scholarly journals Country Governance and Corporate Governance as determinants of Firm Efficiency; Empirical Study of Pakistan

2021 ◽  
Vol 6 (1) ◽  
pp. 241-254
Author(s):  
Muhammad Nisar Khan ◽  
Dr. Muhammad Ilyas ◽  
Dr. Saima Urooge
Keyword(s):  
Corporate Governance ◽  
Technical Efficiency ◽  
Regulatory System ◽  
Agency Cost ◽  
Scale Efficiency ◽  
Best Interest ◽  
Governance System ◽  
Firm Level ◽  
Efficient System ◽  
Firm Efficiency

Financial Crisis Inquiry Commission (FCIC) report of 2011 state that financial crises and failure of large corporation is due to weak governance system. Therefore, governments and regulatory bodies are convinced to ensure effective CG practices and strict regulatory requirements must be imposed. The primary aim of this research is to examine the effect of corporate governance both at country and firm-level on the firm’s efficiency of Pakistani listed non-financial firms. The empirical analyses consist of two parts. Initially firm efficiencies such as overall technical efficiency, Pure Technical efficiency and Scale efficiency are measured through Data Envelopment Analysis (DEA) technique over a 10 years’ period from 2008 to 2017.These efficiency scores are used as proxies for firm performance. In the second stage, CGboth at firm and country level are used as independent variables to examine its impact on firm efficiencies scores. The results findings support the theoretical justifications that efficient system of CG and regulatory system ensures disclosures. These disclosures not only enhance accounting information quality but also help in reducing agency cost which in return improve investors protection. Thus, managers tend to take decisions in the best interest of shareholder by utilizing firm resources efficiently and effectively and as a result enhance firm efficiency.

scholarly journals Investigation on firm efficiency: evidence from selected Asia-Pacific countries

2018 ◽  
Vol 25 (8) ◽  
pp. 3062-3080 ◽  
Author(s):  
Khar Mang Tan ◽  
Fakarudin Kamarudin ◽  
Amin Noordin Bany-Ariffin ◽  
Norhuda Abdul Rahim
Keyword(s):  
Technical Efficiency ◽  
Small Firms ◽  
Banking Sector ◽  
Profit Maximization ◽  
Asia Pacific ◽  
Scale Efficiency ◽  
Scale Level ◽  
Firm Efficiency ◽  
Content Type ◽  
Parametric Data

Purpose The purpose of this paper is to examine the firm efficiency or technical efficiency (TE), pure technical efficiency (PTE) and scale efficiency (SE) in the selected developed and developing Asia-Pacific countries. Design/methodology/approach The sample consists of a sum of 700 firms in selected developed and developing Asia-Pacific countries over the period from 2009 to 2015. The non-parametric data envelopment analysis under the production approach is used to investigate firm efficiency. Findings On average, this paper discovers that the firms in selected Asia-Pacific countries are moderately efficient. Scale inefficiency (SIE) is found to be the dominant source of firms’ technical inefficiency. The analysis of return to scale shows that the large firms tend to operate at decreasing return to scale level, while the small firms tend to operate at increasing return to scale level. Practical implications The findings from this paper provide significant insights to the policy makers and firm managers in promoting the efficient firms of Asia-Pacific countries. Originality/value The present paper conducts a critical analysis on return to scale in the firms sector of Asia-Pacific context, which is ignored by the past studies on firm efficiency since the analysis of return to scale is mostly emphasized on banking sector. The precise nature of SIE is important for a firm to be efficient in achieving the firm’s primary goals of profit maximization and sustaining market competitiveness.

