  
Operating Performance ◽  
Annual Reports ◽  
Bank Performance ◽  
Content Type ◽  
Governance Practices ◽  
The Impact

Purpose The purpose of this paper is to investigate the impact of different dimensions of corporate governance practices such as board characteristics, ownership structure, corporate disclosure and CEO education on the operating performance of Russian banks before, during and after financial crises. Based on the findings, it proposes some policy measures for improved governance practices to protect banks from future financial crisis or economic downturns. Design/methodology/approach The study comprises data from the largest publicly traded Russian banks listed on the Russian Stock Exchange RST for the period. Operating performance data were collected from financial statements, while corporate governance mechanisms were collected from annual reports available on the banks’ websites. Because panel data were used, the panel regression model was used to control unobserved time-constant heterogeneity. Findings The findings revealed a positive impact of corporate governance on bank performance before and after the financial crisis. The financial crisis enforced Russian banks to improve their corporate governance practices, resulting in better operating performance after the crisis. Surprisingly, the results for the during-crisis period show that better governance did not yield higher operating performance in Russian banks. Originality/value This is one of the first studies to provide empirical results regarding the relationship between corporate governance practices and bank performance in Russia across different financial crisis periods. The findings revealed the uniqueness of corporate governance scenarios of Russia which could provide important guidelines for other transition economies and emerging markets.

Sign in / Sign up

Export Citation Format

Share Document