scholarly journals Board Structure and Firm Performance:Evidence from Emerging Market

2020 ◽  
Vol 8 (5) ◽  
pp. 2305-2311
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Financial Performance ◽  
Corporate Performance ◽  
Emerging Market ◽  
Small Sample ◽  
Independent Director ◽  
Board Structure ◽  
Board Size ◽  
Firm Financial Performance

This paper fulfils the purpose by studying the effect of corporate board structure i.e., board size and independent director on firm financial performance for selected focused and diversified Indian companies. This study analyses the corporate governance structure of 76 Indian companies (60 focused and 16 diversified companies) listed on the BSE-Sensex for ten years from the year 2007-2016 using panel data analysis. The empirical findings showed a positive relationship of board size with firm performance and significant negative association of independent director with the corporate performance of focused Indian firms, while in the diversified Indian firm, board size found to be positively related to financial performance and independent director found to be negatively related to corporate performance. The result has shown that board structure has seemed to be significant in listed focused firm with firm performance while board structure of diversified firm seems to be insignificant with firm performance, it might be because of small sample size and dynamics of an emerging economy in India which is different from the developed economies of the world. This study implied that in emerging or developing economy like India, lower independent director usually boost company value, and adequate board size will significantly impact on firm performance both in case of focused and diversified firms. This research paper contribute and fill existing gap in literature on corporate governance by examining and establishing relation between firm performance and board structure with focused and diversified Indian firms.

Corporate governance, ownership structure and firms’ financial performance: insights from Muscat securities market (MSM30)

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abdelbaset Queiri ◽  
Araby Madbouly ◽  
Sameh Reyad ◽  
Nizar Dwaikat
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Financial Performance ◽  
Board Of Directors ◽  
Ownership Structure ◽  
Securities Market ◽  
Board Size ◽  
Content Type ◽  
Firm Financial Performance ◽  
Individual Ownership

Purpose The purpose of this study is to investigate the relationship between selected board characteristics and ownership elements and the performance of firms listed in the Muscat Securities Market (MSM30). The examination focused on how the firm financial performance was affected by the board size, the number of board meetings and the ratio of the independent board of directors along to the ownership concentration types (i.e. institutional, state and concentrated individual ownership). Design/methodology/approach Data were extracted from the annual reports available online on the MSM30 website over a period of seven years (2009–2015). The sample consisted of 14 firms belonging to the non-financial sector. The data were of a balanced type and there were 98 observations. The analysis was conducted using the ordinary least square in STATA with the use of the robustness technique of standard error. Findings The findings of this study provide evidence that the selected elements for board characteristics and ownership influence firm performance. Nevertheless, such influence has its interpretation that differs to some extent from other securities markets in the developing countries. For instance, the ratio of the independent board of directors, the number of board director’s meetings, state ownership and concentrated individual ownership were inversely affecting the firm performance. However, institutional ownership and board size were found to have a positive effect on firm performance. Originality/value Studies on the influence of corporate governance and ownership structures in the context of Oman are still scarce. MSM30 received little attention, even though such an index encompasses the most liquid and the most profitable firms. MSM30 is an important index for investors in Oman looking for capital gains. Accordingly, this present study contributes to the knowledge body by providing new findings related to Oman and compares it with the other markets within Gulf Council Countries (GCC) and around the world. This will provide more understanding of the Omani context. Moreover, the authors anticipate that the outcomes of this research, which so far is the most comprehensive study in the Omani context in terms of the impact of corporate governance and ownership structure on firm financial performance can significantly shape corporate governance discourse, practices and policies in Oman, in particular, and in other GCC countries in general, to improve financial performance and corporate sustainability.

Impact of corporate governance on financial performance of sugar sector firms listed in Pakistan stock exchange

2019 ◽  
Vol 12 (2) ◽  
Author(s):  
Muhammad Wasim Jan Khan ◽  
Usman Saeed
Keyword(s):  
Developing Countries ◽  
Corporate Governance ◽  
Financial Performance ◽  
Firm Size ◽  
Stock Exchange ◽  
Balance Sheet ◽  
Board Size ◽  
Return On Equity ◽  
Firm Financial Performance ◽  
Relationship Of

Corporate governance is considered as environment of trust, set of processes, policies and laws affecting the way corporations are administrated and directed. The previous literature in context of the corporate governance relationship with firm financial performance shows controversial findings; similarly literature shows lack of studies in context of developing countries as Pakistan. Therefore, this research explores the relationship of the corporate governance and the firm financial performance in context of developing country as Pakistan. The data has been collected from the sugar sector listed in KSE (Pakistan Stock Exchange), 20 corporations are selected as sample from sugar sector on basis of outstanding shares. Corporate governance taken as independent variable and measured as CEO biformity (CB), board size (BS), firm age (FA), firm size (FS). Financial performance of firms taken as dependent variable and measured as return on asset (ROA), return on equity (ROE), net profit margin (NPM). Data is collected for period of 2000-2013 from reports of the sugar companies listed in KSE (Pakistan Stock Exchange) issued annually and analysis of balance sheet given by State Bank of Pakistan (SBP). Result shows that CEO biformity significantly affecting firm financial performance. Board size (BS) shows partially significant impact on firm financial performance. Firms age (FA) show partially significant impact on firm financial performance. Firm size (FS) shows partially significant impact on firm financial performance. Therefore, conclusion has been drawn based on the results of analysis that this study adds new knowledge to the existing body of knowledge of corporate governance impact on firm financial performance and in context of developing countries as Pakistan. Keywords: Corporate governance, firm financial performance, sugar sector, Pakistan.

