scholarly journals Conflict-induced forced CEO turnover and firm performance

2018 ◽  
Vol 44 (9) ◽  
pp. 1134-1154
Author(s):  
Kuntara Pukthuanthong ◽  
Saif Ullah ◽  
Thomas J. Walker ◽  
Jing Zhang
Keyword(s):  
Firm Performance ◽  
Univariate Analysis ◽  
Ceo Turnover ◽  
Main Role ◽  
Corporate Boards ◽  
Firm Characteristics ◽  
Stock Performance ◽  
Content Type ◽  
Strategic Direction ◽  
The Board Of Directors

Purpose The purpose of this paper is to examine operational and stock performance changes around forced CEO turnovers caused by conflicts between corporate boards and CEOs over the strategic direction of the firm. In addition, the authors investigate whether changes in performance can be explained by board, CEO, or firm characteristics. Design/methodology/approach The authors apply propensity score matching to choose matching firms that do not forced CEO turnover but have similar characteristics with the sample firms. The authors compare their operating and stock performances. The authors apply both univariate analysis and multivariate regression analyses. Findings The authors find that the CEO turnovers caused by conflicts between corporate boards and CEOs over the strategic direction of the firms tend to be preceded by significant declines in a firm’s operating and stock performance and that corporate performance improves after turnovers. In addition, the authors find that an increase in long-term incentives and firm size and a decrease in turnover improve firm performance. Originality/value While the existing corporate governance literature emphasizes oversight as the main role of the board of directors and identifies the CEO as the leader who sets the strategic direction of the firm, in cases of conflict-induced forced CEO turnover, it is the board that sets the strategic direction. This paper is the first to provide evidence regarding the implications of conflict-induced forced CEO turnovers.

Bridging and bonding: having a Muslim diversity on corporate boards and firm performance

2018 ◽  
Vol 9 (3) ◽  
pp. 457-478 ◽  
Author(s):  
Rohail Hassan ◽  
Maran Marimuthu
Keyword(s):  
Firm Performance ◽  
Muslim Women ◽  
Listed Companies ◽  
Future Research ◽  
Small Scale ◽  
Extensive Literature ◽  
Corporate Boards ◽  
Demographic Diversity ◽  
Content Type ◽  
Diversity Issues

PurposeThis paper aims to examine the demographic diversity at top-level management and its impact on the performance of Malaysian-listed companies. In addition, Muslim diversity on corporate boards is examined. Design/methodology/approachAlthough many organisations aspire to be socially diverse, diversity’s consequences for organisational performance remain unclear. This study specifies the whole distinct mechanism and measures it independently, bridging as the demographic diversity among the board of directors (BODs) and bonding as the firm’s financial performance. To maintain the homogeneity factor, the empirical analysis has been confined to 12 fully fledged sectors and 529 Malaysian listed firms out of 798 firms selected on the basis of judgmental sampling during the period of 2013. The paper applies the correlation matrix and linear regression model to justify this phenomenon. FindingsThe empirical findings suggest that gender diversity (Muslim and Non-Muslim women) is positively significant with firm performance with regards to management, shareholders and market perspectives. It means that both Muslim and non-Muslim women are contributing to firm performance. Ethnic diversity (minority) and Muslim diversity (majority) have no impact on firm performance. On the other hand, interaction variables are positively significant with firm performance. It means that majority and minorities are essential for corporate boards to produce a greater performance. Research limitations/implicationsFuture research could include more variables such as director’s age profile and foreign participation as well as other types of diversities, such as cognitive diversity and corporate diversity. In addition, another possible extension could be the investigation of diversity issues between small scale and large or high and low-profit firms. The findings provide insightful information to firms, as this study suggests that the diverse corporate boards can enhance firm performance. Originality/valueIn recent years, diversity issues have been examined with regard to firm performance of the listed companies. Whilst extensive literature exists on diversity issues, this issue is still under debate and has had inconsistent results. The paper attempts to fill the gap in the existing literature, discuss the empirically diverse corporate boards with the interaction approach and impact on the firm performance.

