scholarly journals Board Composition, Insider Ownership and Firm Performance: Evidence from Post-Shock Period of Stock Prices in Bangladesh

2021 ◽  
pp. 7-17
Author(s):  
Md. Faruk Hossain
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Stock Prices ◽  
Board Independence ◽  
Hausman Test ◽  
Ceo Duality ◽  
Insider Ownership ◽  
Shock Period ◽  
Post Shock ◽  
Measures Of Performance

Purpose: This study attempts to analyze the influence of board structure (board size, board independence, CEO duality, insider ownership) on performance of Bangladeshi listed nonfinancial firms during the post-shock period of stock prices. Methodology: Putting stress on the issue of controlling for any possible endogeneity problems prevails in the effects of structure of board on corporate performance this study employed the Durbin-Wu-Hausman test as the presence of endogeneity severely makes the OLS estimates biased. Therefore, satisfying endogeneity and overidentification tests the observed data have been analyzed by 2SLS as well as OLS regression models. In an attempt to choose the consistent coefficients between OLS and 2SLS a Hausman test was applied. Findings: Results of the study suggest that a board featuring more directors improve accounting measures of performance and a board having more independent directors also significantly assist firms to enhance their market measure of performance. CEO duality is found detrimental to the accounting measures of performance. Apart from, findings support that holding more ownership by insiders leads to enhance firm performance. Thus, it provides empirical evidence to support a view of agency theory that large board, board independence, and insider ownership are good incentives to the firm to monitor and supervise managerial activities and minimize agency problems. Practical Implication: Overall, findings of the study are posing some implications for academics, practitioners, and policy makers in advancing the existing knowledge domain and formulating governance policies in the context of emerging countries like Bangladesh. Originality: The driving force of this work was to investigate how effective the corporate governance directives/notifications in regard to board independence and insider ownership was in protecting the shareholders’ interest during the post-shock period of stock prices in Bangladesh. Therefore, this study provides a robust result with regard to the impacts of reformed corporate governance notification (CGN 2012) on firm performance in Bangladesh.

scholarly journals Corporate governance mechanisms and the performance of Malaysian listed firms

2016 ◽  
Vol 14 (1) ◽  
pp. 384-398 ◽  
Author(s):  
Shamsul Nahar Abdullah
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Chief Executive ◽  
Board Independence ◽  
Tobin’S Q ◽  
Women Directors ◽  
Board Size ◽  
Tobin's Q ◽  
Ceo Duality ◽  
Listed Firms

In the aftermath of the Asian Financial crisis in 1997/1998, the Malaysia Securities Commission (SC) issued the Malaysian Code on Corporate Governance in 2000 (MCCG 2000). It was subsequently revised in 2007 following the Enron and Transmile debacles. In 2012, the SC issued the latest MCCG 2012 which introduced several new recommendations that are in line with developments in other parts of the world. Hence, the purpose of this study is to investigate the influence of the structure of the board and its activities on firm performance post MCCG 2007. The study also aims to shed light on the effectiveness of the board of directors since the issuance of MCCG 2000 and of MCCG 2007. It also aims to reveal the preparedness of listed firms in Malaysia to embrace MCCG 2012. Using a population of non-finance listed firms for the 2009, 2010 and 2011 financial years, it was found that board independence, chief executive officer (CEO) duality, directors’ busyness, nomination committee independence, the establishment of a risk management committee (RMC) and board meetings are not associated with firm performance, i.e. Tobin’s q. However, the market appears to be in favour of a larger board size. As for return on assets (ROA), it is not associated with board independence, board size, directors’ busyness and nomination committee independence. On the other hand CEO duality and the establishment of a RMC improve ROA, while board meetings are detrimental to ROA. It can therefore be concluded that board independence is not associated with either Tobin’s q or ROA. Hence, any corporate governance reforms should not over-emphasize the representation of independent directors on the board, rather the focus might be shifted to board activities, such as board meetings and the establishment of a RMC. With regard to board size, since the market is in favour of a larger board size, firms should increase the board’s size to enable the appointment of women directors to the board. Finally, combining the CEO and board chairman roles should not be disallowed as the market views this favourably. Hence, the ‘one-hat approach’ does not appear to be applicable in the case of CEO duality.

