scholarly journals Three Essays on Corporate Governance in China

2021 ◽  
Author(s):  
◽  
Zonghao Chen
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
State Ownership ◽  
Independent Directors ◽  
Women Directors ◽  
Director Compensation ◽  
Public Firms ◽  
Listed Firms ◽  
Director Characteristics ◽  
Chinese Public

<p>This thesis consists of three empirical papers on corporate governance in Chinese listed firms. The first essay examines the influence of director characteristics and ownership structure on director compensation. Over the period 2005 through 2015, we find that director compensation in Chinese listed firms is influenced by both director characteristics and ownership structure. We measure director compensation by both the propensity to be paid and the level of compensation. For independent directors, we find that director busyness, tenure, and ownership concentration positively influence and state-ownership negatively influences director compensation. For non-independent directors, we find that tenure positively influences and that both state-ownership and related directors negatively influence director compensation. Lastly, our evidence suggests that women directors in China are not underpaid.  The second essay examines the influence of rookie independent directors on board functions and firm performance in Chinese public companies from 2008 to 2014. We find that rookie independent directors attend more board meetings than seasoned independent directors. Independent directors with higher board meeting attendance are more likely to remain in the firm in the following year (lower turnover rate). This influence of board attendance on re-appointment is stronger for rookie independent directors. Further, we find that boards with more rookie independent directors tunnel less to controlling shareholders, suggesting that rookie independent directors are efficient monitors. Lastly, we find that firms with more rookie independent directors are associated with higher accounting returns.  In the third essay, we investigate the influence of board networks on directors’ career outcomes in Chinese public firms from 2005 to 2014. We find that board connections increase compensation for independent directors. We find that board connections are positively associated with director turnover for non-related directors, but negatively associated with director turnover for related directors. Further, we find that board connections lead to additional future directorships. Overall, we find that board connections both directly lead to higher compensation and indirectly through labor mobility and additional board seats.</p>

scholarly journals Three Essays on Corporate Governance in China

2021 ◽  
Author(s):  
◽  
Zonghao Chen
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
State Ownership ◽  
Independent Directors ◽  
Women Directors ◽  
Director Compensation ◽  
Public Firms ◽  
Listed Firms ◽  
Director Characteristics ◽  
Chinese Public

<p>This thesis consists of three empirical papers on corporate governance in Chinese listed firms. The first essay examines the influence of director characteristics and ownership structure on director compensation. Over the period 2005 through 2015, we find that director compensation in Chinese listed firms is influenced by both director characteristics and ownership structure. We measure director compensation by both the propensity to be paid and the level of compensation. For independent directors, we find that director busyness, tenure, and ownership concentration positively influence and state-ownership negatively influences director compensation. For non-independent directors, we find that tenure positively influences and that both state-ownership and related directors negatively influence director compensation. Lastly, our evidence suggests that women directors in China are not underpaid.  The second essay examines the influence of rookie independent directors on board functions and firm performance in Chinese public companies from 2008 to 2014. We find that rookie independent directors attend more board meetings than seasoned independent directors. Independent directors with higher board meeting attendance are more likely to remain in the firm in the following year (lower turnover rate). This influence of board attendance on re-appointment is stronger for rookie independent directors. Further, we find that boards with more rookie independent directors tunnel less to controlling shareholders, suggesting that rookie independent directors are efficient monitors. Lastly, we find that firms with more rookie independent directors are associated with higher accounting returns.  In the third essay, we investigate the influence of board networks on directors’ career outcomes in Chinese public firms from 2005 to 2014. We find that board connections increase compensation for independent directors. We find that board connections are positively associated with director turnover for non-related directors, but negatively associated with director turnover for related directors. Further, we find that board connections lead to additional future directorships. Overall, we find that board connections both directly lead to higher compensation and indirectly through labor mobility and additional board seats.</p>

scholarly journals Corporate Governance Quality, Ownership Structure, Agency Costs and Firm Performance. Evidence from an Emerging Economy

