scholarly journals Socio-Environmental Responsibility Policy in Financial Institutions

2019 ◽  
Vol 2 (1) ◽  
Author(s):  
Sady Mazzioni ◽  
Francielle  Corazza ◽  
Cristian Baú Dal Magro ◽  
Antonio Zanin
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Central Bank ◽  
Financial Institutions ◽  
Performance Indicators ◽  
Stock Exchange ◽  
Environmental Responsibility ◽  
Contingent Liabilities ◽  
Risk Management Process ◽  
Net Equity

This research intents to analyze the influence of Socio-Environmental Responsibility Policy of Brazilian’s Central Bank on financial institutions economic performance listed at the Brazilian stock exchange. The data was collected from diversified sources (websites, explanatory notes, reference form and Economatica® data base) from 2012 up to 2017. As sample, 22 financial institutions were considered for data collection and analysis. The results showed that the growth in shareholder’s equity and contingent liabilities have significant differences from the adoption of the Socio-Environmental Responsibility Policy. Considering six items of corporate governance and six items of risk management, no investigated institution presented all these mechanisms requested by Brazilian’s Central Bank. Brazilian’s financial institutions recognized a greater volume of liabilities and expenses after the implementation of such policy, which reduced their net equity. This research shed some lights in socio-environmental policies regarding corporate governance and risk management mechanisms. Objective: to analyze whether the adoption of a socio-environmental responsibility policy influences the performance indicators and the corporate governance and risk management framework of financial institutions listed on the Brazilian stock exchange. Method: Data were collected from the period 2012 to 2017, referring to 22 Brazilian financial institutions, which provided information to operationalize the variables. Results: the results showed that, from the performance indicators investigated, the growth in shareholders' equity and contingent liabilities presented significant differences as of the adoption of the socio-environmental responsibility policy. Twelve items were analyzed, six of which were corporate governance and six of risk management, noting that no investigated institution presented all the mechanisms provided by the Central Bank of Brazil. Contributions: the evidence suggests that Brazilian financial institutions began to recognize a greater volume of liabilities and expenses after the obligation to implement the socio-environmental responsibility policy, reducing their net equity. These results may be due to the improvement of the corporate governance structure and the adequacy of the risk management process.

Do disclosure and transparency affect bank’s financial performance?

2019 ◽  
Vol 19 (6) ◽  
pp. 1344-1361
Author(s):  
Isaiah Oino
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Financial Performance ◽  
Financial Institutions ◽  
Content Type ◽  
Loan Portfolios ◽  
Cent Level ◽  
Transparency And Disclosure ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of transparency and disclosure on the financial performance of financial institutions. The emphasis is on assessing transparency and disclosure; auditing and compliance; risk management as indicators of corporate governance; and understanding how these parameters affect bank profitability, liquidity and the quality of loan portfolios. Design/methodology/approach A sample of 20 financial institutions was selected, with ten respondents from each, yielding a total sample size of 200. Principal component analysis (PCA), with inbuilt ability to check for composite reliability, was used to obtain composite indices for the corporate governance indicators as well as the indicators of financial performance, based on a set of questions framed for each institution. Findings The analysis demonstrates that greater disclosure and transparency, improved auditing and compliance and better risk management positively affect the financial performance of financial institutions. In terms of significance, the results show that as the level of disclosure and transparency in managerial affairs increases, the performance of financial institutions – as measured in terms of the quality of loan portfolios, liquidity and profitability – increases by 0.3046, with the effect being statistically significant at the 1 per cent level. Furthermore, as the level of auditing and the degree of compliance with banking regulations increases, the financial performance of banks improves by 0.3309. Research limitations/implications This paper did not consider time series because corporate governance does not change periodically. Practical implications This paper demonstrates the importance of disclosure and transparency in managerial affairs because the performance of financial institutions, as measured in terms of loan portfolios, liquidity and profitability, increases by 0.4 when transparency and disclosure improve, with this effect being statistically significant at the 1 per cent level. Originality/value The use of primary data in assessing the impact of corporate governance on financial performance, instead of secondary data, is the primary novelty of this study. Moreover, PCA is used to assess the weight of the various parameters.