scholarly journals Corporate governance and firm performance in Pakistan: Dynamic panel estimation

2019 ◽  
Vol 12 (2) ◽  
Author(s):  
Muhammad Akbar ◽  
Shahzad Hussain ◽  
Tanveer Ahmad ◽  
Shoib Hassan
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Board Independence ◽  
Managerial Ownership ◽  
Dynamic Panel ◽  
Ceo Duality ◽  
Financial Firms ◽  
Statistical Variations ◽  
Relationship Of ◽  
The Impact

The purpose of this research is to analyze the association between corporate governance and firm performance. Specifically, it examines the impact of CEO duality on board characteristics and its relationship with firm performance through dynamic penal estimation. The findings of this research are based on a sample of 191 listed non-financial firms over the period 2004-2014. We document that corporate governance plays a pivotal role in determining the financial performance of firms operating in Pakistan. Consistent with past studies, findings of this research also show some statistical variations among the sampled firms (large and small size). CEO duality compromises the efficiency of board independence. Further, the non-linear relationship of managerial ownership with performance is also depicted through the results of this study. Keywords: Corporate governance, accounting-market based measures, firm performance

Corporate Governance and Firm Performance in Indian Textile Companies: Evidence from NSE 500

2020 ◽  
Vol 13 (2) ◽  
pp. 210-226
Author(s):  
Ishfaq Gulzar ◽  
S. M. Imamul Haque ◽  
Tasneem Khan
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Performance Measures ◽  
Board Independence ◽  
Board Size ◽  
Ceo Duality ◽  
Board Characteristics ◽  
And Performance ◽  
Business Practitioners ◽  
Measure Of Performance

This article endeavours to study the relationship between corporate governance and performance for a sample of 11 textile firms listed on Nifty 500 Index in India. The article examines whether the board characteristics have any impact on performance measures. The data covers the time period from 2014 to 2018. The study uses board size, board meetings, board independence as corporate governance surrogates from different dimensions along with other widely uses of independent variables to assess their impact in a panel data-based regression. The findings provide mixed results between the board characteristics and the firm performance. Board size and firm performance is statistically significant with return on assets and Tobin’s Q. Whereas, board independence, board meetings and CEO duality are not statistically significant with both accounting-based measure of performance and market-based measure of performance. The article provides empirical evidence that board independence, board meetings and CEO duality is not necessary for listed textile companies in India and would be of interest to regulatory bodies, business practitioners and academic researchers. The main value of this article is the analysis of the effect of corporate governance on performance measures on listed Indian textile industries.

scholarly journals THE MODERATING EFFECT OF INTELLECTUAL CAPITAL ON THE RELATIONSHIP BETWEEN CORPORATE GOVERNANCE AND COMPANIES PERFORMANCE IN PAKISTAN

2018 ◽  
Vol 2 (1) ◽  
pp. 12-22
Author(s):  
Sajad Nawaz Khan ◽  
Engku Ismail Ali
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Intellectual Capital ◽  
Gender Diversity ◽  
Moderating Effect ◽  
Board Independence ◽  
Board Size ◽  
Ceo Duality ◽  
Financial Expertise ◽  
The Relationship

During the global financial crises, the prominence of corporate governance was realized after the major loopholes identified in corporate policies and conspicuous corporate scandals all over the world. Developed countries have passed several laws such as the “Say on Pay” or the “Sarbanes-Oxley Act” to protect the shareholder's wealth. On the contrary, developing countries are still thriving to gain effective corporate governance recognition. This study examined the moderating effect of intellectual capital on the relationship between corporate governance and firm performance. The current study uses four-year panel data from 2012 to 2015. Linear regression, correlated panels corrected standard errors (PCSEs) are used in the analysis. The findings of the study indicate that the intellectual capital has a significant effect on the relationship between board size, board financial expertise, CEO duality, gender diversity and firm performance (ROA). On the other hand, it does not seem to moderate the relationship between board independence and firm performance (ROA). Similarly, the findings indicate that intellectual capital has a significant relationship between board size, board independence, CEO duality, gender diversity and firm performance (ROE) has no moderating effect on the relationship between board financial expertise and firm performance (ROE). Moreover, the empirical results highlight the significance of intellectual capital for regulations and policy making.

