scholarly journals The relationship between earnings quality, control mechanisms of corporate governance, and future stock price returns. The case of the Netherlands

2013 ◽  
Vol 10 (4) ◽  
pp. 379-389
Author(s):  
Elisabetta Basilico ◽  
Hugh Grove
Keyword(s):  
Corporate Governance ◽  
The Netherlands ◽  
Stock Price ◽  
Earnings Quality ◽  
Audit Committees ◽  
Control Mechanisms ◽  
Public Companies ◽  
Corporate Governance Mechanisms ◽  
New Research ◽  
The Relationship

This article extends prior research on the relation between earnings quality (assessed by accruals) and future stock price returns and adds new research on the relationships between direct and indirect corporate governance mechanisms of control with accruals and future stock price returns. We study public companies of the Netherlands and find the presence of mispricing associated with very high and very low accruals. We also find evidence that direct corporate governance control mechanisms, such as the existence of separate, independent, and skilled audit committees, are related to higher earnings quality and higher future stock price returns.

scholarly journals Does D&O insurance matter for stock price crash risk? Evidence from an Asian emerging market

2019 ◽  
Vol 3 (1) ◽  
pp. 34-46
Author(s):  
Ming-Te Lee ◽  
Kai-Ting Nien
Keyword(s):  
Corporate Governance ◽  
Stock Price ◽  
Emerging Market ◽  
Insurance Coverage ◽  
Crash Risk ◽  
Governance Mechanisms ◽  
Content Type ◽  
Corporate Governance Mechanisms ◽  
The Relationship

Purpose The purpose of this paper is to address the opposing views of the relationship between directors’ and officers’ liability insurance (D&O insurance) and stock price crash risk in a major Asian emerging stock market. Design/methodology/approach This paper finds an endogenous relationship between D&O insurance and stock price crash risk. Hence, the two-stage least squares regression analysis is used to address the endogeneity issue when the relationship is examined. Moreover, this paper further controls the quality of other corporate governance mechanisms to investigate whether D&O insurance still has an effect on stock price crash risk. Findings The effect of D&O insurance coverage is significantly negatively related to firm-specific stock price crash risk in Taiwan. More importantly, even when the quality of other corporate governance mechanisms is controlled, the negative relationship between D&O insurance coverage and firm-specific stock price crash risk remains significant. The evidence supports that D&O insurance serves as an effective external monitoring mechanism, strengthens corporate governance, and thus reduces stock price crash risk. Originality/value Emerging Asian markets suffer a dearth of research on the relationship of D&O insurance coverage and the firm-specific stock price crash risk. Investigating the relationship in Taiwan, the present study fills the research void. The findings show that D&O insurance plays an important role in reducing stock price crash risk of Taiwanese firms even when other corporate governance mechanisms are in place.

scholarly journals Voluntary Corporate Governance Disclosure (VCGR) Versi Investor dan Determinan VCGR di Indonesia

2012 ◽  
Vol 2 (2) ◽  
Author(s):  
Anyta, Siti Mutmainah
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Stock Exchange ◽  
Public Access ◽  
Annual Reports ◽  
Control Mechanisms ◽  
Governance Mechanisms ◽  
Public Companies ◽  
Corporate Governance Mechanisms ◽  
Governance Disclosure

The purposes of this research are (1) to know the importance level of voluntary corporate governance disclosure (VCGD) in investor version and (2) to know the factual VCGD which is done by public companies in Indonesia and (3) to test determinants of VCGD existence in annual reports of public companies in Indonesia. The determinant of VCGD is a set of corporate governance mechanisms i.e. ownership structure and control mechanisms of the organ of the company, including (1) the concentration of ownership, (2) institutional ownership, (3) the percentage of tradable shares, (4) the proportion of independent commissioners, and (5) the independence of the audit committee. To know the rate of VCGD’s importance, the questionaires was distributed to investors by email. The mean score was used to indicate the importance level of each VCGD’s item in investors version. Based on this result then the relative disclosure index was calculated. A total of 74 annual reports of companies which was chosen by purposive sampling method. To test the determinants of level of VCGD, regression analysis was used. The results show that: (1)The capability and integrity of board of director and public access of companies’ information are the two most important items based on investor ’s opinions; (2) As a whole, public companies in Indonesia have higher level of VCGD then China’s which has shown by Yuen, et al. (2009); (3) The percentage of tradable shares (public ownership) is the only independent variable that has a positive and significant, while the other independent variables show no significant effect. This study provides empirical evidence for policy makers and regulators of Indonesia to improve the corporate governance mechanisms and transparency of public companies. These findings also contribute to improving the understanding of disclosure behavior among companies listed in Indonesia Stock Exchange (BEI).

