Do bank independency and diversification affect bank failures in Europe?

2019 ◽  
Vol 18 (3) ◽  
pp. 366-398
Author(s):  
Mehdi Mili ◽  
Anis Khayati ◽  
Amira Khouaja
Keyword(s):  
Corporate Governance ◽  
Bank Failure ◽  
Bank Failures ◽  
Governance Mechanism ◽  
Content Type ◽  
Failure Risk ◽  
Corporate Governance Mechanism ◽  
The Impact ◽  
The Relationship

Purpose Motivated by agency theory, this paper aims to explore the impact of bank diversification and bank independency on the likelihood of bank failure. The effects of corporate governance (ownership and board structures) are also examined. Design/methodology/approach Logistic regressions are used to explore the role of corporate governance on bank failure risk. This sample covers 608 banks from eight European countries. Findings The results suggest that the well-documented finding that diversification and bank independency may increase bank failure risk does not persist under strong corporate governance mechanism. Thus, to reduce the bank failure risk, diversification should be strongly monitored by the management to avoid excessive risk-taking by shareholders. Originality/value The approach used in this study differs from that used in previous studies from certain perspectives. First, unlike most previous studies that focused on the relationship between bank performance and bank diversification, the impact of income and asset diversification on bank failure is tested. Also, the impact of a combined effect of diversification and corporate governance variables on bank failure is tested. This allows the control for different ownership and board variables as factors that would potentially affect the likelihood of bank failure.

Corporate governance and investment efficiency in Indonesia: the moderating role of industry competition

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Irenius Dwinanto Bimo ◽  
Engelbertha Evrantine Silalahi ◽  
Ni Luh Gde Lydia Kusumadewi
Keyword(s):  
Corporate Governance ◽  
Generalized Method Of Moments ◽  
Investment Efficiency ◽  
Governance Mechanism ◽  
Content Type ◽  
Industry Competition ◽  
Corporate Governance Mechanisms ◽  
Corporate Governance Mechanism ◽  
The Relationship

Purpose This study aims to analyse the effect of corporate governance on investment efficiency and the moderating impact of industry competition on the relationship between corporate governance and investment efficiency. Design/methodology/approach The research sample includes a total of 36 publicly listed companies assessed by the Indonesian Institute for Corporate Directorship from 2012 to 2018. Testing is performed on full sample and overinvestment and underinvestment subsamples. Additional testing is further carried out using the generalized method of moments to address endogeneity problems and a robustness test is performed to assess the estimated investment efficiency. Findings Corporate governance can increase investment efficiency and the effectiveness of corporate governance is found to drop when the level of industry competition is higher. Practical implications The results of the present study corroborate the suggestion that companies need to implement corporate governance mechanisms. Furthermore, designing a corporate governance mechanism requires the scrutiny of the external environment, including industry competition. Originality/value The present study adds the profitability factor in the calculation of investment efficiency levels. This study also considers external factors that can influence the effectiveness of corporate governance in determining investment efficiency.

scholarly journals Corporate governance in practice: the role of practitioners' understanding in implementing compliance programs

2020 ◽  
Vol 33 (4) ◽  
pp. 887-911
Author(s):  
Riccardo Stacchezzini ◽  
Francesca Rossignoli ◽  
Silvano Corbella
Keyword(s):  
Corporate Governance ◽  
Governance Mechanism ◽  
Content Type ◽  
Case Study Analysis ◽  
Implementation Processes ◽  
Compliance Programs ◽  
Corporate Governance Mechanisms ◽  
Potential Benefits ◽  
Corporate Governance Mechanism

PurposeThis article investigates the implementation of a compliance programme (CP) in terms of how practitioners conceive of and execute the responsibilities arising from this corporate governance mechanism.Design/methodology/approachThis study involves a practice lens approach forms the case study analysis and interpretation, involving both interviews and documentary materials collected from an Italian company with prolonged compliance experience. Schatzki's (2002, 2010) practice organisation framework guides the interpretation of CP as a practice organised by rules, practical and general understandings and teleoaffective structures.FindingsCP practice evolves over time. A practical understanding of daily actions required to accomplish the CP and a general understanding of the responsibilities connected with the CP, such as the attitudes with which the CP is performed, are mutually constitutive and jointly favour this evolution. Dedicated artefacts – such as IT platforms, training seminars and compliance performance indicators – help spread both of these types of understanding. These artefacts also align practitioners' general understanding with the CP's teleoaffective structures imposed, including the CP's assigned objectives and the desired reactions to them.Research limitations/implicationsThe findings have theoretical and practical implications by revealing the relevance of practitioners' understanding of corporate governance mechanisms in their implementation processes.Originality/valueThis study reveals the potential benefits of practice lens approaches in corporate governance studies. It responds to the call for qualitative studies that demonstrate corporate governance as implemented in daily activities.

