Corporate governance and corporate performance: financial crisis (2008)

2016 ◽  
Vol 39 (11) ◽  
pp. 1494-1515 ◽  
Author(s):  
Oskar Kowalewski
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Financial Crisis ◽  
Stock Exchange ◽  
Emerging Market ◽  
Positive Association ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
Content Type ◽  
The Impact

Purpose This paper aims to investigate the impact of corporate governance, as measured by the Corporate Governance Index, on firm performance and dividend payouts during the financial crisis of 2008. Design/methodology/approach The empirical approach followed in the study involved constructing a comprehensive measure of corporate governance for 298 non-financial companies listed on the Warsaw Stock Exchange in the years 2006-2010. Findings The results show that prior to the crisis, there was a positive association between corporate governance and performance as measured by Tobin’s q. Moreover, the study presents evidence that higher corporate governance leads to an increase in cash dividends. Amid the financial crisis, corporate governance was positively associated with a higher return on assets, yet this was not observed when measured by Tobin’s q. Additionally, during this period, better-governed companies paid dividends less generously than firms with lower corporate governance standards did. Originality/value The study provides new evidence on the impact of corporate governance on firm performance and valuation in an emerging market during the financial crisis. Moreover, the study shows that governance mechanisms operate differently in crisis and non-crisis periods.

Corporate governance and firm performance: empirical evidence from Jordan

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ahmad Yuosef Alodat ◽  
Zalailah Salleh ◽  
Hafiza Aishah Hashim ◽  
Farizah Sulong
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Performance Measures ◽  
Ownership Structure ◽  
Audit Committee ◽  
Superior Performance ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
Content Type ◽  
The Impact

Purpose This study aims to assess the effect of director board and audit committee attributes and ownership structure on firm performance. In general, resource dependency and agency theories have underlined the superior performance of firms equipped with stronger Corporate Governance (CG) versus those of deficient governance. Concurrently, the study delineated the provisions of ownership structure provision, specifically foreign ownership and institutional ownerships, thus describing the component denoting the structural significance in explicating firm performance. Design/methodology/approach The current study implemented an empirical approach involving the construction of extensive CG measures thus, subjected to 81 non-financial firms listed on the Amman Stock Exchange spanning the period of 2014–2018. Findings The current study identified the positive and significant relationship between the board of directors and audit committee characteristics with the firm performance measures tested, namely, return on equity (ROE) and Tobin’s Q. In terms of ownership structure, both foreign and institutional ownerships yielded a significant and positive relationship with ROE. Meanwhile, Tobin’s Q led to an insignificant and negative relationship between both ownership types and firm performance measures. Practical implications The analytical outcomes substantiate the possibility of enhanced performance shown by growing global firms because of the implementation of CG mechanisms, specifically because of the practices resulting in minimised agency costs. Originality/value The current study offers novel evidence detailing the impact of CG effectiveness towards performance and its implementation in emerging markets following the minimal amount of scholarly efforts on the topic. It is a timely contribution towards the current understanding of the relationship linking governance and performance for the purpose of ensuring the adoption and imposition of a strong corporate governance code by the government.

Corporate governance mechanisms and corporate performance of firms in Nigeria and Ghana

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Martha Coleman ◽  
Mengyun Wu
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Financial Distress ◽  
Corporate Performance ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
Content Type ◽  
Structure Index ◽  
The Impact ◽  
The Relationship

PurposeThis study investigates the impact of corporate governance (CG) mechanisms with inclusion of compliance and diligence index on corporate performance (CP) of firms in Nigeria and Ghana. It further examines the moderating effect of financial distress on the relationship between CG and CP.Design/methodology/approachThe study used panel data of 102 nonfinancial listed firms of Nigeria and Ghana stock exchange for the period 2012–2016 with total observation of 510. The study first used OLS in estimating the influence of CG mechanisms on CP. Due to multicollinearity in the independent variables, ridge regression was employed.FindingsIt was revealed that ownership structure index and board compliance and diligence index, board size, board disclosure, ownership structure, shareholders' right and board compliance and diligence index had positive influence on ROA and ROE. Growth of Tobin's Q depends on board procedure and board compliance and diligence index. Also, financial distress (ZFS) negatively moderates the relationship between board structure index, board disclosure index, board procedure index, shareholders' right and performance (ROA and ROE) but negatively moderates between ownership structure index and Tobin's Q.Practical implicationsThis study provides interesting findings to policymakers in full implementation of CG codes as stated by OCED (2015) by West African firms with greater emphasis on compliance and diligence index since it positively influences all CP measures.Originality/valueThe study provides evidence of the importance of the introduction of the new index: compliance and diligence, which looks at disclosure of CSR activities. This has been overlooked by most researchers especially in Africa in assessing quality CG mechanisms.

