The Role of Boards of Directors in Corporate Governance: A Conceptual Framework & Survey

This paper is a survey of the literature on boards of directors, with an emphasis on research done subsequent to the Benjamin E. Hermalin and Michael S. Weisbach (2003) survey. The two questions most asked about boards are what determines their makeup and what determines their actions? These questions are fundamentally intertwined, which complicates the study of boards because makeup and actions are jointly endogenous. A focus of this survey is how the literature, theoretical as well as empirical, deals—or on occasions fails to deal—with this complication. We suggest that many studies of boards can best be interpreted as joint statements about both the director-selection process and the effect of board composition on board actions and firm performance. (JEL G34, L25)

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Tools for improving the efficiency of corporate governance at enterprises of rocket and space engineering

Voprosy regionalnoj ekonomiki ◽

10.21499/2078-4023-2021-46-1-14-20 ◽

2021 ◽

pp. 14-20

Author(s):

М.С. Абрашкин ◽

Н.С. Хорошавина ◽

М.С. Гусаков

Keyword(s):

Corporate Governance ◽

Goal Setting ◽

Boards Of Directors ◽

Equity Capital ◽

Independent Directors ◽

State Participation ◽

Legal Forms

Сложившиеся условия развития предприятий ракетно-космического машиностроения требуют переосмысления эффективности их корпоративного управления, подходов к формированию советов директоров и обоснованию привлечения независимых директоров в их составах. Специфика отрасли требует трансформации функции целеполагания, усиления роли экономических результатов над общественными, которые при условии превалирования участия государства в акционерных капиталах выступают доминирующими. По результатам исследования 62 предприятий отрасли удалось установить изменение их организационно-правовых форм в сторону нарастания акционерных обществ, а анализ выборочной совокупности из них позволил установить закономерности в корпоративном управлении и концептуализировать предложения по его совершенствованию. The current conditions for the development of rocket and space engineering enterprises require a rethinking of the effectiveness of their corporate governance, approaches to the formation of Boards of Directors and the rationale for attracting independent directors in their composition. The specifics of the industry require the transformation of the goal-setting function, the strengthening of the role of economic results over public ones, which, given the prevalence of state participation in equity capital, are dominant. According to the results of the study of 62 enterprises in the industry, it was possible to establish a change in their organizational and legal forms towards the growth of joint-stock companies, and the analysis of a sample of them made it possible to establish patterns in corporate governance and conceptualize proposals for its improvement.

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Corporate governance and information technology in fraud prevention and detection

Managerial Auditing Journal ◽

10.1108/maj-02-2015-1163 ◽

2016 ◽

Vol 31 (6/7) ◽

pp. 589-628 ◽

Cited By ~ 15

Author(s):

Sawsan Saadi Halbouni ◽

Nada Obeid ◽

Abeer Garbou

Keyword(s):

Information Technology ◽

Corporate Governance ◽

Boards Of Directors ◽

Senior Management ◽

Fraud Prevention ◽

Content Type ◽

External Auditors ◽

Detection Techniques ◽

Significant Difference

Purpose This paper aims to investigate the role of corporate governance and information technology in fraud prevention and detection within the United Arab Emirates (UAE). Design/methodology/approach This study uses a survey of financial accountants and internal and external auditors to assess their perceptions of the effectiveness of IT and corporate governance as measured in terms of the audit committee’s effectiveness, internal audit functions, external audit functions, culture of honesty and employee training programmes in preventing and detecting fraud in the UAE. Findings The results indicate that corporate governance has a moderate role in preventing and detecting fraud in the UAE and that IT has the same role as traditional fraud prevention and detection techniques. The results also show no significant difference between internal and external auditors in their use of technological and traditional techniques during the course of audits. Research limitations/implications The findings suggest that the senior management and boards of directors must better understand the importance of their oversight function. The finding that a culture of honesty has a low positive impact on fraud prevention and detection in the UAE indicates that chief executive officers and boards of directors must make more efforts to set the “tone at the top” to improve the corporate environment in terms of integrity and ethics, among other factors. Furthermore, as IT and traditional techniques provide the same function, senior management and boards of directors must be alerted to the importance of developing systematic approaches to fraud investigation that involve greater reliance on technological approaches. Practical implications The moderate role of corporate governance suggests that senior management and boards of directors must better understand the importance of their oversight function to meet their obligations and fiduciary responsibilities to stakeholders. Furthermore, greater adoption of IT to detect and prevent fraud contributes to developing a systematic approach to fraud investigation, capable of identifying unusual activity using effective software. Originality/value This study contributes to the literature on the role of corporate governance and IT in preventing and detecting fraud, particularly for Middle Eastern countries and other emerging nations. The study may provide insights to academics and practitioners in the UAE and their international counterparts.

