Board Composition and Governance Dilemma at Magna International

2014 ◽  
Vol 3 (2) ◽  
pp. 207-220
Author(s):  
Eduardo Schiehll ◽  
Gokhan Turgut ◽  
Elise Demers
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Board Composition ◽  
Board Structure ◽  
Minority Shareholders ◽  
Board Diversity ◽  
Publicly Traded Companies ◽  
Governance Practices ◽  
The Board Of Directors ◽  
Governance Roles

The primary subject matter of this case study is board composition and the governance roles of the board of directors in publicly traded companies. It is designed to supplement a text chapter or other material on the monitoring and advisory roles of directors and how board structure and composition impact these roles. The case is also designed to allow students to identify and assess governance issues related to firm ownership structures, family-owned or controlled companies, ethical conduct of the board of directors and conflicts between majority and minority shareholders. The case is sufficiently detailed to allow discussing the multidimensional aspects of board composition (or board diversity), including gender, ethnicity, expertise, experience and prestige. It is structured as a chronological description of the controversy generated by a proposed related party transaction (a buyout transaction) designed to dismantle a dual-share capital structure that allowed the Stronach family to control the company (Magna International Inc.) with just a fraction of its equity. The case can serve as the basis for both short case assignments and class discussions. It is appropriate for undergraduate and graduate courses in strategic management, leadership, corporate governance and financial accounting. The topic is relevant and current, as it can be related to the ongoing reforms of Canadian corporate governance practices for controlling shareholders and related party transactions.

scholarly journals Board of directors, performance and firm value in Brazilian listed state-owned enterprises

2020 ◽  
Vol 18 (2) ◽  
pp. 1
Author(s):  
Carolina Coletta ◽  
Roberto Arruda de Souza Lima
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Board Of Directors ◽  
Firm Value ◽  
Board Structure ◽  
Agency Conflicts ◽  
Governance Practices ◽  
The Board Of Directors ◽  
Structure Index ◽  
Corporate Governance Practice

<p>This paper investigates the relationship between the board of directors' structure and firm performance and the value of Brazilian listed state-owned enterprises (SOEs), from 2002 to 2017, totaling 327 observations using an unbalanced panel data with fixed and random effects regressions. The evolution of corporate governance practices adopted by the boards is presented for this period, using a Board Structure Index (BSI). The results indicate a significant positive relation between the board's structure and firm performance, measured by ROE and ROA, and firm value, measured by Tobin's <em>q</em>. These findings are consistent with corporate governance literature, in the sense that the board's role of monitoring management reduces agency conflicts. The results also show an improvement in adopting corporate governance practice on Brazilian SOEs' boards over the last decade.</p>

scholarly journals Diversity in the board of directors and good governance practices

2020 ◽  
Vol 9 (2) ◽  
pp. 97
Author(s):  
Álvaro Melón-Izco ◽  
Francisco J. Ruiz-Cabestre ◽  
M. Carmen Ruiz-Olalla
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Boards Of Directors ◽  
Good Governance ◽  
Gender Diversity ◽  
Positive Influence ◽  
Board Diversity ◽  
Corporate Governance Mechanisms ◽  
Governance Practices ◽  
The Board Of Directors

Motivated by the debate on the adequacy of the composition of boards of directors, we examine the effect that board diversity has on corporate governance performance in Spain, analysing gender diversity, diversity of director types and tenure diversity. The findings reveal that diverse boards of directors have a positive influence on good governance practices,improving the efficiency of corporate governance mechanisms. These results could be interesting for practitioners and regulators.

scholarly journals The Current Rights of Minority Shareholders in Saudi Arabia

2017 ◽  
Vol 6 (1) ◽  
pp. 185
Author(s):  
Khalid Saad Al-habshan
Keyword(s):  
Corporate Governance ◽  
Saudi Arabia ◽  
Board Of Directors ◽  
Legal Framework ◽  
Minority Shareholders ◽  
Shareholder Protection ◽  
Minority Shareholder Protection ◽  
The Board Of Directors ◽  
Standards And Regulations ◽  
Minority Shareholdings

