Corporate Governance, Accounting Outcomes, and Organizational Performance

2007 ◽  
Vol 82 (4) ◽  
pp. 963-1008 ◽  
Author(s):  
David F. Larcker ◽  
Scott A. Richardson ◽  
I˙rem Tuna
Keyword(s):  
Principal Component Analysis ◽  
Corporate Governance ◽  
Organizational Performance ◽  
Executive Compensation ◽  
Stock Returns ◽  
Operating Performance ◽  
Principal Component ◽  
Institutional Ownership ◽  
Stock Ownership ◽  
Excess Stock Returns

The empirical research examining the association between typical measures of corporate governance and various accounting and economic outcomes has not produced a consistent set of results. We believe that these mixed results are partially attributable to the difficulty in generating reliable and valid measures for the complex construct that is termed “corporate governance.” Using a sample of 2,106 firms and 39 structural measures of corporate governance (e.g., board characteristics, stock ownership, institutional ownership, activist stock ownership, existence of debtholders, mix of executive compensation, and anti-takeover variables), our exploratory principal component analysis suggests that there are 14 dimensions to corporate governance. We find that these indices have a mixed association with abnormal accruals, little relation to accounting restatements, but some ability to explain future operating performance and future excess stock returns.

The Design of Index about Corporate Governance Based on PCA Method

2014 ◽  
Vol 926-930 ◽  
pp. 4085-4088
Author(s):  
Chuan Jun Li
Keyword(s):  
Principal Component Analysis ◽  
Corporate Governance ◽  
Principal Components ◽  
Principal Component ◽  
Component Analysis ◽  
Contribution Rate ◽  
Variance Contribution ◽  
Pca Method

This article uses the PCA method (Principal component analysis) to evaluate the level of corporate governance. PCA is used to analyze the correlation among 10 original indicators, and extract some principal components so that most of the information of the original indicators is extracted. The formulation of the index of corporate governance can be got by calculating the weight based on the variance contribution rate of the principal component, which can comprehensively evaluate corporate governance.

Determinants of CEO Pay: A Comparison of ExecuComp and Non-ExecuComp Firms

2010 ◽  
Vol 85 (5) ◽  
pp. 1511-1543 ◽  
Author(s):  
Brian Cadman ◽  
Sandy Klasa ◽  
Steve Matsunaga
Keyword(s):  
Executive Compensation ◽  
Stock Returns ◽  
Institutional Ownership ◽  
Stock Option ◽  
Ownership Concentration ◽  
Positive Relation ◽  
Stock Liquidity ◽  
Compensation Contracts ◽  
Cash Compensation ◽  
Ceo Pay

ABSTRACT: We document that firms included in the ExecuComp database tend to be larger, more complex, followed by more analysts, have greater stock liquidity levels, and have higher total, but less concentrated, institutional ownership than other firms. Based on these differences, we test and find support for three predictions. First, ExecuComp firms rely more heavily on earnings and stock returns in determining CEO cash compensation. Second, the weight on earnings is more sensitive to differences in the extent of growth opportunities for ExecuComp firms. Third, the positive relation between institutional ownership concentration and the value of stock option grants is stronger for ExecuComp firms. Overall, our results suggest that ExecuComp and non-ExecuComp firms operate in different contracting environments that lead to differences in the design of their executive compensation contracts. As a result, care should be taken in extending results based on ExecuComp samples to non-ExecuComp firms.

scholarly journals Board of directors, capital structure, investment decisions and firm-performance: An empirical study of Nordic firms

2020 ◽  
Vol 17 (4, Special Issue) ◽  
pp. 377-390
Author(s):  
Shab Hundal ◽  
Anne Eskola
Keyword(s):  
Principal Component Analysis ◽  
Corporate Governance ◽  
Firm Performance ◽  
Capital Structure ◽  
Corporate Finance ◽  
Board Of Directors ◽  
Boards Of Directors ◽  
Investment Decisions ◽  
Principal Component ◽  
The Impact

Firms’ financing, boards of directors’ characteristics, investments, and firm-performance (financial and non-financial) occupy a pivotal place in corporate finance and corporate governance literature. The current study explores if causalities between the abovementioned four distinct albeit inter-related phenomena follow any pattern. The data comprising of 1240 firm-years belonging to Finland, Norway, Sweden, and Denmark for the period of 2003 to 2018 have been analyzed by applying multivariate linear regression and principal component analysis. The findings show that the impact of boards of directors’ characteristics is stronger on capital structure, however, weaker on investments and financial performance. The major contribution of the article is creating a set orderly and sequential causalities between financing, boards of directors’ characteristics, investments, and firm-performance.