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How Does Corporate Governance Affect Bank Performance? The Mediating Role of Risk Governance

International Journal of Business and Management ◽

10.5539/ijbm.v13n10p212 ◽

2018 ◽

Vol 13 (10) ◽

pp. 212

Author(s):

Paola Leone ◽

Carmen Gallucci ◽

Rosalia Santulli

Keyword(s):

Corporate Governance ◽

Boards Of Directors ◽

Governance Structure ◽

Independent Directors ◽

Risk Governance ◽

Bank Performance ◽

Board Size ◽

Mediating Role ◽

Risk Committee

This paper aims to investigate how bank governance (board size, board composition, ownership structure) affects performance (ROA), by considering the mediating role of risk governance (presence of a risk committee, the number of meetings of the risk committee in one year, the risk committee size, the percentage of independent directors in the risk committee, and the presence of a chief risk officer). A sample of 31 Italian listed banks is examined over a ten-year period (2008-2017), in order to delineate the changes in corporate governance structure and to catch the effects of the current national and European regulations followed to the financial crisis. Hypotheses are tested by applying a mediation analysis according to the causal steps procedure. The main findings suggest that risk governance fully mediates the corporate governance-bank performance relationship. Specifically, we find that the board size is positively related to the presence of a risk committee and to the number of meetings. The percentage of independent directors on board is positively related to the percentage of independent directors in the risky committee and, in turn, has a positive effect on performance. Finally, the presence of institutional owners is positively related to the presence of a chief risk officer and, thus, to bank performance. Summing up, banks with wider and more heterogeneous boards of directors have better risk management-related corporate governance mechanisms and reach higher performance levels.

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Duties and responsibilities of the nominating committee

Corporate Ownership and Control ◽

10.22495/cocv15i1c1p8 ◽

2017 ◽

Vol 15 (1) ◽

pp. 246-252

Author(s):

Maria Gaia Soana ◽

Giuseppe Crisci

Keyword(s):

Corporate Governance ◽

Boards Of Directors ◽

Annual Review ◽

Banking Supervision ◽

Strategic Issues ◽

Board Committees ◽

Corporate Governance Codes ◽

Governance Committee ◽

Nominating Committees

Many corporate governance codes and reports emphasize the importance of creating nominating committees within boards. Focusing on banks, the Basel Committee on Banking Supervision (2015) recommends that boards of directors should create an internal nomination/human resources/governance committee. In this context, we have analysed the presence and main characteristics of this committee in the 30 systemically important banks (G-SIBs). To the best of our knowledge, this is the first paper describing in depth the activities of the nominating committees. Our analysis shows that the nominating committee is often also a “governance committee”. Its main responsibilities towards the full board of directors usually include identifying individuals qualified to become board members, guiding the board in its annual review, reviewing succession plans and, occasionally, monitoring education programs for directors. Most charters also entrust the appointment committee with the role of identifying members, and/or reviewing the composition, of board committees and, in a minority of cases, reviewing the suitability of the charters adopted by each board committee. The nominating committee is also frequently required to oversee for the board corporate governance policies and occasionally required to review policies relating to public/strategic issues, relationships with external entities affecting the bank’s reputation and ESG matters. Many charters also entrust the appointment committee with reviewing/appointing directors to the boards of important subsidiaries (9 out of 29) and reviewing/appointing managers (14 out of 29). The nominating committees of G-SIBs are primarily composed of independent directors. The male gender is the most represented. In 2016, the effective average number of meetings of nominating committees in was seven.

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The influence of corporate governance characteristics on human capital disclosure: the moderating role of managerial ownership

Journal of Intellectual Capital ◽

10.1108/jic-03-2019-0055 ◽

2020 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Francisca Tejedo-Romero ◽

Joaquim Filipe Ferraz Esteves Araujo

Keyword(s):

Corporate Governance ◽

Human Capital ◽

Social Responsibility ◽

Intellectual Capital ◽

Boards Of Directors ◽

Managerial Ownership ◽

Linear Regression Models ◽

Content Type ◽

Moderating Role

PurposeThe main objective of this paper is to analyse the content and extent of human capital disclosure by Spanish companies. It studies various factors related to the board of directors’ composition and functioning. These factors can be seen as mechanisms of corporate governance and the moderating role of managerial ownership, which help predict the behaviour of managers in relation to the human capital disclosure.Design/methodology/approachThis study develops and applies a more comprehensive framework for coding information on human capital, integrating the intellectual capital and social responsibility perspectives in order to explain the content and extent of human capital disclosure. The research was based on a content analysis of 210 corporate reports from 2007 to 2016. A system-GMM estimator was used to test the hypotheses in four dynamic linear regression models of balanced panel data in order to address concerns of endogeneity.FindingsThe results show that companies are adapting to new regulations and voluntarily disclosing information on human capital – a trend which signals their commitment to responsible attitudes towards employees and stakeholders. The results also show that board composition and functioning are mechanisms of supervision, control and legitimacy that promote human capital disclosure, with managerial ownership acting as moderator for aligning interests between managers and stakeholders.Originality/valueThis study contributes to the literature on human capital disclosure by introducing a broader conception of human capital to coding information. It accomplishes this through considering aspects of the intellectual capital and social responsibility approaches, which provide a better understanding of companies’ human capital disclosure. In addition, it seeks to enrich the debate about the effects of corporate governance mechanisms– such as boards of directors and managerial ownership – on human capital disclosure.