Corporate Governance and Cash Holdings

2021 ◽  
pp. 305-321
Author(s):  
Ahmed Hassanein
Keyword(s):  
Corporate Governance ◽  
Cash Holdings ◽  
Opportunistic Behavior ◽  
Governance System ◽  
Firm Level ◽  
Corporate Managers ◽  
Country Level ◽  
Corporate Governance System ◽  
The Impact ◽  
Corporate Cash Holdings

Corporate cash induces the opportunistic behavior of corporate managers that can create an agency problem. A corporate governance system controls the opportunistic behavior of managers and can affect the firm's policy on holding cash. This study explains how the aspects of corporate governance, country-level and firm-level governance, can affect the corporate policy on holding cash. First, the study provides the nature, definition, and importance of corporate cash holdings. Second, it outlines various motivations and theories behind holding corporate cash. Third, it explains the relation between firm-level governance and corporate cash holdings. Fourth, it focuses on the impact of firm-specific governance attributes on the level of corporate cash holdings. Fifth, it presents the relation between country-level governance and corporate cash holdings.

scholarly journals Does better corporate governance attract foreign equity ownership? Evidence from Malaysian listed companies

2012 ◽  
Vol 9 (4) ◽  
pp. 118-125
Author(s):  
Yap Voon Choong ◽  
Chan Kok Thim ◽  
John Stanley Murugesu
Keyword(s):  
Corporate Governance ◽  
Agency Cost ◽  
Government Ownership ◽  
Firm Level ◽  
Insider Ownership ◽  
Listed Firms ◽  
Good Corporate Governance ◽  
Corporate Governance Mechanisms ◽  
Governance Practices ◽  
Equity Ownership

This study examines the effect of firm-level corporate governance variables on foreign equity ownership (FEO) in Malaysia. Foreign equity ownership can be an important source of capital for companies to fund their expansion and growth. To attract FEO, good corporate governance practices are vital because these practices are used to reduce or mitigate agency cost. Based on a sample of listed firms on Bursa Malaysia and employing multiple regression analysis, the study finds that a number of corporate governance mechanisms significantly improve the ability of companies to attract foreign equity ownership, especially, Insider Ownership, Government Ownership, Firm Size, Dividend Yield and Tobin’s Q. The results of the study indicate that firm-level efforts for better corporate governance sends positive signals and confidence to foreign investors.

scholarly journals Review of Corporate Governance Practices and Financial Distress Prediction

2018 ◽  
Vol 7 (4.28) ◽  
pp. 30
Author(s):  
Syed Muhammad Hassan Gillani Ahmad ◽  
Suresh Ramakrishnan ◽  
Hamad Raza ◽  
Humara Ahmad
Keyword(s):  
Corporate Governance ◽  
Financial Distress ◽  
Firm Value ◽  
Agency Cost ◽  
Review Of Literature ◽  
Firm Level ◽  
Country Level ◽  
Financial Distress Prediction ◽  
Good Corporate Governance ◽  
Governance Practices

Good corporate governance practices play an import role in increasing the firm value. Based on the agency theory related to corporate governance, if an agent (management) does not protect interest of principal (shareholders) then, agency cost is occurred and this creates a bad impact on the corporate performance. Therefore, it is necessary to address weak corporate governance practices in early stages otherwise firms can go in financial distress and eventually become bankrupt. The objective of this current study is to conduct a nonsystematic review of literature on theories and models related to corporate governance and financial distress. In the light of thorough review of literature, it is found that corporate governance variables (i.e. ownership concentration, board size, board composition, CEO duality, level of independence of board from management and managerial ownership) are good predictors for predicting financial distress. Moreover, it is also found that these corporate governance variables were not only used separately for predicting financial distress but also used along with others variables (firm level and country level) for the purpose of enhancing quality of financial distress models.

scholarly journals Corporate Governance Features and Efficiency: Evidence from the Saudi Arabian Banks

2019 ◽  
Vol 12 (1) ◽  
pp. 43
Author(s):  
Adel Bogari
Keyword(s):  
Corporate Governance ◽  
Technical Efficiency ◽  
Ownership Structure ◽  
Saudi Arabian ◽  
Foreign Ownership ◽  
State Ownership ◽  
Scale Efficiency ◽  
Private Ownership ◽  
Board Size ◽  
Banking Efficiency