scholarly journals PENGARUH GOOD CORPORATE GOVERNANCE TERHADAP SAHAM RETURN PERUSAHAAN PERBANKAN YANG TERCATAT DI BEI PERIODE 2016–2019 [THE INFLUENCE OF GOOD CORPORATE GOVERNANCE ON STOCK RETURNS OF BANKING COMPANIES LISTED ON IDX FROM 2016 TO 2019]

2021 ◽  
Vol 1 (2) ◽  
pp. 125
Author(s):  
Natalia Natalia ◽  
Herlina Lusmeida
Keyword(s):  
Corporate Governance ◽  
Stock Returns ◽  
Audit Committee ◽  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Institutional Ownership ◽  
Multiple Linear Regression Analysis ◽  
Managerial Ownership ◽  
Purposive Sampling ◽  
Good Corporate Governance

<p>The purpose of this study is to analyze the effect of good corporate governance on stock returns. Return is the level of profit obtained by investors on investment activities. Good corporate governance used in this study is an independent board of commissioners, audit committee, managerial ownership, and institutional ownership. This research was conducted using the annual report documentation method of banking companies listed on the Indonesia Stock Exchange (IDX) from 2016 to 2019. The sampling method in this study was purposive sampling with the number of samples obtained is 106 samples. Data processing is done by quantitative method using multiple linear regression analysis. The results of the study show that the audit committee and institutional ownership have a negative and significant effect on stock returns, while independent commissioners and managerial ownership have no effect on stock returns.<em></em></p><p><strong>BAHASA INDONESIA ABSTRAK</strong></p><p>Tujuan dari penelitian ini adalah untuk menganalisis pengaruh <em>good corporate governance</em> terhadap pengembalian saham. <em>Return</em> adalah tingkat keuntungan yang diperoleh investor atas kegiatan investasi. <em>Good corporate governance </em>yang digunakan dalam penelitian ini adalah dewan komisaris independen, komite audit, kepemilikan manajerial dan kepemilikan institusional. Penelitian ini dilakukan dengan metode dokumentasi laporan tahunan perusahaan perbankan yang terdaftar di Bursa Efek Indonesia (BEI) 2016–2019. Metode pengambilan sampel dalam penelitian ini adalah <em>purposive sampling</em> dengan jumlah sampel yang diperoleh sebanyak 106 sampel. Pengolahan data dilakukan dengan metode kuantitatif dengan menggunakan analisis regresi linier berganda. Hasil penelitian menunjukkan variabel komite audit dan kepemilikan institusional berpengaruh negatif dan signifikan terhadap <em>return</em> saham, sedangkan dewan komisaris independen dan kepemilikan manajerial tidak berpengaruh terhadap <em>return</em> saham.</p><p><strong><br /></strong></p>

scholarly journals Beyond Dichotomous Approach, Experts Method Compatibles with an Information System View for Developing a Valid Corporate Governance Index

2021 ◽  
Vol 5 (1) ◽  
pp. 18
Author(s):  
Maysa Ali Abdallah
Keyword(s):  
Principal Component Analysis ◽  
Information System ◽  
Corporate Governance ◽  
Delphi Technique ◽  
Principal Component ◽  
Black Box ◽  
Governance Index ◽  
Prior Literature ◽  
Practical Implications

This paper provides a critical review of the corporate governance quantification process at academic and professional levels to scrutinize the main troubles in the black box of CG assessment models and spot some lights on how to develop a valid Corporate Governance Index (CGI) at the firm and industry levels regarding evenly the entire stakeholders' perceptions. Prior literature has been reviewed and a Corporate Governance index was constructed merging the power of multi-methodologies: Principal Component Analysis (PCA), Delphi Technique and Stability analysis. The findings show that the validity of the results necessitates enforcing End to End processes and taking into account the country's individualization to increase the reliability and comparability of the results. As well, the governance ratings are sensitive to the applied methodology, particularly, a well-known approach in quantifying CG, i.e., dichotomous approach, is underestimated the index findings then it will directly affect all aspects of governance endogeneity with firm’s performance/value. This research has important practical implications for governance guidelines setters, companies, stakeholders and other researchers. For the G setters, it underlines the necessity to make harmonization between industries' regulations and governance code, and revise the priority of the "comply or explain" approach in practice; which could serve as a roadmap for future improvements and researches. For companies, this paper highlights which effective G mechanisms and urges the role of the boardroom in monitoring and explanations for non-compliance. For CGI users, the research highlights that ratings' users should be more precautions and concerned about the base of the assessing models.