Board performance and its relation to dividend payout: evidence from Malaysia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ravichandran Subramaniam ◽  
Mahenthiran Sakthi
Keyword(s):  
Board Of Directors ◽  
Capital Market ◽  
Performance Measure ◽  
Corporate Boards ◽  
Minority Shareholders ◽  
Dividend Payout ◽  
Content Type ◽  
Return On Capital ◽  
The Board Of Directors ◽  
Board Performance

PurposeTo examine the board of directors’ performance and if higher performance helps protect minority shareholders in an emerging capital market. Additionally, we determine if the different types of company ownership moderate the level of protection to minority shareholders.Design/methodology/approachThe study develops a measure of board performance with their compensation. And it tests its association with the dividend payout decision of 300 of the largest Malaysian public listed companies (referred to as PLCs) over the period 2008 to 2014.FindingsThe results find that higher board productivity in terms of return on capital employed is associated with higher dividend payout. Additionally, the study finds that the board performance measure interacts with race, ethnicity and gender of the board of directors and CEO duality to affect the dividend payout decision of Malaysian PLCs.Research limitations/implicationsIt is a single-country study of large Malaysian PLCs. And it uses only the governance mechanisms that have been shown in emerging capital markets to have the most significant effect on affecting the relationship between board performance and dividend payout.Practical implicationsThe findings show the importance of inclusivity and diversity in governing State-controlled firms in an emerging capital market.Originality/valueThe findings suggest improving corporate boards’ performance, protecting minority shareholders and contributing to the corporate governance literature. Notably, the study highlights boardroom diversity’s importance to enhance the boards of State-controlled firms’ performance.

A social capital view of women on boards and their impact on firm performance

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Erin Oldford ◽  
Saif Ullah ◽  
Ashrafee Tanvir Hossain
Keyword(s):  
Social Capital ◽  
Firm Performance ◽  
Ethnic Diversity ◽  
Gender Diversity ◽  
Negative Relationship ◽  
Future Research ◽  
Corporate Boards ◽  
Board Diversity ◽  
Content Type ◽  
Board Gender Diversity

PurposeThe objective of this paper is to leverage a two-sided view of social capital to develop a model of board gender diversity and firm performance using social capital data from Northeast Regional Center of Rural Development.Design/methodology/approachThe authors examine a large sample of 2,322 US publicly listed firms over the period 1996 to 2009. The final sample consists of 14,634 firm-year observations.FindingsThe authors find that when a firm's social network is not supportive of gender diversity, corporate boards have lower levels of female representation. The strength of a social network's social ties exacerbates the relationship between social capital and board gender diversity. The authors also report a negative relationship between female board membership and firm performance in social networks that are not pro-diversity. Robustness tests reveal that the authors’ social capital view of board diversity also applies to board ethnic diversity.Research limitations/implicationsThis study focuses primarily on blue chip firms due to data constraints. It will be interesting for future researchers to investigate a broader spectrum of firms from a broader perspective of diversity beyond the study’s gender and ethnicity findings. Furthermore, this study assesses the US context, and future research could investigate firm sociability in other national contexts.Practical implicationsThis study contributes new insights to the discourse on gender diversity on corporate boards which stand to inform both policy and practice. The results of the study can inform the position of an industry association on board gender diversity, with guidance on how messaging across networks can be more effective should it account for the hidden bias that the authors uncover in the current study. From a manager's perspective, this study can help those managers and boards trying to enhance board gender diversity by providing a more complete understanding of the factors that can limit progress.Originality/valueThis study contributes a social capital view of board gender diversity to the growing literature of corporate governance, board diversity and local environmental influences on corporate policies.

