The Impact of Board Directors, Audit Committee and Ownership on Financial Performance and Firms Value

The aim of the research is to understand the impact of corporate governance on financial performance of listed companies on Karachi Stock Exchange Pakistan. Data was collected from forty two companies from different sectors like, insurance, banking, investment banking, and sugar industries. Study includes variables like profit margin & return on equity as a dependent (profitability) and board size, audit committee, annual general meetings & chief executive office (corporate governance). Using Pooled OLS, the result of the study proved those board size and audit committees have positive relationship with Profit margin and Return on Equity, if any independent variable changes it also stimulus the positively changing impact on Return on Equity (ROE) and Audit Committee (AC). This research offers imminent guidelines to the policy and decision makers in any type of firms to take good decision to set their firms hierarchy system.

Download Full-text

Financially Qualified Audit Committee Member and Corporate Sustainability: Evidence from Emerging Economy

10.20944/preprints201809.0478.v1 ◽

2018 ◽

Author(s):

Ashfaque Banbhan ◽

Xinsheng Cheng ◽

Nizam Ud Din

Keyword(s):

Financial Performance ◽

Audit Committee ◽

Positive Relationship ◽

Stock Exchange ◽

Corporate Sustainability ◽

Committee Member ◽

Positive Relation ◽

Accrual Quality ◽

The Impact ◽

The Relationship

This paper examines the relationship between financial qualification of the audit committee (AC) chairman on corporate sustainability (CS) in developing the economy of Pakistan, which has a weak corporate environment. In a sample of companies listed on Pakistan Stock exchange (PSX) during 2010-2014. Empirical results of 1020 firm-year observations indicate that the presence of financially qualified AC chairman has a positive relationship with firm’s accrual quality. The results found that accounting qualification of AC chairman has significant positive relation with CS performance. Furthermore, the study found that powerful CEO is also not able to influence CS in the presence of accounting qualified AC chairman, but this result is not present if AC chairman is non-accounting qualified. This study extends the literature on the impact of accounting qualification of AC members and CS and offers some significant understanding into efficient corporate practices to achieve sustainability goals. This study suggests the presence of accounting qualified member in AC which results in effective monitoring for the increased financial performance of the organization.

Download Full-text

The financial impacts of board mechanisms on performance: The case of listed Moroccan banks

International Journal of Financial, Accounting, and Management ◽

10.35912/ijfam.v3i2.536 ◽

2021 ◽

Vol 3 (2) ◽

pp. 93-113

Author(s):

Issam El Idrissi ◽

◽

Youssef Alami ◽

Keyword(s):

Corporate Governance ◽

Financial Performance ◽

Fixed Effects ◽

Audit Committee ◽

Negative Impact ◽

Governance Mechanisms ◽

Return On Equity ◽

Corporate Governance Mechanisms ◽

Governance Practices ◽

The Impact

Abstract Purpose: The present study examines the impact of corporate governance mechanisms on listed Moroccan banks' financial performance. Research methodology: This study investigates the relationship between listed banks' governance mechanisms and financial performance in the CSE for six years between 2014-2019. This study employs three performance measures, return on assets, return on equity, and Tobin's Q, to determine bank performance. This research uses the GMM EGLS approach to analyze data. In the first phase of this empirical research, we did use OLS, Fixed Effects, and Radom Effects regressions to show their inefficiency. Results: Our results portray that most board mechanisms have a negative impact on financial performance. In comparison, the audit committee and nomination & remuneration committee have a positive effect on financial performance. Limitations: Many qualitative and quantitative factors could influence financial performance and not only the used variables in this paper. Contribution: This research shows that the dynamic connection between corporate governance and financial performance is robust in the Moroccan banking context. Also, our study has important implications for establishing good corporate governance practices in emerging economies.

Download Full-text

The Impact of Board Diversity, CEO Characteristics, and Board Committees on Financial Performance in the Case of Romanian Companies

Journal of Risk and Financial Management ◽

10.3390/jrfm15010007 ◽

2021 ◽

Vol 15 (1) ◽

pp. 7

Author(s):

Bogdan Aurelian Mihail ◽

Dalina Dumitrescu ◽

Carmen Daniela Micu ◽

Adriana Lobda

Keyword(s):

Financial Performance ◽

Audit Committee ◽

Stock Exchange ◽

Board Members ◽

Board Diversity ◽

Board Committees ◽

Positive Effects ◽

Governance Practices ◽

The Impact ◽

Ceo Characteristics

This paper examines the impact of board diversity, CEO characteristics, and board committees on the financial performance of the companies listed on the Bucharest Stock Exchange (BSE). In order to test the influence of these characteristics, detailed data on more than 70 firms are collected by hand, for the 2016–2020 period, and comprehensive regression models are estimated. The findings show that there are positive effects of board diversity especially with regard to the independent board members. In terms of the board committees, the audit committee is found to have a favourable influence. The regression coefficients imply that a 10% increase in the share of independent board members would be associated with a 0.93% increase in ROE. Based on these findings, it can be argued that improving the corporate governance practices of the companies listed on the BSE would increase the performance and the value of these firms.