Corporate governance and the social performance: investigation on Tunisian financial institutions

2018 ◽  
Vol 60 (6) ◽  
pp. 1412-1431
Author(s):  
Nejia Nekaa ◽  
Sami Boudabbous
Keyword(s):  
Corporate Governance ◽  
Financial Institutions ◽  
Financial Institution ◽  
Stock Exchange ◽  
Social Performance ◽  
Financial Sector ◽  
Content Type ◽  
The Social ◽  
Questionnaire Method ◽  
The Impact

Purpose The purpose of this study is to show the specificities of the corporate governance of Tunisian financial institutions and the impact of the internal mechanisms of corporate governance of these institutions on their social performance. It is therefore interesting to establish the existing relationship between these mechanisms of corporate governance and the performance of a financial firm. Design/methodology/approach This study aims to study the financial sector, generally characterized by its opacity, its regulation, its evolution and its obscurity. Therefore, a study based on the questionnaire method was recommended. The questionnaire is intended for managers. Therefore, the authors interviewed 138 managers of Tunisian financial institutions dispersed between agencies and headquarters in different regions (Gabes, Tozeur, Gafsa, Sfax, Sousse and Tunisia). Findings As a result, an impact on performance was observed according to the empirical study. Therefore, the authors can conclude an essential role of internal mechanisms for improving the social performance of a financial institution. The empirical findings in this paper lead to important conclusions. Indeed, the variables measuring the governance mechanisms have divergent effects on the social performance of the financial institutions subject to the sample. For the variables board of directors, confidence, culture, auditing, they have a positive effect. While, the incentive remuneration effect negatively the social performance. Originality/value This study will be based essentially on the financial sector in Tunisia: the credit institutions (22 banks), the establishments of leasing (eight companies of leasing), two factoring companies and two banks of cases which are listed on the Stock Exchange of Tunis (BVMT).

scholarly journals CORPORATE RISK DISCLOSURE: THE EFFECT OF CORPORATE GOVERNANCE

2021 ◽  
Vol 5 (1) ◽  
pp. 101-113
Author(s):  
Arisona Ahmad ◽  
Muhammad Muhammad ◽  
Dwi Narullia
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Stock Exchange ◽  
Company Size ◽  
Business Risk ◽  
Risk Disclosure ◽  
Initial Hypothesis ◽  
Corporate Risk ◽  
Corporate Business

ABSTRACT This research investigates the role of corporate governance on the disclosure of corporate business risk management with leverage and company size as control variables. Research data were taken from a company that classified as LQ 45 on the Indonesian stock exchange from 2015 to 2018. This research finds that disclosure of business risk management as a sign that management has managed the company with the good attitude increases along with increased corporate governance activities. Leverage and company size also affect company policies regarding the disclosure of corporate business risks. Overall, the results of this study are consistent with the assumption that corporate governance affects company policies regarding business risk disclosure. However, in contrast to the initial hypothesis, the composition of the board commissioners reduces the risk management disclosure activity in the company. This is because the board of commissioners considers that business risk disclosure can increase costs and reduce its competitive advantage so that investors will respond negatively. Apart from these variables, this study contributes to agency theory, where the findings of this study indicate the confirmation of the application of theory in the context of this study. ABSTRAK Penelitian ini menyelidiki peran tata kelola perusahaan terhadap pengungkapan manajemen risiko bisnis perusahaan dengan leverage dan size perusahaan sebagai variable control. Data penelitian meliputi perusahaan yang tergolong LQ 45 di bursa efek Indonesia dari tahun 2015 hingga 2018. Penelitian ini menemukan bahwa pengungkapan manajemen risiko bisnis sebagai tanda bahwa manajemen telah berperilaku baik dalam mengelola perusahaan meningkat seiring dengan peningkatan aktivitas tata Kelola perusahaan. Leverage dan ukuran perusahaan juga mempengaruhi kebijakan perusahaan mengenai pengungkapan risiko bisnis perusahaan. Secara keseluruhan, hasil penelitian ini konsisten dengan dugaan bahwa tata kelola perusahaan mempengaruhi kebijakan perusahaan mengenai pengungkapan risiko bisnis. Namun, berbeda dengan hipotesis awal komposisi dewan komisaris menurunkan aktivitas pengungkapan manajemen risiko diperusahaan. Hal ini dikarenakan dewan komisaris menimbang bahwa pengungkapan risiko bisnis dapat meningkatkan biaya serta menurunkan keunggulan kompetitif perusahaan sehingga akan direspon negatif oleh investor. Selain variabel tersebut, penelitian ini berkontribusi pada teori agensi dimana temuan yang ada menunjukkan konfirmasi dari penerapan teori di dalam konteks penelitian.