External and internal determinants of performances of Shariah and non-Shariah compliant firms

2019 ◽  
Vol 12 (2) ◽  
pp. 236-253 ◽  
Author(s):  
Catherine S.F. Ho ◽  
Nor Erna Nabila Mohd-Raff
Keyword(s):  
Firm Performance ◽  
Financial Distress ◽  
Firm Heterogeneity ◽  
Relevant Information ◽  
Firm Characteristics ◽  
Term Survival ◽  
Content Type ◽  
Panel Data Regression ◽  
New Findings ◽  
And Performance

Purpose This study aims to provide comprehensive models that investigate the combination of both external fundamentals and internal characteristics on firm performance and if there is any difference between Shariah and non-Shariah compliant firms. The objective of this paper therefore is to analyze the significant relation between external fundamentals, internal characteristics and firm performance. Design/methodology/approach Panel data regression analyses are applied to determine significant results. It helps to control for unobserved factors of firm heterogeneity, which may result in spurious regression. Findings Most internal firm characteristics are found to be significant, but the same cannot be said for external fundamentals. Firm size is found to be very significant in driving both sets of firm performances. Financial distress in term of higher level of leverage is found to be a negative driver of non-Shariah-compliant firms’ performance in terms of return on asset but not for Shariah firms consistent with Islamic finance understanding. Shariah-compliant firms with higher liquidity tend to perform much better than less liquid firms, but the same is not found for non-Shariah-compliant ones. Research limitations/implications This study is limited to the industrial production sector and compares both Shariah and non-Shariah compliant firms. Practical implications This study adds new findings to clarify the roles of external macroeconomic fundamentals and internal characteristics determinants on firm performance. Findings from this study combine relevant information on different sets of determinants on firm performance and produce empirical evidence beneficial to both sets of Shariah and non-Shariah compliant firms in the industry. Originality/value This paper fulfills the need for firms to understand the external and internal environment for continuous survival and performance. It is therefore important for firms to recognize the possible factors which may influence their performance and mechanisms to sustain their performance for long-term survival.

Do analysts’ recommendations reflect co-opted boards?

2020 ◽  
Vol 20 (6) ◽  
pp. 1091-1103
Author(s):  
Suwongrat Papangkorn ◽  
Pattanaporn Chatjuthamard ◽  
Pornsit Jiraporn ◽  
Piyachart Phiromswad
Keyword(s):  
Corporate Governance ◽  
Univariate Analysis ◽  
Chief Executive ◽  
Firm Characteristics ◽  
Analyst Recommendations ◽  
Exogenous Shock ◽  
Content Type ◽  
Information Intermediaries ◽  
Sarbanes Oxley

Purpose This study aims to examine whether co-opted directors influence analysts’ recommendations. As information intermediaries, financial analysts should incorporate the quality of corporate governance into their valuation because well-governed firms are associated with lower agency costs and better performance. Co-opted directors are those appointed after the incumbent chief executive officer assumes office. The authors investigate whether board co-option has an effect on analyst recommendations. Design/methodology/approach The present study uses univariate analysis, multi-variate regression analysis and conduct a natural experiment using the Sarbanes-Oxley as an exogenous shock. Findings The results show that firms with fewer co-opted directors tend to receive more favorable recommendations, suggesting that analysts favor firms with strong corporate governance. The results hold even after controlling for various firm characteristics, including the traditional measures of board quality, i.e. board size and independent directors. Originality/value The paper is the first of its kind and offers evidence on the effect of co-opted directors on analyst recommendations. The results contribute to the literature both in corporate governance and in financial intermediaries, where analysts play a crucial role in providing information to the various participants in financial markets.

scholarly journals Firm Performance, Corporate Governance Mechanisms and CEO Turnover: Evidence from Nigeria

2020 ◽  
Vol 6 (1) ◽  
pp. 66
Author(s):  
Yahya Uthman Abdullahi ◽  
Magajiya Tanko
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Stock Exchange ◽  
Governance Structure ◽  
Foreign Ownership ◽  
Ceo Turnover ◽  
Corporate Boards ◽  
Governance Mechanisms ◽  
Female Directors ◽  
Internal Governance Mechanisms

This paper examines the influence of firm performance and internal governance mechanisms on CEO turnover decision. The sample of the study is all Nigerian non-financial firms listed on the Nigerian Stock Exchange (NSE) from year 2011 to 2015 consisting of 72 cases of CEO turnover. Using logistic regression analysis, this study provides evidences that poor accounting-based performance (ROA) and low engagement of female directors in corporate boards do increase the probability of CEO turnover. Furthermore, firms dominated with foreign ownership and those with independent board nominating committee are swifter in removing their CEOs. However, this study fails to support the argument that firms with large board size and those that are dominated by managerial ownership, help to enhance the monitoring practices, which ought to sanction underperformed CEOs with dismissal. Consequently, this study recommends that the Nigerian government should enact a legislation on gender quota to ensure that more female directors are appointed to the boards and as well encourage more foreign ownership in the Nigerian corporate landscape by attracting foreign investment into the economy via favourable policies. This paper contributes to the literature concerning CEO succession in developing markets with poor corporate governance structure such as Nigeria.

