scholarly journals The Effect of Corporate Sustainable Management on the Relationship between Cost Stickiness and Earnings Transparency

2021 ◽  
Vol 13 (23) ◽  
pp. 13453
Author(s):  
Hyunmin Oh ◽  
Sambock Park
Keyword(s):  
Corporate Governance ◽  
Sustainable Management ◽  
Negative Relationship ◽  
Positive Direction ◽  
External Auditors ◽  
Evaluation Scores ◽  
Interaction Variables ◽  
Cost Behavior ◽  
The Relationship ◽  
Cost Stickiness

This study empirically analyzes the relationship between cost stickiness and earnings transparency. Additionally, this study examines the effect of corporate sustainable management (CSM) on the relationship between cost stickiness and earnings transparency. The evaluation scores of Korea Corporate Governance Service (KCGS) are employed to measure CSM activities. The empirical results show that the relationship between cost stickiness and earnings transparency is significant in the negative direction. This means that the more sticky the costs of a firm, the lower the earnings transparency of the firm. In addition, the relationship between the interaction variables of CSM and cost stickiness and earnings transparency is significant in the positive direction. This indicates that CSM activities act as a mechanism to mitigate the negative relationship between cost stickiness and earnings transparency. The findings of this study, which presented the effects of cost stickiness on earnings transparency and the fact that CSM activities act as a device to suppress the opportunistic cost behavior of managers, are expected to provide important implications to investors, external auditors, and supervisors.

scholarly journals Corporate Sustainable Management, Dividend Policy and Chaebol

2021 ◽  
Vol 13 (13) ◽  
pp. 7495
Author(s):  
Hyunmin Oh ◽  
Sambock Park
Keyword(s):  
Corporate Governance ◽  
Significant Relationship ◽  
Sustainable Management ◽  
Positive Relationship ◽  
Dividend Policy ◽  
Business Group ◽  
Positive Direction ◽  
Empirical Results ◽  
Dividend Policies ◽  
The Relationship

This study empirically examines the relationship between corporate sustainable management (CSM) and dividend policy. Among the various motivations related to dividends, this study examines the relationship between CSM and dividend policy based on the agency and signaling theory. After examining the relationship between CSM and dividend policy, we investigate whether belonging to a large business group (chaebol group) has a significant effect on the relationship between CSM and dividend policy. The analysis period is from 2011 to 2018, and the ESG ratings of the Korea Corporate Governance Service are used as proxies for CSM. The empirical results show that CSM and dividends have a significant relationship in the positive direction. This means that firms with excellent CSM activities have higher dividend levels than those that do not. Furthermore, the association between CSM and dividends is more negative for firms belonging to a chaebol group. This indicates that the positive relationship between CSM and dividends in a firm that belongs to a chaebol group is weakened. This means that the relationship between CSM and dividends in the group belonging to the chaebol group is weakened. It belongs to the group of conglomerates, meaning that the relationship between the amount of dividends and CSM weakened. Our study focuses on CSM as a determinant of dividends, and examines the effects of belonging to a chaebol group in the relationship between CSM and dividends. Given that resolving the interest incompatibility between investors and managers is the focus of corporate governance, dividend policies can be used as a method for resolving the interest incompatibility between investors and managers.

scholarly journals Sticky cost behavior: evidence from Egypt

2017 ◽  
Vol 7 (1) ◽  
pp. 16-34 ◽  
Author(s):  
Awad Elsayed Awad Ibrahim ◽  
Amr Nazieh Ezat
Keyword(s):  
Corporate Governance ◽  
Information Needs ◽  
Academic Research ◽  
Content Type ◽  
Listed Firms ◽  
Corporate Governance Code ◽  
Cost Behavior ◽  
Asymmetric Cost ◽  
Cost Stickiness ◽  
Asymmetric Cost Behavior

