Relationship between Code of Corporate Governance and Corporate Financial Performance (An Empirical Study of Food Companies Listed on KSE)

GIS Business ◽  
2017 ◽  
Vol 12 (4) ◽  
pp. 01-09
Author(s):  
Asma Rafique Chughtai ◽  
Afifa Naseer ◽  
Asma Hassan
Keyword(s):  
Corporate Governance ◽  
Stock Exchange ◽  
Securities And Exchange Commission ◽  
Executive Directors ◽  
Agency Conflicts ◽  
Cross Sectional ◽  
Return On Equity ◽  
Governance Practices ◽  
Code Of Corporate Governance ◽  
The Impact

The crucial role that implementation of Code of Corporate Governance plays on protecting the rights of minorities, shareholders, local as well as foreign investors cannot be denied. Companies all over the world are required to implement their respective Code of Corporate Governance for avoiding agency conflicts between companies management and stakeholders and for assuring transparency in accountability. This paper aims at exploring the impact of implementation of corporate governance practices (designed by Securities and Exchange Commission of Pakistan) have on the financial position of companies. For explanatory variables of the study, composition of the board as per the Code of Corporate Governance that comprises of presence of independent, executive and non-executive directors has been taken into consideration. Return on equity has been taken as an indicator of firms profitability i.e. the dependent variable. For this study, companies listed on food producing sector of Karachi Stock Exchange have been screened for excogitation of the relationship. It is an empirical research based on nine years data from 2007–2015. Using Hausman Test for selecting the data analysis technique between Fixed or Random, Fixed Cross Sectional Panel Analysis has been used for analysis of the data collected. Findings indicate that presence of independent, executive and non-executive directors as per the code requirements levies a significant impact on the profitability of companies indicated by return on equity. It is, thus concluded that companies should ensure compliance with code of governance practices to reduce not only the agency issues but also to increase their profitability.

scholarly journals Impact of Corporate Governance on Financial Performance: Karachi Stock Exchange, Pakistan

2016 ◽  
Vol 6 (2) ◽  
pp. 401 ◽  
Author(s):  
Aon Waqas Awan ◽  
Javed Ahmed Jamali
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Audit Committee ◽  
Stock Exchange ◽  
Profit Margin ◽  
Audit Committees ◽  
Board Size ◽  
Good Decision ◽  
Return On Equity ◽  
The Impact

The aim of the research is to understand the impact of corporate governance on financial performance of listed companies on Karachi Stock Exchange Pakistan. Data was collected from forty two companies from different sectors like, insurance, banking, investment banking, and sugar industries. Study includes variables like profit margin & return on equity as a dependent (profitability) and board size, audit committee, annual general meetings & chief executive office (corporate governance). Using Pooled OLS, the result of the study proved those board size and audit committees have positive relationship with Profit margin and Return on Equity, if any independent variable changes it also stimulus the positively changing impact on Return on Equity (ROE) and Audit Committee (AC). This research offers imminent guidelines to the policy and decision makers in any type of firms to take good decision to set their firms hierarchy system.

The Effect of Earnings Management on Dividend Policy in Pakistan

2017 ◽  
Vol 9 (1-3) ◽  
Author(s):  
Faiza Saleem ◽  
Mohd Norfian Alifiah
Keyword(s):  
Earnings Management ◽  
Dividend Policy ◽  
Oil And Gas ◽  
Stock Exchange ◽  
Annual Data ◽  
Cross Sectional ◽  
Return On Equity ◽  
Dividend Payments ◽  
Oil And Gas Companies ◽  
The Impact

The aim of this study was to find out the impact of earnings management on dividend policy of oil and gas companies listed at the Karachi stock exchange. The study uses annual data of oil and gas companies for the period from 2008 to 2015. The dependent and independent variables are dividend policy and earnings management and the three control variables are leverage, return on equity and firm size. Modified cross sectional Jones model (1995) was used for calculating discretionary accruals which has been used as proxy for earnings management whereas measurement of dividend policy has been proxy by dividend payout. The findings from regression analysis indicate that earnings management has insignificant relationship with dividend policy of selected firms in Pakistan. Financial crisis in the world and economic decline period are the main reasons of this relationship. In the decline period the firms try to increase manipulation in earnings as a result the company starts reducing dividend payments. It is concluded that there are some other factors that may influence the pattern of dividend payment in the firms.

scholarly journals CORPORATE GOVERNANCE AND BUSINESS PERFORMANCE: EVIDENCE FOR THE ROMANIAN ECONOMY

2015 ◽  
Vol 17 (3) ◽  
pp. 458-474 ◽  
Author(s):  
Monica-Violeta ACHIM ◽  
Sorin-Nicolae BORLEA ◽  
Codruţa MARE
Keyword(s):  
Corporate Governance ◽  
Business Performance ◽  
Stock Exchange ◽  
Policy Makers ◽  
Governance Practices ◽  
Corporate Governance Practice ◽  
Corporate Governance Quality ◽  
The Impact ◽  
A Company