The preceding articles examined the legal framework of corporate governance in Saudi Arabia and the important elements of the institutional framework for Saudi corporate governance. The discussion in this chapter first focuses on government and government-regulated institutions established to enforce compliance and see that the actions of corporations are in line with corporate governance law. This chapter then examines minority shareholdings interests and rights and investigates minority shareholder protection under the CL. In addition, the board of directors is described, which controls and guides firm operations in compliance with corporate governance standards and regulations.

scholarly journals Corporate governance mechanisms for publicly-traded companies

2008 ◽  
Vol 5 (4) ◽  
pp. 309-314 ◽  
Author(s):  
Sean M. Hennessey
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Best Interests ◽  
Minimal Cost ◽  
Publicly Traded ◽  
Senior Managers ◽  
Compensation Plans ◽  
Publicly Traded Companies ◽  
Corporate Governance Mechanisms ◽  
The Board Of Directors

The resolution of conflicts between shareholders and managers, at minimal cost, is the goal of corporate governance. This paper discusses four mechanisms, two internal, two external, that attempt to ensure managers act in the best interests of shareholders: 1) the board of directors, 2) management compensation plans, 3) the market, and 4) takeovers. Theoretically, these four forms of corporate governance should ensure management maximizes shareholder value. But, agency costs are real for shareholders. In practice each the mechanisms may be severely limited in their ability to protect shareholders. The best protection is an independent, credible board of directors. Without good boards, shareholders are left to the mercy of the agents. In such cases, it is very difficult, and expensive, to discipline the senior managers of a publicly-traded company

DO OWNERSHIP CONCENTRATION AND THE BOARD OF DIRECTORS AFFECT EXPORTS?

2021 ◽  
Vol 22 (3) ◽  
Author(s):  
VITOR F. M. B. DIAS ◽  
MICHELE A. CUNHA ◽  
FERNANDA M. PEIXOTO ◽  
DUTERVAL JESUKA
Keyword(s):  
Corporate Governance ◽  
Good Governance ◽  
Optimal Level ◽  
Board Composition ◽  
Exporting Firms ◽  
Listed Firms ◽  
Corporate Governance Mechanisms ◽  
Dependent Variables ◽  
Governance Practices ◽  
The Board Of Directors

ABSTRACT Purpose: To investigate whether the shareholder concentration and the board composition influence the export of Brazilian listed firms from 2010 to 2017. Originality/value: The study contributes to the literature on exports and corporate governance by highlighting that companies with good governance practices, measured by the board composition and ownership/control structure, might increase their exports. This research can serve as a guide for companies to structure their boards in order to positively influence exports and improve performance. In addition, the study raises the question of what would be the “optimal level” of firms’ shareholding concentration in order to improve the decision-making process involved in choosing to expand borders through export. Design/methodology/approach: The study performed logistic regression (logit model) and regression with the censored dependent variable (tobit model). Propensity to export and intensity of export were used as dependent variables. The logit regressions involved a sample of 307 exporting and non-exporting companies, and the tobit regressions involved a sample of 61 exporting firms. Findings: We found a positive relationship between board independence and exports, that is, the greater presence of independent members on the board, the higher the export level of firms. We also found that there is a non-monotonic relationship between shareholder concentration and level of exports. In summary, the study suggests that some corporate governance mechanisms may act as antecedents for firms’ export practices.

