Control Privatization, Corporate Governance, and Firm Performance: Evidence from China

2011 ◽  
Vol 10 (2) ◽  
pp. 23-56 ◽  
Author(s):  
Joanna L. Y Ho ◽  
Xiongsheng Yang ◽  
Xiang Li
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Executive Compensation ◽  
Performance Improvement ◽  
Transitional Economies ◽  
Listed Firms ◽  
Large Shareholder ◽  
Control Transfer ◽  
Privatized Firms ◽  
Jel Classifications

ABSTRACT Governments in transitional economies have long been concerned with whether privatization of state-owned enterprises can improve firm performance and, if so, through which mechanisms this can be achieved. Using 135 publicly listed firms that China privatized via control transfer from 1998 to 2005 as a sample, we investigate whether newly privatized firms enhance incentives of top management and employees and, consequently, whether post-privatization firm performance is improved. Our findings reveal several post-privatization effects: (1) a much lower level of large shareholder expropriation, (2) higher and more performance-sensitive executive compensation, and (3) lower levels of management perk consumption and employment, which increase more slowly when sales grow and decrease more quickly when sales shrink. These enhancements in incentives help explain post-privatization firm performance improvement. JEL Classifications: G34; M48.

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 Corporate governance and firm performance: Evidence from an emerging market

2019 ◽  
Vol 9 (1) ◽  
pp. 45-52 ◽  
Author(s):  
Ahmed S. Alanazi
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Emerging Markets ◽  
Regression Models ◽  
Emerging Market ◽  
Operating Performance ◽  
Listed Firms ◽  
Developed Markets ◽  
Two Samples ◽  
And Performance

The paper investigates the link between corporate governance scores and firm performance among the largest 90 listed companies on the Saudi Stock market. The sample of 90 listed firms is split into two samples: firms with high governance scores and firms with low governance scores. The research compares and contrasts the operating performance of the two samples. In addition, regression models are used to test the link between governance scores and performance. No link between the companies’ corporate governance scores and operating performance is found. It is difficult to capture all elements of the complex corporate governance topic in corporate governance scores. It seems that corporate governance in emerging markets lags far behind that of developed markets. This is the first paper to examine the link between corporate governance scores and operating performance in the Saudi market, a new emerging market that has not been examined. The paper adds to the debate in the literature whether there is a link between corporate governance scores and performance. The evidence in the literature is inconclusive.

scholarly journals Executive compensation and board of directors’ disclosure in Canadian publicly-listed corporations

2013 ◽  
Vol 10 (3) ◽  
pp. 188-199 ◽  
Author(s):  
Martin Spraggon ◽  
Virginia Bodolica ◽  
Tor Brodtkorb
Keyword(s):  
Corporate Governance ◽  
Executive Compensation ◽  
Boards Of Directors ◽  
Corporate Boards ◽  
Publicly Traded ◽  
Information Transparency ◽  
Publicly Traded Companies ◽  
Listed Firms ◽  
Reporting Practices ◽  
Governance Regime

This article contributes to the growing body of literature exploring the important role that information transparency plays in strengthening the national corporate governance regime. We review the 2007 amendments to the Canadian reporting legislation with the particular emphasis on sections pertaining to executive compensation and boards of directors. Taking into consideration the specificities of the „comply-or-explain‟ system in Canada, we seek to uncover the extent to which publicly-listed firms comply with these newly amended standards of corporate governance reporting. Based on a comparison of 403 proxy circulars issued in the post-amendment period, we identified important cross-firm variations in the type and format of disclosed information on executive compensation and corporate boards of directors. In order to address the problems that inter-organizational disclosure discrepancies generate for governance researchers and analysts, we provide several recommendations on how Canadian publicly-traded companies can improve their reporting practices

scholarly journals Blockholders and Firm Performance: A Malaysian Evidence

2019 ◽  
pp. 18-26
Author(s):  
Imani Mokhtar ◽  
Sharifah Raihan Syed Mohd Zain ◽  
Jarita Duasa ◽  
Azhar Mohamad
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Panel Data ◽  
Performance Measure ◽  
Ownership Concentration ◽  
Independent Directors ◽  
Board Governance ◽  
Listed Firms ◽  
Regulatory Bodies ◽  
Investment Portfolios

This study enhances the corporate governance literature by investigating the influence of blockholders on firm performance. Employing panel data estimations, this study works on a sample of 526 non-financial listed firms in Malaysia from 2006 to 2015. Overall, our findings reveal that firm performance is negatively associated with blockholders presence but positively related to blockholders total ownership concentration. Further examinations reveal that identity of blockholders matters in influencing performance of the firm. We also found that board governance mechanisms particularly independent directors and CEO duality play a significant monitoring role in relation to firm performance. More importantly, our findings are robust to a wide variety of performance measure which includes accounting, market and value based measures. Finally, findings of our study could facilitate the regulatory bodies and firm managers in promoting better and effective corporate governance in Malaysia. Investors may also benefit from our findings in understanding corporate governance of Malaysian firms and thus diversify their investment portfolios.

Relationship between Corporate Governance Index and Firm Performance: Indian Evidence

2018 ◽  
Vol 19 (3) ◽  
pp. 675-689 ◽  
Author(s):  
Akshita Arora ◽  
Shernaz Bodhanwala
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Performance Metrics ◽  
Market Competition ◽  
Board Structure ◽  
Data Set ◽  
Listed Firms ◽  
Market For Corporate Control ◽  
Governance Index ◽  
The Relationship

The Indian corporate governance norms have been evolving over a period of time but limited number of studies have been undertaken with reference to corporate governance index (CGI) in the Indian context. The study aims to examine the relationship between CGI and firm performance. We construct CGI using important parameters of governance such as board structure, ownership structure, market for corporate control and market competition. Our panel data set comprises of listed firms and the estimation analysis has been carried out using random effects method. The study reveals significant positive relationship between CGI and firm performance metrics. CGI is an important and causal factor in explaining firm performance. The investors would also have positive perception about business firms maintaining high governance standards, thus reducing possible funding costs.

scholarly journals The Effect of Director's Individual and Family Shareholdings on Firm Performance

2018 ◽  
Vol 9 (4) ◽  
pp. 51
Author(s):  
Tsung-Che Wu ◽  
Ming-hsiang Huang
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Agency Theory ◽  
Firm Value ◽  
Positive Association ◽  
Critical Issue ◽  
Family Welfare ◽  
Executive Directors ◽  
Incentive Effect ◽  
Listed Firms

The relation between firm performance and shareholding is a critical issue in corporate governance. In this paper, we examine if significant associations exist between firm performance and (1) directors’ shareholdings or (2) directors’ family shareholdings among Taiwanese listed firms. After addressing for possible endogeneity and controlling for firm specific variables, we find a positive association between executive director’s shareholding and firm performance. Consistent with incentive effect in agency theory, this result indicates that executive directors have incentive to maximize firms’ value. Also, we find that executive directors’ family shareholding is positively related to firm performance, which implies that executive directors may be motivated by their family members to improve firm value. The results also imply that the majority-minority agency problem can be mitigated when director’s family welfare is at stake. In addition, we divide research sample into subsets to accommodate the effect of mandatory independent director regulation in Taiwan since 2007.

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