Current state of corporate governance: global business and cultural analysis

2016 ◽  
Vol 39 (11) ◽  
pp. 1431-1446 ◽  
Author(s):  
Namporn Thanetsunthorn ◽  
Rattaphon Wuthisatian
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
National Culture ◽  
Future Research ◽  
Governance System ◽  
Cultural Characteristics ◽  
Policy Makers ◽  
Content Type ◽  
Current State ◽  
Corporate Governance System

Purpose The purpose of this study is to explore the current state of corporate governance in various aspects of business settings and to empirically examine the impact of national culture on corporate governance performance, with a view of supporting business corporations in further enhancing the effectiveness of their corporate governance system. Design/methodology/approach A pooled sample of 9,003 companies drawn from 50 countries across ten different regions is collected. A variety of statistical methods, including the paired sample t-test, the ordinary least squares regression and the Pearson product-moment correlation coefficient are implemented to analyze the current state of corporate governance. To empirically investigate the causal relationship between national culture and corporate governance, the multivariate regression analysis is also applied. Findings This study proposes a broad set of the empirical findings regarding the current state of corporate governance. Despite being accepted as a prerequisite building block for sustainable corporate social responsibility (CSR), corporate governance is still receiving far less attention among business corporations. The governance framework is widely adopted by business corporations, yet the intensity of implementing corporate governance is significantly different across regions. The variation of the intensity observed across regions can be explained by the national cultural characteristics that are all likely to impact the degree to which corporations act in corporate governance manners. Corporate governance performance is strongly related to three other aspects of socially responsible corporate performance – community, employee and environment. Research limitations/implications This study provides both the motivation and a starting point for further investigation in the milieu of corporate governance. It would be interesting for future research to further explore the extent to which corporate governance has a positive indirect impact on a firm’s financial performance. There is potential to provide a more comprehensive analysis of the interaction effect of national culture and geographic region on corporate governance performance of the corporations embedded in that region through a statistical interaction method. In addition, it may be interesting to integrate corporate financial performance (CFP) into the analysis to identify a specific type/practice of the corporate governance that could provide the highest return on the investment. Last, another interesting avenue for future research would be to explore the ethical mechanisms that have been institutionalized to promote corporate governance practices. Practical implications The present study is beneficial to both business corporations and policy makers. In essence, the study can potentially draw managers’ attention to applying modified corporate governance strategies according to their national culture. Furthermore, the study can alter business corporations to promote a strong corporate governance regime in chorus to CSR strategies so as to promote CSR development, which ultimately results in higher levels of competitiveness and CFP. In addition, policy makers who are responsible for inward foreign investment can use the findings of this study to evaluate the investors’ potential governance adoption. Originality/value The findings of this study are useful in encouraging the business corporations to further strengthen their corporate governance system. This study helps to fill the theoretical void regarding the cultural impact on corporate governance by exploring a broad set of national cultural characteristics under which good corporate governance is more or less likely to occur.

Linking earnings management practices and corporate governance system with the firms’ financial performance

2017 ◽  
Vol 24 (2) ◽  
pp. 223-241 ◽  
Author(s):  
Prity Kumari ◽  
Jamini Kanta Pattanayak
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Earnings Management ◽  
Financial Performance ◽  
Commercial Banks ◽  
Management Practices ◽  
Global Financial Crisis ◽  
Governance System ◽  
Content Type ◽  
Corporate Governance System

Purpose In the shadow of global financial crisis, practice of earnings management can be hazardous for the growth and development of an economy, especially for a developing economy like India. This empirical study is performed to analyse the presence of earnings management practices in Indian public and private commercial banking industry. This study also aims at developing a framework for the three-way relationship existing between the variables of corporate governance, earnings management practices and firm performance. Design/methodology/approach Data have been collected for a period of 11 financial years (2003-2013) from Prowess (Centre for Monitoring Indian Economy) 4.14 database. A bank-based accrual model has been used for calculating earnings management practices. OLS regression has been used for analysing degree of interdependence among variables of corporate governance, earnings management practices and financial performance. Findings The analysis supports the fact that there is the existence of income increasing earnings management practices in Indian commercial banks. It is also observed that corporate government practices (viz. board characteristics, audit practices and performance-based remuneration) basically work as restricting variables for earnings management practices. It is evident from the analysis that market-based firm performance variables (viz. PE ratio, yield and profit after tax) are significantly related to earnings management and corporate governance system. Practical implications The finding of this study will help in monitoring and controlling fraudulent earnings management practices existing in Indian commercial banks. Originality/value This study is the initial research about the presence of earnings management practices in Indian commercial banks.