2020 ◽  
Vol 13 (7) ◽  
pp. 154
Author(s):  
Haroon ur Rashid Khan ◽  
Waqas Bin Khidmat ◽  
Osama Al Hares ◽  
Naeem Muhammad ◽  
Kashif Saleem
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Ownership Structure ◽  
Agency Cost ◽  
State Ownership ◽  
Ownership Concentration ◽  
Listed Firms ◽  
Governance Quality ◽  
Corporate Governance Quality ◽  
The Relationship

The purpose of this paper is to investigate the effect of corporate governance quality and ownership structure on the relationship between the agency cost and firm performance. Both the fixed-effects model and a more robust dynamic panel generalized method of moment estimation are applied to Chinese A-listed firms for the years 2008 to 2016. The results show that the agency–performance relationship is positively moderated by (1) corporate governance quality, (2) ownership concentration, and (3) non-state ownership. State ownership has a negative effect on the agency–performance relationship. Various robust tests of an alternative measure of agency cost confirm our main conclusions. The analysis adds to the empirical literature on agency theory by providing useful insights into how corporate governance and ownership concentration can help mitigate agency–performance relationship. It also highlights the impact of ownership type on the relationship between agency cost and firm performance. Our study supports the literature that agency cost and firm performance are negatively related to the Chinese listed firms. The investors should keep in mind the proxies of agency cost while choosing a specific stock. Secondly; the abuse of managerial appropriation is higher in state-held firms as compared to non-state firms. Policymakers can use these results to devise the investor protection rules so that managerial appropriation can be minimized.

scholarly journals Ownership structure, board of directors and firm performance: evidence from Taiwan

2019 ◽  
Vol 19 (1) ◽  
pp. 189-216 ◽  
Author(s):  
Mao-Feng Kao ◽  
Lynn Hodgkinson ◽  
Aziz Jaafar
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Board Of Directors ◽  
Ownership Structure ◽  
Firm Value ◽  
Listed Companies ◽  
Independent Directors ◽  
Data Set ◽  
Content Type ◽  
Listed Firms

PurposeUsing a data set of listed firms domiciled in Taiwan, this paper aims to empirically assess the effects of ownership structure and board of directors on firm value.Design/methodology/approachUsing a sample of Taiwanese listed firms from 1997 to 2015, this study uses a panel estimation to exploit both the cross-section and time–series nature of the data. Furthermore, two stage least squares (2SLS) regression model is used as robustness test to mitigate the endogeneity issue.FindingsThe main results show that the higher the proportion of independent directors, the smaller the board size, together with a two-tier board system and no chief executive officer duality, the stronger the firm’s performance. With respect to ownership structure, block-holders’ ownership, institutional ownership, foreign ownership and family ownership are all positively related to firm value.Research limitations/implicationsAlthough the Taiwanese corporate governance reform concerning the independent director system which is mandatory only for newly-listed companies is successful, the regulatory authority should require all listed companies to appoint independent directors to further enhance the Taiwanese corporate governance.Originality/valueFirst, unlike most of the previous literature on Western developed countries, this study examines the effects of corporate governance mechanisms on firm performance in a newly industrialised country, Taiwan. Second, while a number of studies used a single indicator of firm performance, this study examines both accounting-based and market-based firm performance. Third, this study addresses the endogeneity issue between corporate governance factors and firm performance by using 2SLS estimation, and details the econometric tests for justifying the appropriateness of using 2SLS estimation.

scholarly journals Ownership structure and demand for independent directors: evidence from an emerging market

2020 ◽  
Vol 22 (2) ◽  
pp. 335-342
Author(s):  
Quoc Trung Tran
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Agency Costs ◽  
Emerging Market ◽  
State Ownership ◽  
Independent Directors ◽  
Minority Shareholders ◽  
Foreign Investors ◽  
Content Type ◽  
Insider Ownership

