scholarly journals Corporate governance mechanisms and the performance of Malaysian listed firms

2016 ◽  
Vol 14 (1) ◽  
pp. 384-398 ◽  
Author(s):  
Shamsul Nahar Abdullah
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Chief Executive ◽  
Board Independence ◽  
Tobin’S Q ◽  
Women Directors ◽  
Board Size ◽  
Tobin's Q ◽  
Ceo Duality ◽  
Listed Firms

In the aftermath of the Asian Financial crisis in 1997/1998, the Malaysia Securities Commission (SC) issued the Malaysian Code on Corporate Governance in 2000 (MCCG 2000). It was subsequently revised in 2007 following the Enron and Transmile debacles. In 2012, the SC issued the latest MCCG 2012 which introduced several new recommendations that are in line with developments in other parts of the world. Hence, the purpose of this study is to investigate the influence of the structure of the board and its activities on firm performance post MCCG 2007. The study also aims to shed light on the effectiveness of the board of directors since the issuance of MCCG 2000 and of MCCG 2007. It also aims to reveal the preparedness of listed firms in Malaysia to embrace MCCG 2012. Using a population of non-finance listed firms for the 2009, 2010 and 2011 financial years, it was found that board independence, chief executive officer (CEO) duality, directors’ busyness, nomination committee independence, the establishment of a risk management committee (RMC) and board meetings are not associated with firm performance, i.e. Tobin’s q. However, the market appears to be in favour of a larger board size. As for return on assets (ROA), it is not associated with board independence, board size, directors’ busyness and nomination committee independence. On the other hand CEO duality and the establishment of a RMC improve ROA, while board meetings are detrimental to ROA. It can therefore be concluded that board independence is not associated with either Tobin’s q or ROA. Hence, any corporate governance reforms should not over-emphasize the representation of independent directors on the board, rather the focus might be shifted to board activities, such as board meetings and the establishment of a RMC. With regard to board size, since the market is in favour of a larger board size, firms should increase the board’s size to enable the appointment of women directors to the board. Finally, combining the CEO and board chairman roles should not be disallowed as the market views this favourably. Hence, the ‘one-hat approach’ does not appear to be applicable in the case of CEO duality.

scholarly journals Corporate Governance and Firm Performance: An Empirical Analysis of Manufacturing Listed Firms in Ghana

2018 ◽  
Vol 7 (3) ◽  
pp. 111 ◽  
Author(s):  
Beatrice Sarpong-Danquah ◽  
Prince Gyimah ◽  
Richard Owusu Afriyie ◽  
Albert Asiama
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Manufacturing Sector ◽  
Gender Diversity ◽  
Generalized Least Squares ◽  
Manufacturing Firms ◽  
Board Independence ◽  
Outside Directors ◽  
Board Size ◽  
Listed Firms

This paper assesses the effect of corporate governance on the financial performance of manufacturing firms in a developing country. Specifically, the paper investigates whether gender diversity, board independence, and board size affects return on asset (ROA) and return on equity (ROE) of manufacturing listed firms in Ghana. We use the generalized least squares (GLS) panel regression model to analyze the dataset of 11 listed manufacturing firms from 2009-2013. Our result reveals an insignificant representation of women on boards. Also, the empirical result shows that board independence and board gender diversity have significant positive effect on ROE and ROA. However, there is no statistical significant relationship between board size and firm performance (ROE and ROA). We suggest that manufacturing firms should appoint female board members as well as outside directors on their boards as this can make significant contribution to firm’s performance. Our study provides the first comprehensive explicit exposition of corporate governance-performance nexus using data from the manufacturing sector in Ghana.

scholarly journals The South African code of corporate governance. The relationship between compliance and financial performance: Evidence from South African publicly listed firms

2015 ◽  
Vol 12 (2) ◽  
pp. 149-169 ◽  
Author(s):  
Jonty Tshipa ◽  
Thabang Mokoaleli-Mokoteli
Keyword(s):  
South Africa ◽  
Corporate Governance ◽  
Firm Performance ◽  
Financial Performance ◽  
South African ◽  
Small Firms ◽  
Large Firms ◽  
Board Size ◽  
Tobin's Q ◽  
Listed Firms