The aim of this article is to examine the effect of the Corporate Governance features as measured by the Independence of the board of directors, the board size and the ownership structure (private ownership/State ownership and foreign ownership) on the banking efficiency of Saudi Arabian banks. A data set of the twelve biggest banks for the period 2000 to 2017 is used. As for banking efficiency scores, the methodology is based on the Data Envelopment Analysis (DEA). It allows for Technical Efficiency, Pure Technical Efficiency and Scale Efficiency scores. The results of this study point to the significant role of The Independence (INDEP) variable supported by a positive and significant effect on efficiency in all regressions, indicating a positive relationship with the Technical Efficiency (TE) and the Pure Technical Efficiency (PTE). In the contrary, the independence of the board directors has a negative and significant effect on scale efficiency (SE). According to Board Size variable, results related to this later reveal a negative and a significant effect on technical efficiency (TE), Pure Technical Efficiency (PTE) and Scale Efficiency (SE) in all regressions. Finally, as for the ownership structure variables, results confirm that Private Ownership (OWEN-P) provides positive and significant effects on both the Technical and the Scale Efficiency. This effect seems to be turn to be negative and significant when it is correlated to the Pure Technical Efficiency. State Ownership (OWEN-S) impacts positively and significantly the Technical Efficiency, the Pure Technical Efficiency and Scale Efficiency separately. As for the Foreign Ownership (OWEN-F) variable, except for the Pure Technical Efficiency (PTE), we note a positive and significant effect on the Technical and Scale Efficiency. This study implies better Corporate Governance practices should be supported to improve the overall efficiency and its components. This includes in particular, the Board Size and the Ownership structure variables.

Productivity growth in India's bakery manufacturing industry

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shiv Kumar ◽  
Abdulla ◽  
ChhatraPal Singh
Keyword(s):  
Technical Efficiency ◽  
Productivity Growth ◽  
Manufacturing Industry ◽  
Stochastic Frontier ◽  
Allocative Efficiency ◽  
Scale Efficiency ◽  
Firm Level ◽  
Indian States ◽  
Content Type ◽  
Bakery Industry

PurposeThe main aim of this paper is to examine the total factor productivity (TFP) and its components namely, technological change, technical efficiency change, scale change and allocative change in bakery industry in India.Design/methodology/approachThe study is based on panel data on 35 Indian states for the period 2009–2010 and 2012–2013. Stochastic frontier function is employed to estimate the productivity growth.FindingsThe results show that TFP is driven by technological progress, followed by technical efficiency and scale efficiency. Allocative efficiency, however, has a negative effect on TFP.Research limitations/implicationsThe bakery industry needs to define its innovation strategies, as these strategies lead to different outcomes that can be achieved only through the management of resources dedicated to the generation and implementation of innovations.Originality/valueUsing frontier production function takes the stochastic context into account for the dynamic behaviour of TFP and its components. Most of the past studies have assessed the TFP at the aggregate level using three-digit National Industrial Classification (NIC) or four-digit NIC code. An analysis at higher levels aggregation masks the variation in TFP and its components available at the firm level. This study uses five-digit NIC data to measure the firm specific TFP of bakery industry. Further, it looks at the contribution of technical progress (TP), technical efficiency, scale efficiency and allocative efficiency.

scholarly journals Corporate Governance and Firm Efficiency: Empirical Study of Pakistan

2018 ◽  
Vol 4 (2) ◽  
pp. 135-144
Author(s):  
Adnan Ahmad ◽  
Muhammad Nisar Khan ◽  
Muhammad Ilyas ◽  
Ihtisham Khan
Keyword(s):  
Corporate Governance ◽  
Technical Efficiency ◽  
Stock Exchange ◽  
Cash Flows ◽  
Net Income ◽  
Firm Efficiency ◽  
Financial Firms ◽  
Dummy Variable ◽  
Size Growth ◽  
Input Variables

