scholarly journals Effects of Corporate Governance Guidelines on Investors: An Experimental Examination of Bangladeshi Investors’ Decisions

2021 ◽  
Author(s):  
◽  
ATM Tariquzzaman
Keyword(s):  
Decision Making ◽  
Corporate Governance ◽  
Theoretical Model ◽  
Insider Trading ◽  
Emerging Market ◽  
Governance Structure ◽  
Developed Countries ◽  
Financial Condition ◽  
The Impact ◽  
Investor Decisions

<p>The main purpose of the study is to examine whether investors assign importance to corporate governance in making investment decisions. The study involves a 2x2x2 between-participant experiment on real investors that examines the effects of corporate governance structure, financial condition and insider trading on individual investor decisions. The findings of this study extend the literature on corporate board practices and investor perceptions by providing evidence from this emerging economy that strong corporate governance has a positive impact on investor decisions. The study also confirms the findings of prior literature that financial condition of a company positively influences investor decisions. Hence, the results provide insights into the effects of strengthening corporate governance guidelines and of variation in financial condition on investor decisions. The study provides evidence that the common occurrence of illegal insider trading in the emerging market of Bangladesh does not appear to impact on investor decision making, unlike in developed countries.  The results of this study also contribute to understanding of how the quality of corporate governance impacts on decision making. It appears that governance directly impacts the perceived reliability of financial reports and trust in the board and management and that these factors fully mediate the impact on investor decision making.  The theoretical model and instrument developed for this study will be useful for further studies to explore the impact of other corporate governance factors on investor decisions. Furthermore, the theoretical model and instrument will also be useful for further studies in other developed and developing countries, particularly where insider trading is regarded by investors as being a concern and to investigate the impact of other corporate governance factors on investors and financial analysts.</p>

scholarly journals Effects of Corporate Governance Guidelines on Investors: An Experimental Examination of Bangladeshi Investors’ Decisions

2021 ◽  
Author(s):  
◽  
ATM Tariquzzaman
Keyword(s):  
Decision Making ◽  
Corporate Governance ◽  
Theoretical Model ◽  
Insider Trading ◽  
Emerging Market ◽  
Governance Structure ◽  
Developed Countries ◽  
Financial Condition ◽  
The Impact ◽  
Investor Decisions

<p>The main purpose of the study is to examine whether investors assign importance to corporate governance in making investment decisions. The study involves a 2x2x2 between-participant experiment on real investors that examines the effects of corporate governance structure, financial condition and insider trading on individual investor decisions. The findings of this study extend the literature on corporate board practices and investor perceptions by providing evidence from this emerging economy that strong corporate governance has a positive impact on investor decisions. The study also confirms the findings of prior literature that financial condition of a company positively influences investor decisions. Hence, the results provide insights into the effects of strengthening corporate governance guidelines and of variation in financial condition on investor decisions. The study provides evidence that the common occurrence of illegal insider trading in the emerging market of Bangladesh does not appear to impact on investor decision making, unlike in developed countries.  The results of this study also contribute to understanding of how the quality of corporate governance impacts on decision making. It appears that governance directly impacts the perceived reliability of financial reports and trust in the board and management and that these factors fully mediate the impact on investor decision making.  The theoretical model and instrument developed for this study will be useful for further studies to explore the impact of other corporate governance factors on investor decisions. Furthermore, the theoretical model and instrument will also be useful for further studies in other developed and developing countries, particularly where insider trading is regarded by investors as being a concern and to investigate the impact of other corporate governance factors on investors and financial analysts.</p>

scholarly journals Does ESG Performance Enhance Firm Value? Evidence from Korea

2018 ◽  
Vol 10 (10) ◽  
pp. 3635 ◽  
Author(s):  
Bohyun Yoon ◽  
Jeong Lee ◽  
Ryan Byun
Keyword(s):  
Corporate Governance ◽  
Firm Value ◽  
Emerging Market ◽  
Market Value ◽  
Governance Structure ◽  
Developed Countries ◽  
Share Prices ◽  
Performance Enhance ◽  
Environmentally Sensitive ◽  
Governance Practice