Using both Return On Assets (ROA) and Tobin’s Q as proxies for performance, the study seeks to explore if better governed firms exhibit greater financial performance than poorly governed firms. The paper employs a panel study methodology for a sample of 137 Johannesburg Stock Exchange (JSE) listed firms between 2002 and 2011. The results show that the compliance levels to corporate governance in South Africa (SA) has been improving since 2002 when King II came into force. However, the compliance level in large firms appears to be higher than in small firms. Further, the findings show that the market value of large firms is higher than that of small firms. These results largely support the notion that better governed firms outperforms poorly governed firms in terms of financial performance. Notably, the empirical results indicate that board size, CEO duality and the presence of independent non-executive directors positively impact the performance of a firm, whereas board gender diversity, director share-ownership and frequency of board meetings have no impact on firm performance. This suggests that greater representation of independent non-executive director, a larger board size and the separation of CEO and Chairman should be encouraged to enhance firm performance. Unexpectedly, the presence of internal key board committees, such as remuneration, audit and nomination, negatively impact firm performance. Similar to UK, South Africa has a flexible approach to corporate governance, in which listed firms are required to apply or explain non-conformance to King recommendations. This study has policy implications as it determines whether the flexible corporate governance approach employed by SA improves corporate governance compliance than the mandatory corporate governance approach as employed by countries such as Sri Lanka and US, and whether compliance translates into firm performance. The significant finding of this study is that compliant firms enjoy a higher firm performance as measured by ROA and Tobin’s Q. This implies that compliance to corporate governance code of practice matters, not just as box ticking exercise but as a real step change in the governance of South African listed firms. This paper fulfils an identified need of how compliance to corporate governance influences firm performance in South Africa. The findings have implications to JSE listing rules, policy, investor confidence and academia.

scholarly journals The Interaction Effect of Financial Leverage on the Relationship Between Board Attributes and Firm Performance; Evidence of Non-financial Listed Companies of Pakistan

2019 ◽  
Vol 5 (1) ◽  
pp. 115-122
Author(s):  
Sajjad Nawaz Khan ◽  
Muhammad Noman Yaseen ◽  
Fakhra Mustafa ◽  
Sidra Abbasi
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Interaction Effect ◽  
Tobin’S Q ◽  
Outside Directors ◽  
Board Size ◽  
Tobin's Q ◽  
Corporate Scandals ◽  
Financial Firms ◽  
Sarbanes Oxley

The eminence of corporate governance (CG) was grasped after the major blunders incorporate strategies and distinct corporate scandals around the world during the global financial crises. Advanced countries have passed numerous laws such as “Say on Pay” or the Sarbanes-Oxley Act to shield the shareholder’s wealth. However, evolving countries are still flourishing to gain recognition in corporate governance (CG) effectiveness. The intention of the study is to probe the link between the CG (board size, outside directors) and firm performance (Tobin’s Q). Leverage has been used as an interaction term in the current study. The data had been collected from 130 non-financial firms from the year 2012 to 2015 and Multiple Regression Techniques will be used as the instruments for data analysis. The results indicate that the board size and Tobin’s Q have a significant association and outside directors’ insignificant association with Tobin’s Q. The interaction effect of leverage found a significant connotation between board size, outside directors, and Tobin’s Q.

scholarly journals Corporate governance and firm performance in the Saudi banking industry

2019 ◽  
Vol 14 (1) ◽  
pp. 147-158 ◽  
Author(s):  
Ahmed Almoneef ◽  
Durga Prasad Samontaray
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Audit Committee ◽  
Positive Relationship ◽  
Banking Industry ◽  
Negative Relationship ◽  
Tobin’S Q ◽  
Board Size ◽  
Tobin's Q ◽  
Governance Practices

The current research aims to explore the impact of corporate governance on the Saudi banking performance for the period of 2014–2017. Though many researchers tested the relationship of corporate governance and firm performance, globally as well as in Saudi Arabia, however, during the literature review, it was found that many excluded the banking industry. This study tries to fill the gap by looking exclusively at the Saudi banking industry. Firm performance is measured through return on assets, return on equity, and Tobin’s Q as the dependent variables. The corporate governance practices are measured through the board characteristics (size, meeting, number of committees, independence, foreign board membership), and an audit committee (size, meeting, independence) as the independent variables. Firm size and firm age are the controls. Panel data analysis was implemented, using both descriptive and multivariate analysis through multiple regression to investigate the governance practices and firm performance. The empirical findings demonstrate that board size, audit committee meeting and bank size have a positive impact on ROE, whereas board independence has a negative impact on ROE. Similarly, board size and bank size have a positive relationship with ROA and board meeting has a negative relationship with ROA. Further, board (size and independence) and bank size have a positive relationship with Tobin’s Q, whereas number of board committees and bank age have a negative relationship with Tobin’s Q. Finally, audit committee (size and independence) and foreign board membership have no impact on the bank performance.