governance on firm efficiency calculated through Data Envelopment Analysis (DEA) during the period from 2008-2017 for a sample of 136 non-financial firms listed on Pakistan Stock Exchange (PSX). DEA is a non-parametric technique developed by Charnes, Cooper and Rhodes (1978) which is used to measure firm efficiency by taking different input and output variables. In this study we have used three input and three output variables for firm overall technical efficiency (OTE) measurement, input variables were Total Assets, Total Liabilities and Cost of Goods Sold (CGS) and output variables were Gross Sales Revenue (Sales), Income before Tax (IBT) and Net Income (NI). Overall technical efficiency was calculated through DEA for selected non-financial firms. In the second stage, the association between firm efficiency measured through DEA and corporate governance estimated by Corporate Governance Index has been fully confirmed in selected firms. Firm size, growth, dummy variable for financial crises 2007-09, GDP growth, and operating cash flows (OCF) were used as control variables. The results show that better implementation of CG practices by the firms will help in increasing their efficiency. In other words, better CG practices help firms to utilize their resources in the better way to produce firm outputs (sales/Profit).

Corporate governance and cash holdings: the way forward

2018 ◽  
Vol 10 (2) ◽  
pp. 152-170 ◽  
Author(s):  
Tahir Akhtar ◽  
Mohamad Ali Tareq ◽  
Muhammad Rizky Prima Sakti ◽  
Adnan Ahmad Khan
Keyword(s):  
Corporate Governance ◽  
Cash Holdings ◽  
Agency Cost ◽  
Best Interests ◽  
Theoretical Argument ◽  
Firm Level ◽  
Content Type ◽  
Country Level ◽  
Developing Markets

Purpose This study aims to provide a review of corporate governance and cash holdings because strong corporate governance is necessary for the efficient utilization of firm’s liquid resources such as cash, to minimize the agency cost of high cash holdings and to improve the value of cash. Design/methodology/approach The authors provide a literature review of corporate governance and cash holdings through a conceptual and theoretical argument rather than empirical research. Findings The authors review an empirical and theoretical work surrounding key corporate governance variables and identify avenues for future research. The authors find that corporate governance mechanisms and cash holdings have received much attention during the past two decades. However, the significant role of corporate governance (both country-level and the firm-level) in controlling the entrenched behaviour of the managers is discussed separately in the literature. The combined effect of both country-level and the firm-level governance is lacking in the cash holdings literature. Additionally, this study has found that much attention is paid to the developed markets, while only a few focused on the developing markets regarding cash holding literature, although the agency problems are high in developing markets. Originality/value The study contributes to the growing literature on corporate governance and cash holdings and provides a further understanding of the role of governance in minimizing the agency cost to increase value by assuring that firms’ assets are used efficiently and productively in the best interests of investors and other stakeholders. In addition, it provides a new idea to the policymaker and future researchers where they need to do more work.

scholarly journals Capital Structure, Agency Cost and Corporate Governance: Theoretical Linkages under the Operational Framework of a Modern Company

2019 ◽  
Vol 1 (2) ◽  
pp. p140
Author(s):  
Zacharias Bragoudakis
Keyword(s):  
Corporate Governance ◽  
Internal Friction ◽  
Capital Structure ◽  
Interaction Mechanism ◽  
Analytical Framework ◽  
Agency Cost ◽  
Governance System ◽  
Company Value ◽  
Corporate Governance System ◽  
Executive Managers

The purpose of this paper is to explain the interaction mechanism between the capital structure of a modern company, the implying agency cost that is raised when the company is expanding and the corporate governance system that should be implemented in order to achieve a smoothness of the implied internal friction. The corporate governance experience suggests that there is a lack of a systemic management at those problems. The above corporate problems reduce the maximization of the company value. It is argued that the failure to maximize the value of the company can be attributed to the endogenous weakness of corporate interconnection. This paper analyses the theory of corporate interconnection between its agents (shareholders, executive managers and bondholders), contributes to a better understanding of those issues and propose some ideas of addressing them though a systematical and analytical framework.

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