PurposeIn this study, we examine how ownership structure affects the use of independent directors in Vietnam – an emerging stock market.Design/methodology/approachWe develop logit and tobit regression models to investigate the effects of ownership structure on the propensity to use independent directors and the number of independent directors on the board, respectively. Insider ownership and the use of independent directors are proposed to have a non-linear relationship.FindingsWith a sample of 1,318 observations collected from 192 listed firms over the period from 2008 to 2017, we find that insider ownership and independent director appointment have a U-shaped relationship. It is positive when insiders hold a small proportion of shares, and turns out to be negative when insiders hold a large percentage of shares. In addition, both state ownership and foreign ownership are negatively related to firm decisions of appointing independent directors.Practical implicationsOur findings imply that minority shareholders should have appropriate actions to reduce agency costs and protect their own interests. In addition, policymakers should improve the effectiveness of corporate governance legislation to increase the presence of independent directors in order to protect minority shareholders. Moreover, government agencies also need to increase the number of independent directors in state-controlled firms as a means to improve their corporate governance. Foreign investors may be a substitute for independent directors; therefore, firms without independent directors are able to improve their corporate governance by attracting foreign investors.Originality/valueWhile the extant literature shows that independent directors can help firms decrease agency costs of equity in financial decisions and performance, there are relatively few studies investigating corporate decisions to use independent directors. This paper contributes to the literature of corporate governance mechanisms through independent directors in emerging markets.

scholarly journals Ownership structure and firm performance in emerging markets: evidence from Chinese listed firms

2009 ◽  
Vol 6 (3) ◽  
pp. 465-472
Author(s):  
Benjamin Ehikioya ◽  
Yuanjin Qin ◽  
Keifa Xie ◽  
Chen ru Yun
Keyword(s):  
Firm Performance ◽  
Ownership Structure ◽  
Negative Influence ◽  
State Ownership ◽  
Legal Person ◽  
Stock Exchanges ◽  
Holding Companies ◽  
Listed Firms ◽  
Panel Data Regression ◽  
Data Regression

This study investigates how ownership structure impacts on the corporate performance of listed firms in China. The study uses sample data of firms listed in the Shanghai and Shenzhen stock exchanges for the five year fiscal period that ended 2005. The results of the panel data regression analysis suggests firm performance to have positive and significant relation with the proportion of shares held by the institution, through the legal person holding companies. In addition, while state ownership indicates negative influence on performance, individual and foreign investors are found to have positive effect on performance, though at a minimal levels. Interestingly, the effect of ownership structure is stronger in firms experiencing the dominance of legal person share holdings over state shares. Further, firm size and ratio of debt to equity are also observed to have influence on the performance of Chinese listed firms. These findings are of great significant to policymakers, academics, shareholders and other stakeholders.

scholarly journals Ownership structure and corporate governance: What does the data reveal about Saudi listed firms?

2017 ◽  
Vol 14 (4) ◽  
pp. 413-424 ◽  
Author(s):  
Mamdouh Abdulaziz Saleh Al-Faryan ◽  
Everton Dockery
Keyword(s):  
Corporate Governance ◽  
Stock Market ◽  
Firm Size ◽  
Ownership Structure ◽  
Ownership Concentration ◽  
Listed Firms ◽  
Ownership Structures ◽  
Market Instability ◽  
Positive Effect ◽  
Size Variable

In this paper we examine the ownership structure of 169 firms listed on the Saudi Arabian stock market from 2008 to 2014. The analysis uses the testing methodology described by Demsetz and Lehn (1985) to examine the effects of firm and market instability on Saudi ownership structure and additionally, the effect of systematic regulation that imposes constraints on the behaviour of the selected listed firms. We find evidence, for the majority of the ownership structures considered, in favour of the view that firm size, regulation and instability affects ownership structure. The results suggest that the size variable has a positive effect on ownership concentration. Our analysis also shows that instability had some effect on ownership concentration and structure when using the non-linear specification, particularly when using firm specific instability, albeit the effect was stronger when the instability measure was accounting profit returns. Lastly, there is evidence that government-owned firms were mostly affected by regulation while diffused owned firms were affected most by instability than non-government owned firms.