Corporate Governance and Firm Performance in Indian Textile Companies: Evidence from NSE 500

2020 ◽  
Vol 13 (2) ◽  
pp. 210-226
Author(s):  
Ishfaq Gulzar ◽  
S. M. Imamul Haque ◽  
Tasneem Khan
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Performance Measures ◽  
Board Independence ◽  
Board Size ◽  
Ceo Duality ◽  
Board Characteristics ◽  
And Performance ◽  
Business Practitioners ◽  
Measure Of Performance

This article endeavours to study the relationship between corporate governance and performance for a sample of 11 textile firms listed on Nifty 500 Index in India. The article examines whether the board characteristics have any impact on performance measures. The data covers the time period from 2014 to 2018. The study uses board size, board meetings, board independence as corporate governance surrogates from different dimensions along with other widely uses of independent variables to assess their impact in a panel data-based regression. The findings provide mixed results between the board characteristics and the firm performance. Board size and firm performance is statistically significant with return on assets and Tobin’s Q. Whereas, board independence, board meetings and CEO duality are not statistically significant with both accounting-based measure of performance and market-based measure of performance. The article provides empirical evidence that board independence, board meetings and CEO duality is not necessary for listed textile companies in India and would be of interest to regulatory bodies, business practitioners and academic researchers. The main value of this article is the analysis of the effect of corporate governance on performance measures on listed Indian textile industries.

scholarly journals THE MODERATING EFFECT OF INTELLECTUAL CAPITAL ON THE RELATIONSHIP BETWEEN CORPORATE GOVERNANCE AND COMPANIES PERFORMANCE IN PAKISTAN

2018 ◽  
Vol 2 (1) ◽  
pp. 12-22
Author(s):  
Sajad Nawaz Khan ◽  
Engku Ismail Ali
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Intellectual Capital ◽  
Gender Diversity ◽  
Moderating Effect ◽  
Board Independence ◽  
Board Size ◽  
Ceo Duality ◽  
Financial Expertise ◽  
The Relationship

During the global financial crises, the prominence of corporate governance was realized after the major loopholes identified in corporate policies and conspicuous corporate scandals all over the world. Developed countries have passed several laws such as the “Say on Pay” or the “Sarbanes-Oxley Act” to protect the shareholder's wealth. On the contrary, developing countries are still thriving to gain effective corporate governance recognition. This study examined the moderating effect of intellectual capital on the relationship between corporate governance and firm performance. The current study uses four-year panel data from 2012 to 2015. Linear regression, correlated panels corrected standard errors (PCSEs) are used in the analysis. The findings of the study indicate that the intellectual capital has a significant effect on the relationship between board size, board financial expertise, CEO duality, gender diversity and firm performance (ROA). On the other hand, it does not seem to moderate the relationship between board independence and firm performance (ROA). Similarly, the findings indicate that intellectual capital has a significant relationship between board size, board independence, CEO duality, gender diversity and firm performance (ROE) has no moderating effect on the relationship between board financial expertise and firm performance (ROE). Moreover, the empirical results highlight the significance of intellectual capital for regulations and policy making.

Corporate Governance in Portugal

2021 ◽  
pp. 147-167
Author(s):  
João Teodósio
Keyword(s):  
Corporate Governance ◽  
Chief Executive ◽  
Board Independence ◽  
Firm Risk ◽  
Governance Mechanisms ◽  
Board Size ◽  
Listed Firms ◽  
Corporate Governance Mechanisms ◽  
Ceo Pay ◽  
International Investors

This study provides a literature review of the research on the corporate governance mechanisms of Portuguese firms. Based on a sample of 47 articles published, between 2004 and 2019, it is documented that research is predominantly focused on corporate governance mechanisms as determinants of the performance on non-financial listed firms. Literature reports, in its majority, that board size decreases firm performance while CEO (Chief Executive Officer) non-duality promotes it; board size, board independence, and CEO non-duality improve the level of firms' information disclosure; CEO age is positively associated with an increase of CEO pay but CEO duality has an opposite effect; board independence increases firm risk-taking. These results should be of interest to national authorities in the development of future regulation related to firms' corporate governance and to national and international investors that intend to invest in Portuguese companies.

scholarly journals Effects of Corporate Governance on the Performance of Nepalese Firms

2016 ◽  
Vol 1 ◽  
Author(s):  
Prem Prasad Silwal
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Audit Committee ◽  
Tobin’S Q ◽  
Return On Assets ◽  
Board Size ◽  
Tobin's Q ◽  
Return On Equity ◽  
Explanatory Variables ◽  
Major Factors

