scholarly journals Corporate control, agency problem and board composition: Evidence from Indonesia

2015 ◽  
Vol 11 (2) ◽  
pp. 121-131 ◽  
Author(s):  
Tulus Haryono ◽  
Rahmawati ◽  
Yunastiti Purwaningsih ◽  
Muhammad Agung Prabowo ◽  
Eddy Suratman
Keyword(s):  
Agency Theory ◽  
Control Agency ◽  
Agency Problem ◽  
Corporate Control ◽  
Board Composition ◽  
Foreign Investors ◽  
Listed Firms ◽  
Large Shareholder ◽  
Different Types ◽  
The Impact

The study investigates the impact of agency problem and the distribution of corporate control on board composition using a dataset consisting of 190 listed firms in Indonesia. The conceptual framework is derived from agency theory assuming that board composition is endogenously determined by firm’s specific environment. The study reveals that corporate control drives the composition of the board. The different types of large shareholders are found to pursue different strategies in relation to the board composition. While domestic and foreign investors rely on independent board, controlling family prefer to structure a less independent board. This suggests that the battle for corporate control between controlling family, in one side, and unrelated domestic and foreign investors begins with the structure of board. The findings imply that the type of large shareholder does matter in determining the device of corporate control.

scholarly journals The Impact of Corporate Board Size on Firm Performance: Evidence from Ghana and Nigeria

2017 ◽  
Vol 4 (2) ◽  
pp. 1 ◽  
Author(s):  
LjEbenezer Agyemang Badu ◽  
K.O. Appiah
Keyword(s):  
Firm Performance ◽  
Agency Theory ◽  
Firm Size ◽  
Positive Relationship ◽  
Empirical Support ◽  
Corporate Board ◽  
Board Size ◽  
Listed Firms ◽  
Different Types ◽  
The Impact

This paper examines the impact of corporate board size on firm performance for a sample of 137 listed firms in Ghana and Nigeria. Our findings suggest a statistically significant and positive relationship between board size and firm performance, implying that in Ghana and Nigeria allowing corporate board size to be dependent of firm size tends to improve firm performance. Our findings are consistent across different kinds of models that deal with different types of endogeneities and corporate performance proxies. Our results provide empirical support for agency theory, which suggests that optimal corporate board size effectively advise, monitor and discipline management thereby improving firm performance.

The impact of board composition and ownership structure on dividend payout policy: evidence from Saudi Arabia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Helmi A. Boshnak
Keyword(s):  
Saudi Arabia ◽  
Ownership Structure ◽  
Dividend Policy ◽  
Payout Policy ◽  
Board Composition ◽  
Dividend Payout ◽  
Content Type ◽  
Listed Firms ◽  
Propensity To Pay ◽  
The Impact

PurposeThis study examines the impact of board composition and ownership structure variables on dividend payout policy in Saudi Arabian firms. In particular, it aims to determine the effect of board size, independence and meeting frequency, in addition to chief executive officer (CEO) duality, and state, institutional, managerial, family, and foreign ownership on both the propensity to pay dividends and dividend per share for Saudi-listed firms over the period 2016–2019.Design/methodology/approachThe paper captures dividend policy with two measures, propensity to pay dividends and dividend per share, and employs a range of regression methods (logistic, probit, ordinary least squares (OLS) and random effects regressions) along with a two-stage least squares (2SLS) model for robustness to account for heteroscedasticity, serial correlation and endogeneity issues. The data set is a large panel of 280 Saudi-listed firms over the period 2016 to 2019.FindingsThe results underline the importance of board composition and the ownership structure in explaining variations in dividend policy across Saudi firms. More specifically, there is a positive relationship between the propensity to pay dividends and board-meeting frequency, institutional ownership, firm profitability and firm age, while the degree of board independence, firm size and leverage exhibit a negative relation. Further, dividend per share is positively related to board meeting frequency, institutional ownership, foreign ownership, firm profitability and age, while it is negatively related to CEO duality, managerial ownership, and firm leverage. There is no evidence that family ownership exerts an impact on dividend payout policy in Saudi firms. The findings of this study support agency, signalling, substitute and outcome theories of dividend policy.Research limitations/implicationsThis study offers an important insight into the board characteristic and ownership structure drivers of dividend policy in the context of an emerging market. Moreover, the study has important implications for firms, managers, investors, policymakers, and regulators in Saudi Arabia.Originality/valueThis paper contributes to the existing literature by providing evidence on four board and five ownership characteristic drivers of dividend policy in Saudi Arabia as an emerging stock market, thereby improving on less comprehensive previous studies. The study recommends that investors consider board composition and ownership structure characteristics of firms as key drivers of dividend policy when making stock investment decisions to inform them about the propensity of investee firms to pay dividends and maintain a given dividend policy.