The effect of borrower country financial system and corporate governance system types on the spread of syndicated loans

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nuno Moutinho ◽  
Carlos Francisco Alves ◽  
Francisco Martins
Keyword(s):  
Corporate Governance ◽  
Governance System ◽  
Financial Systems ◽  
Content Type ◽  
Financial Firms ◽  
Governance Systems ◽  
Corporate Governance System ◽  
Lower Interest Rate ◽  
Loan Spreads ◽  
The Cost

Purpose This study aims to analyse the effect of borrower’s countries on syndicated loan spreads, featuring countries according to institutional factors, namely, financial systems and corporate governance systems. Design/methodology/approach This study is an empirical investigation based on a unique sample of more than 85,000 syndicated loans from 122 countries. The paper uses standard and two-stage least squares regression analysis to test whether the types of financial and corporate governance systems affect loan spreads. Findings The paper finds that borrowers from countries with financial systems oriented towards the banking-based paradigm pay lower interest rate spreads than those from countries with financial systems oriented towards the market-based paradigm. In addition, there is evidence that borrowers from countries with more developed financial systems pay lower spreads. The results also show that borrowers from countries with an Anglo-Saxon governance system pay higher spreads than borrowers from countries with a Continental governance system. Research limitations/implications This study does not consider potential promiscuous relationships that can arise at the ownership structure and governance level between banks and borrowers and may affect loan spreads. Practical implications This study suggests that financial and corporate governance systems are essential factors in the financial intermediation process. Furthermore, the evidence indicates that corporates with higher potential agency costs and higher potential information asymmetry are requested to pay higher spreads. Therefore, the opportunities to such corporates invest optimally tend to be scarcer. Originality/value The paper highlights the impact of institutional factors on the cost of financing, characterising the countries according to the type of financial system and the type of corporate governance system. The study finds that borrowers from countries with bank-based financial systems pay lower interest rate spreads than those from countries with market-based financial systems. The paper also highlights how the level of financial development affects the cost of financing. The paper focusses on non-financial firms, unlike financial firms, which have been the focus of several empirical studies on topics relating to the cost of funding and corporate governance.

scholarly journals Evolution of German corporate governance (1995-2014): an empirical analysis

2019 ◽  
Vol 19 (5) ◽  
pp. 1042-1062
Author(s):  
Andreas Rühmkorf ◽  
Felix Spindler ◽  
Navajyoti Samanta
Keyword(s):  
Corporate Governance ◽  
Financial Crisis ◽  
Global Financial Crisis ◽  
Governance System ◽  
Content Type ◽  
Convergence Process ◽  
Corporate Governance System ◽  
Anglo American ◽  
The Stability ◽  
The Global Financial Crisis

Purpose This paper aims to address the evolution of corporate governance in Germany with a particular regard to whether there can be observed a gradual convergence to a shareholder primacy corporate governance system. Design/methodology/approach To investigate a potential shift of the German corporate governance system to an Anglo-American tiled corporate governance system, the authors have empirically assessed on a polynomial base 52 separate company and corporate governance variables for 20 years (1995-2014). Findings This research suggests that a gradual convergence has taken place prior to the global financial crisis. However, the results suggest that the convergence process experienced a slowdown in the aftermath of the global financial crisis, which may be linked to the stability of the German corporate governance system during the global financial crisis and the political environment during this time. Originality/value This paper contributes to the research by not only analysing the development of the German corporate governance system but also identifying new reasons for this development and explaining why a new convergence process may be observed in the future again.

