scholarly journals CEO duality and firm performance: the moderating roles of CEO informal power and board involvements

2019 ◽  
Vol 16 (8) ◽  
pp. 1453-1474
Author(s):  
Chaminda Wijethilake ◽  
Athula Ekanayake
Keyword(s):  
Firm Performance ◽  
Sri Lanka ◽  
Board Of Directors ◽  
Large Scale ◽  
Resource Dependence ◽  
Listed Companies ◽  
Resource Dependence Theory ◽  
Ceo Duality ◽  
Content Type ◽  
The Board Of Directors

Purpose This study aims to draw on the resource dependence theory to synthesize the conflicting arguments as well as commonalities of the agency and stewardship perspectives on the relationship between CEO duality and firm performance. Design/methodology/approach Multiple regression analysis is used to analyze the data collected from a sample of 212 large-scale publicly listed companies representing 20 sectors in the Colombo Stock Exchange in Sri Lanka. Findings The research results based on all of 212 publicly listed companies in Sri Lanka show, in support of the agency theory, that CEO duality exerts a negative effect on firm performance when the CEO is equipped with additional informal power. Conversely, CEO duality exhibits a positive effect on firm performance when board involvements are high, a finding that supports the commonalities of the agency and stewardship theoretical perspectives. Practical implications By examining the governance practices and concepts in an Asian developing economy, this study provides insight into the power dynamics between the CEO and the board of directors in managerial contexts that are largely different from those in western countries. Originality/value This study expands the theoretical underpinning of corporate governance research by identifying the performance implications of CEO duality within the broad context of the resource provision of the board of directors and the informal power of CEOs.

The effect of royal family members on the board on firm performance in Saudi Arabia

2019 ◽  
Vol 10 (3) ◽  
pp. 487-518
Author(s):  
Zahra AL Nasser
Keyword(s):  
Saudi Arabia ◽  
Firm Performance ◽  
Board Of Directors ◽  
Firm Value ◽  
Family Members ◽  
Resource Dependence Theory ◽  
Royal Family ◽  
Content Type ◽  
Listed Firms ◽  
The Board Of Directors

Purpose The purpose of this paper is to empirically examine the effect of royal family members on firm performance of publicly listed companies in Saudi Arabia. Design/methodology/approach Using 491 firm-year observations of non-financial publicly listed firms in Saudi Arabia’s stock market between 2009 and 2013, the study employs, besides others, the advanced econometric technique GMM-system estimator. This allows the dynamic nature and control of the endogeneity problem to be accounted for in corporate governance and firm performance. Findings The main result is that the attendance of royal family members at board meetings negatively influences firm performance but does not have an influence on firm value. The results also show that firms with many independent royal family members on the board of directors have better firm performance and firm value. In addition, firms with a high number of royal family members presenting on the board have better firm performance. Research limitations/implications This study offers guidance to assist the further investigation of the SA Royal Family’s BoD membership either in SA or in other monarchy countries. It is interesting to compare these results in order to further understand the different effects that the Royal Family’s BoD membership have in such countries. This study’s results suggest that independent members of SA’s Royal Family on the BoD have some influence on firm performance in both the short and long term. Thus, policymakers should encourage the members of SA’s Royal Family to become more involved in firms’ BoDs. Practical implications This study offers guidance for further investigation of royal family members in the region or in other monarchy countries. It will be interesting to compare these results. The study suggests that royal family members on the board have a partial influence on firm performance, especially the independent ones. Thus, the policymakers should encourage more involvement of independent royal family members on the board. Social implications Foreign and minority investors, who invest in SA’s publicly listed firms, should note that when independent members of SA’s Royal Family are on the BoD their investment will benefit from the reduced risks and uncertainty. Originality/value To the best of the author’s knowledge, this is the first study undertaken to investigate empirically the influence a royal family’s presence on the board of directors has on firm performance. This study is based on both theories, namely the agency theory and resource dependence theory.

