scholarly journals Impact of Corporate Governance on Financial Returns of Indian Listed Companies

2021 ◽  
Vol 4 (4) ◽  
pp. 88-99
Author(s):  
Sanjeeb Kumar Dey ◽  
Debabrata Sharma
Keyword(s):  
Corporate Governance ◽  
Financial Services ◽  
Research Work ◽  
Listed Companies ◽  
Dual Role ◽  
Financial Returns ◽  
Financial Return ◽  
Ceo Duality ◽  
Board Committees ◽  
Return On Capital

Purpose- In this paper, we have evaluated the relationship of corporate governance with companies’ financial returns using return on assets (ROA) and return on capital employed (ROCE) as proxies. For this purpose, companies listed in Nifty-50 are considered as a sample. Design/Methodology- The present study is conducted on the NIFTY-50 Index with a final sample of 35 companies after excluding banking companies, financial services companies, and companies that did not have the required data in the sample period.  Data has been collected for ten years from 2009-10 to 2018-19, and they are analyzed with the help of software packages such as SPSS and Stata. Findings- The results showed that firms’ financial return measures (ROA and ROCE) were significantly affected by governance measures, board committees, and CEO duality. Board size, board meetings, and board independence did show positive relation, but it was not significant. Our analysis observed that corporate governance significantly affected the financial return of Indian listed companies. Practical Implications- Our research work indicated the importance of corporate governance in generating financial returns for Indian listed companies.  CEO duality is found to be increasing the ROCE of listed companies in India, and therefore investors should choose such companies where the CEO plays a dual role in the board. Also, policymakers should take into consideration the dual role of CEOs while making changes in company regulations.

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.

What drives board committee structure? Evidence from an emerging market

2019 ◽  
Vol 35 (3) ◽  
pp. 373-397 ◽  
Author(s):  
Pornsit Jiraporn ◽  
Ali Uyar ◽  
Cemil Kuzey ◽  
Merve Kilic
Keyword(s):  
Corporate Governance ◽  
Audit Quality ◽  
Emerging Market ◽  
Panel Data Analysis ◽  
Positive Association ◽  
Developed Countries ◽  
Board Structure ◽  
Ceo Duality ◽  
Content Type ◽  
Board Committees

Purpose Board committees enable boards to function effectively, as committees improve the quality of corporate governance by fulfilling specific, assigned tasks. This study aims to explore how board structure, CEO duality and audit quality are associated with board committee structure in the context of an emerging market, namely, Turkey. Design/methodology/approach The sample consisted of 122 firms listed on the Industrial Index of Borsa Istanbul for the years between 2012 and 2014, inclusive, and this yielded 366 firm-year observations. To test the hypotheses, the panel data analysis method was used, which enabled the elimination of certain problems, such as multicollinearity and estimation bias, as well as specification of the time-variant association between the predictor variables and the output variable. Findings Board size, board independence and firm size had a positive association with the number and size of board committees, whereas CEO duality had a negative association with the number and size of board committees. Moreover, the appointment of female members on audit and corporate governance committees was more frequent in firms that had a high proportion of women on their boards. Finally, audit quality was positively associated with the existence of risk committee, the overall diversity of board committees and the diversity of corporate governance committees. Research limitations/implications The study is not free from limitations. It covers the time span between 2012 and 2014; thus, readers should be cautious about generalizing these results longitudinally, as a different time periods could possibly yield different results. The second limitation concerns the fact that only industrial firms were sampled; thus, these findings may not be valid in other sectors. Practical implications The paper shifts the attention of researchers from overall board structure to board committee structure. The results of the study provide insights for policymakers, boards and shareholders. Policymakers can formulate boards and committees by considering these findings. Boards can benefit from the conclusions of this study in shaping their own structure and sub-committee structures. Current and potential shareholders may find the results of the study instructive in making investment decisions. Originality/value This study investigates the factors associated with the structure of overall and specific board committees. Additionally, while most prior research on board committees has sampled firms that are domiciled in developed countries, this study examines the subject in an emerging country context, namely Turkey. Moreover, this study adds to the literature by examining the association between audit quality and board committee structure, which has been largely neglected in prior literature.

