Corporate governance and turnaround: Evidence from Australia

2020 ◽  
Vol 45 (4) ◽  
pp. 549-578
Author(s):  
Seema Miglani ◽  
Kamran Ahmed ◽  
Darren Henry
Keyword(s):  
Institutional Ownership ◽  
Jel Classification ◽  
Board Independence ◽  
Outside Directors ◽  
Firm Level ◽  
Corporate Turnaround ◽  
Outside Director ◽  
Director Ownership ◽  
The Relationship ◽  
Matched Samples

We examine the relationship between ownership and outside director attributes and corporate turnaround outcomes using matched samples of 99 turnaround and 99 non-turnaround listed Australian firms during the 2004–2015 period. Based on agency theory principles, we propose that key shareholder groups (block ownership, director ownership, institutional ownership) and outside directors are related to firm-level turnaround outcomes, and particularly changes in these attributes across decline to turnaround periods. Our results provide evidence that turnaround and non-turnaround firms differ in terms of their ownership and board composition structures, and that changes in director ownership and the degree of board independence are important in determining the likelihood of turnaround success. JEL Classification: G33, G34, M40

Investigating the Relationship Between Ownership Structure and Investment Efficiency in Emerging Markets: Evidence From the Egyptian Stock Market

2018 ◽  
Vol 8 (4) ◽  
pp. 1
Author(s):  
Ahmed Sayed Rashed ◽  
Ebitihj Mostafa Abd ◽  
Esraa Fathi Mohamed Ismail ◽  
Doaa Mohamed Abd El Samea
Keyword(s):  
Ownership Structure ◽  
Stock Exchange ◽  
Panel Data Analysis ◽  
Negative Relationship ◽  
Institutional Ownership ◽  
Managerial Ownership ◽  
Investment Efficiency ◽  
Outside Director ◽  
Director Ownership ◽  
The Relationship

This paper aims to examine the relationship between Ownership Structure Mechanisms (Managerial Ownership, Institutional Ownership, Block holder Ownership and Outside Director Ownership) and Investment Efficiency by using panel data analysis. To investigate this relationship used the multiple regression models. Findings of investigation of 35 firms listed on the Egyptian Stock Exchange in the period 2006 to 2015 by balanced Panel model representative. Results indicated that Managerial Ownership isn’t related with investment efficiency. In contract, institutional ownership, block holder ownership and outside director ownership have a negative relationship with investment efficiency. In addition, the researcher found that control variables (Firm size, Debt ratio, Tobin’s Q) not related to investment efficiency. These findings imply that the Majority of Egyptians firms relies on institutional without individual ownership and then reduces much of possible from agency problems and decreasing information asymmetry and facilitating the monitoring of investment decisions.

Ownership structure and audit quality: the mediating effect of board independence

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Moncef Guizani ◽  
Gaafar Abdalkrim
Keyword(s):  
Ownership Structure ◽  
Audit Quality ◽  
Institutional Ownership ◽  
Audit Fees ◽  
Mediating Effect ◽  
Board Independence ◽  
Government Ownership ◽  
Content Type ◽  
New Perspective ◽  
The Relationship

Purpose This study aims to examine the mediating effect of board independence on the relationship between ownership structure and audit quality. Design/methodology/approach The research uses generalized methods of moments regression to test the relationship between ownership structure and audit quality. The sample consists of 162 non-financial firms listed on the Gulf Cooperation Council stock markets between the years of 2009 and 2016. To test the significance of the mediating effect, this paper uses the Sobel test. Findings Empirical findings show that companies with higher family ownership are less likely to demand extensive audit services and, as a result, pay lower audit fees. Conversely, this study finds that companies with higher active and passive institutional ownership are more likely to engage high-quality auditors and pay larger audit fees. As for government ownership, it has no significant impact on audit fees. The results also reveal that the negative (positive) effect of family (institutional) ownership on audit quality follows the path through reducing (enhancing) board independence. Further tests are conducted and support the main findings. Practical implications This study has important implications for policymakers and regulators to address the conflict between controlling shareholders and minorities by promoting higher standards of audit quality. The study findings may be useful to investors, assisting them in making better-informed decisions and aids other interested parties in gaining a better understanding of the role played by ownership structure in audit quality. The study also contributes to the strategic board behavior by bringing a new perspective on how boards engage in monitoring by requesting external audit services. This behavior is likely to be influenced by the type of controlling shareholder. Originality/value The main contribution of the present paper is to examine the board composition as a potential mediating variable between ownership structure and audit quality. Moreover, it highlights the issue of improving governance mechanisms.