The effects of corporate governance on financial performance and financial distress: evidence from Egypt

2015 ◽  
Vol 15 (5) ◽  
pp. 641-662 ◽  
Author(s):  
Tamer Mohamed Shahwan
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Financial Performance ◽  
Financial Distress ◽  
Emerging Market ◽  
Negative Relationship ◽  
Positive Association ◽  
Time Frame ◽  
Content Type

Purpose – This paper aims to empirically examine the quality of corporate governance (CG) practices in Egyptian-listed companies and their impact on firm performance and financial distress in the context of an emerging market such as that of Egypt. Design/methodology/approach – To assess the level of CG practices at a given firm, the current study constructs a corporate governance index (CGI) which consists of four dimensions: disclosure and transparency, composition of the board of directors, shareholders’ rights and investor relations and ownership and control structure. Based on a sample of 86 non-financial firms listed on the Egyptian Exchange, the effects of CG on performance and financial distress are assessed. Tobin’s Q is used to assess corporate performance. At the same time, the Altman Z-score is used as a financial distress indicator, as it measures financial distress inversely. The bigger the Z-score, the smaller the risk of financial distress. Findings – The overall score of the CGI, on average, suggests that the quality of CG practices within Egyptian-listed firms is relatively low. The results do not support the positive association between CG practices and financial performance. In addition, there is an insignificant negative relationship between CG practices and the likelihood of financial distress. The current study also provides evidence that firm-specific characteristics could be useful as a first-pass screen in determining firm performance and the likelihood of financial distress. Research limitations/implications – The sample size and time frame of our analysis are relatively small; some caution would be needed before generalizing the results to the entire population. Practical implications – The findings may be of interest to those academic researchers, practitioners and regulators who are interested in discovering the quality of CG practices in a developing market such as that of Egypt and its impact on financial performance and financial distress. Originality/value – This paper extends the existing literature, in the Egyptian context in particular, by examining firm performance and the risk of financial distress in relation to the level of CG mechanisms adopted.

scholarly journals Corporate governance and financial performance of listed companies: A case of an emerging market

2021 ◽  
Vol 5 (3) ◽  
pp. 8-17
Author(s):  
Emmanuel Selase Asamoah ◽  
Albert Puni
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Performance Indicator ◽  
Stock Exchange ◽  
Emerging Market ◽  
Target Population ◽  
Governance Structure ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
A Performance

Corporate financial performance (CFP) is a key benefit that comes with the adoption and implementation of a good corporate governance structure in organizations. The objective of this paper is to analyze the effect of the six (6) broad corporate governance structures (board composition, board committees, separation of CEO/chairman, size of board, number of board meetings held, and shareholder concentration) on CFP measured by ROA, ROE, EPS, and Tobin’s Q among Ghanaian companies. The target population for the study was the companies that were listed on the Ghana Stock Exchange (GSE) for the period 2015–2020 and purposive sampling methods were deployed in the sample selection. The study found that using ROA as a performance indicator, corporate governance variables affected CFP by 18.95% whilst it influenced ROE by 29.71%. Additionally, corporate governance mechanisms impacted EPS by 52.53% when it was used as a performance indicator and 18.01% when Tobin’s Q was the performance index. The paper concludes that companies that implement the corporate governance guidelines on best practices stand a better chance of enhancing CFP especially with performance targets that integrate shareholder value maximization.

Board characteristics and firm value for Indian companies

2018 ◽  
Vol 10 (1) ◽  
pp. 2-32 ◽  
Author(s):  
Rakesh Kumar Mishra ◽  
Sheeba Kapil
Keyword(s):  
Decision Making ◽  
Corporate Governance ◽  
Firm Performance ◽  
Firm Value ◽  
Corporate Performance ◽  
Strategic Decision ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
Content Type ◽  
Board Characteristics