Board composition and value relevance of Ghanaian firms: a seemingly unrelated regression approach

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ebenezer Agyemang Badu ◽  
Ebenezer Nyarko Assabil
Keyword(s):  
Best Practices ◽  
Firm Value ◽  
Value Relevance ◽  
Practical Implication ◽  
Seemingly Unrelated Regression ◽  
Board Composition ◽  
Content Type ◽  
Listed Firms ◽  
Unrelated Regression ◽  
The Impact

PurposeThe purpose of this study is to examine the connection between board composition and value relevance of financial information in Ghana.Design/methodology/approachThe study uses a panel data of 144 firm-year observations of listed firms in Ghana.FindingsThe study finds that a higher fraction of independent directors is associated with lower firm value. The study further finds that board size is positively related to firm value, whereas duality is negatively associated with firm value.Practical implicationsThe practical implication of this paper is that investors and regulators should be mindful that specifying governance composition should not only be based on “so-called” codes of best practices but also the level of the country's or the sector's development and local institutional structures.Originality/valueThis study uses five different measurements of market share and considers the impact of the provision of the Code of Best Practices in Ghana.

scholarly journals The Simultaneity of Corporate Financial Decisions Under Different Levels of Managerial Ownership: A Case of Pakistani Listed Firms

2019 ◽  
Vol 10 (2) ◽  
pp. 147
Author(s):  
Mohamad Helmi bin Hidthiir ◽  
Muhammad Farhan Basheer ◽  
Saira Ghulam Hassan
Keyword(s):  
Agency Theory ◽  
Random Effect ◽  
Order Theory ◽  
Managerial Ownership ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Financial Decisions ◽  
Listed Firms ◽  
Financing Decisions ◽  
The Impact

Purpose- The prime objective of the current study is to investigate the interdepended of financial decision. In addition to that the impact of different level of managerial ownership on the interdepended of financial decisions is also examined agency theory, pecking order theory and the signaling theory are used as the theoretical lenses to draw the theocratical framework.Design/methodology/approach- The balance panel of 161 nonfinancial firm over the period of five years from 2013 to 2017 is used to achieve the research objectives. Polled OLS, Fixed effect and Random effect estimates are employed to answer the reach questions Findings- The managerial ownership with an average mean ownership of 39 is appeared at the top. Interestingly more than 75 percent firms are being controlled by mangers and in more than 60 percent firms of our sample the controlling managers hold more than 40 percent of shares. The Wu Hausman test is performed to determine the existence of the endogeneity problem.  The results indicates that the financial decisions namely cash holding decisions, financing decisions and investment decisions has significant impact on each other. Where the managerial ownership is in nonlinear relationship with financial decisions. The results of the study are also providing support to agency theory, pecking order theory and the signaling theoryResearch implications- The study will be helpful for policymakers, researchers, corporate personals and financial institutions in understanding the interrelationship between financing decisions and the role of managerial ownership in there interdepended.Originality/value- The study is among the pioneering studies on the issue and will provide policy guideline on the said issues.

