scholarly journals Editorial: Advances in corporate governance practices

2021 ◽  
Vol 17 (1) ◽  
pp. 4-6
Author(s):  
Sabri Boubaker
Keyword(s):  
Corporate Governance ◽  
Internal Audit ◽  
Codes Of Ethics ◽  
The United States ◽  
Auditor Independence ◽  
Management Control ◽  
Corporate Board ◽  
High Quality Research ◽  
Public Company ◽  
Governance Practices

Corporate governance has gone through three decades of profound changes in terms of new regulations, new practices, and environmental conditions. Many countries drafted guidelines for best corporate governance practices following Cadbury report (Cadbury, 1992). These practices were mainly related to the board of directors (composition and functioning), internal controls, and internal audit. The Enron scandal followed by the collapse of Arthur Andersen, one of the big five audit firms, and the enactment of the “Public Company Accounting Reform and Investor Protection Act” (Sarbanes-Oxley law) in 2002 were other milestones in the evolution of corporate governance. This law brought about significant changes related to public company accounting oversight, auditor independence, financial disclosure, and corporate responsibility. The financial crisis in 2008 started in the United States and has shaken the world economy. This crisis was due to weak corporate governance that led to fraudulent financial reporting and excessive risk-taking. Grove and Victoravich (2012) consider CEO duality, lack of board independence, weak management control systems, short-termism, weak codes of ethics, and opaque disclosures among the main drivers of this crisis. The COVID-19 has consistently shown that firms with better corporate governance and corporate social responsibility practices were the most resilient entities during the first quarter of the pandemic (Ramelli & Wagner, 2020). All these topics are addressed in this collection of high-quality research papers of this year’s first issue of Corporate Board: Role, Duties, and Composition.

Corporate board for innovative managerial control: implications of corporate governance deviance perspective

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Irfan Saleem ◽  
Mujtaba Nasir Ali Khan ◽  
Rashedul Hasan ◽  
Muhammad Ashfaq
Keyword(s):  
New York ◽  
Corporate Governance ◽  
Stock Exchange ◽  
Management Control ◽  
Corporate Board ◽  
Managerial Control ◽  
Governance Mechanisms ◽  
Content Type ◽  
Governance Practices ◽  
The Impact

Purpose Drawing from the firm’s entrepreneurial identity and ecology perspectives, this study aims to explain why the firms deviate from standard corporate governance practices and apply innovative management control. Design/methodology/approach The authors used a panel of 2,538 public companies listed with the New York Stock Exchange to explain the impact of corporate governance deviance on firm’s performance. The authors relied on unique governance variables extracted from the Bloomberg database to develop the governance deviance index. Findings Study unveils that deviance from governance practices influences firm’s performance. Consequently, it can be said that the firms which use innovative governance mechanisms, usually stay ahead of the market by leading the governance trends. The findings also generalise the firm’s entrepreneurial identity and organisational ecology perspectives. Research limitations/implications Research implies that the firm’s entrepreneurial identity demands innovative managerial control. This study is focused on the US financial market, but in future, researchers could revalidate the deviance index. Scholars can also use mixed methods to test the need for innovative governance mechanisms in emerging markets. Practical implications The firms should focus on innovative governance practices not only to safeguard the firm’s entrepreneurial identity but also to pursue the growth objectives. Such innovative mechanisms and managerial controls are helpful to deal with industrial transformations to satisfy key stakeholders. Originality/value The study contributed to governance and management control research by sharing insights and catering the potential endogeneity problem faced to measure corporate governance measures. The study also proposes an alternative testing tool to measure governance deviance to add methodological uniqueness and reduce knowledge gap.

scholarly journals Evaluating Information Security System Effectiveness for Risk Management, Control, and Corporate Governance

2019 ◽  
Vol 9 (1) ◽  
pp. 164
Author(s):  
Mouhamadou Sow ◽  
Christina Gehrke
Keyword(s):  
Corporate Governance ◽  
Information Security ◽  
Research Literature ◽  
Management Control ◽  
Advanced Technology ◽  
Accounting System ◽  
Security Measures ◽  
Control Factors ◽  
Forensic Accounting ◽  
Governance Practices