Purpose This paper aims to explore the relationship between board characteristics and firm performance for Indian companies. Design/methodology/approach Corporate governance structures of 391 Indian companies out of CNX 500 companies listed on National Stock Exchange have been studied for their impact on performance of companies. Panel data regression methodology has been used on data for five financial years from 2010 to 2014 for the selected companies. Performance measures considered are market-based measure (Tobin’s Q) and accounting-based measure (return on asset [ROA]). Findings The empirical findings indicate that the market-based measure (Tobin’s Q) is more impacted by corporate governance than the accounting-based measure (ROA). There is a significant positive association between board size and firm performance. Board independence is found significantly related to firm performance. Number of board meetings is found to be sending positive signal to the market creating firm value. Separation of chief executive officer and chairman of the board is found to be value-creating, and overburdened directors affect firm performance adversely. Research limitations/implications Limitations of the study are in terms of methodology and possible omission of some variables. It is understood that the qualitative dynamics happening inside board meetings impact corporate performance. The strategic decision-making process adopted by the boards to fight competition or to increase market share is not easily available in public domain. The decision-making processes and monitoring for implementation of those decisions could impact corporate governance performance relationship. These parameters and their impact on corporate performance are not covered under the scope of the present study. Originality/value The paper adds to the emerging body of literature on corporate governance performance relationship in the Indian context by using a reasonably wider and newer data set.

Effect of ownership structure and board structure on firm value: evidence from India

2017 ◽  
Vol 17 (4) ◽  
pp. 700-726 ◽  
Author(s):  
Rakesh Mishra ◽  
Sheeba Kapil
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Performance Measures ◽  
Board Structure ◽  
Tobin’S Q ◽  
Reverse Causality ◽  
Tobin's Q ◽  
Data Set ◽  
Content Type ◽  
The Relationship

Purpose This paper aims to explore the relationship of promoter ownership and board structure with firm performance for Indian companies. Design/methodology/approach Corporate governance structures of 391 Indian companies out of CRISIL NSE Index (CNX) 500 companies listed on national stock exchange (NSE) have been studied for their impact on performance of companies. Panel data regression methodology has been used on data for five financial years from 2010 to 2014 for the selected companies. Performance measures considered are market-based measure (Tobin’s Q) and accounting-based measure (return on assets [ROA]). Findings The empirical findings indicate that market-based measure (Tobin’s Q) is more impacted by corporate governance than accounting-based measure. There is significant positive association between promoter ownership and firm performance. It is also indicated that the relationship between promoter ownership and firm performance is different at different levels of promoter ownership. Board size is found to be positively related to ROA; however, board independence is not found to be related to any of the performance measures. Research limitations/implications Limitations of the study are in terms of data methodology and possible omission of some variables. It is felt that endogeneity and reverse causality might be better addressed using simultaneous equation methodology. Originality/value The paper adds to the emerging body of literature on corporate governance performance relationship in Indian context using a reasonably wider and newer data set.

scholarly journals Effects of ownership concentration on firm performance: Pakistani evidence

2015 ◽  
Vol 9 (2) ◽  
pp. 162-176 ◽  
Author(s):  
Qaiser Rafique Yasser ◽  
Abdullah Al Mamun
Keyword(s):  
Firm Performance ◽  
Performance Measures ◽  
Stock Exchange ◽  
Emerging Market ◽  
Positive Association ◽  
Ownership Concentration ◽  
Content Type ◽  
Concentrated Ownership ◽  
Concentration Degree ◽  
The Relationship

Purpose – This paper aims to present an analysis of the association between five categories of concentrated ownership and firm performance in Pakistan. The connection between high ownership concentration and firm performance has attracted much attention, especially in emerging market, yet yielded many inconsistent empirical results. Design/methodology/approach – Karachi Stock Exchange (KSE)-100 Indexed companies listed in KSE from 2007 to 2011 were selected as the sample, and correlation coefficient and regression model were used to inspect the relationship between ownership concentration degree and corporate performance. Findings – It was found that there is no significant association with ownership concentration and accounting-based performance, market-based performance measures and economic profit, in general. Originality/value – The first demonstration that the shareholding proportion of the single largest shareholder is the only variable having positive association with market-based performance measures.

scholarly journals Corporate governance mechanisms and firm performance: evidence from the emerging market following the revised CG code

2019 ◽  
Vol 20 (1) ◽  
pp. 158-174 ◽  
Author(s):  
Yan Wang ◽  
Kaleemullah Abbasi ◽  
Bola Babajide ◽  
Kemi C. Yekini
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Performance Indicators ◽  
Fixed Effects ◽  
Emerging Market ◽  
Board Independence ◽  
Executive Directors ◽  
Board Diversity ◽  
Content Type ◽  
The Impact