scholarly journals The Relationship between Corporate Governance Mechanisms and Going Concern Evaluation: Evidence from Firms Listed on Amman Stock Exchange

2014 ◽  
Vol 4 (4) ◽  
pp. 100
Author(s):  
Bilal Nayef Zureigat ◽  
Faudziah Hanim Fadzil ◽  
Syed Soffian Syed Ismail
Keyword(s):  
Corporate Governance ◽  
Stock Exchange ◽  
Negative Relationship ◽  
Institutional Ownership ◽  
Board Independence ◽  
Board Meeting ◽  
Governance Mechanisms ◽  
Going Concern ◽  
Corporate Governance Mechanisms ◽  
The Relationship

This study aims to examine the relationship between corporate governance mechanisms (representative by each of managerial, institutional ownership, board independence and board meeting) and going concern evaluation among Jordanian listed firms. Through using multiple regression analysis, the results of this study illustrates that there is a positive relationship between managerial ownership, board independence and board meeting and going-concern evaluation, while a negative relationship is found with institutional ownership. There are four main hypotheses, two of them which are managerial and institutional ownership are accepted, while board independence and board meeting are not supported. This study shed more light on the importance of complying with the requirements of governance code and instructions by the companies and the need to impose fines or sanctions on non-compliant companies. The results of this study contribute to the creditors’ interest to be more alert to companies which may possess characteristics that contribute in manipulation of future companies.

scholarly journals A Cross-country Study of the Effects of Institutional Ownership on Credit Ratings

2017 ◽  
Vol 12 (8) ◽  
pp. 80 ◽  
Author(s):  
AlHares A. ◽  
Ntim C. G.
Keyword(s):  
Financial Crisis ◽  
Firm Size ◽  
Global Financial Crisis ◽  
Credit Ratings ◽  
Negative Relationship ◽  
Institutional Ownership ◽  
Control Variables ◽  
Firm Level ◽  
Anglo American ◽  
The Relationship

A considerable number of studies have examined the relationship between corporate governance (CG) structures and corporate performance (e.g., Yermack, 1996; Gompers et al., 2003; Beiner et al., 2006; Renders et al., 2010; Ntim et al., 2012; Kumar & Zattoni 2013; Griffin, et al., 2014). In contrast, despite its importance as demonstrated by the recent financial crisis, studies examining why and how a corporation’s CG mechanisms might influence its credit ratings are rare (e.g., Switzer and Wang, 2013;Matthies, 2013; Tran, 2014). This research, therefore, seeks to contribute to the extant literature by exploring the effects of (CG) mechanisms on corporate credit ratings. Specifically, using a sample of 200 firms from 10 OECD countries over ten years covering the pre- and post-2007/08 global financial crisis period from Anglo American (i.e., Australia, Canada, Ireland, UK, and US) and Continental European (i.e., France, Germany, Italy, Japan and Spain) traditions and employing a total of 200 listed companies, this paper hopes to achieve a number of objectives. First, the paper attempted to assess the levels of compliance with, and disclosure of, CG principles contained in the 2004 OECD CG Code in firms from two different traditions: Anglo America and Continental Europe. Second, the paper sought to investigate the relationship between CG mechanisms and credit ratings. These relationships will be explored by employing firm-level CG mechanisms (ownership structures measured by Institutional Ownership) by accounting for firm-level control variables (e.g., firm size, growth, profitability, and leverage) based on a multi-theoretical framework that incorporates insights from agency and legitimacy theories. The findings revealed that there was a strong negative relationship between institutional ownership and credit ratings. From the descriptive analysis, it was shown that institutional owners did not have a very high credit rating. When the control variables were assessed, it was shown that they had a negative influence on the credit ratings with sales growth and leverage and positive significant relationship with firm size, corruption index, power distance and Anglo American countries.

scholarly journals The Impact of Institutional Ownership and a Firm's Size on Firm Value: Tax Avoidance as a Moderating Variable

2018 ◽  
Vol 3 (1) ◽  
pp. 01-08
Author(s):  
Vince Ratnawati ◽  
Azhari S. ◽  
Desmond Freddy ◽  
Nita Wahyuni
Keyword(s):  
Firm Size ◽  
Firm Value ◽  
Stock Exchange ◽  
Tax Avoidance ◽  
Institutional Ownership ◽  
Jel Classification ◽  
Least Square ◽  
Manufacturing Companies ◽  
The Impact ◽  
The Relationship

