scholarly journals Board Diversity and Its Effects on Firm Performance and Risk: A Study in Banking Firms

2021 ◽  
Vol 22 (1) ◽  
pp. proofreading
Author(s):  
Maulida Nurul Innayah ◽  
Bima Cinintya Pratama
Keyword(s):  
Firm Performance ◽  
Resource Dependence ◽  
Random Effect ◽  
Resource Dependence Theory ◽  
Annual Reports ◽  
Board Diversity ◽  
Capital Theory ◽  
Final Sample ◽  
Effect Regression ◽  
Negative Effect

This study examines the effect of board diversity on firm performance and risk in banking firms. The data used in this study was obtained from Bloomberg and OSIRIS database and also firm’s annual reports during 2014-2018 and conducted on banking firms in Indonesia. The final sample used in this study consists of a total of 160 observations. This study uses panel data regression model analysis, ie. fixed effect regression and random effect regression. The results showed that woman director has a positive effect on performance. This results are consistent with resource dependence theory and human capital theory which states that a more diverse board will provide more valuable resources, which can result in better firm performance. The results also showed that woman director have a negative effect on risk because woman director can correct bias in important decisions. Otherwise, based on the research data, the small number of foreign directors make their existence have no effect on performance and risk.

scholarly journals Resignation of officials as independent directors and firm performance

2020 ◽  
Vol 14 (1) ◽  
Author(s):  
Ting Ren ◽  
Youzhi Xiao ◽  
Xinguo Yu ◽  
Hongyan Yang ◽  
Jianmei Ge
Keyword(s):  
Firm Performance ◽  
Resource Dependence ◽  
Resource Dependence Theory ◽  
Social Capital Theory ◽  
Political Connections ◽  
Independent Directors ◽  
Chinese Government ◽  
Political Connection ◽  
Capital Theory ◽  
Negative Effect

Abstract In 2013, the Chinese government implemented Rule No. 18, which suspended the directorships of incumbent government officials and precluded those who retired within the past three years from serving as independent directors for listed firms. The surprise implementation of Rule No. 18 triggered a wave of resignations among official independent directors (OIDs). The event provided a unique opportunity to examine the impacts of the political connections of board members on firm performance. We applied a difference-in-difference technique to empirically investigate the effect of OID resignations on firm performance from the perspectives of resource dependence theory and social capital theory. The results indicate that the resignation of OIDs had a significantly negative effect on firm performance, as measured by Tobin’s Q and firm leverage. This also confirmed the importance of independent directors’ political connection on firm performance, as discovered in prior research. However, this influence varied across OIDs’ heterogeneity, external environment and firm ownership. The results indicate that political connections may not be necessary channels for firms to achieve success.

scholarly journals The Role of Foreign Directors in Corporate Risk Disclosure: Empirical Evidence From Jordan

2019 ◽  
Vol 10 (4) ◽  
pp. 119
Author(s):  
Malek Hamed Alshirah ◽  
Azhar Abdul Rahman ◽  
Ifa Rizad Mustapa
Keyword(s):  
Resource Dependence ◽  
Random Effect ◽  
Random Effect Model ◽  
Resource Dependence Theory ◽  
Annual Reports ◽  
Risk Disclosure ◽  
Foreign Directors ◽  
Corporate Risk ◽  
Level Of Risk

The current study examined the role of foreign directors in enhancing the level of risk disclosure in the annual reports of Jordanian listed companies. The content analysis method was used to measure the level of risk disclosure by computing the number of risk-related sentences in annual reports. To achieve the study’s objective, random effect model have been applied on a sample of 376 firm-year observations of Jordanian non-financial companies for the period of 2014-2017. The findings are in line with the argument of agency theory and resource dependence theory, which posits that existence of foreign members on the board contributes in increasing the level of risk disclosure. The study aimed to fill the gap in the literature of risk disclosure regarding the relationship between foreign directors and risk disclosure. It is expected that the findings will be useful to researchers, authorities and investors alike in understanding the important role of foreign directors in improving practices of risk disclosure in Jordan.

Nonlinear effects of board characteristics on China’s hotel firm performance

2021 ◽  
pp. 135481662110253
Author(s):  
Chunmei Liang ◽  
Ming-Hsiang Chen ◽  
Di Zhu ◽  
Hung Wan Kot ◽  
Zhandong Yang
Keyword(s):  
Firm Performance ◽  
Resource Dependence ◽  
Generalized Method Of Moments ◽  
Nonlinear Effects ◽  
Resource Dependence Theory ◽  
Growth Opportunities ◽  
Optimal Point ◽  
Capital Theory ◽  
Dynamic Panel Regression ◽  
The Impact

This study uses dynamic panel regression tests based on the estimation of the system generalized method of moments to examine the effects of board size (BS), board age (BA), and board education (BE) on China’s hotel firm performance (FP). Test results reveal that the effects of BS and BA on hotel FP are nonlinear, but BE has no effect. Specifically, BS has a cubic effect on hotel growth opportunities in terms of Tobin’s Q with turning points equal to 12 and 18, supporting both agency theory and resource dependence theory. Moreover, the impact of BA on hotel growth opportunities is quadratic (inverted U-shaped) with an optimal point of BA at 51, supporting both similarity–attraction theory and human capital theory. Empirical findings suggest that director-owned resources and experience are essential factors in a hotel’s success, providing strategic guidance for the Chinese hotel industry and making a pioneering addition to the hospitality finance literature.