PENGARUH PERSEPSI TATA KELOLA DAN KARAKTERISTIK PERUSAHAAN TERHADAP RISK-TAKING BEHAVIOR INVESTOR DI PASAR SAHAM

2014 ◽  
Vol 10 (1) ◽  
pp. 31
Author(s):  
Wiwit Widyawati ◽  
Triyono Triyono
Keyword(s):  
Corporate Governance ◽  
Stock Returns ◽  
Risk Taking ◽  
Stock Exchange ◽  
Institutional Ownership ◽  
Firm Characteristics ◽  
Final Sample ◽  
Sample Data ◽  
Risk Taking Behavior ◽  
The Relationship

This study examines the relationship between the corporate governance perception index and firm characteristics are proxied by institutional ownership , profitability (ROA), growth opportunities (growth sales) and size on the risk-taking behavior judged by market stock returns. The population are company that list in Indonesian Stock Exchange (IDX) and Indonesian Institute for Corporate Governance (IICG) from 2006-2012. Sample was collected based on purposive sampling and resulted in 91 companies as a final sample. Data was collected from Indonesian Capital market Directory (ICMD) and The Indonesian Institute for Corporate Governance (IICG). Its was analyzed with multiple regression analysis. The results indicated that corporate governance perception index, institutional ownership, growth sales and size have significant effect on investor’s risk-taking behavior. But ROA does not impact on investor’s risk-taking behavior. Keywords : corporate governance perception index, firm’s characteristic, risk-taking behavior.

scholarly journals The Challenges of Bumiputera Furniture SME in Design Capabilities

2019 ◽  
Vol 3 (2) ◽  
pp. 21-25
Author(s):  
Nur Syazana Osman ◽  
Keyword(s):  
Social Sciences ◽  
Principal Component Analysis ◽  
Organizational Performance ◽  
Frequency Analysis ◽  
Important Implication ◽  
Principal Component ◽  
Furniture Industry ◽  
Business Sustainability ◽  
Strategic Design ◽  
Future Direction

In the furniture industry in Malaysia, the factors that influence the export value of Bumiputera furniture SME manufacturers have already been discussed, and with the lack of clusters that could continue the survival of Bumiputera manufacturers in this industry is getting worse. Although the furniture sector has the highest export value, the participation of Bumiputera furniture SME is very low compared to others. This is disrupted as the current Bumiputera furniture SME is incapable, due to the increasing competition or weakness in different aspects of entrepreneurship and other factors, to continue the business sustainability. This article aims to discuss the design capabilities that affect the performance of Bumiputera furniture SME manufacturers and how to overcome through strategic design approaches. In this study, a set of questionnaire was distributed to 30 companies and analyzed using the IBM Social Sciences Statistical Package (SPSS) to test the reliability. The further analysis was the use of frequency analysis and principal component analysis (PCA). The results have important implication for the future direction of research to improve organizational performance of Bumiputera furniture SME manufacturers

scholarly journals Effect of Good Corporate Governance (GCG) Mechanism on Earning Management Practices and the Impact on Stock Returns (Case Study on LIQUID (lQ 45) Companies Listed in Indonesia Stock Exchange Period 2013-2017)

2015 ◽  
Vol 5 (3) ◽  
pp. 11
Author(s):  
M. Noor Salim ◽  
M. Rusman HN
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Stock Returns ◽  
Audit Committee ◽  
Management Practices ◽  
Stock Exchange ◽  
Institutional Ownership ◽  
Earning Management ◽  
Managerial Ownership ◽  
Good Corporate Governance

This study aims to analyze the effect of the mechanism of good corporate governance (GCG) on earnings management practices and their impact on stock returns. The population used in this study is the companies included in the go public LQ 45 group listed on the Indonesia Stock Exchange in 2017. The analytical tool used in this study is Eviews software version 8.0. The results of the analysis in this study indicate that (1) Institutional Ownership has a negative and significant effect on Earning Management Practices, (2) Managerial Ownership has a negative and significant effect on Earning Management Practices, (3) Independent Board of Commissioners has a negative and significant effect on Earnings Management, (4) The Audit Committee has a negative and significant effect on Earning Management Practices, (5) Institutional Ownership, Managerial Ownership, Independent Board of Commissioners and Simultaneous Audit Committee (Together) have a significant effect on earnings management, (6) Earning Management Practices have a negative and significant effect on stock returns(7) Institutional Ownership has a positive and significant effect on stock returns, (8) Managerial ownership has a positive and significant effect on stock returns, (9) The Independent Board of Commissioners has a positive and significant effect on stock returns, (10) The Audit Committee has a positive and significant to stock returns, and (11) Earning Management is able to mediate the influence of Institutional Ownership, Managerial Ownership, Independent Board of Commissioners, and the Audit Committee simultaneously (jointly) on Stock Returns. It is recommended that the LQ45 company increase the portion of Institutional ownership as part of a supervision for management in managing the company so as to increase stock returns on an ongoing basis.

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