scholarly journals Pengaruh Intellectual Capital dan Corporate Governance Terhadap Kinerja Bank di Indonesia

2019 ◽  
Vol 2 (1) ◽  
pp. 57
Author(s):  
Jadzil Baihaqi
Keyword(s):  
Corporate Governance ◽  
Intellectual Capital ◽  
Boards Of Directors ◽  
Audit Committee ◽  
Stock Exchange ◽  
Governance Mechanism ◽  
Moderation Effect ◽  
Corporate Governance Mechanism ◽  
The Impact ◽  
The Relationship

This study examines the impact of intellectual capital and corporate governance mechanism on banks’ performance both directly and also moderated effect. We used banks that were listed in the Indonesia Stock Exchange. The bank’s performance was measured by risk-based bank rating while intellectual capital was measured by the coefficient of VAICTM (Pulic, 1998). The corporate governance mechanism was measured based on the size of boards of directors, the composition of independent director, CEO remuneration, managerial ownership, the effectiveness of audit committee and ownership concentration. The result of the study shows that banks’ performance was positively influenced by intellectual capital. However, corporate governance mechanism did not influence the banks’ performance, while the moderation effect of corporate governance mechanism on the relationship between intellectual capital and banks’ performance was not confirmed.

The impact of corporate governance and IFRS on the relationship between financial reporting quality and investment efficiency in a continental accounting system

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Asma Houcine ◽  
Mouna Zitouni ◽  
Samir Srairi
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Investment Efficiency ◽  
Accounting System ◽  
Governance Mechanism ◽  
Content Type ◽  
The Impact ◽  
The Relationship

PurposeThe purpose of this paper is to investigate whether Financial Reporting Quality (FRQ), Corporate Governance and IFRS affect investment efficiency of French listed companies.Design/methodology/approachBased on a sample of 125 French firms listed on the CAC All Tradable index between 2008 and 2017, the study uses Feasible Generalized Least Squares (FGLS) regressions to examine the relationship between FRQ and firms' investment efficiency.FindingsThe findings show that FRQ plays a role in reducing overinvestment and does not affect underinvestment, suggesting that in a code-law country, informal and personal relationships tend to replace the role of financial reports in mitigating information asymmetry. The results also reveal that the relationship between FRQ and investment efficiency increases with better corporate governance and with the implementation of IFRS. However, the results provide no evidence between incentives to minimize profits for tax purposes and firms' underinvestment and continues to be negative for overinvesting companies that have more incentives to manage their earnings for tax purposes.Research limitations/implicationsOur study has some limitations. First, we only examine listed firms, so the results cannot be generalized to unlisted companies that represent the vast majority of French economic activity. Second, this research does not distinguish between government companies and private companies. The two types of companies have different governance mechanisms, financial reporting, disclosure environment and concentration of ownership.Practical implicationsThis study suggests that in a code-law country with weak investor protection, FRQ acts as a governance mechanism by mitigating asymmetric information and improving firms' investment decisions.Originality/valueThe relationship between FRQ and investment efficiency has been widely examined for companies in “common law” countries. This study extends the scarce evidence of this relation to companies in a code-law country. It also builds on previous research by introducing new factors never discussed before that could change this relationship, namely corporate governance, IFRS implementation and tax purposes.

scholarly journals Political connections, corporate governance, and tax aggressiveness in Malaysia