scholarly journals Quality of Corporate Governance Risk Management in Dealing with Unanticipated Events: Evidence from Pakistan

2019 ◽  
Vol 8 (1) ◽  
pp. 1-24
Author(s):  
Rubeena Tashfeen ◽  
Saud Hayat ◽  
Afreen Mallik
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Stock Exchange ◽  
Governance Structure ◽  
Governance Structures ◽  
Governance Mechanisms ◽  
Market Dynamic ◽  
Average Abnormal Return ◽  
The Face ◽  
Governance Risk

This study examines the effectiveness of the corporate governance structure when coping with any potentially unexpected events. For the purpose of this research, an event study has been conducted in order to investigate the market responses of various firms through the Cumulative Average Abnormal Return (CAAR) of the stocks listed on the Pakistan Stock Exchange (PSX). The stocks data under consideration is that which was presented after the assassination of Benazir Bhutto in 2007. The overall results indicate that firms that are governed conventionally do not perform well in the markets during a crisis situation. In our comparison of conventionally, and non-conventionally governed firms, the overall pooled results show that the former record a lower CAAR. This, in short, indicates that conventional corporate governance structures may not be equipped to take timely and dynamic actions that are deemed necessary in the face of a crisis. Moreover, our results suggest that firms which have less diversified ownership, and governance mechanisms are less vulnerable to such unanticipated events. There are two reasons that support our hypotheses: first, strict governance mechanisms, and a resultant cautious/conservative approach may not allow firms to take timely and proactive decisions during these situations and second, there is a lower chance of existing agency problems, as family owners would be working for the protection of their own wealth during these events. Therefore, our findings ultimately reveal that the conventional corporate governance structures that work during normal time period, may become ineffective during a crisis. This study, aims to fill a gap in the literature in order to provide fresh insights into the stock market dynamic, and corporate governance risk management. Furthermore, it also highlights the benefits of family owned structures, and unconventional corporate governance systems, that may outperform conventional governance structure in some situations. This, however, raises the question whether one governance framework could be the correct fit in all the situations.

Corporate Governance and Risk Management on Listed Banks, The Tanzania Perspective

2021 ◽  
Vol 8 (1) ◽  
pp. 27
Author(s):  
Erick Lusekelo Mwambuli ◽  
Avitus Mwebembezi Dominick
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Board Of Directors ◽  
Ownership Structure ◽  
Management Practices ◽  
Stock Exchange ◽  
Management Approach ◽  
Financial Risks ◽  
The Board Of Directors

The study was to assess on corporate governance and risk management in Tanzania. The study was guided by three objectives which were to assess if transparency, disclosure and audit have significant effect on risk management of the firm, to assess if the board of directors have significant effect on risk management of the firm and evaluate if the ownership structure have significant effect on risk management of the firm. Furthermore, we assess how corporate governance and particularly board of directors, ownership structure, transparency disclosure and audit can affect risk management practices in the context of Dar es Salaam stock exchange listed banks. By the use of a content in analysis approach, the level of exposing the risks in terms of likelihood, consequences of such risk and the strategies used for managing that risk were identified for each kind of risk by using attributes. The results show that corporate governance is related to board of directors, ownership structure, transparency, disclosure and audit play a positive significant and crucial role in establishing an integrative risk management approach. The results from data collected demonstrate that corporate governance has positive significant effect in determining the the good quality of risk management through the level of risk-taking in decisions, especially in terms of financial risks management.

The Influence of Risk Management, Third-Party Funds and Capital Structure on Banking Sector Financial Performance in Indonesia and Thailand with Corporate Governance as Moderating Variable in 2015-2019

2021 ◽  
pp. 71-80
Author(s):  
Nurtika Ekawati ◽  
◽  
Unggul Purwohedi ◽  
Ari Warokka ◽  
◽  
...  
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Capital Structure ◽  
Financial Performance ◽  
Banking Sector ◽  
Stock Exchange ◽  
Partial Least Square ◽  
Third Party ◽  
Return On Assets ◽  
Study Results