Using Grounded Theory, this study addresses factors related to forensic accounting, as well as various issues that can arise due to lack of security measures. The study identifies issues related to lack of security measures and cybersecurity crimes, and their impact on corporate-governance practices within organizations. This qualitative research study was phenomenological in nature and participants included a group of twelve employees in the field of forensic accounting, auditing, and information security systems across several organizations in the Southwest United States who were interviewed about cybersecurity and information security. Specific research literature provides a framework for this study, indicating the need for information technology that reinforces data safety and increases the effectiveness of corporate governance. The forensic accounting system depends on auditing and risk-control factors because in their absence, organizations may be unable to keep data confidential. Larger firms must adopt security measures that advanced technology provides within the accounting system to help develop fairness and transparency within the forensic accounting system. The study proposes means of increasing good corporate-governance practices and decreasing the risk in larger organizations using the latest technology.

scholarly journals Editorial note: Theory and practices of the corporate board in the international context

2019 ◽  
Vol 15 (2) ◽  
pp. 4-6
Author(s):  
Montserrat Manzaneque-Lizano
Keyword(s):  
Corporate Governance ◽  
Editorial Note ◽  
Corporate Board ◽  
International Context ◽  
Interdisciplinary Dialogue ◽  
Governance Practices

Nowadays, literature and practitioners, from a theoretical and empirical focus, agree that corporate governance efficiency is essential to achieve the long-term sustainability of firms and institutions. This issue of the journal marks another step in this area, providing an interdisciplinary dialogue on diversity in corporate governance practices.

scholarly journals Assessment of Earnings Conservatism in Malaysian Financial Reporting

2021 ◽  
Author(s):  
◽  
Khairul Anuar Kamarudin
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Family Firms ◽  
Good Governance ◽  
The United States ◽  
Systematic Difference ◽  
Cultural Issues ◽  
Corporate Board ◽  
Short Period ◽  
Significant Difference

<p><b>This study examines four influences on earnings conservatism of financial reporting in Malaysia. The study employs a sample of 3,126 firm-year observations of Malaysian listed companies over the period 2003 to 2008 and measures conservatism by the asymmetric timeliness of earnings measure due to Basu (1997). First, the study assesses the degree of earnings conservatism in reporting during the period following the institutional reforms which started after the 1997 Asian financial crisis. The results suggest that conservatism has increased with the reforms which contrasts with the findings of Ball et al. (2003) who find no evidence of earnings conservatism in Malaysia. Second, this study investigates the effect of the adoption of IFRS on the level of earnings conservatism. The results show no systematic difference in the level of earnings conservatism for the short period of one to two years before and after the adoption, suggesting that conservatism may not be specific to any particular set of accounting standards. Third, this study examines the effect of ownership structure on earnings conservatism. Reporting by family firms and widely-held firms exhibits earnings conservatism, but this is not the case for state-controlled firms. The analysis also shows no significant difference between the levels of earnings conservatism for family firms and widely-held firms. Additional tests show that family firms that are strategically controlled by a family, that is, where a member of the controlling family acts as CEO and chairman of the corporate board, report significantly higher earnings conservatism than other family firms.</b></p> <p>Finally, the study examines the link between corporate governance and earnings conservatism. Employing a comprehensive set of corporate governance variables, this study does not find any evidence to link corporate governance and earnings conservatism. This result is contrary to the evidence from developed markets, such as the United States and the United Kingdom, where firms with good governance are more timely in recognising bad news. This raises the possibility that the different ownership structures in Malaysia make corporate governance reforms less important. However, this suggestion is subject to environmental and cultural issues that have not been addressed in this study.</p>