Our finding contributes towards the understanding of movements regarding the adoption of corporate governance practice in emerging countries such as Romania and its impact on business performances of a company. We have developed two econometric models to assess the business performances of the companies listed on Bucharest Stock Exchange, in order to point out the impact of corporate governance on business performances. Our results are inconsistent for the period 2001–2011, but if we consider only 2011, the results document a positive correlation between corporate governance quality and market value of companies, such it is reflected by Tobin’s Q. Therefore, our results contribute to the studies relating corporate governance and business performances, as it confirms a positive relationship between the two variables which appears once the Romanian emerging economy has began to adopt the best corporate governance practices. Firstly, our research has important implications for managers in order to know that the adoption of the best corporate governance practices could contribute to the financial success of the firm. Secondly, the results are useful for any investor who needs to consider the quality of corporate governance as a good predictor for the best rate of return of theirs investments. Moreover, our findings have also implications on policy-makers and regulatory authorities in European developing countries and offer them a barometer of adopting the best corporate governance practices in European space.

scholarly journals The financial impacts of board mechanisms on performance: The case of listed Moroccan banks

2021 ◽  
Vol 3 (2) ◽  
pp. 93-113
Author(s):  
Issam El Idrissi ◽  
◽  
Youssef Alami ◽  
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Fixed Effects ◽  
Audit Committee ◽  
Negative Impact ◽  
Governance Mechanisms ◽  
Return On Equity ◽  
Corporate Governance Mechanisms ◽  
Governance Practices ◽  
The Impact

Abstract Purpose: The present study examines the impact of corporate governance mechanisms on listed Moroccan banks' financial performance. Research methodology: This study investigates the relationship between listed banks' governance mechanisms and financial performance in the CSE for six years between 2014-2019. This study employs three performance measures, return on assets, return on equity, and Tobin's Q, to determine bank performance. This research uses the GMM EGLS approach to analyze data. In the first phase of this empirical research, we did use OLS, Fixed Effects, and Radom Effects regressions to show their inefficiency. Results: Our results portray that most board mechanisms have a negative impact on financial performance. In comparison, the audit committee and nomination & remuneration committee have a positive effect on financial performance. Limitations: Many qualitative and quantitative factors could influence financial performance and not only the used variables in this paper. Contribution: This research shows that the dynamic connection between corporate governance and financial performance is robust in the Moroccan banking context. Also, our study has important implications for establishing good corporate governance practices in emerging economies.

scholarly journals PENGARUH PENERAPAN GOOD CORPORATE GOVERNANCE TERHADAP PROFITABILITAS PADA PERUSAHAAN PERBANKAN YANG TERDAFTAR DI BEI PERIODE 2009-2013

2014 ◽  
Vol 3 (1) ◽  
pp. 77
Author(s):  
Riana Christel Tumewu ◽  
Stanly Alexander
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Banking Sector ◽  
Stock Exchange ◽  
Return On Equity ◽  
Purposive Sampling ◽  
Good Corporate Governance ◽  
Governance Practices ◽  
Independent Variable ◽  
Simple Regression

ABSTRAK Sejak krisis ekonomi tahun 1997 pelaksanaan tata kelola perusahaan yang baik, atau lebih dikenal dengan Good Corporate Governance (GCG) menjadi isu yang mengemuka di Indonesia. Akibat buruknya tata kelola perusahaan di Indonesia pada masa itu, menyebabkan perekonomian jatuh. Sehingga setiap orang setuju untuk mengcover kesulitan indonesia dimulai dengan tata kelola perusahaan. Objek dari penelitian ini yaitu dampak dari penerapan good corporate governance terhadap ROE. Tujuan dari penelitian ini adalah untuk mengetahui tentang pengaruh penerapn good corporate governance pada kinerja keuangan perusahaan. Sampel dalam penelitian ini adalah perusahaan sektor perbankan yang terdaftar di BEI (Bursa Efek Indonesia) dalam periode 2009-2013. Jumlah sampel yang digunakan sebanyak 16 perusahaan yang diambil melalui purposive sampling. Metode analisis dari penelitian ini menggunakan regresi berganda dan regresi sederhana program SPSS 20. Kata Kunci: Good Corporate Governance, Profitabilitas  ABSTRACT Since the economic crisis 1997 the implementation of good corporate governance being an issue in indonesia. The bad thing of governance’s company in those days causing indonesian economy being slump. So, every one agree to recovered from adversity, indonesia have to start with governance good corporate. The main objective of this research was to determine the effect of implementation of good corporate governance (GCG) to return on equity. The purpose of this research is to know about the influence of empirical evidence of Good Corporate Governance practices to the company's financial performance. The independent variable in this research is the implementation of GCG and the dependent variable is the financial performance using a ratio of profitability. The sample in this study were banking sector companies listed in Indonesian Stock Exchange (IDX) in the periode 2009-2013. The number of sample used were 16 companies listed were taken by purposive sampling. The method of analysis of this research used simple regression with SPSS 20 Program. Keyword: Good Corporate Governance, Profitability