Purpose The purpose of this paper is to provide further empirical evidence on the asymmetric cost behavior, cost stickiness, in an emerging country, Egypt, which lacks academic research on this subject. Design/methodology/approach This study uses multiple regression analysis to analyze the behavior of selling, general, and administrative costs (SG&A) and cost of goods sold (CGS) individually and jointly using total costs (TC) for the period 2004-2011 for Egyptian-listed firms. In addition, the study compares the cost behavior three years prior to and after the application of the corporate governance code in Egypt in 2007. Findings The results indicate that asymmetric cost behavior is common among Egyptian-listed firms as their SG&A, CGS, and TC were found to be sticky during the study period. The application of the corporate governance code in Egypt was found to affect the nature of SG&A – the behavior of these costs changed from sticky before the code to anti-sticky after the application of the code. Moreover, the code was found to affect the magnitude of stickiness of both CGS and TC. Originality/value Greater awareness about cost behavior is important for emerging markets such as Egypt in order to protect investors’ interests and satisfy their information needs. To the best of our knowledge, this study is the first to provide evidence on cost stickiness in Egypt. Moreover, this study provides further evidence on the correlation between corporate governance and asymmetric cost behavior.

Corporate Governance and Firm Performance

2015 ◽  
pp. 257-274
Author(s):  
Devanjali Nandi ◽  
Arindam Das
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Stock Price ◽  
Panel Data Analysis ◽  
Negative Relationship ◽  
Crisis Period ◽  
Price Performance ◽  
Time Period ◽  
Relationship Of ◽  
The Relationship

Ownership structure is considered to be of prime importance in corporate governance of a firm. The ownership structure significantly varies across the nations. The main focus of this chapter is twofold: firstly to see the impact of ownership structure on performance of the firm and secondly to investigate the relationship between stock market performance and ownership structure during the crisis period. Panel data analysis of CNX 200 companies has been done for the time period of 2006-2013.The study also takes into account the relationship between crisis period stock return and ownership structure. The results of this study reveal a positive relationship of promoter's shareholding with performance while a negative relationship of performance is found with the non-promoters shareholding. The regression of stock price performance on ownership variable gives a significant negative relationship during the crisis period.

scholarly journals Business Strategy, State-Owned Equity and Cost Stickiness: Evidence from Chinese Firms

2020 ◽  
Vol 12 (5) ◽  
pp. 1850
Author(s):  
Tingyong Zhong ◽  
Fangcheng Sun ◽  
Haiyan Zhou ◽  
Jeoung Yul Lee
Keyword(s):  
Business Strategy ◽  
Low Cost ◽  
Differentiation Strategy ◽  
Cost Strategy ◽  
Cost Behavior ◽  
Low Cost Strategy ◽  
The Cost ◽  
The Relationship ◽  
Management Expectations ◽  
Cost Stickiness

This paper investigates the relationship between business strategy and cost stickiness under different ownership. Using the data from listed firms in China from 2002 to 2015, we find that first, firms with different strategies exhibit different cost behavior. The cost stickiness of choosing a differentiation strategy is higher than that of choosing a low-cost strategy. Second, management expectations will affect cost stickiness. Optimistic expectations will increase cost stickiness, while pessimistic expectations will reduce cost stickiness. Third, management expectations can adjust the relationship between business strategy and cost stickiness in terms of government-created advantages (GCAs). If management expectations tend to be optimistic, the cost stickiness is higher with a differentiation strategy than with a low-cost strategy. If management expectations tend to be pessimistic, then cost stickiness is higher with a low-cost strategy than with a differentiation strategy. Finally, the state-owned equity affects the extent of the effect of a differentiation strategy on cost stickiness. State-owned firms, which receive more GCAs than non-state-owned firms, have stronger cost stickiness than non-state-owned firms, even if both categories of firms use more differentiation strategy.

Corporate governance and dividends payout: are they substitutes or complementary?

2015 ◽  
Vol 9 (2) ◽  
pp. 177-194 ◽  
Author(s):  
Samuel Jebaraj Benjamin ◽  
Mazlina Mat Zain
Keyword(s):  
Corporate Governance ◽  
Agency Costs ◽  
Negative Relationship ◽  
Board Independence ◽  
Board Meeting ◽  
Dividend Payout ◽  
Content Type ◽  
Significant Negative Relationship ◽  
The Relationship ◽  
Unique Relationship