A theoretical and econometric evaluation of corporate governance and capital structure in JSE-listed companies

2019 ◽  
Vol 19 (5) ◽  
pp. 1063-1081 ◽  
Author(s):  
Navitha Singh Sewpersadh
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Audit Committee ◽  
Firm Growth ◽  
Listed Companies ◽  
Annual Reports ◽  
Ceo Duality ◽  
Content Type ◽  
Governance Practices ◽  
Director Ownership

PurposeA vital resource for attracting investments and boosting economic growth is compliance with corporate-governance practices. To achieve firm growth, businesses often rely on leverage as a source of finance, which has tax-saving benefits but could attract financial distress costs. In this context, this study aims to examine the relationship between corporate governance and the use of debt financing in Johannesburg Stock Exchange (JSE)-listed companies.Design/methodology/approachThis study used a six-year period to examine 713 annual reports in an unbalanced panel of 130 JSE-listed companies from 2011 to 2016. The empirical econometric methodology used was the two-step difference generalised method of moments estimation model, which is robust in controlling endogeneity and potential bi-directional causality between leverage and corporate governance.FindingsThis study illustrated that corporate governance practices and firm-specific variables such as profitability, firm size and firm age have a significant influence on the capital structure decisions of JSE-listed firms. This study found support for four out of the six hypotheses. CEO duality and director ownership are positively correlated with leverage, whereas audit committee independence and board size are negatively correlated with leverage. This study also found contraventions of board independence, audit committee independence and CEO duality. The technology sector was the least compliant, with only 40 per cent of their boards being independent. The consumer-services sector had the maximum presence of CEO duality (7 per cent). The industrial sector had the highest average director ownership (18 per cent). The heath-care sector had 28 per cent of their audit committees in contravention of the independence rule.Practical implicationsA useful analysis of the theoretical frameworks used by academic writers are provided. This study revealed the governance practices contravened by the relevant sectors, as well as the associations between corporate governance and leverage.Originality/valueThe study contributes to the literature on capital structure and corporate governance by an emerging economy such as South Africa (SA) which has not been explored. This study’s results have key implications for policy-makers, practitioners, investors and regulatory authorities. This study informs these constituencies about a set of governance attributes that are catalysts and/or inhibitors of leverage.

scholarly journals Corporate Governance and Organisational Performance: Analysis of Nigeria Stock Exchange Listed Companies

2018 ◽  
Vol 6 (4) ◽  
pp. 12
Author(s):  
Olajide Solomon Fadun
Keyword(s):  
Corporate Governance ◽  
Stock Exchange ◽  
Listed Companies ◽  
Board Size ◽  
Ceo Duality ◽  
Positive Correlation ◽  
Performance Variables ◽  
Ceo Tenure ◽  
Governance Practices ◽  
And Performance

<p><em>Corporate governance is relevant in both developed and emerging economies. The study investigated the impact of corporate governance on organisational performance, using thirty (30) randomly selected listed companies in the Nigeria Stock Exchange (NSE) in the year 2016. The study focused on three corporate governance variables (i.e., Board Size, Board Independence, CEO Duality/Tenure); and two performance variables - i.e., Returns on Asset (ROA) and Returns on Equity (ROE). The study does not cover the market measure performance variable of Tobin’s Q. The study is an empirical research, with analytical research design. Secondary data, extracted from published annual reports of selected quoted companies and NSE website, is used for the study. The findings revealed a positive correlation between board size, independence directors, and performance variables; but, showed a negative correlation between CEO tenure and performance variables. The result showed that number of directors was not positively related to performance in selected quoted companies in terms of ROA; but, it revealed a positive correlation between board size and performance in terms of ROE. It also showed that the correlation between CEO tenure and performance variables was negative on the two performance variables (ROA and ROE). Regarding relationship between CEO Duality and performance variables (ROA and ROE), the result showed that CEO Duality has a positive correlation with ROA; but had a negative relationship with ROE. Generally, the study revealed that adoption of sound corporate governance practices by listed companies can improve their performance. Companies can benefit from this improved corporate governance practices by way of increased investment from investors and reduced capital cost. Shareholders confidence would be enhanced with attendant improvement in shareholders wealth. The nation’s economy would also benefit from sound corporate governance practices by way of improved GDP. </em></p>