Board involvement in corporate performance: evidence from a developing country

2015 ◽  
Vol 5 (3) ◽  
pp. 250-268 ◽  
Author(s):  
Chaminda Wijethilake ◽  
Athula Ekanayake ◽  
Sujatha Perera
Keyword(s):  
Developing Countries ◽  
Sri Lanka ◽  
Developing Country ◽  
Resource Dependence ◽  
Corporate Performance ◽  
Stock Exchange ◽  
Corporate Boards ◽  
Ceo Duality ◽  
Content Type ◽  
The Relationship

Purpose – The purpose of this paper is to provide insights into the understanding of the relationship between board involvement and corporate performance within the context of developing countries. Design/methodology/approach – A number of aspects related to board involvement, including board’s shareholdings, frequency of board meetings, availability of independent board committees, board size, CEO duality, and CEO is being a promoter, were examined in order to explore their influence on corporate performance measured in terms of earnings per share. The study mainly draws on agency theory, and is supplemented by resource dependence and stewardship theories. Multiple regression analysis is utilized to analyze the data gathered from a sample of 212 publicly listed companies in 20 industries in the Colombo Stock Exchange in Sri Lanka. Findings – Among the aspects of board involvement considered, board’s shareholdings, board meetings frequency, independent committees, and CEO duality showed a positive influence on corporate performance. However, two other aspects, namely CEO being a promoter, and the size of corporate boards showed a negative effect. The findings also suggest that the use of multiple theories, rather than depending on a single theory, is more effective in understanding the relationships examined in this study. Further, the study highlights the need to be cautious in utilizing the theories that are more applicable to matured western economies when analyzing issues relating to developing countries. Originality/value – This study makes an original contribution to corporate governance literature by examining the relationship between board involvement and corporate performance in a developing country, namely Sri Lanka. The study also adds to the existing literature by utilizing multiple theories to examine the issue under investigation.

scholarly journals The board of directors and firm performance: empirical evidence from listed companies

2019 ◽  
Vol 19 (3) ◽  
pp. 508-551 ◽  
Author(s):  
Alessandro Merendino ◽  
Rob Melville
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Agency Theory ◽  
Ownership Structure ◽  
Listed Companies ◽  
Independent Directors ◽  
Board Structure ◽  
Board Size ◽  
Ceo Duality ◽  
Content Type

PurposeThis study aims to reconcile some of the conflicting results in prior studies of the board structure–firm performance relationship and to evaluate the effectiveness and applicability of agency theory in the specific context of Italian corporate governance practice.Design/methodology/approachThis research applies a dynamic generalised method of moments on a sample of Italian listed companies over the period 2003-2015. Proxies for corporate governance mechanisms are the board size, the level of board independence, ownership structure, shareholder agreements and CEO–chairman leadership.FindingsWhile directors elected by minority shareholders are not able to impact performance, independent directors do have a non-linear effect on performance. Board size has a positive effect on firm performance for lower levels of board size. Ownership structure per se and shareholder agreements do not affect firm performance.Research limitations/implicationsThis paper contributes to the literature on agency theory by reconciling some of the conflicting results inherent in the board structure–performance relationship. Firm performance is not necessarily improved by having a high number of independent directors on the board. Ownership structure and composition do not affect firm performance; therefore, greater monitoring provided by concentrated ownership does not necessarily lead to stronger firm performance.Practical implicationsThis paper suggests that Italian corporate governance law should improve the rules and effectiveness of minority directors by analysing whether they are able to impede the main shareholders to expropriate private benefits on the expenses of the minority. The legislator should not impose any restrictive regulations with regard to CEO duality, as the influence of CEO duality on performance may vary with respect to the unique characteristics of each company.Originality/valueThe results enrich the understanding of the applicability of agency theory in listed companies, especially in Italy. Additionally, this paper provides a comprehensive synthesis of research evidence of agency theory studies.

Politicians on the Board of Directors: Do Connections Affect the Bottom Line?

2005 ◽  
Vol 31 (3) ◽  
pp. 464-481 ◽  
Author(s):  
Amy J. Hillman
Keyword(s):  
Board Of Directors ◽  
Resource Dependence ◽  
Resource Dependence Theory ◽  
Bottom Line ◽  
Dependence Theory ◽  
The Board Of Directors ◽  
Regulated Industries ◽  
The Government ◽  
The Relationship

Resource dependence theory emphasizes the importance of linking firms with external contingencies that create uncertainty and interdependence. A critical source of external interdependency and uncertainty for business is government. One way to link a firm to the government is appointing ex-politicians to the board of directors. This study compares the boards of two groups of firms—those from heavily and less regulated industries—and finds the former group has more politician directors. Firms with politicians on the board are associated with better market-based performance across both groups, although the relationship is more pronounced within heavily regulated industries.

scholarly journals Board demographic diversity and human rights reporting in Western Europe