2017 ◽  
Vol 25 (3) ◽  
pp. 424-451 ◽  
Author(s):  
Effiezal Aswadi Abdul Wahab ◽  
Akmalia M. Ariff ◽  
Marziana Madah Marzuki ◽  
Zuraidah Mohd Sanusi
Keyword(s):  
Corporate Governance ◽  
Fixed Effects ◽  
Least Square ◽  
Political Connections ◽  
Corporate Tax ◽  
Content Type ◽  
Tax Aggressiveness ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to examine the relationship between political connections and corporate tax aggressiveness in Malaysia. In addition, this paper investigates the relationship between corporate governance variables and corporate tax aggressiveness. Next, the study investigates the mitigating role of corporate governance in the relationship between political connections and corporate tax aggressiveness. Design/methodology/approach The sample of this study is based on 2,538 firm-year observations during the 2000-2009 periods. This study employs a panel least square regression with both period and industry fixed effects. The study retrieved the corporate governance variables from the downloaded annual reports, whilst the remaining data were collected from Compustat Global. Findings This study finds that politically connected firms are more tax aggressive than non-connected firms. Furthermore, the study finds that large board size decreases the likelihood of tax aggressiveness and a non-linear relationship exists between institutional ownership and tax aggressiveness suggesting increase in monitoring as the ownership increases. However, the study finds no evidence to suggest that corporate governance mitigates the influence of political connections in promoting tax aggressiveness behavior. The findings suggest that the impact of political connections could outweigh the benefits of changes in corporate governance in Malaysia. Research limitations/implications The data are not recent, but it reflects a rather longitudinal research period. Originality/value This paper extends the literature of tax research in Malaysia which is in its’ infancy stage. Furthermore, it investigates the role of political connections in tax-planning research.

Sales order backlog and corporate cash holdings

2020 ◽  
Vol 28 (3) ◽  
pp. 351-371
Author(s):  
Kailing Deng ◽  
Linda Nichols ◽  
Li Sun
Keyword(s):  
Corporate Governance ◽  
Performance Indicator ◽  
Cash Holdings ◽  
Content Type ◽  
Precautionary Motive ◽  
Research Questions ◽  
The Impact ◽  
The Relationship ◽  
Corporate Cash Holdings

PurposeWe examine the impact of sales order backlog (an important leading performance indicator) on corporate cash holdings and the role of corporate governance in the relation between sales order backlog and cash holdings.Design/methodology/approachWe use the regression analysis to examine our research questions.FindingsConsistent with the agency motive and the precautionary motive of cash holdings, we document a significant negative relation between order backlog and cash, suggesting that firms with higher order backlog hold less cash. We further examine and find that the relationship between order backlog and cash becomes stronger for firms with stronger corporate governance, highlighting the role of governance in determining the level of corporate cash holdings.Originality/valueOur study contributes to the accounting literature on sales order backlog and the finance literature on corporate cash holdings. In particular, our study contributes to developing a more comprehensive understanding of the sales order backlog because it is still an under-researched area in accounting. To the best of our knowledge, this study is perhaps the first empirical study that examines the direct link between order backlog and cash.

scholarly journals CORPORATE GOVERNANCE AND FIRM PERFORMANCE: A STUDY ON MODERATING EFFECTS OF FIRM SIZE AND LEVERAGE ON THE RELATIONSHIP BETWEEN CORPORATE GOVERNANCE AND FIRM PERFORMANCE IN BANKING SECTOR OF PAKISTAN

2013 ◽  
Vol 01 (02) ◽  
pp. 40-46
Author(s):  
Irfah Sohail ◽  
Muhammad Bilal Saeed ◽  
Zeenat Murtaza
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Banking Sector ◽  
Governance Mechanism ◽  
Moderating Effects ◽  
Significant Relation ◽  
Return On Assets ◽  
Corporate Governance Mechanism ◽  
The Impact ◽  
The Relationship

The main purpose of this study is to examine the impact of the corporate governance mechanism on firm performance. The variable employed in this study to measure firm performance, is return on assets. The empirical results indicate that firm performance is in positive and significant relation to corporate governance. On the other hand, the relationship between firm performance and corporate governance is moderated by size of the firm where as the leverage does not play its role in moderating the relationship between the variables of interest of this study.