The ultimate controlling owner and corporate governance in Brazil

2019 ◽  
Vol 19 (1) ◽  
pp. 120-140 ◽  
Author(s):  
Vicente Lima Crisóstomo ◽  
Isac de Freitas Brandão
Keyword(s):  
Corporate Governance ◽  
Emerging Market ◽  
Governance System ◽  
Private Benefits ◽  
Controlling Shareholder ◽  
Content Type ◽  
Controlling Shareholders ◽  
Private Benefits Of Control ◽  
Corporate Governance System

Purpose High ownership concentration makes controlling blockholders powerful enough to use private benefits of control and able to shape the corporate governance system to favor their own interests. This paper aims to examine the effect of the nature of the ultimate firm owner on the quality of corporate governance in Brazil. Design/methodology/approach Econometric models are estimated to assess whether the nature of the ultimate controlling shareholder affects the quality of the corporate governance system. Models are estimated using panel data methodology with coefficients estimated by the generalized method of moments system estimator. Findings The results show that the absence of a controlling shareholder has a positive effect on corporate governance, whereas the presence of a controlling blockholder, or a shareholder agreement among a few large shareholders, has a negative effect. This adverse effect holds when the controlling blockholder is a family or another firm. The findings are in line with the expropriation effect given that weaker corporate governance system facilitates controlling shareholders’ ability to extract private benefits of control. The findings also give support to the substitution effect as powerful blockholders take on the management monitoring function by weakening the board. Originality value Following important previous literature, the study investigates the effect of the nature of large controlling shareholders on the adoption of good corporate governance practices. The work provides additional evidence on the effect of the nature of large controlling shareholders on the quality of the corporate governance system in Brazil, taking into account the main kinds of controlling blockholders present in that market. The findings give support to both the expropriation and substitution hypotheses highlighting the presence of the principal-principal agency model in an important emerging market, Brazil.

Corporate governance integration with sustainability: a systematic literature review

2019 ◽  
Vol 19 (2) ◽  
pp. 255-269 ◽  
Author(s):  
Sahar E-Vahdati ◽  
Norhayah Zulkifli ◽  
Zarina Zakaria
Keyword(s):  
Corporate Governance ◽  
Literature Review ◽  
Systematic Literature Review ◽  
Geographical Area ◽  
Future Research ◽  
Future Market ◽  
Joint Work ◽  
Policy Makers ◽  
Content Type ◽  
Reference Index

Purpose The purpose of this paper is to systematically review the literature on corporate governance and sustainability integration in identifying the main rigidity, infirmity and gaps in the current literature, and also to mention future research paths. Design/methodology/approach A systematic literature review of existing international papers is used through quantitative and qualitative approach by selecting 27 articles published in Scopus. Findings The review suggests although integration of governance into sustainability is interpreted differently in a geographical area, vision, mission and leadership are the most significant drivers of sustainability framework dealing corporate governance. Despite the limitation which is related to the choice of number and type of keywords and journals, outcomes and the interpretation, generalization and application of results, sustainability frameworks suggest a number of avenues for investors, policy makers and future market scenario which will increase the efficiency of companies. Research limitations/implications This research uses limited number of reviews by the common features of Scopus search as previous studies. This review study reflects corporate governance to sustainability models and provides opportunities to researchers for a more in-depth investigation into the theoretical advancement and joint work of sustainability and corporate governance which better inform strategies and implementations of governmental structures. Originality/value This paper undertakes a significant thorough systematic review for sustainability integration with corporate governance literature. It gives a written work review and reference index from1995 to 2017, useful for both academics and professionals.

Changes in ownership forms and role of institutional investors in governing public companies in Malaysia

2015 ◽  
Vol 11 (4) ◽  
pp. 455-475 ◽  
Author(s):  
Hairul Azlan Annuar
Keyword(s):  
Corporate Governance ◽  
Institutional Investors ◽  
Institutional Investor ◽  
Governance System ◽  
Public Companies ◽  
Content Type ◽  
Investment Companies ◽  
Corporate Governance System ◽  
Different Types