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ana Paula Castelo Branco ◽  
Maria Teresa Bianchi ◽  
Manuel Castelo Branco
Keyword(s):  
Human Rights ◽  
Boards Of Directors ◽  
Western Europe ◽  
Resource Dependence ◽  
Resource Dependence Theory ◽  
Demographic Diversity ◽  
Board Diversity ◽  
Content Type ◽  
Ordinal Logistic Regression Analysis ◽  
The Board Of Directors

Purpose This paper aims to examine the relationship between board demographic diversity and human rights reporting for a sample of large Western European companies. Design/methodology/approach Grounded on resource dependence theory, the authors hypothesize that greater gender, age and nationality diversities will translate into enhanced levels of human rights reporting. The authors use ordinal logistic regression analysis to analyze the association between these types of board diversity and such reporting. Findings The findings suggest that the companies in the sample attribute little importance to the reporting of information pertaining to the issue of human rights. They also suggest that only the diversity of nations represented in the board of directors is significant in explaining this type of reporting. Research limitations/implications The sample includes only large companies from Western Europe and the analysis covers only one year. Originality/value To the best of the authors’ knowledge, this study provides the first empirical analysis of factors influencing human rights reporting conducted on a multiple-country setting. It is also the first investigating the association between boards of directors’ demographic diversity and such reporting.

Corporate governance and the choice to take on the hybrid organizational model of the benefit company: evidence from Italy

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Christian Corsi ◽  
Antonio Prencipe ◽  
Danilo Boffa
Keyword(s):  
Corporate Governance ◽  
Agency Theory ◽  
Board Of Directors ◽  
Stakeholder Theory ◽  
Theoretical Models ◽  
Organizational Model ◽  
Ceo Duality ◽  
Content Type ◽  
The Board Of Directors ◽  
Institutional Model

Purpose This study aims to investigate the role assumed by corporate governance mechanisms in guiding a corporate organization to take on benefit company (BC) model using the theoretical models of agency theory and stakeholder theory applied to the corporate social responsibility activities of the firm. In detail, it has been hypothesized that the phenomenon of chief executive officer (CEO) duality, independent directors and female directors has a positive effect on the likelihood of a firm taking the model of a BC. Design/methodology/approach A panel sample of 354 Italian firms taking the institutional model of BC and a control group of 600 firms extracted from the Aida BvD database were analysed. Data covers a period from 2009 to 2018. To empirically validate the advanced research hypotheses, four non-linear probit regression models were estimated. Findings The results show that CEO duality seems to have a positive influence on the company’s likelihood of taking the model of a BC. Similarly, the independence of the board of directors and the gender diversity within the board of directors have a positive impact on the company’s likelihood of assuming the model of a BC. Originality/value The research work contributes at integrating the emerging debates into the literature about the relationship between corporate governance and corporate responsibilities by expanding them into new and emerging business context of the hybrid organizational model. Further, the systematic use of the theoretical models of agency theory and stakeholder theory applied to socially responsible activities will improve the understanding of the heterogeneous relationships between corporate governance and choice for the institutional model of BC.

Board Leadership Structure and Firm Performance: Evidence from Listed Companies in Sri Lanka

2017 ◽  
Vol 7 (2) ◽  
pp. 391
Author(s):  
Saseela Balagobei ◽  
K.G.A. Udayakumara
Keyword(s):  
Firm Performance ◽  
Sri Lanka ◽  
Stock Exchange ◽  
Secondary Data ◽  
Listed Companies ◽  
Ceo Duality ◽  
Significant Difference ◽  
Board Leadership ◽  
Leadership Structure ◽  
Board Leadership Structure

Corporate Governance as a mechanism helps to align management's goals with those of the stakeholders that are to increase firm performance. The aim of this study is to identify the relationship between board leadership structure and firm performance of listed companies in Sri Lanka during the period of 2014-2016. The data was collected from the secondary data sources and board leadership structure is measured by CEO duality. The sample of this study consists of 100 firms listed in Colombo Stock Exchange based on market capitalization. For the purpose of data analysis, Pearson’s correlation analysis and independent sample t-test were used to examine the hypotheses of this study. The findings reveal that board leadership structure is positively correlated with firm performance in terms of Tobin’s Q and there is no significant difference in firm performance between CEO duality firms & non-duality firms.

scholarly journals Roles of board of directors: Evidence from Malaysian listed companies

2009 ◽  
Vol 5 (1) ◽  
pp. 22-36 ◽  
Author(s):  
Hasnah Kamardin ◽  
Hasnah Haron
Keyword(s):  
Firm Performance ◽  
Board Of Directors ◽  
Firm Size ◽  
Descriptive Analysis ◽  
Listed Companies ◽  
Annual Reports ◽  
Outside Directors ◽  
Test Analysis ◽  
Governance Practices ◽  
The Board Of Directors