Determinants of corporate social and environmental voluntary disclosure in Saudi listed firms

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Helmi A. Boshnak
Keyword(s):  
Corporate Governance ◽  
Firm Size ◽  
Ownership Structure ◽  
Voluntary Disclosure ◽  
Firm Characteristics ◽  
Content Type ◽  
Listed Firms ◽  
Corporate Social ◽  
The Impact ◽  
Ifrs Implementation

Purpose This paper aims to examine firm characteristics and ownership structure determinants of corporate social and environmental voluntary disclosure (CSEVD) practices in Saudi Arabia to address the paucity of research in this field for Saudi listed firms. Design/methodology/approach The paper uses manual content and regression analyses for online annual report data for Saudi non-financial listed firms over the period 2016–2018 using CSEVD items drawing on global reporting initiative-G4 guidelines. Findings Models show that Saudi firm CSEVD has increased over time compared to previous studies to an average of 68% disclosure due to new corporate governance regulations and IFRS implementation. The models show that firm size, leverage, manufacturing industry type and government ownership are positive determinants of CSEVD, while family ownership is the negative driver of CSEVD. However, firm profitability, audit firm size, firm age and institutional ownership have no impact on the level of CSEVD. Originality/value Using legitimacy and stakeholder theories, the paper determines the influence of firm characteristics and ownership structure on CSEVD, identifying implications for firm stakeholders and providing some evidence on the impact of corporate governance regulation and IFRS implementation on such disclosure. The paper provides additional evidence on progress towards Saudi’s Vision 2030.

Female directors on corporate boards and their impact on corporate social responsibility (CSR): evidence from China

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Waqas Bin Khidmat ◽  
Muhammad Danish Habib ◽  
Sadia Awan ◽  
Kashif Raza
Keyword(s):  
Corporate Governance ◽  
Corporate Social Responsibility ◽  
Gender Diversity ◽  
State Ownership ◽  
Corporate Boards ◽  
Female Representation ◽  
Content Type ◽  
Listed Firms ◽  
Self Selection ◽  
Corporate Social

Purpose This study aims to examine the determinants of the female representations on Chinese listed firm’s boards. This study also investigates the effect of gender diversity on corporate social responsibility activities. Design/methodology/approach The Tobit regression model is used because the data is censored and using ordinary least square regression can give spurious results. For robust check, the authors also used Heckman’s (1979) two-stage self-selection model to remove the sample self-selection bias. Findings The authors find that the female representations on the corporate board are positively associated with firm age, firm performance, corporate governance, family ownership, institutional ownership and managerial ownership while negatively related to firm size and state ownership. This study also incorporates predictors of the critical mass of women on the Chinese listed firm’s board. The study also tests the female-led hypothesis and concludes that the female representation increases in firms with female chief executive officer (CEO) or female chairpersons. The Chinese listed firms with gender-diverse board are socially responsible. Research limitations/implications The importance of diversity in corporate boards has been demonstrated in light of the agency theory and the resource dependence framework. The results contribute to the previous literature by documenting the determinants of female representations on board, robust by alternative measures of gender diversity, firm size, corporate governance and estimation techniques. Practical implications The economic significance of gender diversity stirred the firms to increase female representation. The policymakers can understand the reasons for female underrepresentation in Chinese boards and can reform the regulation to enhance governance quality, non-state ownership and risk aversion among the listed firms. Originality/value This study contributes to the literature by providing empirical evidence on the key predictor of the world’s largest emerging economy, specifically the study focuses on the firm specific determinants, different governance attributes, ownership structure and firm risk measures. This study also seeks to answer if the presence of a female in the Chairperson or CEO position encourages the firms to hire more female directors or not?

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.

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