scholarly journals Impact of Corporate Governance on the Cost of Capital: Empirical Evidence from the Non-Financial Sector of Pakistan

2021 ◽  
Vol 7 (2) ◽  
pp. 477-489
Author(s):  
Muhammad Bilal Ijaz ◽  
Muhammad Naveed ◽  
Hassan Raza
Keyword(s):  
Economic Growth ◽  
Corporate Governance ◽  
Cost Of Capital ◽  
Financial Sector ◽  
Political Connections ◽  
Board Independence ◽  
Data Set ◽  
Ceo Duality ◽  
Board Committees ◽  
The Cost

Purpose: The study looked at the effect of corporate governance on the cost of capital of firms in Pakistan's non-financial sector. Design/Methodology/Approach: The study sample is comprised of balanced data set of 175 non-financial companies listed on the Pakistan Stock Exchange between 2008 and 2018. The study used the dynamic panel GMM estimator technique. Findings: The findings revealed that an increase in the number of directors, board independence, CEO duality, and inflation negatively influence the cost of capital. On the other hand, the increase in institutional holdings increased the cost of capital. In addition, it is discovered that board committees, political connections, and economic growth do not affect the cost of capital Implications/Originality/Value:  When board size, CEO duality, board independence, and inflation increased, the cost of capital decreased in Pakistan's non-financial sector. Furthermore, board committees, political connections, company leverage, and economic growth do not affect the cost of capital in Pakistan's non-financial sector. In comparison, an increase in institutional shareholding increased the cost of capital in Pakistan's non-financial sector.

scholarly journals A suggested measure for the quality of corporate governance in Egypt

2017 ◽  
Vol 15 (1) ◽  
pp. 52-64 ◽  
Author(s):  
Dina Hassouna ◽  
Hassan Ouda
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Ownership Structure ◽  
Listed Companies ◽  
Measurement Tool ◽  
Board Committees ◽  
Corporate Governance Mechanisms ◽  
Governance Practices ◽  
Transparency And Disclosure

This paper aims at constructing an objective measurement tool for the quality of corporate governance practices implemented by listed companies in Egypt. Consequently, several main criteria for the inclusion and the exclusion of a corporate governance guideline were followed. The resulting “objective index and questionnaire” includes a total of 66 indicators grouped under four main internal corporate governance mechanisms: Ownership structure; Board of directors; Transparency and disclosure and Board committees. Additionally, the scoring process that can be used in the rankings of Egyptian listed companies is suggested

scholarly journals Does Corporate Governance Increase Related Party Transaction Disclosure In Indonesia?

2021 ◽  
Vol 4 (1) ◽  
pp. 1
Author(s):  
Amrie Firmansyah ◽  
Pria Aji Pamungkas ◽  
Fardan Ma’ruf Zainuddin
Keyword(s):  
Corporate Governance ◽  
Financial Services ◽  
Audit Committee ◽  
Stock Exchange ◽  
Secondary Data ◽  
Institutional Ownership ◽  
Total Sample ◽  
Listed Companies ◽  
Managerial Ownership ◽  
Related Party Transaction

The purpose of this study is to examine the effect of corporate governance (audit committee, institutional ownership, managerial ownership, and independent commissioners) on Related Party Transaction Disclosure. The data employed in this study is secondary data, financial statements from manufacturing sector companies listed on the Indonesia Stock Exchange from 2016 up to 2019. Based on the purposive sampling conducted, companies that meet the criteria in this study are 40 companies, so that the total sample is 160 observations. This study uses panel data regression analysis. This study finds that the independent commissioner has a positive effect on Related Party Transaction Disclosure. Meanwhile, the audit committee, managerial ownership, and institutional ownership do not affect Related Party Transaction Disclosure. This research indicates that the Indonesian Financial Services Authority (OJK) should supervise and tighten the rules for Indonesia listed companies, especially regarding the audit committee's or independent commissioner's requirements in listed companies.