Compensation committees: independence and firm performance

2015 ◽  
Vol 42 (1) ◽  
pp. 23-33 ◽  
Author(s):  
Sharon Kay Lee ◽  
William Bosworth ◽  
Franklin Kudo
Keyword(s):  
Firm Performance ◽  
Shareholder Wealth ◽  
Audit Committees ◽  
Content Type ◽  
Wealth Maximization ◽  
Classified Boards ◽  
The Board Of Directors ◽  
Shareholder Wealth Maximization ◽  
Under Performing ◽  
Compensation Committees

Purpose – Recently all major stock exchanges issued a requirement that listed companies have 100 percent independence on audit committees of the board of directors but now the focus has turned to compensation committees. Does 100 percent independence on compensation committees make a difference in firm performance? The paper aims to discuss these issues. Design/methodology/approach – Only 1 percent of the S & P 1,500 firms are not in compliance with the new 100 percent independence requirement for compensation committees. This presents an opportunity to examine characteristics of these firms and if this noncompliance may harm firm performance. Industry-adjusted ROA and Tobin’s Q measures are collected as well as firm size, debt ratios, and the presence of a classified board. Findings – Findings are as follows: S & P 500 firms with lower levels of debt, have classified board, but do not perform significantly worse than firms in compliance in the same industry; mid-cap firms with debt levels similar to complying firms, have classified boards, and perform significantly worse, and lastly, small-cap firms with lower levels of debt, have classified boards, and perform significantly worse. Research limitations/implications – Results imply that non-complying mid-cap and small-cap firms may be protecting under-performing management through maintaining classified boards, low levels of debt to avoid scrutiny of the debt markets, and less objectivity (i.e. overall and committee independence) on boards. Originality/value – Existing corporate governance literature provides evidence that overall board independence may promote shareholder wealth maximization. The latest focus regarding independence has recently been on compensation committees. Should independence on compensation committees matter to shareholders? It is appears that noncompliance should matter in the case of small- and mid-cap firms.

The boundary conditions of gender diversity in top teams

2017 ◽  
Vol 15 (4) ◽  
pp. 425-442
Author(s):  
Luisa Delgado-Márquez ◽  
Julio de Castro ◽  
Rachida Justo
Keyword(s):  
Firm Performance ◽  
Boundary Conditions ◽  
Boards Of Directors ◽  
Role Theory ◽  
Gender Diversity ◽  
Curvilinear Relationship ◽  
Corporate Boards ◽  
Solidarity Economy ◽  
Content Type ◽  
Brazilian Government

Purpose In this study, the authors aim to extend previous research and examine the phenomenon of gender diversity on firm performance in the context that of community-based enterprises (CBEs). The study builds on gender role theory and analyzes three factors that affect the relationship between gender diversity and firm performance: the overall percentage of women in the business, the level of participative decision-making and top management team (TMT) compensation. Design/methodology/approach Data for this study were obtained from the Solidarity Economy Enterprise Database. The Brazilian Government created the database to gather information regarding the status of the Solidarity Economy in the country. Findings The authors argue and find support for the idea that gender diversity in TMT positively influences firm performance. However, there is a point where higher presence of women in the business starts to be detrimental for firm performance. That is, the authors find that there is a curvilinear relationship between gender diversity in TMT and firm performance. Moreover, they found strong empirical evidence for the influence of compensation in strengthening the effect of gender diversity on firm performance. Research limitations/implications The great potential that this study offers applied to the CBEs relies on the fact that these businesses are naturally oriented toward equality, so understanding how the unbalance in gender diversity may affect the firm performance could help us to understand if there is a disconnection between the theory and the practice in terms of how women are positioned. Practical implications The paper has important implications for corporate boards and policy-makers, suggesting the importance of increasing the number of women in boards of directors to benefit from the diversity in value, perspectives, background and skills they bring to TMTs. This study focuses on an under-researched context in terms of TMTs – CBEs. Social implications This work shows that gender diversity in top on boards of CBE’s is positive which is aligned to the orientation toward equality that these businesses have. However, at the same time even although having more women is positive for financial performance, there is a saturation point from when the influences starts to be detrimental. Originality/value The authors consider that this study raises areas for further consideration in efforts to understand what are the boundary conditions of gender diversity in top teams.