We analyze whether a firm’s corporate social responsibility (CSR) plays a significant role in promoting its market value in an emerging market, namely Korea. We employ environmental, social, and corporate governance (ESG) scores to evaluate CSR performances and examine their effect on firm valuation. We find that CSR practices positively and significantly affect a firm’s market, in line with previous studies on developed countries. However, its impact on share prices can differ according to firm characteristics. For firms in environmentally sensitive industries, the value-creating effect of CSR is lesser than for firms that do not belong to sensitive industries. Specifically, corporate governance practice negatively influences the firm value of environmentally sensitive firms. Further, governance practice significantly promotes market value only for chaebols, while investors do not significantly value governance practice carried out by other firms. This finding suggests the value-enhancing effects of governance structure reformation in the former. This work mainly contributes to the literature by verifying a positive CSR-valuation relationship in emerging markets, which provides substantial policy and welfare implications in markets where governments play a major role in promoting CSR. A stronger valuation effect of CSR in chaebols may present economic background for the intervention of the Korean government in the reformation of chaebol.

scholarly journals Corporate Governance: Theory and Practice Impact of Corporate Governance on Firm Performance

2019 ◽  
Vol 7 (1) ◽  
pp. 66-75
Author(s):  
Rizwan Khalid ◽  
◽  
Tayyab Ali ◽  
Muhammad Usman Javed
Keyword(s):  
Developing Countries ◽  
Corporate Governance ◽  
Firm Performance ◽  
Empirical Studies ◽  
Governance Structure ◽  
Developed Countries ◽  
Theory And Practice ◽  
Corporate Governance Structure ◽  
Equal Importance ◽  
The Impact

Corporate governance is one of most widely researched topics in the different fields of management sciences. Additionally, governance plays equal role in firm performance in all countries especially developing countries become more important like Pakistan which contain equal importance to be studied with in subject to developed countries as to be well known in governance values, moreover there is increased interest to observe impact of corporate governance on different dimensions of firm performance. The objective of this paper is to underlay the corporate governance theories and practices and we have studied and try to analysis the impact of corporate governance structure on firm performance. This is a descriptive type of study in which we analysis different studies as coded all studies as they may have different implications in developed countries but here they may have different results as in developing countries and Pakistan is different among other Asian countries because of number of reasons as discussed in introduction with respect to its governance structure. We also have find interesting results as from other empirical studies recently a part of Pakistan perspective research and having number of important implications with respect of changes need to be made in Pakistan’s governance structure. Findings shows there is impact of corporate governance on firm performance and market performance of firm also been effected with governance style

scholarly journals The Integration and Reliance on Technology to Enhance the Independence and Accountability of Company Directors in South Africa

2021 ◽  
Vol 24 ◽  
pp. 1-32
Author(s):  
Friedrich Hamadziripi ◽  
Howard Chitimira
Keyword(s):  
South Africa ◽  
Decision Making ◽  
Corporate Governance ◽  
Developed Countries ◽  
Short Term ◽  
Governance Systems ◽  
Company Directors ◽  
Future Potential ◽  
The Impact ◽  
Do So

The most indispensable means of change in contemporary business society is technology because it offers convenience to both businesses and their clients. Almost every business has been influenced by technology. Traditional corporate governance systems have been affected as technology has ceased to be a mere business enabler but is now a source of a company's future potential opportunities. The infusion of corporate governance and technology has been quite slow in South Africa. This may either be attributed to the fact that it is costly to do so, at least in the short term, or that company directors in South Africa do not yet trust technological measures with corporate decision-making input. Consequently, the impact of decision support technology on corporate entities and their governance has received less academic interest in South Africa than in developed countries. This article seeks to discuss the integration and reliance on technology to enhance corporate governance principles in developing countries like South Africa. The article also discusses the practical challenges and the benefits to be anticipated by directors in South Africa when they integrate technology in decision making to enhance their independence and accountability.

scholarly journals Corporate Governance Structure And Firm Performance: Empirical Evidence From Brusa Malaysia, Kuala Lumpur

2011 ◽  
Vol 4 (9) ◽  
Author(s):  
Huson Joher ◽  
Mohd Ali
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Corporate Performance ◽  
Governance Structure ◽  
Developed Countries ◽  
Net Income ◽  
Outside Directors ◽  
Cross Sectional ◽  
Corporate Governance Structure ◽  
The Impact