Theories Related to the Relationship Between Board Diversity, Earnings Management, and Firm Performance

2021 ◽  
pp. 1-26
Author(s):  
Ahmad Alqatan ◽  
Imad Chbib ◽  
Khaled Hussainey
Keyword(s):  
Social Capital ◽  
Human Capital ◽  
Firm Performance ◽  
Earnings Management ◽  
Resource Dependence ◽  
Social Capital Theory ◽  
Board Diversity ◽  
Capital Theory ◽  
The Relationship ◽  
Research Studies

Previous research studies have used multiple theories, such as resource dependence, human capital, social capital, busyness, signalling, behavioural, and agency theories in order to investigate the association between board diversity and earnings management and the association between board diversity and firm performance. This chapter surveys 75 research studies and used 37 theories. Most of the studies focused on agency and resource dependent theories. Also, this study used social capital theory as a contribution of the chapter, which was rarely used and which examined the relationship between board diversity and earnings management in addition to firm performance.

scholarly journals Impact of corporate governance index on firm performance: evidence from Pakistani manufacturing sector

2015 ◽  
Vol 4 (3) ◽  
pp. 163-174 ◽  
Author(s):  
Faisal Javaid
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Capital Investment ◽  
Random Effect ◽  
Annual Reports ◽  
Governance Mechanism ◽  
Inconsistent Result ◽  
Governance Index ◽  
Corporate Governance Mechanism ◽  
The Relationship

Corporate governance is considered to have significant impact on the growth and development perspective of an economy. Sound corporate governance practices leads the economy towards the achievement of higher performance, provide sources for capital investment by increasing the creditability of shareholders. The purpose of this study is to empirically investigate the relationship of corporate governance and firm performance in terms of accounting as well as market performance i.e.to be measured by Return on asset, Return on equity and Tobin’s Q. The theoretical base to conduct the study is the demand of separation of ownership and control characterize as agency theory. The previous studies have yielded inconsistent result. To achieve the purpose 58 textile sector companies were selected listed in the Karachi stock exchange and data was taken from annual reports of the companies for the period of 2009 to 2013. Descriptive statistics, correlation analysis and regression estimation using pooled, fixed effect, random effect and Hausman specification test were carried out after developing a composite index based on 21 proxies. The result entails that corporate governance index (CGI) and firm performance has positive and significant association but the relationship for each specific index is dependent upon the measure of firm performance. The result also shows that companies having strong corporate governance mechanism has greater chances to acquire finance. The implication of study demands that the reform effort should be directed towards the improvement in internal corporate governance mechanism and regulatory framework for the governance system.

Board Gender Diversity and Firm Performance

2019 ◽  
pp. 302-311
Author(s):  
Reem Khamis ◽  
Elisabetta Barone ◽  
Adel Sarea ◽  
Allam Mohammed Hamdan
Keyword(s):  
Firm Performance ◽  
Institutional Theory ◽  
Agency Theory ◽  
Resource Dependence ◽  
Gender Diversity ◽  
External Environment ◽  
Resource Dependence Theory ◽  
Firm Level ◽  
Exogenous Factors ◽  
Board Gender Diversity

This chapter aims at investigating board gender diversity and firm performance by integrating two theoretical backgrounds (agency theory and institutional theory). Board gender diversity has been investigated by using firm level theories such as agency theory and stewardship theory. Resource dependence theory, which links the board to the external environment of the firm, was also implemented in order to better understand how board gender diversity would affect firm performance. However, results were inconsistent. This study tries to integrate agency theory with institutional theory under the assumption that firms are affected by endogenous and exogenous factors that would eventually affect its outcomes such as performance.

scholarly journals Partnership-Based Supply Chain Collaboration: Impact on Commitment, Innovation, and Firm Performance

2019 ◽  
Vol 11 (2) ◽  
pp. 449 ◽  
Author(s):  
Nina Shin ◽  
Sun Park ◽  
Sangwook Park
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Structural Equation ◽  
Resource Dependence ◽  
Resource Dependence Theory ◽  
Equation Modeling ◽  
Supply Network ◽  
Supply Chain Collaboration ◽  
The Impact ◽  
The Relationship