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CEO resistance: The role of BOD dependence/independence and CEO profile

Corporate Ownership and Control ◽

10.22495/cocv13i1c6p4 ◽

2015 ◽

Vol 13 (1) ◽

pp. 652-662 ◽

Cited By ~ 1

Author(s):

Pouya Seifzadeh

Keyword(s):

Corporate Governance ◽

Boards Of Directors ◽

Stewardship Theory ◽

Upper Echelons ◽

The Relationship ◽

Do So

The relationship between boards of directors and CEOs has been at the center of attention in the literature on Corporate Governance. However, little has been done to identify sources of friction and possible outcomes in this relationship. In this paper, drawing on the literature on Agency/Stewardship Theory, Upper Echelons perspective, and Corporate Governance, I have addressed this gap. To do so, this paper recognizes the distinction between founder and non-founder CEOs and dependent and independent boards of directors. I have hypothesized that founder CEOs will demonstrate higher resistance than non-founder CEOs in the presence of independent boards of directors and lower than non-founder CEOs in the presence of dependent boards of directors to takeover proposals.

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The Role of Institutional Investors in Improving Board of Director Attributes around the World

Journal of Risk and Financial Management ◽

10.3390/jrfm14040166 ◽

2021 ◽

Vol 14 (4) ◽

pp. 166

Author(s):

Badar Alshabibi

Keyword(s):

Corporate Governance ◽

Institutional Investors ◽

Boards Of Directors ◽

Institutional Environment ◽

Economic Conditions ◽

Legal Systems ◽

Ownership Structures ◽

Board Of Director ◽

Corporate Governance Mechanisms

This paper investigates the role of institutional investors in the improvement of corporate governance for the companies in which they invest (investee companies) using evidence about the attributes of boards of directors across 15 countries. Furthermore, this paper examines the extent to which the activism of institutional investors is determined by the institutional environment, to include various economic conditions (pre-crisis, crisis and post-crisis), legal systems and ownership structures. Drawing from the agency theory and institutional theory, the results show that foreign institutional investors are the main promoters of board governance structures across the globe. This study also provides evidence that institutional investors promote the independence of a board and its audit and compensation sub-committees (but excluding its nomination committee). The study also demonstrates that institutional investors reduce board entrenchment, though it presents no evidence that institutional investors reduce board busyness. The results also suggest that institutional investors behave differently when operating within different economic conditions (pre-crisis, crisis and post-crisis), legal systems and ownership structures. This paper contributes to the growing literature on shareholder activism and comparative corporate governance mechanisms. The findings suggest that the activism of institutional investors is contingent on the institutional settings, to include economic conditions, legal systems and ownership structures.

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Corporate governance and performance of Italian gambling SMEs during recession

International Journal of Contemporary Hospitality Management ◽

10.1108/ijchm-03-2017-0135 ◽

2018 ◽

Vol 30 (3) ◽

pp. 1939-1958 ◽

Cited By ~ 3

Author(s):

Fabio La Rosa ◽

Francesca Bernini

Keyword(s):

Corporate Governance ◽

Financial Crisis ◽

Boards Of Directors ◽

Global Financial Crisis ◽

Negative Relationship ◽

Chief Executive ◽

Positive Role ◽

Firm Level ◽

Content Type

Purpose This study aims to explore how the economic recession and some corporate governance (CG) provisions can affect the performance of Italian gambling small and medium-sized enterprises (SMEs) across different business segments. Design/methodology/approach This study uses a panel sample of 2,135 observations before and during the global financial crisis. Specifically, the roles of ownership, boards of directors, chief executive officer gender and gambling business segments are investigated in the Italian gambling market. Findings Ownership concentration has a negative relationship with the performance of foreigner- and financial-owned firms, while boards exert a positive role on performance. Interestingly, the financial crisis does not impact the performance of Italian gambling SMEs and some business segments, such as bingo, perform even better during the crisis. Research limitations/implications Further investigations should analyze the role of single games on firm performance. The consumer- and firm-level examinations offer very different perspectives and scholars should be aware of this when investigating the gambling industry. Practical implications This study might help both policymakers and other gambling firms, such as casinos, to better understand which appropriate CG model should be adopted and how it can positively influence performance, especially in recessionary times. Originality/value This study contributes to studies on hospitality and tourism by focusing on the complementary role of gambling SMEs with respect to casinos. It also increases knowledge on the role of CG in privately owned gambling firms, which thus far has been scantly investigated by scholars.

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