scholarly journals Dynamics of audit lag − board of directors and audit committees’ effect

2015 ◽  
Vol 12 (3) ◽  
pp. 281-294 ◽  
Author(s):  
Rabih Nehme ◽  
Guy Assaker ◽  
Rita Khalife
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Financial Institutions ◽  
Audit Committee ◽  
Audit Committees ◽  
Governance Mechanism ◽  
Audit Report ◽  
Corporate Governance Mechanisms ◽  
External Governance ◽  
The Relationship

Audit procedures are considered to be an external governance mechanism tool used by shareholders from an agency theory perspective. The empirical model is constructed to assess the theoretical and statistical relationship between audit lag and corporate governance characteristics over a period of four years (for FTSE 350 companies excluding financial institutions between 2007 and 2010). This paper studies the effect of corporate governance mechanisms, board of directors and audit committee, on audit report lag. The importance of this research comes from the few studies conducted regarding the relationship between corporate governance and audit report lag. It is crucial to understand the determinants of audit lag in order to minimize it as much as possible and accordingly generate timely information.

Corporate governance and integrated reporting: evidence of French companies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abir Hichri
Keyword(s):  
Corporate Governance ◽  
Chief Executive ◽  
Audit Committees ◽  
Cognitive Diversity ◽  
Governance Mechanisms ◽  
Integrated Reporting ◽  
Content Type ◽  
Corporate Governance Mechanisms ◽  
The Impact ◽  
The Relationship

Purpose This paper aims to draw on the agency theory to examine the relationship between corporate governance and integrated reporting on a sample of 120 listed French companies making up the SBF 120 Index during the period 2016–2019. Design/methodology/approach The methodology adopted in the present study consists of the hypothetico-deductive approach. Thus, as part of this quantitative approach, the authors aim at investigating the hypotheses concerning the impact of corporate governance mechanisms on integrated reporting. Moreover, the applied data are analyzed using the multiple linear regressions. Findings The finding of this study is that the cognitive diversity and audit committees have a positive and significant effect on integrated reporting. However, the chief executive officer’s duality and the board’s size have a positive and non-significant effect on integrated reporting. Originality/value In fact, this study contributes to the literature on the practices of integrated reporting. Faced with the rarity of studies linking the corporate governance mechanisms and the integrated reporting, this study makes a huge contribution to the determinants of integrated reporting.

scholarly journals The effect of financial and non-financial performance on investors’ reactions: The role of corporate governance mechanisms as moderating

2022 ◽  
Vol 10 (8) ◽  
pp. 47-56
Author(s):  
Intadaviqotul Minakh ◽  
Erwin Saraswati ◽  
Abdul Ghofar
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Boards Of Directors ◽  
Audit Committee ◽  
Institutional Ownership ◽  
Audit Committees ◽  
Governance Mechanisms ◽  
Corporate Governance Mechanisms ◽  
The Relationship

The purpose of this study is to examine the effect of financial and non-financial performance on investor reactions and the role of corporate governance mechanisms as moderating. The analysis technique used is the moderated regression analysis (MRA). The research population is manufacturing sector companies listed on the Indonesia Stock Exchange (IDX). Based on the purposive sampling method, 78 companies were selected as the samples (390 firm-year observations). The results of this study provide empirical evidence that the existence of financial and non-financial performance in a company can increase investor reactions. Institutional ownership plays a role in the relationship between financial performance and investor reactions. Meanwhile, independent commissioners, boards of directors, and audit committees have no role in the relationship between financial performance and investor reactions. And independent commissioners and institutional ownership can moderate the influence of non-financial performance on investor reactions. Meanwhile, the board of directors and audit committee cannot moderate the influence of non-financial performance on investor reactions.