Corporate governance mechanisms and firm performance in a developing country

2020 ◽  
Vol 62 (2) ◽  
pp. 147-169 ◽  
Author(s):  
Albert Puni ◽  
Alex Anlesinya
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Financial Performance ◽  
Governance Mechanisms ◽  
Board Size ◽  
Ceo Duality ◽  
Content Type ◽  
Board Committees ◽  
Discourse Practices ◽  
Corporate Governance Mechanisms

Purpose The purpose of this study is to examine the influence of corporate governance mechanisms recommended by the Securities and Exchange Commission (SEC) of Ghana on firm performance as measured by accounting-based ratios (return on assets, return on equity and earning per share) as well as market-based measure (Tobin’s Q) among listed Ghanaian companies from 2006 to 2018. These mechanisms are: board composition (board size, inside directors and outside directors), board committees (audit, remuneration and nomination), chief executive officer (CEO) duality/separation, board meetings and shareholder concentration. Design/methodology/approach The study used panel regression analysis of data from 38 listed firms in Ghana from 2006 to 2018 to test how each corporate governance variable initiated by the SEC of Ghana contributed to firm performance. Data were extracted from the annual reports of listed companies. Findings The study found that the presence of both insiders and outsiders on the corporate board improved financial performance. Similarly, board size, frequency of board meetings and shareholder concentration/ownership structure generally had a positive impact on financial performance. However, the presence of board committees generally had a negative impact on financial performance while CEO duality had no impact on financial performance. Practical implications The study contributes to the understanding of how good corporate governance practices affect firm performance for both academics and particularly Ghanaian policymakers. Originality/value This study provided new findings to bridge the gaps in the general corporate governance literature relative to the lack of consensus on financial impacts of corporate governance mechanisms. The finding contributes to knowledge by providing new and original evidence that some current corporate governance mechanisms are not effective in minimizing the agency problem in a developing setting. Furthermore, the authors anticipate that the outcomes of this research, which so far is the most comprehensive study in the Ghanaian context in terms of the coverage of corporate governance mechanisms specified by the SEC of Ghana, can significantly shape corporate governance discourse, practices and policies in Ghana, particularly and in other developing countries generally to improve financial performance and corporate sustainability.

Audit Committee Effectiveness Among Malaysian Listed Companies

2020 ◽  
Author(s):  
Shamsul Nahar Abdullah ◽  
Ku Nor Izah Ku Ismail
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Stock Exchange ◽  
Listed Companies ◽  
The Other ◽  
Interactive Effects ◽  
Committee Chairman ◽  
Kuala Lumpur ◽  
Political Costs ◽  
Leadership Structure

This study investigates further the previous paper by Shamsul Nahar and Al-Murisi (1997) by examining the interactive effects of the variables in that paper and introducing other variables associated with corporate governance and political costs. The present study postulated that percentage of external directors on audit committee interacted with the presence of an accountant on audit committee and with the number of years an audit committee in existence, respectively, to influence audit committee effectiveness. The study also posited that the interaction of the presence of an accountant on audit committee and the number of years an audit committee in existence positively and significantly influenced audit committee effectiveness. Addition. ally, the roles of leadership structure, audit committee chairman, and a firm's size on audit committee effectiveness were also investigated. Using a multiple regression from a sample consisting the Kuala Lumpur Stock Exchange listed companies, results showed that only a firm's size significantly influenced audit committee effectiveness in the predicted direction. Other variables, on the other hand, did not show any significant influence on audit committee effectiveness.  

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