Firm Efficiency of East Asia Countries: The Impact of Board Busyness

2019 ◽  
Vol 23 (2) ◽  
pp. 111-124 ◽  
Author(s):  
Khar Mang Tan ◽  
Fakarudin Kamarudin ◽  
Bany-Ariffin Amin Noordin ◽  
Norhuda Abdul Rahim
Keyword(s):  
East Asia ◽  
Agency Theory ◽  
Negative Impact ◽  
Practical Implication ◽  
Profit Maximization ◽  
Data Envelopment ◽  
Firm Efficiency ◽  
Listed Firms ◽  
East Asia Region ◽  
The Impact

This study aims to examine the impact of board busyness on firm efficiency under the concept of technical efficiency. By employing conventional agency theory and busyness hypothesis, the logical relationships between board busyness and firm efficiency are established. In the first stage of analysis, this study employs data envelopment analysis (DEA) to investigate firm efficiency. While in the second stage of analysis, this study adopts panel regression analysis to empirically examine the proposed effect of board busyness on firm efficiency, based on a sample of 400 listed firms in the countries of significant East Asia region from 2009 to 2015. This study discovers the significant and negative impact of board busyness on firm efficiency, suggesting that the busy board significantly impedes firm efficiency due to their overcommitted issue and therefore consistent with busyness hypothesis and agency theory. This study highlights practical implication for managers who pursue to enhance firm efficiency in attaining the goals of profit maximization by understanding how board busyness impacts the firm efficiency. In addition, this study calls for regulators and government policymakers to review the restrictions on board busyness in preventing the overcommitted issue of busy boards.

scholarly journals Ownership, structure and agency costs in UK firms

2007 ◽  
Vol 4 (3) ◽  
pp. 303-311
Author(s):  
Mahendra Raj ◽  
Mazida Abdul-Malik
Keyword(s):  
Agency Theory ◽  
Ownership Structure ◽  
Agency Costs ◽  
Agency Cost ◽  
Structure And Agency ◽  
Different Types ◽  
Prior Literature ◽  
Firm Type ◽  
The Impact

This paper investigates the impact of firm type and ownership structure on agency costs in UK firms. Prior literature suggests that agency costs are significantly higher when an outsider manages the firm. In this paper, we examine the agency costs associated with different types of firms such as subsidiary, holding, foreign-owned and limited companies. We extend our analysis by examining the agency costs for firms with various levels of diffuse ownership. Consistent with the agency theory, we find that firms with single ownership incur lower agency cost. In addition, we find that the type of firm does contribute to the increase or decrease of agency cost

Impact of Corporate Fraud on Foreign Direct Investment?

2021 ◽  
pp. 148-165
Author(s):  
Radwan Alkebsee ◽  
Gaoliang Tian ◽  
Konstantinos G. Spinthiropoulos ◽  
Eirini Stavropoulou ◽  
Anastasios Konstantinidis
Keyword(s):  
Foreign Direct Investment ◽  
Foreign Investment ◽  
Capital Market ◽  
Direct Investment ◽  
Corporate Fraud ◽  
Foreign Investors ◽  
Negatively Associated ◽  
Listed Firms ◽  
Using Data ◽  
The Impact

The capital market reputation attracts foreign investment. Corporate fraud phenomenon is one of the most crucial aspects that threaten foreign investors. This study investigates the impact of corporate fraud on foreign direct investment FDI. Using data of Chinese listed firms, over the period 2009 to 2017, the results show that corporate fraud is negatively associated with foreign direct investment. This suggests that corporate fraud declines foreign shareholders ratio, and foreign investors avoid investing in a risky environment where their wealth may be expropriated. Further, we explore the impact of having foreign shareholders on corporate fraud. We find that increasing foreign shareholders may help in curbing corporate fraud due to diversified corporate experience and risk-taking behavior. However, the findings remain robust after controlling for the potential endogeneity problem. Our findings have important implications for policymakers and governments as it shows that corporate fraud is a crucial determinant to the cause of foreign direct investment.

scholarly journals Different board structures and R&D: Evidence from Japanese corporation

2015 ◽  
Vol 11 (2) ◽  
pp. 171-201
Author(s):  
Takahiro Nishi
Keyword(s):  
Corporate Governance ◽  
Panel Data ◽  
Agency Theory ◽  
Institutional Investors ◽  
Board Composition ◽  
Board Structure ◽  
Specific Relationship ◽  
The Impact ◽  
D Investment

This study examines the effect of different board style and ownership, and board composition on R&D investment in Japanese corporation. I explore how different board structure contribute to R&D investment in varied way and the impact of different type of governance on R&D investment incorporation. I analyze it with 2010-2014 panel data regarding Japanese corporate governance. I found that different type of corporate governance make impacts on R&D in corporations indicating the specific relationship between corporate governance and R&D, not explained by agency theory. This study observed that Board composed of insider avoid interference of institutional investors by caring about investor’s interests.