Purpose – The purpose of this paper is to ascertain whether different types of institutional investor in Malaysia are involved in the corporate governance of their investee companies, and, if yes, to what extent is the level of the involvement. Design/methodology/approach – A qualitative approach, consisting of a series of interviews with 18 senior investment managers of different types of institutional investor, was chosen. Findings – The findings suggest that lessons learnt from the fallout of the Asian crisis has made Malaysian institutional investors not only to be more prudent in managing their total funds and in making equities investment decisions, but has resulted in a more active participation in their “core” investee companies apart from merely discharging their voting rights. Interview analysis revealed that government-linked investment companies are championing the cause and could possibly affect the overall level of institutional investors’ involvement, which bode well for the future of the corporate governance system of the country. Research limitations/implications – Generalisations may be an issue when interviews are used as the method of inquiry. Also, the sample is not random, as access to many managers depended on recommendations. In addition, respondents were consciously selected to obtain different types of institutional investors that included government and non-government linked. Originality/value – There is a lack of work on studying the involvement of institutional investors in developing countries, whereby previous work and literature review were predominantly based upon the experience of Western economies.

scholarly journals Corporate governance and remuneration: a bibliometric analysis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jinnatul Raihan Mumu ◽  
Paolo Saona ◽  
Hasibul Islam Russell ◽  
Md. Abul Kalam Azad
Keyword(s):  
Corporate Governance ◽  
Bibliometric Analysis ◽  
Boards Of Directors ◽  
Gender Diversity ◽  
Research Field ◽  
Future Research ◽  
Top Management ◽  
Outside Directors ◽  
Governance System ◽  
Content Type

PurposeThis study aims to pinpoint gaps in the literature on corporate governance and remuneration by producing a comprehensive bibliometric review for the period 1990–2020.Design/methodology/approachBibliometric analysis is the quantitative study of the bibliographic material in a specific research field. It allows an analyst to classify that material by paper, journal, author, indexation, institution or country, among other possibilities. This study reviews a total of 298 Web of Science–indexed journal articles on corporate governance and top-management remuneration schemes.FindingsThe authors find five distinct research strands: (1) firm performance and remuneration of top management, (2) the remuneration and independence of boards of directors and the efficiency of boards of directors as a governance system, (3) outside-director remuneration and the efficiency of outside directors as a monitoring system, (4) director remuneration and the corporate governance of companies and (5) the role of ownership structure and top managers' compensation schemes as corporate-governance tools. The authors identify gaps in the literature and avenues for future research for each of these strands.Practical implicationsThe authors’ findings have implications for board diversity (e.g. gender diversity), remuneration policy for top-level managers and governance issues (independent directors, separation of ownership with control). This study is the only one to summarize the key topics on which top research has been focused and can be broadly used for corporate governance management perspective.Originality/valueThis paper provides an overview of how the literature on corporate governance and remuneration has developed and a synopsis of the most influential and most productive authors, countries and journal sources. It creates an opportunity for other researchers to focus on this area. This study will also serve as a foundation for future meta-analyses.

Corporate Governance, Socio-Economic Factors and Economic Growth: Theoretical Analysis

2017 ◽  
Vol 7 (1) ◽  
pp. 311 ◽  
Author(s):  
Muhammad Arslan ◽  
Jamal Roudaki
Keyword(s):  
Economic Growth ◽  
Corporate Governance ◽  
Economic Factors ◽  
Governance System ◽  
Policy Makers ◽  
Stock Market Development ◽  
Corporate Governance Mechanisms ◽  
Corporate Governance System ◽  
Governance Practices ◽  
Socio Economic Factors

Corporate governance (CG) fosters dynamic economic growth through managing stakeholder interest and reducing the cost of capital which ultimately lead towards the development of financial markets and better firm performance. Recently, regulators and policy makers around the world either have revised extensively or introduced new laws, codes and listing regulations to enhance effectiveness and transparency of corporate governance practices. Established economic theories were already aware of the significance of corporate governance for development and economic growth. This study assesses the link between corporate governance, socio-economic factors and economic growth through a consistent literature review. A majority of studies show a positive effect of corporate governance on economic growth of a country through stock market development. Moreover, theoretical and empirical research reveals that socio-economic factors are also a pivotal determinant of corporate governance mechanisms. This study summarizes the key findings and concludes that dynamic and flexible corporate governance system claims more demand as compared to rigorous corporate governance principles especially in emerging countries. This study also finds the need of methodological advancement in corporate governance research. Nevertheless, the social economic factors, political and legal system of the country should be blended in introduction and adaption of corporate governance system. The regulators and policy makers can use theoretical grounds of study for reforms of the corporate governance system.