scholarly journals Corporate governance and conglomerate diversification strategy – evidence from Vietnam

2018 ◽  
Vol 13 (6) ◽  
pp. 1578-1596 ◽  
Author(s):  
Thi Xuan Trang Nguyen
Keyword(s):  
Corporate Governance ◽  
Stock Exchange ◽  
Board Composition ◽  
Governance Mechanisms ◽  
Content Type ◽  
Unrelated Diversification ◽  
Corporate Governance Mechanisms ◽  
Control Devices ◽  
Interest Alignment ◽  
The Relationship

Purpose The purpose of this paper is to examine the impact of internal corporate governance mechanisms, including interest alignment and control devices, on the unrelated diversification level in Vietnam. Additionally, the moderation of free cash flow (FCF) on these relationships is also tested. Design/methodology/approach The study is based on a balanced panel data set of 70 listed companies in both stock markets, Ho Chi Minh Stock Exchange and Hanoi Stock Exchange, in Vietnam for the years 2007–2014, which gives 560 observations in total. Findings The results show that if executive ownership for CEOs is increased, then the extent of diversification is likely to be reduced. However, the link between unrelated diversification level and executive stock option, another interest alignment device, cannot be confirmed. Among three control devices (level of blockholder ownership, board composition and separation of CEO and chairman positions), the study finds a positive connection between diversification and blockholder ownership, and statistically insignificant relations between the conglomerate diversification level and board composition, or CEO duality. Additionally, this study discovers a negative link between diversification and state ownership, although there is no evidence to support the change to the effect of each internal corporate governance mechanism on the diversification level of a firm between high and low FCF. Practical implications The research can be a useful reference not only for investors and managers but also for policy makers in Vietnam. This study explores the relationship among corporate governance, diversification and firm value in Vietnam, where the topics related to effectiveness of corporate governance mechanisms to public companies has been increasingly attractive to researchers since the default of Vietnam Shipbuilding Industry Group (Vinashin) happened in 2010 and the Circular No. 121/2012/TT-BTC on 26 July 2012 of the Vietnamese Ministry of Finance was issued with regulations on corporate governance applicable to listed firms in this country. Originality/value This research, first, enriches current literature on the relationship between corporate governance and firm diversification. It can be considered as a contribution to the related topic with an example of Vietnam, a developing country in Asia. Second, the research continues to prove non-unification in results showing the relationship between corporate governance and conglomerate diversification among different nations. Third, it provides a potential input for future research works on the moderation of FCF to the effects of corporate governance on diversification.

scholarly journals Hedging Activities Information and Risk Management Committee Effectiveness: Malaysian evidence

2018 ◽  
Author(s):  
Azrul Bin Abdullah ◽  
Ku Nor Izah Ku Ismail
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Significant Influence ◽  
Statistical Models ◽  
Voluntary Disclosure ◽  
Annual Reports ◽  
Management Committee ◽  
Corporate Governance Mechanisms ◽  
The Relationship ◽  
Risk Management Committee

This study examines the extent of information about hedging activities disclosures within the annual reports of Main Market companies listed on Bursa Malaysia. The extent of hedging activities disclosures is captured through a 32-item-template, which consists of a mandatory and voluntary disclosure scores. The results of this study indicate that the extent of information on hedging activities disclosure is still insufficient among the sampled companies even though the disclosure scored is quite high. This study also examines the relationship between the existence of risk management committee (RMC), its characteristics and the extent of information on hedging activities disclosure in two separate statistical models. The regression results imply that the existence of RMC is positive but does not significantly influence the extent of information on hedging activities disclosure. However its characteristics (i.e. RMC independence and RMC meeting) have a significant influence. The findings may provide some meaningful insights to regulators, policymakers and researchers, towards the establishment of RMC as a part of the internal corporate governance mechanisms. In addition to its existence, the effectiveness of RMC also needs to be emphasised.

scholarly journals The relationship between corporate governance and financial performance of small corporations in Australia