With increasing numbers of nodes and links in supply network relationships, understanding partnership management and the required level of collaboration is important for sustainable supply network alignment. This study explores the impact of partnership orientation on partnership commitment and firm performance using a model based on social capital theory and resource dependence theory. It aims to understand the appropriate partnership orientation for the desired level of commitment and firm performance, including innovation, operational, and financial performance. Using a survey of 423 respondents representing three different partnership structure types (supplier, buyer, and parallel-aligned firms’ perspectives), the relationship between partnership orientation and commitment in enhancing firm performance is investigated using structural equation modeling. Additional analysis identifies the moderating role of commitment and investment exchange on performance. The findings show that positive relationships between both investment and contractual-based partnership orientation positively contribute to partnership commitment, but the direct association between partnership commitment and firm performance type varies by partnership structure. Furthermore, (i) investment exchange level moderates the relationship between commitment and innovation and operational performance regardless of partnership structure type, (ii) negative investment exchange signals higher firm performance from the buyer firm’s perspective, and (iii) positive investment exchange is absolutely necessary for financial performance from the supplier firm’s perspective.

Positioning decisions within strategic groups

2014 ◽  
Vol 52 (10) ◽  
pp. 1858-1887 ◽  
Author(s):  
Xiao Duan ◽  
Zhan-ming Jin
Keyword(s):  
Firm Performance ◽  
Performance Comparison ◽  
Annual Reports ◽  
Corporate Diversification ◽  
Strategic Groups ◽  
Strategic Positioning ◽  
Strategic Group ◽  
Content Type ◽  
Two Factors ◽  
Negative Effect

Purpose – Strategic group has been intensively studied since this term emerged in 1970s, but previous studies have been limited to the comparisons between groups such as performance comparison. The purpose of this paper is to explore the internal structure of strategic groups by examining the effect of strategic distance from a firm to the center of its strategic group on firm performance. Design/methodology/approach – The research is based on data acquired from the annual reports of listed companies and some Chinese domestic databases, including CSMAR Solution, WIND financial database, and China Core Newspapers Full-text Database. After grouping listed pharmaceutical companies in China over the period 2010-2011, the authors test three hypotheses by using fixed effect regressions. Findings – The paper finds that the strategic distance from a firm to the center of its strategic group has a significant negative effect on the firm's financial performance. Two factors are discovered to influence that effect: corporate diversification strengthens the negative effect of strategic distance on performance, while firm's media visibility weakens that negative effect. Originality/value – The findings reveal the relationship between intra-group strategic positioning and firm performance, and specify how firms can gain competitive advantage through positioning choices and strategic actions. This study promotes the establishment of a more comprehensive strategic group theory by revealing the structure within strategic groups.

scholarly journals The Effect of Intellectual Capital towards Firm Performance and Risk with Board Diversity as a Moderating Variable: Study in ASEAN Banking Firms

2020 ◽  
Vol 11 (1) ◽  
pp. 27-38
Author(s):  
Maulida Nurul Innayah ◽  
Bima Cinintya Pratama ◽  
Mamduh Mahmadah Hanafi
Keyword(s):  
Social Psychology ◽  
Firm Performance ◽  
Intellectual Capital ◽  
Interaction Effect ◽  
Annual Reports ◽  
Board Diversity ◽  
Psychology Theory ◽  
Asean Countries ◽  
Effective Use ◽  
The Impact

This paper finds out the impact of intellectual capital on firm performance and risk. Moreover, this paper also examines whether the board diversity in terms of gender and nationality can strengthen the effect of intellectual capital towards firm performance and risk that operates in banking industries in ASEAN. The data in this study obtained from Bloomberg and OSIRIS database and also the firm’s annual reports over the period of 2012-2016 (375 observations) and conducted in ASEAN countries, namely Indonesia, Philippines, Malaysia, Singapore, and Thailand. The results find that the efficient and effective use of intellectual capital will make the firms achieved higher performance. Meanwhile, intellectual capital can help reduce credit risk. In the interaction effect, the result is consistent with social psychology theory and shows that the presence of board diversity actually reduces firm performance and increases risk.

scholarly journals Gender Diversity of Boards, Board Composition and Firm Performance

2017 ◽  
Vol 13 (34) ◽  
pp. 62
Author(s):  
Nebert Mandala ◽  
Erasmus Kaijage ◽  
Josiah Aduda ◽  
Cyrus Iraya
Keyword(s):  
Financial Institutions ◽  
Resource Dependence ◽  
Gender Diversity ◽  
Secondary Data ◽  
Resource Dependence Theory ◽  
Board Composition ◽  
Policy And Practice ◽  
Capital Theory ◽  
Governance Practices ◽  
Broad Objective

The broad objective of this research was to determine whether gender diversity of boards and board composition, affects performance. Secondary data was collected for a ten-year period from 2006 to 2015 from 98 sampled financial institutions. Multiple regression analysis and generalized estimating equations were used in analysis of the collected data. Parametric and nonparametric methodologies were used. The study was anchored on the agency theory, stakeholder theory, the human capital theory and resource dependence theory. The results show that, gender diversity of boards and board composition had no independent significant influence on performance of financial institutions. Through the study formulation of managerial policy and practice that promote better governance practices and appropriate firm characteristics that improve performance of financial institutions will be enhanced.

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