Women on boards, sustainability reporting and firm performance

2016 ◽  
Vol 7 (3) ◽  
pp. 376-401 ◽  
Author(s):  
Mahmoud Arayssi ◽  
Mustafa Dah ◽  
Mohammad Jizi
Keyword(s):  
Firm Performance ◽  
Gender Diversity ◽  
Abnormal Returns ◽  
Sustainability Reporting ◽  
Corporate Boards ◽  
Women Directors ◽  
Related Factors ◽  
Content Type ◽  
Increased Risk ◽  
Sustainability Disclosure

Purpose As pressures mount for women directors on corporate boards (WDOCBs) from different stakeholders, companies become more interested in finding out how WDOCBs impact sustainability disclosure. The purpose of this paper is to investigate the effect of gender-diverse boards on the association between sustainability reporting and shareholders’ welfare. Design/methodology/approach This paper examines the implications of women on board for firm-related factors, particularly environmental, social and governance (ESG) disclosure and firm performance. The firms studied are all listed in the Financial Times Stock Exchange 350 index between 2007 and 2012. Bloomberg social disclosure score is used and panel data through a regression model are applied. Findings The results reveal that the presence of WDOCBs favorably influences on firm’s risk and performance through promoting a firm’s investment in effectual social engagements and reporting on them. The desirable effect of WDOCB on the ESG-performance relationship leads to increased risk-adjusted and buy-and-hold abnormal returns and reduced firm risks, measured by both volatility of returns and systematic risk. Originality/value The research contributes to the literature on the relationship between women participation on corporate boards and firms’ good citizenship and enhanced shareholders’ welfare. The empirical findings contribute to providing statistical and economical validity to the UK Corporate Governance Code 2014 recommendation on the importance of board gender diversity for effective board functioning.

Do problem directors affect firm operating performance?

2015 ◽  
Vol 23 (2) ◽  
pp. 170-185 ◽  
Author(s):  
Md. Borhan Uddin Bhuiyan
Keyword(s):  
Firm Performance ◽  
Past History ◽  
Practical Implication ◽  
Operating Performance ◽  
Corporate Boards ◽  
Content Type ◽  
Sensitivity Tests ◽  
History Of ◽  
Performance Problem ◽  
The Impact

Purpose – The purpose of this paper is to examine empirically the consequences of having problem directors on the board with respect to operating performance. Problem directors are directors who have a past history of managerial integrity weakness. Design/methodology/approach – This paper uses three measures of operating performance to investigate the impact of problem directors and applies regression analysis to data from S & P 500 companies from 2004 to 2009. Findings – The author found evidence for the problem that director affiliated firms have more board and independent members. The CEO dual firm has a comparatively higher number of problem directors on the board. Firm operating performance is reduced when a board is served by a problem director. The results are consistent for a number of sensitivity tests. Practical implications – Results provide evidence that firms have negative performance consequences when monitored by a director with a lack of managerial integrity. The practical implication of this study is that corporate boards should appoint directors who have a clean professional background so that more vigilant monitoring by directors can be ensured. Originality/value – This study goes beyond the traditional focus on corporate governance and firm performance. The author uses problem directors as an indicator of governance quality to measure firm performance. To the best of the author’s knowledge, this paper is the first to investigate the consequences of firms holding problem directors on the board. This issue has implications for investors, auditors, directors and regulators.

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