The Impact of Stock Exchange Rules on the Federalization of Corporate Governance

2018 ◽  
Author(s):  
Marc I. Steinberg
Keyword(s):  
Corporate Governance ◽  
Government Regulation ◽  
Stock Exchange ◽  
Codes Of Ethics ◽  
Stock Exchanges ◽  
Significant Component ◽  
Board Committees ◽  
Governance Practices ◽  
Nominating Committees ◽  
The Impact

This chapter focuses on the important role that the national stock exchanges play in the federalization of corporate governance. Responding to federal legislative and SEC directives and, at times, acting on their own initiative, the stock exchanges have promulgated meaningful rules that comprise a significant component of the corporate governance landscape. Although technically not government regulation, the national stock exchanges play a central role in the enhancement of sound corporate governance practices and policies. Examples include the emphasis by the exchanges on independent directors, board committees (including audit, compensation, and nominating committees), and corporate codes of ethics. Hence, when addressing the federalization of corporate governance, stock exchange regulation is to be given prominent status.

scholarly journals Auditing Issues with Chinese Reverse Merger Companies Traded in the United States

2012 ◽  
Vol 2 (2) ◽  
pp. 76
Author(s):  
Frederic M. Stiner ◽  
Susan A. Lynn
Keyword(s):  
United States ◽  
Audit Quality ◽  
The United States ◽  
Auditor Independence ◽  
Securities And Exchange Commission ◽  
Future Research ◽  
Chinese Government ◽  
The Public ◽  
Reverse Mergers ◽  
Public Company

Recently there have been two issues related to Chinese companies seeking capital in the United States.   The first issue is frauds that have been perpetrated by companies using reverse mergers in order to go public.   The second issue is fraud in continuing audit engagements when there has been reliance by an American audit firm on a foreign accountant’s audit work.  There is also conflict between the Public Company Accounting Oversight Board (PCAOB) demanding to inspect audit workpapers for companies in China and the Chinese government’s refusal to let the PCAOB see these workpapers.   These issues relate to characteristics of the practice of accounting and auditing in China that threaten auditor independence and audit quality. The paper discusses: (1) issues involving reverse mergers and the response of the Securities and Exchange Commission (SEC) to these issues, (2) issues involving reliance on the work of foreign Certified Public Accountants (CPAs) and the response of the PCAOB to these issues, (3) issues involving conflicts between U.S.  regulatory agencies and the Chinese government over access to audit-related documents, and (4) suggestions for future research.

Strong Corporate Governance and Audit Firm Rotation: Effects on Judges' Independence Perceptions and Litigation Judgments

2006 ◽  
Vol 20 (3) ◽  
pp. 253-270 ◽  
Author(s):  
Marianne Moody Jennings ◽  
Kurt J. Pany ◽  
Philip M. J. Reckers
Keyword(s):  
Corporate Governance ◽  
Financial Statements ◽  
Auditor Independence ◽  
Corporate Board ◽  
Auditor Liability ◽  
Audit Firm ◽  
Auditor Rotation ◽  
Sarbanes Oxley ◽  
Governance Environment ◽  
Audit Firms

The Sarbanes-Oxley (SOX) legislation mandated modest threshold levels of corporate board independence and expertise, as well as audit partner (not firm) rotation. One objective was to create an environment supportive of enhanced actual and perceived auditor independence. This study examines whether perceptions of auditor independence and auditor liability are incrementally influenced by further strengthening corporate governance and by rotating audit firms. Our experimental study addresses these questions by analyzing responses of 49 judges attending a continuing education course at the National Judicial College. The experiment manipulates corporate governance at two levels (minimally compliant with current corporate governance requirements versus strong) and auditor rotation at two levels (partner rotation versus audit firm rotation). We find that strengthening corporate governance (beyond minimal SOX levels) and rotating audit firms (compared to partner rotation) lead to enhanced auditor independence perceptions. We also find that judges consider auditors less likely to be liable for fraudulently misstated financial statements when firm rotation is involved in a minimally compliant corporate governance environment.

scholarly journals Could the Pay Ratio Disclosure Backfire?