Objective - The objective of this study is to investigate how institutional ownership and firm size affect firm value. The study also investigates the moderating effect of tax avoidance on the relationship between institutional ownership and the size of a firm on its value. Methodology/Technique - A model was developed and tested using a sample of 66 manufacturing companies listed on the Indonesian Stock Exchange between 2012 and 2014. Findings - The data was collected and analysed using a least square regression and moderated regression analysis. The analysis shows that institutional ownership and firm size affect firm value. The results also indicate that tax avoidance moderates the effect of institutional ownership and that of a firm's size on its value. Type of Paper - Empirical Keywords: Institutional Ownership, Firm Size, Tax Avoidance, Firm Value. JEL Classification: G30, G32, G39.

scholarly journals MODERATING EFFECT OF ENTERPRISE RISK MANAGEMENT ON THE RELATIONSHIP BETWEEN BOARD STRUCTURES AND CORPORATE PERFORMANCE

2019 ◽  
pp. 01-15
Author(s):  
Saddam Ali Shatnawi ◽  
Mustafa Mohd Hanefah ◽  
Monther Yahiya Sobhi Eldaia
Keyword(s):  
Risk Management ◽  
Firm Performance ◽  
Corporate Performance ◽  
Continuous Process ◽  
Enterprise Risk Management ◽  
Board Independence ◽  
Board Size ◽  
Enterprise Risk ◽  
Director Ownership ◽  
The Relationship

Risk encroachment into Corporate Governance (CG) remains a continuous process that required an efficient and long-term solution. Using enterprise risk management (ERM) as a moderating variable on the relationship between board structures and corporate performance remains an area unexploited in CG research. This relationship can effectively measure by the extent of ERM interactions between board structures and corporate performance. Despite various studies on CG mechanisms, firm performance, ERM implementation level, and gender diversity, the empirical results appeared inconclusive and the findings are inconsistent. None of the studies have addressed the role play by ERM as a moderator between director ownership, the board size, board independence, the total number of women on the board, number of Muslim directors on the board, and firm performance. It is demonstrated that the ERM has the potential to moderate between the different board structures and corporate performance, and this moderation has never been reported in the literature. It is expected that this ERM moderation may considerably improve corporate performance by determining the strength or weakness of the relationship between board structures and firm performance. Thus, this paper, with regards to available literature, conceptualized that ‘ERM’ moderates the relationship between Board Size, Board Independence, Director Ownership, Total Women in the Board, Muslim directors on the Board, and corporate performance.

The Moderating Effect of Board Independence on the Relationship between Family Ownership and Corporate Sustainability Reporting In Malaysia

2021 ◽  
Vol 5 (4) ◽  
pp. 31-43
Author(s):  
Zainab Aman ◽  
Norman Mohd SALEH ◽  
Zaleha Abdul SHUKOR ◽  
Romlah JAFFAR
Keyword(s):  
Corporate Sustainability ◽  
Sustainability Reporting ◽  
Listed Companies ◽  
Jel Classification ◽  
Moderating Effect ◽  
Annual Reports ◽  
Family Ownership ◽  
Board Independence ◽  
Social Dimensions ◽  
The Relationship

Objective - The objective of this paper is to investigate the relationship between family ownership and corporate sustainability reporting to determine how the role of board independence affects the relationship between those variables within Malaysian listed companies. Methodology/Technique – The annual reports of 771 listed companies from 2014 to 2016 were analyzed using content analysis methods. The study uses agency theory to develop the hypotheses. Findings - The study found that family ownership is negatively related to corporate sustainability reporting. The finding shows that independent directors are unable to influence the relationship between family ownership and corporate sustainability reporting. The findings of this study are expected to provide insight to authorities in relation to the factors that could enhance corporate sustainability reporting primarily in family-owned companies. Novelty - Previous studies have only focused on environmental and social dimensions of corporate sustainability, whilst this study addresses all the 3 dimensions of sustainability (economic, environmental, and social). This paper is one of the first attempts to investigate the roles of board independence on the relationship between family ownership and corporate sustainability reporting in Malaysia. Type of Paper: Empirical. JEL Classification: M14, M41. Keywords: Sustainability Reporting; Family Ownership; Corporate Governance; Independent Director Reference to this paper should be made as follows: Aman, Z; Saleh, N; Shukur, Z.A; Jaafar, R. (2021). The Moderating Effect of Board Independence on the Relationship between Family Ownership and Corporate Sustainability Reporting in Malaysia, Accounting and Finance Review, 5(4): 31 – 43. https://doi.org/10.35609/afr.2021.5.4(4)

scholarly journals The Relationship Between Tenure and Outside Director Task Involvement: A Social Identity Perspective