2014 ◽  
Vol 9 (2) ◽  
Author(s):  
Yongqiang Li ◽  
Anona Armstrong ◽  
Andrew Clarke
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Structural Equation ◽  
Small Firms ◽  
Negative Impact ◽  
Governance Mechanisms ◽  
Latent Constructs ◽  
Equation Modelling ◽  
Corporate Governance Mechanisms ◽  
The Relationship

This paper examines a widely explored but yet to be confirmed relationship between two latent constructs - corporate governance and financial performance of small corporations in Australia. Prior studies have either focused on larger organisations or isolated corporate governance mechanisms in small firms. However, few have examined how corporate governance mechanisms, as a bundle, relate to small corporations. This study fills this gap by empirically analysing the aforementioned relationship using Structural Equation Modelling (SEM). Based on 387 responses from small corporations, the results show that corporate governance bundles measured by the extant literature, has a negative impact on the financial performance of small corporations. The result calls for a stakeholder approach to the governance needs of small corporations.

scholarly journals Mechanisms of corporate governance and performance: analysis of public companies listed in BM&FBovespa

2017 ◽  
Vol 16 (3) ◽  
pp. 1161-1184
Author(s):  
Josimar Pires Da Silva ◽  
Mariana Pereira Bonfim ◽  
Rafael Martins Noriller ◽  
Carlos Vicente Berner
Keyword(s):  
Corporate Governance ◽  
Performance Analysis ◽  
Financial Statements ◽  
Public Companies ◽  
The Public ◽  
Corporate Governance Mechanisms ◽  
The Government ◽  
And Performance ◽  
Future Reference

AbstractThe objective of this research is to verify the level of relationship between the mechanisms of corporate governance and the performance of the companies of the public subsector, listed on BM&FBovespa. The research was based on the financial statements from 2010 to 2014, obtained on the BM&FBovespa website, resulting in a sample of 63 companies with 315 observations. In order to calculate the performance proxy of the company, the ROA was used, and for the calculation of the proxies of the corporate governance mechanisms were used for the quality of the audit, the concentration of ownership in common shares and preferred shares, participation in the levels of governance of BM&FBovespa, number of shares held by the government and number of directors in the Board, adapted from the Mollah and Zaman (2015) survey. Convergence with national and international research, the findings of the study showed that such variables as quality of profit, concentration of ownership in preferred shares, participation in governance levels and size of the Board are positively related to the performance of the company; already a concentration of ownership in common shares and number of shares held by the government are negatively related to performance. For future reference, it is recommended to expand other sectors of the market as well as to use other mechanisms of corporate governance, presented in the literature.Keywords: Corporate Governance. Performance. Public Subsector.Mecanismos de governança corporativa e desempenho: análise das companhias do subsetor de utilidade pública listadas na BM&FBovespa Resumo O objetivo da pesquisa foi o de verificar o nível de relação entre os mecanismos de governança corporativa e o desempenho das empresas do subsetor de utilidade pública, listadas na BM&FBovespa. A pesquisa teve como base os dados das demonstrações financeiras de 2010 a 2014, obtidas no sítio eletrônico da BM&FBovespa, resultando assim, em uma amostra de 63 empresas, com 315 observações. Para o cálculo da proxy de desempenho da empresa foi utilizado o ROA, e para o cálculo das proxies dos mecanismos de governança corporativa foram utilizadas a qualidade da auditoria, concentração de propriedade em ações ordinárias e em ações preferenciais, participação nos níveis de governança da BM&FBovespa, número de ações mantidas pelo governo e número de diretores no Conselho, adaptado da pesquisa de Mollah e Zaman (2015). Convergente com pesquisas nacionais e internacionais, os achados desse estudo evidenciaram que as variáveis qualidade do lucro, concentração de propriedade em ações preferenciais, participação nos níveis de governança e tamanho do Conselho são positivamente relacionados com o desempenho da empresa; já a concentração de propriedade em ações ordinárias e o número de ações mantidas pelo governo são negativamente relacionadas com o desempenho. Para pesquisas futuras, recomenda-se ampliar a outros setores do mercado bem como utilizar outros mecanismos de governança corporativa, presentes na literatura.Palavras-chave: Governança Corporativa. Desempenho. Utilidade Pública.

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