scholarly journals Does Corporate Governance Compliance Increase Company Value? Evidence from the Best Practice of the Board

2020 ◽  
Vol 13 (10) ◽  
pp. 242
Author(s):  
Maria Aluchna ◽  
Tomasz Kuszewski
Keyword(s):  
Corporate Governance ◽  
Transition Economies ◽  
Best Practice ◽  
Stock Exchange ◽  
Developed Countries ◽  
Minority Shareholders ◽  
Concentrated Ownership ◽  
Company Value ◽  
Warsaw Stock Exchange ◽  
Code Provisions

Drawing upon agency theory, we address the limitations of best practice code in the context of emerging governance, emphasizing the role of concentrated ownership. While the code provisions were formulated in developed countries, the transfer of one-size-fits-all guidelines may not address the characteristics and challenges of emerging and post-transition economies. Specifically, we emphasize that provisions of corporate governance codes are aimed at solving the principal–agent conflict between shareholders and managers. These guidelines may remain limited in addressing principal–principal conflicts between majority and minority shareholders and have either a lesser effect on valuation or none at all. Using a unique sample of 155 companies listed on the Warsaw Stock Exchange during the period 2006–2015, with hand-collected data from declarations of conformity, we tested the hypotheses on the link between corporate governance compliance (with board) practice and company value. The period of 2006–2015 was chosen deliberately, due to the relative stability of corporate governance code recommendations over this time. The results of our panel model reveal a negative and statistically significant relation between corporate governance compliance and company value. We contribute to the existing literature providing new evidence on compliance practice in the context of concentrated ownership, and the limited effect of code provisions in addressing structural challenges of corporate governance in emerging post-transition economies and hierarchy-based control systems.

scholarly journals Responses to corporate governance code: evidence from a longitudinal study

2021 ◽  
Author(s):  
Maria Aluchna ◽  
Tomasz Kuszewski
Keyword(s):  
Corporate Governance ◽  
Mixed Method ◽  
Best Practice ◽  
Stock Exchange ◽  
Empirical Studies ◽  
Descriptive Statistics ◽  
Main Reaction ◽  
Organizational Response ◽  
Warsaw Stock Exchange ◽  
Method Approach

AbstractDrawing upon neo-institutional theory as the perspective for research on corporate governance, we present the results of empirical studies on compliance with best practice codes. We view the declarations of conformity as the organizational response to institutional pressure and address questions on (1) how companies respond to recommendations on board best practice and (2) how these reactions evolve over time. The study employs the mixed method approach and is based on a time-series sample of conformity declarations published by 126 companies listed on the Warsaw Stock Exchange during the period 2006–2019. Descriptive statistics indicate an increase in the number of complying companies, an improvement in compliance quality and the growing length of conformity declarations. In the content analysis we identify two main reaction strategies (acceptance and rejection) with seven selected responses. We discuss the contribution to the existing literature on reactions to new practices in corporate governance.

scholarly journals The Influence of Good Corporate Governance and Capital Structure on Firm Value: The Mediation Role of Financial Performance

2020 ◽  
Vol 35 (2) ◽  
pp. 230
Author(s):  
Ridwan Nurazi ◽  
Intan Zoraya ◽  
Akram Harmoni Wiardi
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Financial Performance ◽  
Firm Value ◽  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Multiple Linear Regression Analysis ◽  
Company Value ◽  
Good Corporate Governance ◽  
The Impact

<pre>The objective of this study is empirically identify the impacts of Good Corporate Governance and capital structure on firm value with financial performance as intervening variable. We operate quantitative approach within the scope of manufacturing company of metal, chemical, and plastic packaging sector which listed in Indonesia Stock Exchange during the 2017-2018 periods as the population. Samples are chosen by purposive sampling method inwhich the company must report the financial statement in a row, obtained 79 observations. The data analysis technique used is financial ratio analysis to determine the condition of the business financial ratios of the variables studied. Data were analyzed using multiple linear regression analysis. The result shows that corporate governance and capital structure influence the firm value, moreover the use of institutional ownership ratio and capital structure will increase the value of the firm. The result also shows that the impact of Corporate governance and capital structure on the company value are mediated by financial performance. It means that the value of the firm can increase if the company able became an effective monitoring tool.</pre>