This study examines the extent of roles played by the board of directors (BOD) in Malaysian listed companies and the significant differences on the roles based on the company characteristics and board characteristics: firm size, leverage, growth, firm performance (ROA), family controlled companies, and CEO duality. Data are gathered from two sources whereby questionnaires are used to ascertain the extent of BOD participation in the board roles in the financial year 2006 and companies’ annual reports are used to gather financial and board data. Using a sample of 112 companies, descriptive analysis shows that BOD mostly performs greater monitoring roles, other than performance evaluation. Strategy roles focus more on reviewing company’s strategic plan and defining company’s vision. Outside directors are required to focus on protecting shareholders’ interests, provide a balanced view, and have strategic thinking capabilities. The results of t-test analysis indicate that to some extent the roles played by the BOD are significantly different in terms of firm size, firm performance and family companies. The results have some implications to the corporate governance practices.

scholarly journals Ownership structure, board of directors and firm performance: evidence from Taiwan

2019 ◽  
Vol 19 (1) ◽  
pp. 189-216 ◽  
Author(s):  
Mao-Feng Kao ◽  
Lynn Hodgkinson ◽  
Aziz Jaafar
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Board Of Directors ◽  
Ownership Structure ◽  
Firm Value ◽  
Listed Companies ◽  
Independent Directors ◽  
Data Set ◽  
Content Type ◽  
Listed Firms

PurposeUsing a data set of listed firms domiciled in Taiwan, this paper aims to empirically assess the effects of ownership structure and board of directors on firm value.Design/methodology/approachUsing a sample of Taiwanese listed firms from 1997 to 2015, this study uses a panel estimation to exploit both the cross-section and time–series nature of the data. Furthermore, two stage least squares (2SLS) regression model is used as robustness test to mitigate the endogeneity issue.FindingsThe main results show that the higher the proportion of independent directors, the smaller the board size, together with a two-tier board system and no chief executive officer duality, the stronger the firm’s performance. With respect to ownership structure, block-holders’ ownership, institutional ownership, foreign ownership and family ownership are all positively related to firm value.Research limitations/implicationsAlthough the Taiwanese corporate governance reform concerning the independent director system which is mandatory only for newly-listed companies is successful, the regulatory authority should require all listed companies to appoint independent directors to further enhance the Taiwanese corporate governance.Originality/valueFirst, unlike most of the previous literature on Western developed countries, this study examines the effects of corporate governance mechanisms on firm performance in a newly industrialised country, Taiwan. Second, while a number of studies used a single indicator of firm performance, this study examines both accounting-based and market-based firm performance. Third, this study addresses the endogeneity issue between corporate governance factors and firm performance by using 2SLS estimation, and details the econometric tests for justifying the appropriateness of using 2SLS estimation.

Board involvement in corporate sustainability reporting: evidence from Sri Lanka

2018 ◽  
Vol 18 (6) ◽  
pp. 1042-1056 ◽  
Author(s):  
Nayana Chandani Swarnapali Rathnayaka Mudiyanselage
Keyword(s):  
Resource Dependence ◽  
Corporate Sustainability ◽  
Binary Logistic Regression ◽  
Sustainability Reporting ◽  
Resource Dependence Theory ◽  
Sri Lankan ◽  
Content Type ◽  
Sustainability Disclosure ◽  
The Board Of Directors ◽  
Asian Context

Purpose The purpose of this paper is to explore the role played by the board of directors in corporate sustainability (CS) disclosure within the Asian context in which sustainability reporting (SR) is an emerging phenomenon. Design/methodology/approach Data are collected from a sample of 100 listed Sri Lankan companies over a period of four years (2012-2016), representing practically all the business sectors. This study draws on both agency and resource dependence theories, while binary logistic regression is performed for the data analysis. Findings The results point out that firms that follow a sustainability disclosure policy have larger boards, a higher proportion of independent directors and more female directors. Contrary to certain common assumptions, firms that practice sustainability disclosure are not influenced by dual leadership, board ethnicity and board ownership. This study helps firms to understand whether their boards can influence the sustainability disclosure choice or not and further, to validate the appropriateness of the agency theory and the resource dependence theory for examining issues of this nature. Originality/value This study contributes significantly to the extant literature on this subject by broadening the geographical coverage, which has generally been limited to the West in corporate disclosure studies.

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