Directors’ duties in the context of Confucianism

2015 ◽  
Vol 22 (1) ◽  
pp. 37-47
Author(s):  
Charles KN Lam ◽  
S.H. Goo
Keyword(s):  
Corporate Governance ◽  
Common Law ◽  
Fiduciary Duty ◽  
Moral Principle ◽  
Duty Of Care ◽  
Governance System ◽  
Content Type ◽  
The United Kingdom ◽  
Corporate Governance System ◽  
The Law

Purpose – The purpose of this paper is to demonstrate how Confucianism can be applied in the areas that are now governed by company law in the common law system and how it can play a role in improving corporate governance. A gentleman in the context of Confucianism tends to be inclusive and broad-minded in embracing the interest of different stakeholders. In fact, he will balance the interests of shareholders and other stakeholders if there is any inherent conflict and try to achieve a win-win situation. Ultimately, he will run the company not just for profit-making but for social justice and commitment. Design/methodology/approach – The authors examine the leading cases in Hong Kong and the United Kingdom about the law of fiduciary duty and the duty of care and its relationship with Confucianism. In this respect, we review the teachings of the traditional Confucian texts and use Confucianism to fill in the gap where common law rules cannot reach. In addition, we adopt a comparative study approach in examining the law of directors’ duties in Hong Kong, China and the United Kingdom. Findings – It can be seen that the concept of fiduciary duty and duty of care is quite complicated and evolving and always subject to the interpretations of the court from time to time. For fiduciary duty, the term itself is quite conceptual and not immediately available to the general public. But loyalty in the context of Confucianism is a very lively and down-to-earth moral principle. Besides, fiduciary duty is imposed from outside, where directors had no choice but to accept. But loyalty in the context of Confucianism is something inherent and something from within. It is a moral principle that if you deeply understand the meaning of it, you will automatically accept it as a good virtue and your conduct will naturally be guided by such a principle. Confucianism can thereby be used to fill the gap where rules and regulations cannot reach. Confucian business ethics and common law rule should be complementary to each other in the development of a Chinese corporate governance system. Originality/value – This paper is the first of its kind in discussing the relationship between the law of directors’ duties and Confucianism. It argues that Confucianism plays a crucial role in guiding the behavior of the directors and can supplement the abstract principles of directors’ duties in the context of a Chinese corporate governance system.

scholarly journals Explaining the complexity relationship of CSR and financial performance using neo-institutional theory

2020 ◽  
Vol 27 (3) ◽  
pp. 227-244
Author(s):  
Golrida Karyawati P ◽  
Bambang Subroto ◽  
Sutrisno T ◽  
Erwin Saraswati
Keyword(s):  
Corporate Governance ◽  
Institutional Theory ◽  
Financial Performance ◽  
Developed Countries ◽  
Future Research ◽  
Institutional Factor ◽  
Content Type ◽  
Governance Model ◽  
Corporate Governance Model ◽  
The Relationship

PurposeThis study aims to prove the complexity of the relationship between CSR and financial performance (FP) and to decompose the complexity of the relationship using neo-institutional theory.Design/methodology/approachThis research employs a meta-analysis that integrates 55 various contexts studied between 1998 and 2017 using correlation coefficient as the effect size.FindingsThis study proves that the nature of the relationship between CSR and FP is complex and suggests that the analysis of the relationship between the two variables includes institutional factors to produce generalizable conclusions. Country characteristics, forms and dimensions of CSR, CSR measurements and FP measurements explain the complexity of the relationship between CSR and FP.Research limitations/implicationsFuture research is expected to include industry characteristics and the corporate governance model in the analysis of the relationship between CSR and FP. Differences in industry characteristics affect the selection of CSR forms and dimensions, bringing it the potential to influence the relationship between CSR and FP. The corporate governance model adopted by developing countries and developed countries also has the potential to be an institutional factor to influence the relationship between CSR and FP.Originality/valueThis research proves that the complexity of the relationship between CSR and FP is nature given. This research explores the factors causing the complexity of the relationship using neo-institutional theory, which, to the author's knowledge, has not been done by other researchers.

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