Download Full-text

The impact of the board of directors on the financial performance of Tunisian companies

Corporate Board role duties and composition ◽

10.22495/cbv8i3art1 ◽

2012 ◽

Vol 8 (3) ◽

pp. 6-21

Author(s):

Zied Bouaziz ◽

Mohamed Wajdi Triki

Keyword(s):

Financial Performance ◽

Board Of Directors ◽

Audit Committee ◽

Stock Exchange ◽

Gender Diversity ◽

Linear Regression Models ◽

The Board Of Directors ◽

Internal Mechanism ◽

And Control ◽

The Impact

The Board of Directors plays a key role as a internal mechanism of corporate governance. Indeed, its effectiveness is dependent on the presence of several factors, the most important are related to characteristics that relate primarily to the independence of its members, board size, the cumulative functions of decision and control, the degree of independence of the audit committee and the gender diversity of the board. To test the validity of our hypothesis, which states the existence of a certain deterministic between the board’s characteristics and financial performance measured by three different ratios, namely ROA, ROE and Tobin’s Q, we have developed three linear regression models. Our empirical validation was conducted on a sample of 26 companies listed on the Tunisian stock exchange Tunis (Tunis Stock Exchange) over a period that spans four years (2007-2010). The estimated models show satisfactory results showing the importance of the impact of board characteristics on financial performance of Tunisian companies.

Download Full-text

Corporate Governance and Financial Performance of Money Deposit Banks in Nigeria

Review of Innovation and Competitiveness ◽

10.32728/ric.2021.71/4 ◽

2021 ◽

Vol 7 (1) ◽

pp. 75-98

Author(s):

Bilqis Bolanle Amole ◽

Ik Muo ◽

Kamaldeen A. Lawal

Keyword(s):

Corporate Governance ◽

Financial Performance ◽

Board Of Directors ◽

Audit Committee ◽

Negative Impact ◽

Secondary Data ◽

Least Square ◽

Executive Directors ◽

Study Results ◽

The Impact

Purpose. The main cause of distress in the majority of Nigerian banks is poor corporate governance in the country. Corporate governance (CG) is a contemporary subject attracting the consideration of the corporate world, practitioners, consultants, academia and society at large. As a result, this study explores the financial performance (FP) of money deposit banks (MDBs) in Nigeria as a result of corporate governance put in. It went on to investigate the impact of board size and composition, as well as the audit committee, on bank financial performance. Methodology. A descriptive design method was adopted, while secondary data in the form of yearly financial reports of banks selected for the study were obtained and relevant documents via electronic search of databases. Descriptive statistics were used in analyzing the data and an econometric model of panel least square (PLS) regression test was employed for the study. Findings and Implication. The findings affirmed that the correlation between size of board of directors and bank performance was significant, however negative. The results of the study show that the board of directors (BOD) composition significantly influences the FP of MDBs. The study results further reveal that the correlation between size of the audit committee (AC) and FP of MDBs is significant and also a negative one. As a result, based on the empirical findings of the study, it is concluded that CG has a statistically significant influence on the FP of Nigeria’s listed money deposit banks. Mechanisms such as the large size and composition of the board as well as the size of the audit committee encourage a negative impact on the FP. In line with the foregoing, the study recommended that an effort be made to improve CG, in the sense that the number of directors on board should be kept to a desirable level, and that the ratio of executive directors to non-executive directors, as well as the size of the audit committee, is kept at an optimal level.

Download Full-text

The Impact Of Corporate Governance on The Financial Performance in Malaysia

UNIMAS Review of Accounting and Finance ◽

10.33736/uraf.3551.2021 ◽

2021 ◽

Vol 5 (1) ◽

pp. 41-58

Author(s):

NURFATANAH ABDULLAH

Keyword(s):

Corporate Governance ◽

Financial Performance ◽

Firm Size ◽

Audit Committee ◽

Committee Meeting ◽

Board Size ◽

Firm Financial Performance ◽

Normality Test ◽

Lm Test ◽

The Impact

The aim of this study is to investigate the relationship between corporate governance and firm financial performance in Malaysia. This study is mainly focusing on four sections of corporate governance which are board independent, board size, the frequency of audit committee meeting and firm size. The population of this study is Top 30 firms in Malaysia that are public listed in Bursa Malaysia while for the period, this study focusses on year 2016 to 2019 which is 4 years. This study uses Return on Assets (ROA) to measure the firm effectiveness and efficiency. As for statistical analysis, this study uses E-View to run all the test such as Breusch-Godfrey Serial Correlation LM Test, Hausman Test, Ordinary Least Squared (OLS) method, Autocorrelation, Multicollinearity and Normality Test. According to the results of the analysis, board independent has positive insignificant relationship with firm performances while board size and firm performances have negative and insignificant relationship. As for the frequency of audit committee meeting and firm size, the results display that both variables have negatively significant relationship with the performances of the firm. Apart from that this study use two theory which are Prospect Theory and Agency Theory.