Political connections, ownership structure and quality of governance

2017 ◽  
Vol 13 (4) ◽  
pp. 358-377 ◽  
Author(s):  
Saidatou Dicko
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Political Connections ◽  
Minority Shareholders ◽  
Content Type ◽  
Compensation Structure ◽  
Theoretical Contribution ◽  
Concentrated Ownership ◽  
Quality Of Governance

Purpose The purpose of this paper is to ask the following question: is there a link between being politically connected, the quality of governance and the company’s ownership structure? Design/methodology/approach The author then examined Canadian companies from the S&P/TSX index for the year 2015. Findings Political connectedness is significantly associated with lower quality of governance in relation to shareholders’ rights; ownership concentration is associated with lower quality of governance in relation to the overall governance, board of directors, shareholders’ rights and compensation structure indices; ownership structure does not mediate the relationship between political connections and quality of governance; and number of political connections through the executive is associated with less risky governance practices in relation to compensation structure; in other words, when members of the executive are politically connected, the firm adopts better compensation practices. Research limitations/implications The time limitation is the main weakness of this study and probably the cause of observed mitigated results. Practical implications The author hope that the results will inform regulators on the need not only to further regulate the business-politics relationship, but also to consider the specific traits of concentrated ownership companies and the most critical aspects of corporate governance in politically connected firms, such as shareholders’ rights, particularly those of minority shareholders. For example, an intriguing case to investigate in the Canadian context would be Pierre Karl Péladeau’s foray into Quebec politics and the controversy ignited by his political bid in light of his position as majority shareholder (75 percent) in communications giant Quebecor Inc. Social implications In fact, the results shown that concentrated ownership firms have lower governance quality than non-concentrated ones. Furthermore, in a concentrated ownership context, the minority shareholders’ rights could be threatened. In this sense, the results also shown that shareholders’ rights seem to be the most critical governance issue for the politically connected Canadian firms. These results are therefore the indication that Canadian financial market regulators must take action about politically connected and concentrated ownership firms in order to further protect minority shareholders’ rights. Originality/value This study makes a double theoretical contribution by enriching the literature on corporate governance and by providing one of the first investigations into the direct and comprehensive relationships between political connections, governance and ownership structure.

scholarly journals Corporate Governance in Bangladesh: Evidence of Compliance

2018 ◽  
Vol 11 (3) ◽  
pp. 88
Author(s):  
Chowdhury Saima Ferdous
Keyword(s):  
Corporate Governance ◽  
Multivariate Analysis ◽  
Survey Methodology ◽  
Good Governance ◽  
Stock Exchange ◽  
Theoretical Contribution ◽  
Code Of Corporate Governance ◽  
Code Compliance ◽  
A Company ◽  
Code Provisions

This study investigates companies’ level of compliance with the Code of Corporate Governance for Bangladesh. Using a quantitative approach, it aims to understand the extent a regulatory provision can enhance the governance scenario of a company. It employed a survey methodology, with a questionnaire being sent to all 229 companies listed on the Dhaka Stock Exchange. The results of the multivariate analysis suggest that age, size, industry and type of company have a statistically positive correlation with the level of compliance with the Code provisions. The findings of the study indicate that listed companies are, on average, moderately compliant with the Code, and compliance is comparatively higher with the Code provisions that coincide with other regulatory provisions. The major theoretical contribution of this study is with its empirical evidence of the code compliance literature from a developing country perspective. Moreover the findings can be used as a guide to help develop policies for better implementation of good governance standards; the identification of areas of non-compliance are expected to help code formulators, regulators and also companies to understand why and where companies are falling behind in compliance with the Code.

scholarly journals ESG Transparency on the Polish Capital Market

2018 ◽  
Vol 21 (2) ◽  
pp. 55-72
Author(s):  
Robert Sroka
Keyword(s):  
Corporate Governance ◽  
Capital Market ◽  
Stock Exchange ◽  
Comprehensive Analysis ◽  
Financial Data ◽  
Related Data ◽  
Information Gap ◽  
Warsaw Stock Exchange ◽  
Research Show

The article presents the results of five years of research on transparency levels regarding the disclosure non‑financial data by companies listed on the Warsaw Stock Exchange (WSE). The research was conducted as part of a project entitled “ESG analysis of companies in Poland”. The goal of the project is to provide credible knowledge about the quality of environmental, social and corporate governance (ESG) data on the Polish capital market. The article mainly contains the results of a comprehensive analysis of how well the listed companies reported ESG related data in 2016. The five years of analysis enable us to show a change in the level of non‑financial data disclosure between 2012 and 2016.1 The results of the research show that, from an investor’s perspective, there is still a huge information gap on the Polish capital market, especially in the reporting of environmental and social data.