Purpose – This paper aims to furnish incremental insights on dividends and corporate governance (CG) by addressing the relationship between board meeting frequency and board independence with dividend payout. In particular, this study aims to investigate whether CG attributes are substitutes to control agency problem within the Malaysian context. Design/methodology/approach – This paper examines panel data on a sample of 114 Malaysian firms (798 observations) for seven years from 2002 to 2008. Findings – Based on 798 firm-year observations for the period from 2002 to 2008, the results show significant negative relationship between CG (board independence, board meeting frequency) and dividend payout. This suggests that CG and dividend payout are substitutes in reducing agency costs. Our study provides empirical evidence consistent with the “substitution argument”, indicating that firms with weak CG need to establish reputation by paying more dividends. Specifically, the findings indicate that firms with a higher proportion of independent directors and boards of director that meet more frequent pay lower dividends. Originality/value – This paper provides evidence on previously untested governance characteristics in relation to how they act as substitute mechanisms with dividends for reducing agency costs. The results builds a strong case for the fresh strand of knowledge on dividends and CG which tests each CG variables to understand each of its unique relationship with dividends in line with the dividends outcome or substitute theory.

scholarly journals The Relationship between Corporate Governance Mechanisms and Going Concern Evaluation: Evidence from Firms Listed on Amman Stock Exchange

2014 ◽  
Vol 4 (4) ◽  
pp. 100
Author(s):  
Bilal Nayef Zureigat ◽  
Faudziah Hanim Fadzil ◽  
Syed Soffian Syed Ismail
Keyword(s):  
Corporate Governance ◽  
Stock Exchange ◽  
Negative Relationship ◽  
Institutional Ownership ◽  
Board Independence ◽  
Board Meeting ◽  
Governance Mechanisms ◽  
Going Concern ◽  
Corporate Governance Mechanisms ◽  
The Relationship

This study aims to examine the relationship between corporate governance mechanisms (representative by each of managerial, institutional ownership, board independence and board meeting) and going concern evaluation among Jordanian listed firms. Through using multiple regression analysis, the results of this study illustrates that there is a positive relationship between managerial ownership, board independence and board meeting and going-concern evaluation, while a negative relationship is found with institutional ownership. There are four main hypotheses, two of them which are managerial and institutional ownership are accepted, while board independence and board meeting are not supported. This study shed more light on the importance of complying with the requirements of governance code and instructions by the companies and the need to impose fines or sanctions on non-compliant companies. The results of this study contribute to the creditors’ interest to be more alert to companies which may possess characteristics that contribute in manipulation of future companies.

Corporate governance and cost of equity: empirical evidence from Latin American companies

2016 ◽  
Vol 16 (5) ◽  
pp. 831-848 ◽  
Author(s):  
Emanuele Teti ◽  
Alberto Dell’Acqua ◽  
Leonardo Etro ◽  
Francesca Resmini
Keyword(s):  
Corporate Governance ◽  
Latin American ◽  
Cost Of Capital ◽  
Negative Relationship ◽  
Developed Countries ◽  
Equity Capital ◽  
Cost Of Equity ◽  
Content Type ◽  
The Cost ◽  
The Relationship

Purpose This paper aims to investigate the extent to which corporate governance (CG) systems adopted by Latin American listed firms affect their cost of equity capital. Several studies on the link between the two aforementioned dimensions have been carried out, but none in the context of Latin American firms. Design/methodology/approach A CG index is created by taking into account the peculiarities of each country and the recommendations given by the corresponding CG institutes. In particular, to assess the level of CG quality, three sub-indexes have been identified: “Disclosure”, “Board of Directors” and “Shareholder Rights, Ownership and Control Structure”. Findings The results indicate a negative relationship between CG quality and the cost of equity. In particular, the “Disclosure” component is the one mostly affecting the cost of equity. Research limitations/implications This study contributes to the literature by adding knowledge on the relationship between CG and cost of capital considering, for the first time, the overall Latin American market. Practical implications The paper proves that institutional investors all over the world are disposed to pay a premium to invest in firms with effective CG standards; moreover, this premium is higher in emerging countries such as those analyzed in this paper, rather than in developed countries. Originality/value To the authors' knowledge, this is the first paper empirically investigating the relationship between CG and cost of capital in Latin America.