Purpose This study aims to examine the extent to which board characteristics and ownership structure affect firm performance with specific focus on providing new empirical insights following the revised corporate governance (CG) code 2012. Design/methodology/approach This study uses a sample of non-financial firms listed on Pakistan Stock Exchange (PSX)-100 index for the years 2011-2014. Firm performance is measured by accounting-based performance indicators (ROA and ROE) and market-based performance indicators (Tobin’s Q and MTB). This study uses multivariate regression techniques including fixed effects model and two-stage least squares (2SLS). Findings The findings show that board diversity increases over the two periods (pre-2012 and post-2012), whereas there are cases that companies have not fully complied with the revised CG code 2012 in terms of board independence. In addition, the multiple regression results show that firm performance is negatively and significantly associated with institutional ownership. Nevertheless, the results show that board size, board independent, board diversity and board meetings do not have significant impact on firm performance. The findings are fairly consistent and robust across two periods (pre-2012 and post 2012) and a number of econometric models that sufficiently address the potential endogeneity problems. Originality/value To the best of the authors’ knowledge, this is the first empirical study which investigates the impact of the compliance and implementation of 2012 CG code on firm performance in Pakistan. This study is different from the most prior studies in that they use independent non-executive directors rather than conventional non-executive directors to measure board independence.

Institutional antecedents of principle-based corporate governance practices

2014 ◽  
Vol 10 (1) ◽  
pp. 49-82 ◽  
Author(s):  
Krishna Reddy ◽  
Umesh Sharma
Keyword(s):  
Corporate Governance ◽  
Capital Market ◽  
Stock Exchange ◽  
Listed Companies ◽  
Ordinary Least Squares ◽  
Positive Influence ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
Content Type ◽  
Governance Practices

Purpose – This study aims to investigate the nature and extent of compliance to the principle-based corporate governance initiatives by the listed companies in the South Pacific Stock Exchange (SPSE) in Fiji. Three important questions are addressed: whether listed companies in Fiji have complied with the principle-based governance practices? Did compliance with principle-based recommendations lead to an improvement in the listed company's financial performance and legitimacy? How the institutional factors have contributed towards corporate governance practices in Fiji? Design/methodology/approach – Panel data for the SPSE companies over the period 2008-2011 are analysed using ordinary least squares (OLS) regression. Tobin's Q and return on assets (ROA) metrics are used as dependent variables. Findings – The findings indicate that listed companies have adopted the Capital Market Development Authority's (CMDA) recommendations by establishing subcommittees for audit and remuneration, having non-executive/independent directors on the board and separate chair and CEO positions in order to gain legitimacy from stakeholders. Results support the view that the CMDA recommendations of board sub-committees (audit and remuneration) have had positive influence on company performance measured by Tobin's Q. The findings of this study give support to the principle-based corporate governance practices adopted in Fiji to gain legitimacy. Originality/value – The study adds to the governance literature by focusing on the principle-based governance practices in a small remote island country, Fiji which has relatively small economy, capital market and company size. Finally, the study adds to institutional theory by showing how companies' corporate governance choices are affected by the severity of agency conflicts and the way corporate governance is regulated.

The impact of financial crisis on audit quality and audit fee stickiness: evidence from Iran

2019 ◽  
Vol 17 (2) ◽  
pp. 201-221 ◽  
Author(s):  
Mahdi Salehi ◽  
Farzaneh Komeili ◽  
Ali Daemi Gah
Keyword(s):  
Financial Crisis ◽  
Audit Quality ◽  
Stock Exchange ◽  
Emerging Market ◽  
Audit Fees ◽  
Influential Factors ◽  
Industry Specialization ◽  
Content Type ◽  
Random Effects Models ◽  
The Impact

Purpose There is a few studies about stickiness and changes in audit fees. In previous studies, researchers focused on fees behavior, which is expected to change in the short term, regardless of mentioning stickiness of fees and its possible changes. In this study, the authors investigate stickiness of audit fees and the influential factors, specifically audit quality and financial crisis in an emerging economy. Design/methodology/approach Audit quality is examined under three main criteria, namely, auditor size, auditor industry specialization and auditor tenure. The Altman adjusted bankruptcy model is used to identify firms’ financial crisis. In this study, listed companies in Tehran stock exchange market is investigated during the period of 2009-2015. Multiple regression models are used to test research hypotheses. Furthermore, Chow and Hausman tests are selected to choose among hybrid, fixed and random effects models. Findings The findings show no significant relationship between audit quality and audit fees stickiness. The authors also find that financial crisis has no impact on the association between audit quality and audit fees stickiness. Originality/value The current study almost is the first study, which conducted in emerging market of Iran. So, the results may play a helpful role for developing nations.

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