scholarly journals Corporate governance problem and its implications for transition economies

2008 ◽  
Vol 5 (3) ◽  
pp. 335-348
Author(s):  
Miroslav Mateev
Keyword(s):  
Corporate Governance ◽  
Transition Economies ◽  
Governance System ◽  
Active Involvement ◽  
Concentrated Ownership ◽  
Professional Managers ◽  
Corporate Governance System ◽  
Privatized Firms ◽  
And Control ◽  
Main Message

This paper examines the corporate governance problem in Central and Eastern European (CEE) countries and the major implications of highly concentrated ownership in these countries on their economic development. Our main message is that ownership and control in transition economies will remain highly concentrated in short-term aspect, and regulatory intervention should focus on protecting minority shareholder interests while maintaining the incentives for entrepreneurship and large shareholder monitoring. We also argue that the corporate governance system in transition economies will have to rely on active involvement and monitoring by large shareholders, even after the emergence of a class of professional managers. Moreover, our empirical results support Berglöf and Pajuste (2003) findings that controlling shareholders (strategic investors) are critical to the successful restructuring of privatized firms; minority protection is also important to attract outside capital, but it may reduce the disciplinary role of the market for corporate control

scholarly journals Pyramidal Ownership and Company Value: Evidence from Polish Listed Companies

2021 ◽  
Vol 15 (4) ◽  
pp. 479-498
Author(s):  
Maria Aluchna ◽  
Tomasz Kuszewski
Keyword(s):  
Firm Value ◽  
Stock Exchange ◽  
Listed Companies ◽  
Ownership Concentration ◽  
Company Value ◽  
Warsaw Stock Exchange ◽  
Pyramidal Ownership ◽  
Dual Class Shares ◽  
Dual Class ◽  
Majority Shareholder

This paper examines the effects of pyramidal ownership. Using the sample of 162 non-financial companies listed on the Warsaw Stock Exchange during the period 2010-2014, we verify the relation between the adoption of a pyramidal structure and company value. Specifically, we show that the link between pyramidal ownership and company value is more complex than previously thought addressing the aspect of ownership concentration and dual class shares. Our results indicate that the use of pyramids is associated with a higher value measured by Tobin’s Q, supporting the efficient monitoring hypothesis. Contrary to our expectations the combination of pyramidal ownership and dual class shares is correlated with lower Q. Finally, while the adoption of a pyramid by a majority shareholder does not impact firm value, the combination of a pyramid, ownership concentration and dual class shares is associated with higher Q. This finding suggests that the blockholder ownership outweighs the possible cost of excessive disproportionate ownership and that pyramids and dual class shares have different effects on company value.

scholarly journals Compliance with Corporate Governance Best Practice. The Perspective of Ownership Structure

2019 ◽  
pp. 9-26
Author(s):  
Maria Aluchna ◽  
Emilia Tomczyk
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Audit Committee ◽  
Best Practice ◽  
Transition Economy ◽  
Independent Directors ◽  
Board Governance ◽  
Board Committees ◽  
Concentrated Ownership ◽  
Compliance Policy

The article examines compliance with corporate governance best practice in the post transition economy addressing the heterogeneity of interests of different shareholders. On the basis of the agency theory, we suggest that in the concentrated ownership environment the principal-principal conflict results in lower compliance with the corporate governance code. More specifically, since compliance with best practice requires introducing independent directors and in that sense shifts control from shareholders to the board, we hypothesize that companies characterized by concentrated ownership and the dominant position of the founder/individual investor are reluctant to comply with board governance best practice. To evaluate our hypotheses, we explore compliance with board governance best practice with respect to the presence of independent directors, formation of an audit committee and other specialized board committees (remuneration, risk, strategy). We test the link between the compliance with the code and the ownership structure. Our analysis supports the principal-principalconflict argument and shows that companies with concentrated ownership and founder control do not comply with the board governance best practice. We believe this article contributes to the existing literature twofold. Firstly, we identify the patterns of corporate governance best practice implementation in the post socialist, post transition, emerging economy and depict the dynamics of the compliance with the code guidelines. Secondly, we show that the principal-principal conflict addresses the compliance policy of listed companies and results in various approaches to corporate governance conformity.

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