The paper examines the effect of corporate governance on the performance of Nepalese firms. Return on assets, return on equity and Tobin’s Q are the dependent variable for firm performance and firm size, leverage, board size, age of the firm, and audit committee are the explanatory variables. Data are collected from annual report of 18 non financial firms listed in NEPSE from 2010 to 2015.The multiple regression models were estimated to test the effect of explanatory variables on firm performance. The result reveals that corporate governance has significant impact on firms’ performance based on return on assets. Board size, and leverage have negative and significant effect on firm performance however age of the firm and audit committee have positive effect on firm performance based on return on equity. While regressing firm performance based on Tobin’s Q, board size and audit committee are the major factors in determining the firm performance.

scholarly journals The board of directors and firm performance: empirical evidence from listed companies

2019 ◽  
Vol 19 (3) ◽  
pp. 508-551 ◽  
Author(s):  
Alessandro Merendino ◽  
Rob Melville
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Agency Theory ◽  
Ownership Structure ◽  
Listed Companies ◽  
Independent Directors ◽  
Board Structure ◽  
Board Size ◽  
Ceo Duality ◽  
Content Type

PurposeThis study aims to reconcile some of the conflicting results in prior studies of the board structure–firm performance relationship and to evaluate the effectiveness and applicability of agency theory in the specific context of Italian corporate governance practice.Design/methodology/approachThis research applies a dynamic generalised method of moments on a sample of Italian listed companies over the period 2003-2015. Proxies for corporate governance mechanisms are the board size, the level of board independence, ownership structure, shareholder agreements and CEO–chairman leadership.FindingsWhile directors elected by minority shareholders are not able to impact performance, independent directors do have a non-linear effect on performance. Board size has a positive effect on firm performance for lower levels of board size. Ownership structure per se and shareholder agreements do not affect firm performance.Research limitations/implicationsThis paper contributes to the literature on agency theory by reconciling some of the conflicting results inherent in the board structure–performance relationship. Firm performance is not necessarily improved by having a high number of independent directors on the board. Ownership structure and composition do not affect firm performance; therefore, greater monitoring provided by concentrated ownership does not necessarily lead to stronger firm performance.Practical implicationsThis paper suggests that Italian corporate governance law should improve the rules and effectiveness of minority directors by analysing whether they are able to impede the main shareholders to expropriate private benefits on the expenses of the minority. The legislator should not impose any restrictive regulations with regard to CEO duality, as the influence of CEO duality on performance may vary with respect to the unique characteristics of each company.Originality/valueThe results enrich the understanding of the applicability of agency theory in listed companies, especially in Italy. Additionally, this paper provides a comprehensive synthesis of research evidence of agency theory studies.

The impact of VC backing on the corporate governance of Chinese IPOs

2017 ◽  
Vol 29 (3) ◽  
pp. 330-355 ◽  
Author(s):  
Qing (Sophie) Wang ◽  
Hamish D. Anderson ◽  
Jing Chi
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Independent Directors ◽  
Board Independence ◽  
Board Size ◽  
Content Type ◽  
Shareholder Protection ◽  
Political Ties ◽  
The Impact ◽  
Industry Experience

Purpose The purpose of this paper is to investigate how venture capital (VC) backing influences the board size and independence and how VC backing and board structure impact firm performance in China. Design/methodology/approach Using hand-collected data from 924 initial public offering (IPO) prospectuses covering the period from January 2004 to December 2012, the authors investigate the impact of VC backing on board size, board independence and firm market performance through regression analysis. A two-stage approach is also used to address the endogeneity issue. Findings The authors find robust evidence that VC-backed IPOs have more independent boards, after controlling for CEO and firm characteristics, and the potential endogeneity concerns. Furthermore, firms backed by VCs with management political ties (PTs) have more independent directors with industry relevant expertise than other firms. While no significant relationship is found between board independence and firm performance, the authors present some evidence that IPOs which have a larger percentage of independent directors with industry relevant expertise exhibit higher long-term stock returns, and VCs with management PTs also improve IPO long-run stock performance. Research limitations/implications Although VC is new in China and the Chinese capital market has relative poor corporate governance and weak minority shareholder protection, the authors find support in this paper that VC backing is valuable to IPO firms in China not only through providing funding but also by providing political ties and industry experience. However, Chinese regulatory and institutional settings have strong impact on test results and they change rapidly, so the results may not apply to other period in Chinese markets. Originality/value This paper sheds lights on the influences of VC backing on corporate governance and firm performance in a transitional and emerging economy. It discovers the value of VC investors in a transitional economy as of providing political ties and industry experience. The new definition of independent directors suggested by Suchard (2009) is first used by our paper in the Chinese context.

Sign in / Sign up

Export Citation Format

Share Document