Corporate Governance Characteristics and Audit Fees

2019 ◽  
pp. 26-50 ◽  
Author(s):  
Ana Silva ◽  
Helena Inácio ◽  
Elisabete Vieira
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Stock Exchange ◽  
Audit Fees ◽  
Listed Companies ◽  
The Other ◽  
Stock Exchanges ◽  
External Audit ◽  
Governance Practices ◽  
The Board Of Directors

The purpose of this chapter is to analyze the effect that corporate governance measures have in external audit fees in two countries where this matter is not much developed: Portugal and Spain. The analysis includes a sample of 39 listed companies on the Portuguese Stock Exchange and 104 listed companies on the Spanish Stock Exchanges for the years 2013 to 2015 using an OLS regression model. For the Spanish sample, the results show that the capital hold by the Board of Directors influence negatively external audit fees. The results are in accordance with the supplier perspective which states that better corporate governance practices decrease the control risk and, consequently, audit fees. On the other hand, the Board of Directors' diligence also affected external audit fees but positively, that is, the greater the number of meetings the greater the demand for an audit with quality which result in higher fees charged (demand perspective). For the Portuguese sample it can be observed that corporate governance characteristics do not affect external audit fees.

scholarly journals The impact of the board of directors characteristics on regulation compliance: An evaluation of the board of directors’ effectiveness

2021 ◽  
Vol 10 (4) ◽  
pp. 93-103
Author(s):  
Ali A. Alnodel ◽  
Toseef Azid
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Capital Market ◽  
Power Distance ◽  
Ownership Concentration ◽  
Governance Practices ◽  
The Board Of Directors ◽  
Emerging Capital Markets ◽  
Regulation Compliance ◽  
The Impact

This paper aims to investigate the board of directors’ (BD) effectiveness in enhancing compliance with regulations in the Saudi context. In particular, it explores whether there is an impact of the board of directors (size, independence, frequency of meeting and CEO serving on board) on the value of fines imposed by the Saudi Capital Market Authority (CMA) during the period from 2010 to 2017. In total 728 year observations were collected and analyzed. Multiple linear regression is performed to examine the association between the value of fines imposed by CMA and companies’ board of directors attributes. The results show that the CEO is serving on board, and ownership concentration significantly impacts the value of the fines imposed by the CMA. These results suggest that power distance could influence the function and effectiveness of the board of directors in compliance with official regulations. This paper provides implications to regulators interested in fostering compliance with regulations in emerging capital markets. The findings can also help investors to enhance their corporate governance practices.

Impact of Board Diversity on Agency Costs in the Context of Agency Theory Approach: Evidence From Listed Companies in Sri Lanka

2021 ◽  
pp. 097468622110457
Author(s):  
M. S. A. Riyad Rooly
Keyword(s):  
Corporate Governance ◽  
Sri Lanka ◽  
Best Practices ◽  
Agency Theory ◽  
Agency Costs ◽  
Theory Approach ◽  
Board Diversity ◽  
Governance Practices ◽  
The Board Of Directors ◽  
Managerial Implications

Effective corporate governance leads the way towards aligning the interest between managers and shareholders. Effectiveness of practicing the corporate governance of companies in Sri Lanka is debatable topic due to the variation between standard and actual practices. This study aims to examine the influence of board diversity on agency costs of companies listed in Sri Lanka as proposed by agency theory. The sample of this research consists of all companies listed in Sri Lanka, exclusive of bank and financial institutions which are practicing unique governance practices issued by Central Bank of Sri Lanka. The final sample consists of 180 companies during the period from 2013 to 2019. This study deployed panel regression analysis to test the relationship formulated in the hypotheses by using the EViews 9 software. The results showed that the board diversity-related variables such as separate leadership structure and presence of non-executive director on companies’ board are appeared to have significant influence on agency costs. Meanwhile, board size does not have direct impact on agency costs. The findings of this study regarding board diversity and agency costs have important managerial implications, that these findings are unlikely to the prediction of agency theory and best practices. Agency theory is not applicable to these companies, since the exiting corporate governance practices increase agency costs. The potential benefits of this study led to re-think the board of directors of the companies, managers, shareholder and the policymakers to re-organise the implementation of best practices.

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