Download Full-text

Impact of Corporate Governance on Financial Performance of Information Technology Companies

International Journal of Recent Technology and Engineering - 2 ◽

10.35940/ijrte.c5603.098319 ◽

2019 ◽

Vol 8 (3) ◽

pp. 7460-7464

Keyword(s):

Information Technology ◽

Corporate Governance ◽

Financial Performance ◽

Audit Committee ◽

Positive Impact ◽

Return On Assets ◽

Return On Equity ◽

Broad Term ◽

The Impact ◽

Information Technology Companies

Corporate Governance is a broad term in today’s competitive world. It is a series of processes, policies, rules, and regulations by which companies are managed and governed. In this perspective, the study attempts to analyze the impact of corporate governance on the financial performance of Information Technology (IT) Companies in India. Specifically, the study analyzed the impact of Board size, Board Composition, and Audit Committee Independence on Return on Assets and Return on Equity, which are considered as measures of financial performance. The findings of the study revealed that there is a significant and positive impact of Corporate Governance on Financial performance of IT companies, and Audit Committee Independence shows the most significant effect on Financial performance. The finding of the study endeavors to contribute to the limited literature available in the context of corporate governance in IT companies in India.

Download Full-text

Role of Corporate Governance in Shareholders Value Creation

International Journal of Strategic Decision Sciences ◽

10.4018/ijsds.2017040105 ◽

2017 ◽

Vol 8 (2) ◽

pp. 70-82

Author(s):

Muhammad Atif Khan ◽

Muhammad Asif Khan ◽

Idrees Liaqat

Keyword(s):

Corporate Governance ◽

Financial Performance ◽

Value Creation ◽

Performance Optimization ◽

Audit Committee ◽

Positive Impact ◽

Firm Financial Performance ◽

Long Run ◽

The Impact

The mechanism of governing corporate affairs in line with strategic goal of shareholders' value creation (SVC) has been pivotal debate among academic and institutional scholars over last few decades. Most of the studies in developing countries including Pakistan, have considered more conventional measures, like firm financial performance to examine the impact of corporate governance (CG). Theoretically, firm financial performance optimization has little role in maximizing SVC, that rarely streams to shareholders' exchequer. Therefore, the study is unique in its nature that identifies market capitalization, the most appropriate measure of value creation for shareholders over long run. The authors gathered panel and longitudinal data pertaining to PSX-100 listed firm over the period of 10 years ranging from 2006-15, which is analyzed using multivariate regression. Hausman and Likelihood tests guide the process of appropriate econometrics model selection. Empirical findings reveal that CG dimensions such as audit committee independence (ACI), managerial ownership (MO) and ownership concentration (OC) have positive impact on SVC, except board size (BS) and board independence (BI). The study offers valuable policy recommendations to make CG practices more effective, however, application of the model proposition at macro and micro level can be a substantial extension to literature incorporating some controlling dimensions.

Download Full-text

The Impact of Firm Characteristics on Corporate Financial Performance in Emerging Markets

International Journal of Customer Relationship Marketing and Management ◽

10.4018/ijcrmm.2020100105 ◽

2020 ◽

Vol 11 (4) ◽

pp. 70-89

Author(s):

Salah A. Ali ◽

Mohamed Yassin ◽

Rania AbuRaya

Keyword(s):

Financial Performance ◽

Audit Committee ◽

Corporate Financial Performance ◽

Tobin’S Q ◽

Firm Characteristics ◽

Return On Assets ◽

Tobin's Q ◽

Return On Equity ◽

The Impact

This study investigates the impact of firm characteristics on the financial performance of companies listed on the Egyptian stock market. Regression model was performed to regress six firm characteristics variables, namely firm size, foreign listing, age, leverage, liquidity, and assets tangibility. The study controlled for five more variables related to corporate governance including board size, board independence, CEO role duality, audit committee, and the quality of external auditor to avert their effect on financial performance. The study used both accounting measures such as return on assets (ROA) and return on equity (ROE) and market-based Tobin's Q Ratio for measuring financial performance. The findings generally indicate that firm characteristics have an impact on both accounting financial performance as measured by ROA or ROE and market-based financial performance as measured by Tobin's Q, with little difference in the level of such impact. These findings revealed that firm characteristics affect corporate financial performance as evaluated by the company or the market.

Download Full-text