2017 ◽  
Vol 4 (3) ◽  
pp. 417-448 ◽  
Author(s):  
Jillian Loh
Keyword(s):  
Corporate Governance ◽  
Financial Crisis ◽  
Executive Compensation ◽  
Financial System ◽  
Regulatory System ◽  
The United States ◽  
System Reform ◽  
Executive Pay ◽  
Governance Practices ◽  
The 2008 Financial Crisis

At the signing of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”), President Barack Obama asserted that, “We all win when investors around the world have confidence in our markets. We all win when shareholders have more power and more information. . . . And we all win when folks are rewarded based on how well they perform, not how well they evade accountability.” After the financial crisis in 2008, the Obama Administration recognized the need to reconstruct the existing American financial regulatory system to ensure that a financial meltdown would never happen again. It is quite clear that Congress’s purpose behind the Dodd-Frank Act is to redevelop the financial system to ensure that the 2008 financial crisis will never be repeated. However, the Dodd-Frank Act contains considerable provisions that add substantial new requirements for certain publicly traded companies based in the United States. Analysts have theorized that the creation of new regulations relating to executive compensation and corporate governance was due to assertions that large executive pay contributed to the financial crisis. There has been much debate over whether such changes to executive compensation and corporate governance practices under Title IX of the DoddFrank Act are meeting the intended goals of financial system reform.

scholarly journals Does Adopting High-Standard Corporate Governance Increase Firm Value? An Empirical Analysis Of Canadian Companies

2011 ◽  
Vol 10 (9) ◽  
pp. 17 ◽  
Author(s):  
Jun Yang
Keyword(s):  
Corporate Governance ◽  
Private Information ◽  
Firm Value ◽  
Stock Exchange ◽  
High Standard ◽  
Relevant Information ◽  
The United States ◽  
Shareholder Protection ◽  
Governance Practices ◽  
The Impact

Research on the impact of corporate governance on firm value has provided inconclusive results. The findings vary depending on the sample, country of study (regulation, law, shareholder protection, market development, etc.) and methodology employed. Many studies are unable to detect significant connection between corporate governance and firm value. Unlike the United States, Canada adopts a principles-based approach in corporate governance regulation. Canadian companies are required to disclose whether they comply with the corporate governance guidelines set up by authorities (such as the Toronto Stock Exchange) or explain deviations from the guidelines. Using panel data from 2004 to 2008 in Canada the empirical analyses in this paper show that the finding on the connection between corporate governance and firm value is sensitive to the methodology employed. Controlling relevant information is crucial to the results. When the data is analyzed in a self-selection framework, it is found that some time-varying unobservable firm characteristics that make firms adopt high-standard corporate governance also increase firm value, and somewhat surprisingly, adopting better corporate governance practices per se seems to decrease firm value. The results support the view that firms use sound corporate governance to signal their favorable private information.

Conceptual framework for risk-based internal audit. Risk-oriented terminological and visual apparatus

2021 ◽  
pp. 55-68
Author(s):  
E.N. Kalamanova ◽  
N.A. Prodanova
Keyword(s):  
Corporate Governance ◽  
Conceptual Framework ◽  
Professional Practice ◽  
Internal Audit ◽  
Internal Auditing ◽  
Audit Risk ◽  
Corporate Governance Code ◽  
Governance Practices ◽  
Conceptual Foundations ◽  
Visual Apparatus

The article discusses the conceptual foundations of riskbased internal audit, basic terms and definitions. The topic of the article is relevant given the development of corporate governance practices in Russian companies in accordance with the recommendations of the Corporate Governance Code. The International Framework for the Professional Practice of Internal Auditing defines the mission of internal audit as preserving and increasing the value of the organization by conducting objective internal audits based on a risk-based approach, providing advice and sharing knowledge. The material of the article is presented taking into account the current regulatory framework, international auditing standards, the International Foundations for the Professional Practice of Internal Auditing, and expert explanations.

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