scholarly journals Performance of Firm and Board Attributes Nexus: Using Hausman Test Analysis

2021 ◽  
Vol 12 (4) ◽  
pp. 268
Author(s):  
Adegbola Otekunrin ◽  
Tony Nwanji ◽  
Damilola Fagboro ◽  
Johnson Olowookere ◽  
Stella Ibitoye
Keyword(s):  
Firm Performance ◽  
Regression Model ◽  
Consumer Goods ◽  
Annual Reports ◽  
Board Independence ◽  
Board Size ◽  
Test Analysis ◽  
Hausman Test ◽  
Board Characteristics ◽  
Consumer Services

With the rise of corporate failures and the conflict of interest arising from shareholders and the management, there have been growing concerns in corporate governance (CG). It is there is ponsibility of the board of director in CG is to oversee the management as well as the firm performance and to make the management accountable to shareholders. Hence this research examines the connection between firms’ performance and board features using board size, board independence in addition to board age as a proxy for board characteristics and turnover as a proxy for firm performance. A sample size of 16 consumer goods firms out of a population of 20 consumer goods firms listed in the NSE from 2016 to 2019 was used using a judgmental sampling technique. Secondary data employed was taken out from the sampled firms’ annual reports. Hausman test analysis was used to select the appropriate regression model, which is the fixed effect regression model that was utilized to analyse the connection between firms’ performance in addition to board characteristics. It is found that firm performance and board independence of the consumer services goods companies in Nigeria are significantly related.The results also confirmed that firm performance and board size of the consumer services goods companies in Nigeria are significantly related. The result indicates firm performance and board education of the consumer services goods companies in Nigeria are not significantly related. Consequently, overall lthe study concluded that firms’ performance and board characteristics are related. Also, board characteristics increase board performance which will lead to increase in firms’ performances, there by maximizing profit and ensuring efficiency. The study concluded that a company with good board characteristics would help to ensure the maximization of both the shareholders and stakeholders wealth. Hence a proper board characteristic helps to solve the problem of both agency theory and stakeholders’ theory.

scholarly journals Corporate Governance and Firm Performance: An Empirical Analysis of Manufacturing Listed Firms in Ghana

2018 ◽  
Vol 7 (3) ◽  
pp. 111 ◽  
Author(s):  
Beatrice Sarpong-Danquah ◽  
Prince Gyimah ◽  
Richard Owusu Afriyie ◽  
Albert Asiama
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Manufacturing Sector ◽  
Gender Diversity ◽  
Generalized Least Squares ◽  
Manufacturing Firms ◽  
Board Independence ◽  
Outside Directors ◽  
Board Size ◽  
Listed Firms

This paper assesses the effect of corporate governance on the financial performance of manufacturing firms in a developing country. Specifically, the paper investigates whether gender diversity, board independence, and board size affects return on asset (ROA) and return on equity (ROE) of manufacturing listed firms in Ghana. We use the generalized least squares (GLS) panel regression model to analyze the dataset of 11 listed manufacturing firms from 2009-2013. Our result reveals an insignificant representation of women on boards. Also, the empirical result shows that board independence and board gender diversity have significant positive effect on ROE and ROA. However, there is no statistical significant relationship between board size and firm performance (ROE and ROA). We suggest that manufacturing firms should appoint female board members as well as outside directors on their boards as this can make significant contribution to firm’s performance. Our study provides the first comprehensive explicit exposition of corporate governance-performance nexus using data from the manufacturing sector in Ghana.

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.

Sign in / Sign up

Export Citation Format

Share Document