The banking sector plays an important role in the country's economic growth. International experience shows that a weak banking sector not only threatens the long-term stability of a country's economy. It can also cause a financial crisis which can lead to economic crisis. Therefore, it is important to identify and investigate the factors on which the financial performance of banks depends. The purpose of this study is to analyze the influence of risk management, third-party funds and capital structure on banking sector financial performance in Indonesia and Thailand with corporate governance as moderating variable. The authors use return on assets (ROA) as the key indicator of bank efficiency. The data used in this study are secondary data, including nonperforming loan (NPL), loan-to-deposit ratio (LDR), operating expenses to operating income (BOPO), net interest margin (NIM), third party funds (TPF), debt-to-equity ratio (DER), return on assets (ROA), corporate governance. The data was obtained from the official website of the Indonesia Stock Exchange (www.idx.co.id) and the Thai Stock Exchange (www.set.or.th). The sample used in this study is 20 conventional banks listed on the Indonesia and Thailand Stock Exchange from 2015-2019. The methodological basis of this study is the use of the Structural Equation Model (SEM) with Partial Least Square (PLS). Data processing was performed in the WarpPLS 7.0 software. The study results show that NPL and LDR have a negative and significant influence on the financial performance of banks. At the same time, the BOPO and DER do not affect the financial performance of banks. The NIM and TPF have a significant and positive influence on the bank's financial performance. In addition, corporate governance does not moderate risk management relationship to the bank's financial performance. The results of this study can benefit bank shareholders and customers, and bank management.

scholarly journals The Benefit of Enterprise Risk Management (ERM) On Firm Performance

2019 ◽  
Vol 17 (2) ◽  
pp. 168
Author(s):  
Mochamad Muslih
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Firm Performance ◽  
Stock Exchange ◽  
Control Variable ◽  
Secondary Data ◽  
Enterprise Risk Management ◽  
Enterprise Risk ◽  
Research Findings ◽  
Independent Variable

<p>There were inconsistencies on the results of some ERM researches formerly.  There were some variabilities on the benefits and obstacles hampering the implementation of ERM.  The purpose of this research is to study the benefits of  Enterprise Risk Management (ERM) to increase firm performance.</p><p>This research used quantitative method, using the statistical software  of eviews 9 to process the data samples.  The Sampled firms arecompanies listed in the Indonesian stock exchange. 108 questionnaires were filled by the respondents. The variables measured are firm performances and enterprise risk management. The implementation of corporate governance and firm performance are also measured as control variables. Regression procedures were used to analyze the data samples. Some secondary data were also used to enrich analizing the research phenomena.</p><p>The research findings showed a significant relationship between ERM with firm performance. The effect of ERM as independent variable on firm performance waso significant so that the influence of corporate governance (CG) as  control variable became insignificant. Actually based on individual regression, CG influence on firm performance is significant. But totally the influence became insignificant, hampered by the magnitude of ERM influence significancy. These findings add to positive heuristics of falsification model of research as proposed by Imre Lakatos.</p>

scholarly journals Effect of Corporate Governance on Financial Performance of Deposit Money Banks in Nigeria

2020 ◽  
pp. 1-11 ◽  
Author(s):  
Sani, Abdulrahman Bala ◽  
Aliyu, A. Almustapha ◽  
Bakare, Taophic Olarewaju
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Financial Institutions ◽  
Stock Exchange ◽  
Secondary Data ◽  
Sampling Technique ◽  
P Value ◽  
Individual Element ◽  
Ceo Duality ◽  
Significance Level

Effective supervision of financial institutions is premised on existence of sound corporate governance. Corporate governance refers to the extent to which companies are run in an open and honest manner. Despite the relative stability experienced by financial institutions post-consolidated era, the health of financial institutions in Nigeria today appears to have worsen due to the weak corporate governance. It is as a result of this, the study examine the effect of corporate governance on financial performance of deposit money banks in Nigeria. This study obtained secondary data from the annual report of deposit money banks quoted on the Nigeria Stock Exchange (NSE) spanning from 2011 to 2018 with the use of purposive sampling technique. Panel regression technique was adopted to analyse data collected. The result showed that corporate governance has significant effects on financial performance of deposit money banks in Nigeria as indicated by the p-value of Wald x2 of (0.0000) with coefficient (10.92) at 5% significance level. When individual element of corporate governance is considered, CEO duality has no significance effect on ROA with coefficient 2.1903 and p-value 0.943 while management equity holding has significant effect on ROA as indicated by p-value of 0.0000 and coefficient 10.958 at 5% significant level. The study then concluded that corporate governance has significant effect on financial performance of selected banks in Nigeria. Therefore the study recommends that CEO duality should be discourage in the deposit money banks in Nigeria and mandates a three years cooling off period where this is the case. This will assist to minimize potential conflicts of interests.

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.

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