The issue of corporate governance has been emerging as important phenomena that has been searched extensively both in developed countries due to its strategic impact on the monitoring of management activities and firms performance. Yet little attempt has been made in developing countries like Malaysia to ascertain what constitute corporate governance and its impact on firm's performance. Therefore, this study aims at examining the structure of the corporate governance and its impact on firms performance. This study is based on 100 firms, which are the component of the Composite Index (CI) serve as market barometer. This study employs cross-sectional annual multiple regression model to examine, what constitutes the corporate governance structure and its impact on performance of the firm. The analysis was based on annual regression over 5 years period from 1997 through 2001. Three different blend of surrogate for corporate governance were developed for good corporate governance structure. These are the independent non-executive (outside) directors, audit committee and remuneration committee. To isolate the size effect from the impact of corporate governance structure on firms performance, firms size was also included are variable in the model. The ratio of net income before tax to total asset is used as a surrogate for firms performance. Evidence from the study indicates that there is partial relation between corporate governance structure and corporate performance. The presence of both audit and remuneration committee serves as an important monitoring device to control management activities that lead to increase firm's performance. While on average, the presence of independent non-executive directors does not provide any significant explanation for the firm's performance. However, the firm size appears to have significant impact on corporate performance.

Is internal and external mechanism of governance enriching the performance of the banking sector of Pakistan?

2017 ◽  
Vol 17 (4) ◽  
pp. 629-642 ◽  
Author(s):  
Sundas Sohail ◽  
Farhat Rasul ◽  
Ummara Fatima
Keyword(s):  
Corporate Governance ◽  
Banking Sector ◽  
Good Governance ◽  
Random Effect ◽  
Random Effect Model ◽  
General Meeting ◽  
Governance Structure ◽  
Board Structure ◽  
Content Type ◽  
The Impact

Purpose The purpose of this study is to explore how governance mechanisms (internal and external) enhance the performance of the return on asset (ROA), return on equity (ROE), earning per share (EPS) and dividend payout ratios (DP) of the banks of Pakistan. The study incorporates not only the internal factors of governance (board size, out-ratio, annual general meeting, managerial ownership, institutional ownership, block holder stock ownership and financial transparency) but also the external factors (legal infrastructure and protection of minority shareholders, and the market for corporate control). Design/methodology/approach The sample size of the study consists of 30 banks (public, private and specialized) listed at the Pakistan Stock Exchange (PSE) for the period 2008-2014. The panel data techniques (fixed or random effect model) have been used for the empirical analysis after verification by Hausman (1978) test. Findings The results revealed that not only do the internal mechanisms of governance enhance the performance of the banking sector of Pakistan but external governance also plays a substantial role in enriching the performance. The findings conclude that for a good governance structure, both internal and external mechanisms are equally important, to accelerate the performance of the banking sector. Research limitations/implications Internal and external mechanisms of corporate governance can also be checked by adding some more variables (ownership i.e. foreign, female and family as internal and auditor as external), but they are not added in this work due to data unavailability. Practical implications The study contributes to the literature and could be useful for the policy makers who need to force banks to mandate codes of governance through which they can create an efficient board structure and augment the performance. The investments from different forms of ownership can be accelerated if they follow the codes properly. Social implications The study facilitates the bankers in incorporating sound codes of corporate governance to enhance the performance of the banks. Originality/value This work is unique as no one has explored the impact of external mechanism of governance on the performance of the banking sector of Pakistan.

Does investment in innovation impact firm performance in emerging economies? An empirical investigation of the Indian food and agricultural manufacturing industry

2021 ◽  
Vol 13 (2) ◽  
pp. 233-248
Author(s):  
Manogna R.L. ◽  
Aswini Kumar Mishra
Keyword(s):  
Firm Performance ◽  
Manufacturing Industry ◽  
Emerging Market ◽  
Developed Countries ◽  
Emerging Economy ◽  
Content Type ◽  
Agricultural Industry ◽  
Indian Food ◽  
The Impact ◽  
The Relationship