Stock returns and financial performance as mediation variables in the influence of good corporate governance on corporate value

2019 ◽  
Vol 19 (6) ◽  
pp. 1289-1309
Author(s):  
Suhadak Kurniati
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Stock Returns ◽  
Significant Influence ◽  
Corporate Value ◽  
Positive Direction ◽  
Content Type ◽  
Company Value ◽  
Good Corporate Governance ◽  
The Relationship

Purpose This paper aims to examine the influence of good governance on corporate value, in which the stock returns and financial performance act as the mediator of the relationship among them. Design/methodology/approach This research was conducted on companies go public listed on the Indonesia Stock Exchange and was included in 2011 to 2017 LQ45 index list, with samples taking a purposive sampling approach through four criteria. Data analysis using WarpPLS with indicator approaches are formative (mutually exclusive between indicators). Findings The findings are as follows: good corporate governance has a significant influence on stock returns in a negative direction; good corporate governance has no significant influence on financial performance; good corporate governance has no significant influence on company value; stock returns have a significant influence on financial performance in a positive direction; financial performance has a significant influence on stock returns with a positive direction; stock returns significantly influence the value of the company in a positive direction; financial performance has a significant influence on the company value in a positive direction. Originality/value The novelty in this study is that the relationship between stock returns and financial performance is reciprocal, which is the relationship among variables that affect each other (back and forth causality), in which in the previous study, the relationship between variables is only one direction; besides, the previous study conducted an analysis to find out the influence of good corporate on stock returns, company value and financial performance separately, with mixed results.

Effect of corporate governance attributes on IFRS compliance: evidence from a developing country

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Martin Kabwe ◽  
Erastus Mwanaumo ◽  
Henry Chalu
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Panel Data Analysis ◽  
Negative Relationship ◽  
Listed Companies ◽  
Annual Reports ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Content Type ◽  
The Relationship

Purpose This study aims to analyze the relationship between corporate governance attributes and the International Financial Reporting Standard (IFRS) compliance among Zambian listed companies. Design/methodology/approach Data was collected through content analysis of annual reports and audited financial statements of 20 Zambian listed companies for the period 2012 to 2018. This is a longitudinal study which involved panel data analysis. A Hausman test was conducted to select the model to use to run the panel regression analysis. Findings The results indicate a positive statistically insignificant relationship between board size, board independence and IFRS compliance. A statistically significant negative relationship between audit committee independence and IFRS compliance. However, there is a positive relationship between board members with accounting and auditing experience, the inclusion of women on the board and IFRS compliance. Research limitations/implications Limitation includes the narrow focus on listed companies only which cannot be generalized to other public interest and private companies in Zambia. Practical implications The study findings imply that corporate governance attributes such as the inclusion of qualified and experienced Chartered Accountants and women on the board will increase IFRS compliance. The appointment criteria of non-executive directors should be strengthened. Originality/value This is the first empirical study to analyze the relationship between IFRS compliance and corporate governance in Zambia. The study also responds to the call by the World Bank (2017) to empirically study IFRS compliance in Zambia and contributes to the scant literature in developing countries on determinants of IFRS compliance.

scholarly journals Co-CEOs and Asymmetric Cost Behavior

2019 ◽  
Vol 11 (4) ◽  
pp. 1046 ◽  
Author(s):  
Jiyeon Lee ◽  
Jin-Ha Park ◽  
Jiwon Hyeon
Keyword(s):  
Corporate Governance ◽  
Foreign Ownership ◽  
Governance Mechanism ◽  
Governance Mechanisms ◽  
Cost Behavior ◽  
Corporate Governance Mechanism ◽  
Asymmetric Cost ◽  
External Governance ◽  
Cost Stickiness ◽  
Asymmetric Cost Behavior

This study investigates the effect of co-CEO structure on asymmetric cost behavior. A firm’s cost behavior reflects managers’ decision making about resources, which can be influenced by various factors. One of them relates to a manager’s decision to inefficiently reallocate their company’s resources when sales decline in pursuit of their incentives for empire-building and disincentives for downsizing. These inefficient resource allocations may result in asymmetric cost behavior, and ultimately be harmful to a firm’s sustainability. We consider the co-CEO structure as an alternative corporate governance mechanism that prevents managers from making inappropriate decisions. By doing so, we investigate whether the degree of cost stickiness differs between co-CEO and single-CEO structures, and whether the former complements external governance mechanisms, particularly foreign ownership, in mitigating cost stickiness. We analyze data from Korean listed companies for 2000–2013, and find that the cost stickiness is lower in the co-CEO structure than in the single-CEO structure. Thus, the co-CEO structure works as an alternative corporate governance mechanism to control the agency problem by inducing mutual monitoring among co-CEOs. Furthermore, the reduction in cost stickiness is greater for firms with higher foreign ownership, indicating that the co-CEO structure complements external governance mechanisms.

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