scholarly journals IMPACT OF SELECTED DETERMINANTS OF CORPORATE GOVERNANCE ON FINANCIAL PERFORMANCE OF COMPANIES

2020 ◽  
Vol 14 (2) ◽  
pp. 12-23
Author(s):  
Janka Grofcikova
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Performance Indicators ◽  
Stock Exchange ◽  
Insurance Companies ◽  
Return On Assets ◽  
Return On Equity ◽  
Return On Sales ◽  
The Impact

The role of corporate governance (CG) is to ensure functioning of companies in accordance with their formulated objectives to ensure growth of corporate assets and satisfaction of the owners. In addition to management of the company, there are other stakeholders whose interests need to be considered in meeting the owners' objectives. These include creditors, employees, clients, and the wider context of the business. The aim of this paper is to explore and compare the impact of selected financial and non-financial determinants representing the interests of these groups on corporate financial performance. The influence of determinants of CG on financial performance, measured by return on assets (ROA), return on equity (ROE) and return on sales (ROS) indicators, is investigated by means of correlation analysis. The sample of enterprises used consists of non-financial joint-stock companies listed on the Bratislava Stock Exchange, insurance companies, and banks based in Slovakia. The findings show that each of the investigated determinants of CG affects financial performance of companies. ROA, ROE and ROS of share issuers are significantly influenced by the total equity (EQ), average remuneration (AR) and number of the Board of Supervisor members (BSM). With banks, performance indicators are only influenced by total personal costs (PC). ROA, ROE and ROS of all companies are influenced by the dividend ratio (DR), EQ, AR and BSM.

scholarly journals The impact of Board Size on the Performance of Shariah-Compliant Companies in Malaysia

2019 ◽  
Vol 8 (4) ◽  
pp. 6709-6711
Keyword(s):  
Corporate Governance ◽  
Consumer Products ◽  
Strong Positive Correlation ◽  
Board Size ◽  
Daily Lives ◽  
Governance Practices ◽  
And Performance ◽  
Code Of Corporate Governance ◽  
The Impact ◽  
The Relationship

The objective of this study is to examine the relationship between the board size and firm performance of Shariah-Compliant companies in Malaysia. The characteristics of the board of Shariah-compliant companies in Consumer Products counter of Bursa Malaysia are being examined against the firm’s performance using data from 77 companies from year 2014 to 2016. Based on the result of regression, board size has a strong positive correlation with the performance of the firms. This study suggests that Shariah-Compliant Companies need to strengthen the Shariah governance to produce products that Muslim consumer use in their daily lives. The appointment of director with Shariah background must be highly encouraged if not mandatory to companies involved in producing food, drinks, pharmaceutical and cosmetics in order for the companies to tap their expertise in enhancing halal governance. The findings of the study would be very useful to the regulators to improve the Malaysian Code of Corporate Governance. Furthermore, the findings of the study also help to fill the gap on scarce of literatures that study the relationship between the corporate governance practices and performance.

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.

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 Corporate Governance Mechanisms and Firm’s Performance: Evidence from Jordan

2020 ◽  
Vol 9 (2) ◽  
pp. 11
Author(s):  
Mohammad Abdullah Fayad Altawalbeh
Keyword(s):  
Corporate Governance ◽  
Stock Exchange ◽  
Board Members ◽  
Board Structure ◽  
Government Ownership ◽  
Governance Mechanisms ◽  
Financial Reports ◽  
Corporate Governance Mechanisms ◽  
Governance Practices ◽  
The Impact

The purpose of this study is to investigate the effect of corporate governance mechanisms on the firm’s performance. Corporate governance practices were divided into two groups; board structure and ownership structure. The sample of the study consists of 60 companies from industrial and service sectors that are listed on Amman stock exchange (ASE). Data was gathered manually through the annual financial reports for the period from 2012-2017 results in 366 year-observation. Stata statistical software was used to test the study hypotheses. The results revealed that board meetings frequency and government ownership positively and significantly impact the firm’s performance, these results suggest that board meetings frequency is considered an indicator of the board effectiveness that enhances decision making quality and thus the firm performance, the results suggest that government ownership is providing a helping hand that improves the firm’s performance. The findings also showed that board independence negatively and significantly impact the firm’s performance, this result suggests that independent board members do not guarantee to improve the performance of a firm, and it stays the firm’s responsibility to choose independent board members who are able to exercise effective oversight function for the purpose of enhancing the performance of a firm. This study contributes to the literature by providing empirical evidence from developing countries about the impact of corporate governance measures and practices on firms’ performance.

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