Board composition and corporate risk-taking: a review of listed firms from Germany and the USA

2019 ◽  
Vol 20 (4) ◽  
pp. 526-542 ◽  
Author(s):  
Zahid Irshad Younas ◽  
Christian Klein ◽  
Thorsten Trabert ◽  
Bernhard Zwergel
Keyword(s):  
Corporate Governance ◽  
Risk Taking ◽  
Audit Committees ◽  
Board Composition ◽  
Corporate Boards ◽  
Content Type ◽  
Listed Firms ◽  
The Usa ◽  
Corporate Risk ◽  
The Impact

Purpose Corporate governance is a crucial factor when considering excessive corporate risk-taking. Since corporate boards play such an important role in corporate governance, the purpose of this paper is to empirically examine the impact of board composition and further board characteristics on excessive corporate risk-taking. Design/methodology/approach This study investigates listed firms from Germany and the USA from 2004 to 2015 based on data from Thomson Reuters Data Stream. The authors apply the fixed effect and random effect estimation method to demonstrate the impact of board composition on corporate risk-taking. Findings This study provides empirical evidence that an increase in the proportion of independent directors is associated with less corporate risk-taking. These effects are stronger among German firms. Lastly, the effects of board size and audit committee effectiveness (AUCE) on risk-taking have mixed results. Research limitations/implications The results favor continued efforts to strengthen the composition of corporate boards and improve the effectiveness of audit committees to curb unhealthy corporate risk-taking. The recommendations from the research will provide regulators and corporate management with the necessary information needed to design an appropriate independent board structure, and board size (BOSI). The research will, furthermore, fortify the indispensability of financial experts on audit committees. Originality/value This study contributes to the agency theory debate with these findings. Stronger board independence enables a better monitoring of the CEO, which leads to decision making based on a more appropriate level of risk.

scholarly journals The effect of board composition and managerial pay on Saudi firm performance

2021 ◽  
Author(s):  
Mamdouh Abdulaziz Saleh Al-Faryan
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Positive Relationship ◽  
Board Composition ◽  
Board Independence ◽  
Policy Makers ◽  
Listed Firms ◽  
The Impact ◽  
Managerial Pay ◽  
Governance Arrangements

AbstractUsing five empirical methodologies to account for endogeneity issues, this study investigates the effects of board independence and managerial pay on the performance of 169 Saudi listed firms between 2007 and the end of 2014. Studying board independence and managerial pay utilises the main internal governance mechanism in relation to firm performance; therefore, the effect of the 2009 exogenous regulatory shock on board independence was also examined to learn whether it impacted firm performance. The empirical results show that the board composition–performance relationship is endogenous. Strong evidence is found through the dynamic generalised method of moments estimation, which indicates that board composition has a positive relationship with return on assets, and poor past performance of listed firms has a negative impact on the current level of performance. The difference-in-differences approach results show a positive relationship between board composition, stock returns, and Tobin’s Q. The findings also reveal that managerial pay has a positive relationship with firm performance, although when endogeneity is considered, there is a smaller positive relationship and a decrease in significance levels. Thus, pay-for-performance in Saudi Arabia matters, and firms are not simply controlled by the government. The results of this study have implications for both policy makers and investors. In particular, policy makers and Saudi regulators can evaluate the impact of Saudi corporate governance arrangements and, in so doing, highlight changes in corporate governance arrangements that need to be made to achieve their economic objectives, such as Vision 2030. This study also contributes to the literature by showing the importance of considering endogeneity in studies.

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