Bank branch location and stability during distress

2014 ◽  
Vol 6 (2) ◽  
pp. 133-151 ◽  
Author(s):  
Jill M. Hendrickson ◽  
Mark W. Nichols ◽  
Daniel R. Fairchild
Keyword(s):  
Balance Sheet ◽  
Bank Failure ◽  
Bank Failures ◽  
Policy Debate ◽  
Probit Regression ◽  
Home Office ◽  
Bank Branch ◽  
Content Type ◽  
The Impact

Purpose – The purpose of this paper is to examine the impact of bank branch location on the likelihood of bank failure during the most recent financial crisis. Design/methodology/approach – This paper estimates the probit regression to identify the causes of bank failures and attempts to determine the role of branch location in bank performance. Findings – Using data from failed and surviving banks in Georgia and Florida, this paper finds that diversifying the balance sheet and operating in more competitive markets reduced failure rates, but branching intensity, measured by number of branches and distance of branches from the home office did not significantly reduce the probability of failure. This suggests that, at least in today ' s market, it is not important to bank stability to have a branching network a significant distance from the home office. Originality/value – This paper carefully considers the role of branch location in the likelihood of bank failure during financial distress. As such, it contributes to the historical policy debate regarding regulation prohibiting or minimizing banks ' ability to branch. It also contributes to our understanding of how banks structure their branching networks in the contemporary banking environment.

A critical review of relationship between corporate governance and firm performance: GCC banking sector perspective

2015 ◽  
Vol 15 (1) ◽  
pp. 18-30 ◽  
Author(s):  
Tamanna Abdul Rahman Dalwai ◽  
Rohaida Basiruddin ◽  
Siti Zaleha Abdul Rasid
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Banking Sector ◽  
Future Research ◽  
Governance Mechanism ◽  
Content Type ◽  
Conventional Banks ◽  
Relationship Of ◽  
The Impact ◽  
The Relationship

Purpose – The purpose of this paper is to evaluate existing studies on the relationship of corporate governance with firm performance in different regions and address the need for similar analysis for the Gulf Coperation Council (GCC) sector. The banking sector comprises the conventional and Islamic banks in the GCC sector and is important due to their ability to bring stability to this region. Existing studies that measure the relationship of GCC sector conventional banks and firm performance are limited. This study proposes a need for future research on corporate governance in the GCC region. Design/methodology/approach – This paper will review and analyze the different empirical and theoretical contributions in establishing the relationship between corporate governance and firm performance. Findings – This paper will create a focus for future research of measuring the impact of corporate governance mechanism on firm performance. The regulators will be encouraged to focus on more research studies for the GCC sector development in the field of corporate governance of the banking sector. Research limitations/implications – The existing studies are valid and practicable for the region under study, and the results need not be applicable for other business environments. In addition, the evolving business and economic environment have always brought about inconsistent conclusions; thus, the period of study can always give varied results. Practical implications – The analysis undertaken in this paper will address the literature gaps for the GCC banking sector and play an instrumental role for future studies by theoreticians and regulators. Originality/value – This paper identifies the literature gaps for the GCC region and analyses the most applicable existing studies that can be useful for the banking sector corporate governance improvement. This paper will create opportunities for the future researchers.

The effect of novelty in in-game advertising: examining the moderating role of interactivity and congruency

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Devika Vashisht
Keyword(s):  
Brand Attitude ◽  
Interactive Marketing ◽  
Content Type ◽  
Brand Recall ◽  
Engagement Theory ◽  
Transportation Theory ◽  
Management Students ◽  
The Impact ◽  
The Relationship

PurposeThe motivation behind the study is to look at the impact of novelty in games on brand recall and attitude, and to dissect the directing job of game interactivity from the points of view of “contrast effect,” “engagement theory” and “transportation theory”.Design/methodology/approachA 2 (novelty: congruent or incongruent) × 2 (game interactivity: high or low) between-subject measures design was used. In total, 172 management students participated in the study. A 2 × 2 between-subjects measure multivariate analysis of variance (MANOVA) was utilized to test the hypotheses.FindingsIncongruent novelty results in higher brand recall but less favorable brand attitude than congruent novelty. Interactivity moderates the relationship between novelty congruence and brand recall such that in a high-interactivity condition, incongruent novelty results in higher brand recall than that in the low-interactivity condition. But, in case of the high-interactivity condition, congruent novelty results in more favorable brand attitude than that in the low-interactivity condition.Practical implicationsDeveloping high brand recall rates and attitudes are the prime objectives of the marketers for choosing a medium to advertise their brands. This investigation adds knowledge to the area of interactive marketing, particularly in-game advertising as a media technique to promote brands taking novelty and game interactivity factors into thought.Originality/valueFrom the perspectives of interactive marketing, psychological elaboration, mind-engagement and transportation of experience, this investigation adds to the literature of advanced media advertising, explicitly to in-game advertising by looking at the effect of novelty and game interactivity.

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