2015 ◽  
Vol 44 (2) ◽  
pp. 445-469 ◽  
Author(s):  
Dennis B. Veltrop ◽  
Eric Molleman ◽  
Reggy Hooghiemstra ◽  
Hans van Ees
Keyword(s):  
Social Identity ◽  
Social Identification ◽  
Curvilinear Relationship ◽  
Outside Directors ◽  
Task Involvement ◽  
Outside Director ◽  
The Individual ◽  
The Relationship ◽  
Level Of Analysis ◽  
Director Task

Drawing from corporate governance research and social identity theory, the authors argue that the relationship between outside directors’ time in office and outside director task involvement is more complex than generally anticipated. By using a unique multisource data set composed of peer ratings provided by fellow outside directors rating a focal director’s task involvement, this study analyzes director task involvement at the individual director level of analysis. The authors propose and empirically demonstrate that outside director tenure has an inverted U-shaped relationship with outside director task involvement that is moderated by a director’s social identification with the organization. As such, the authors demonstrate that social identification with the organization provides a critical contingency for the curvilinear relationship between outside director tenure and outside director task involvement. Findings suggest that outside directors who socially identify with the organization are more likely to grow “stale in the saddle” at lower levels of tenure. These findings provide support for the merit of analyzing outside directors at the individual level of analysis and suggest that a “one-size-fits-all” approach may not be most appropriate in assessing the effects of tenure on outside director functioning.

Institutional Ownership and Dividend Payout in Emerging Markets: Evidence from India

2018 ◽  
Vol 17 (1_suppl) ◽  
pp. S54-S82 ◽  
Author(s):  
Chacko Jacob ◽  
Jijo Lukose P.J.
Keyword(s):  
Institutional Investors ◽  
Positive Relationship ◽  
Institutional Ownership ◽  
Jel Classification ◽  
Large Firms ◽  
Dividend Payout ◽  
Financial Firms ◽  
The Us ◽  
Propensity To Pay ◽  
The Relationship

We examine the relationship between institutional investor ownership and dividend payouts using a large sample of NSE-listed non-financial firms during the period 2001 to 2016. Consistent with the evidence from the US market, institutional investors, on average, have larger holdings in dividend-paying firms and are seen to prefer dividend payers over non-payers among larger firms. However, among smaller firms, institutional investors seem to prefer non-paying firms. Consistent with it, logistic regression results reveal that institutional investors do improve a firms’ propensity to pay dividends, primarily across large firms. Further, among dividend-paying firms, institutional investors, on average, are observed to have relatively lesser holdings in firms with higher payouts than those with lower payouts. In line with these observations, regression analysis also provides no evidence to support a positive relationship between total institutional ownership and payout level. However, across investor categories, we do find evidence for domestic institutional investors (DII) in improving payouts. Further, we use a dynamic panel GMM estimator to correct for endogeneity and find that the relationship is robust among large firms. Our results highlight the role of DII in improving dividend payout and provide support to models that predict a positive relationship. JEL Classification: G23, G32, G34, G35

scholarly journals Board composition, ownership structure and voluntary disclosure: An empirical study of the listed companies in Egypt

2014 ◽  
Vol 11 (2) ◽  
pp. 415-426 ◽  
Author(s):  
Mohammed Moustafa Soliman ◽  
Aiman A. Ragab ◽  
Mohammed B. Eldin
Keyword(s):  
Ownership Structure ◽  
Voluntary Disclosure ◽  
Institutional Ownership ◽  
Ownership Concentration ◽  
Board Composition ◽  
Board Independence ◽  
Managerial Ownership ◽  
Voluntary Disclosures ◽  
Board Size ◽  
The Relationship

The aim of this study is to examine the relationship between board composition and ownership structure variables on the level of voluntary information disclosures of companies listed on the Egyptian Stock Exchange. Board composition is examined in terms of board independence; board size; and CEO duality; also, ownership structure is examined in terms of ownership concentration; institutional ownership; and managerial ownership. The results show that there is a significant negative relationship between CEO duality and voluntary disclosures. However, board independence; board size; ownership concentration; institutional ownership; and managerial ownership are not associated with voluntary disclosures. Also, the results of the regression analyses show that size and leverage of firms are significantly and positively associated with the level of voluntary information disclosures. Profitability of a firm is not significantly associated with voluntary disclosures. Finally, this paper indicates the relationship among board composition, ownership structure and corporate voluntary disclosure, and provides evidence for Egyptian regulators to improve corporate governance and optimize ownership structure.

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