Purpose The study aims to analyze the impact of Research & Development (R&D) intensity on the firm’s performance, measured by growth of sales in the emerging market like India. Innovation strategy and its outcomes for firms may be different in developing countries as compared to developed countries. Thus, a study that focuses on the emerging economy like India, with a majority of the population dependent on agriculture, is of prime importance to the firm performance in the food and agricultural manufacturing industry. For this study, the broader focus will be on one widely recognised factor which may influence the growth rate of firms, i.e. investment in innovations which is in terms of R&D expenditure. Design/methodology/approach The paper investigates the relationship between the R&D efforts and growth of firms in the Indian food and agricultural manufacturing industry during 2001–2019. To empirically test the relationship between firm’s growth (FG) and R&D investments, system generalised method of moments technique has been used, hence enabling to avoid problems related to endogeneity and simultaneity. Findings The findings reveal that investments in innovations have a positive effect on the growth of firms in the Indian food and agricultural manufacturing industry. Investment in R&D also enables the firms to reap benefits from externalities present in the industry. Further analysis reveals that younger firms grow faster when they invest in R&D. More specifically, this paper finds evidence in the case of the food and agricultural industry that import of raw materials negatively affects the FG and export intensity positively affects the growth in the case of R&D firms. Research limitations/implications This study suggests that the government should encourage the industries to invest optimally in R&D projects by providing favourable fiscal treatments and R&D subsidies which are observed to have positive effects in various developed countries. Originality/value To the best of the author’s knowledge, the current paper is the first to analyse the impact of innovation in food and agricultural industry on firm’s performance in an emerging economy context with the latest data. This paper agrees that a government initiative to increase private R&D expenditure would have favourable effects on FG as growing investments in R&D lead to further growth of the firms.

Insider Trading Laws and Corporate Governance Impact on Investment Decision

2021 ◽  
Vol 3 (2) ◽  
pp. 126-137
Author(s):  
Sadaf Khan ◽  
Ubaid Ur Rehman
Keyword(s):  
Corporate Governance ◽  
Insider Trading ◽  
Positive Impact ◽  
Investment Decision ◽  
Investment Decisions ◽  
Future Research ◽  
Good Corporate Governance ◽  
Governance Practices ◽  
The Government ◽  
The Impact

This research aims to analyze the impact of insider trading laws and corporate governance on investment decisions. For this purpose, the data of 400 potential and actual investors employed who provided their feedback on a structured questionnaire. When the data is collected, it was cleaned. The normality of data and reliability of items were also checked and within limits. Simple Regression was applied to test hypotheses. It was concluded that the perception of insider trading laws and corporate governance have a positive impact on investment decisions. The study has wide implications and the government and corporation both can be beneficial from its insight and findings, and exercise good corporate governance practices and follow stringent insider trading laws. The study also paves the way for future research.

scholarly journals Do Multinational Companies Practice Good Corporate Governance? Empirical Evidence from Bangladesh

2017 ◽  
Vol 7 (2) ◽  
pp. 96
Author(s):  
G. M. Wali Ullah ◽  
Sarwar Uddin Ahmed ◽  
Samiul Parvez Ahmed ◽  
Kazi Md. Jamshed
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Stock Returns ◽  
Governance Structure ◽  
Multinational Companies ◽  
Governance Mechanisms ◽  
Corporate Governance Structure ◽  
Corporate Governance Mechanisms ◽  
The Impact ◽  
The Way

Corporate Governance refers to the way an organization is directed, administrated or controlled. It includes the set of rules and regulations that affect the manager's decision and contribute to the way company is perceived by the current and potential stakeholders. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation such as; boards, managers, shareholders and other stakeholders and spells out the rules and procedures and also decision-making assistance on corporate affairs. Corporate governance practices in Bangladesh are gradually being introduced in most companies and organizations (Du, 2006). However, Bangladesh has fallen behind its neighboring countries and global economy in corporate governance (Gillibrand, 2004). Corporate governance structure is mainly considered ambiguous. Specific governance structures or practices will not necessarily fit all companies at all times. Firms with strong corporate governance mechanisms are generally associated with better financial performance, higher firm valuation and higher stock returns. Unfortunately, investors in Bangladesh have a little information about how these corporate values affect the performance of the Multinational Companies (MNCs). This study aims to provide a quantitative contribution to the literature by examining the impact of corporate governance mechanisms on financial performance from the perspective of MNCs. A panel data based Ordinary Least Squared (OLS) regression model was used to measure the quantitative significance of various corporate governance related variables on MNC performance, as identified through a detailed literature review.

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