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.

The effects of corporate governance on financial performance and financial distress: evidence from Egypt

2015 ◽  
Vol 15 (5) ◽  
pp. 641-662 ◽  
Author(s):  
Tamer Mohamed Shahwan
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Financial Performance ◽  
Financial Distress ◽  
Emerging Market ◽  
Negative Relationship ◽  
Positive Association ◽  
Time Frame ◽  
Content Type

Purpose – This paper aims to empirically examine the quality of corporate governance (CG) practices in Egyptian-listed companies and their impact on firm performance and financial distress in the context of an emerging market such as that of Egypt. Design/methodology/approach – To assess the level of CG practices at a given firm, the current study constructs a corporate governance index (CGI) which consists of four dimensions: disclosure and transparency, composition of the board of directors, shareholders’ rights and investor relations and ownership and control structure. Based on a sample of 86 non-financial firms listed on the Egyptian Exchange, the effects of CG on performance and financial distress are assessed. Tobin’s Q is used to assess corporate performance. At the same time, the Altman Z-score is used as a financial distress indicator, as it measures financial distress inversely. The bigger the Z-score, the smaller the risk of financial distress. Findings – The overall score of the CGI, on average, suggests that the quality of CG practices within Egyptian-listed firms is relatively low. The results do not support the positive association between CG practices and financial performance. In addition, there is an insignificant negative relationship between CG practices and the likelihood of financial distress. The current study also provides evidence that firm-specific characteristics could be useful as a first-pass screen in determining firm performance and the likelihood of financial distress. Research limitations/implications – The sample size and time frame of our analysis are relatively small; some caution would be needed before generalizing the results to the entire population. Practical implications – The findings may be of interest to those academic researchers, practitioners and regulators who are interested in discovering the quality of CG practices in a developing market such as that of Egypt and its impact on financial performance and financial distress. Originality/value – This paper extends the existing literature, in the Egyptian context in particular, by examining firm performance and the risk of financial distress in relation to the level of CG mechanisms adopted.

scholarly journals The South African code of corporate governance. The relationship between compliance and financial performance: Evidence from South African publicly listed firms

2015 ◽  
Vol 12 (2) ◽  
pp. 149-169 ◽  
Author(s):  
Jonty Tshipa ◽  
Thabang Mokoaleli-Mokoteli
Keyword(s):  
South Africa ◽  
Corporate Governance ◽  
Firm Performance ◽  
Financial Performance ◽  
South African ◽  
Small Firms ◽  
Large Firms ◽  
Board Size ◽  
Tobin's Q ◽  
Listed Firms

Using both Return On Assets (ROA) and Tobin’s Q as proxies for performance, the study seeks to explore if better governed firms exhibit greater financial performance than poorly governed firms. The paper employs a panel study methodology for a sample of 137 Johannesburg Stock Exchange (JSE) listed firms between 2002 and 2011. The results show that the compliance levels to corporate governance in South Africa (SA) has been improving since 2002 when King II came into force. However, the compliance level in large firms appears to be higher than in small firms. Further, the findings show that the market value of large firms is higher than that of small firms. These results largely support the notion that better governed firms outperforms poorly governed firms in terms of financial performance. Notably, the empirical results indicate that board size, CEO duality and the presence of independent non-executive directors positively impact the performance of a firm, whereas board gender diversity, director share-ownership and frequency of board meetings have no impact on firm performance. This suggests that greater representation of independent non-executive director, a larger board size and the separation of CEO and Chairman should be encouraged to enhance firm performance. Unexpectedly, the presence of internal key board committees, such as remuneration, audit and nomination, negatively impact firm performance. Similar to UK, South Africa has a flexible approach to corporate governance, in which listed firms are required to apply or explain non-conformance to King recommendations. This study has policy implications as it determines whether the flexible corporate governance approach employed by SA improves corporate governance compliance than the mandatory corporate governance approach as employed by countries such as Sri Lanka and US, and whether compliance translates into firm performance. The significant finding of this study is that compliant firms enjoy a higher firm performance as measured by ROA and Tobin’s Q. This implies that compliance to corporate governance code of practice matters, not just as box ticking exercise but as a real step change in the governance of South African listed firms. This paper fulfils an identified need of how compliance to corporate governance influences firm performance in South Africa. The findings have implications to JSE listing rules, policy, investor confidence and academia.

scholarly journals Can board mechanism affect the firm value in Pakistan?

2009 ◽  
Vol 6 (3) ◽  
pp. 308-317 ◽  
Author(s):  
Mian Sajid Nazir ◽  
Shafaqat Ali ◽  
Abdul Haque
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Firm Value ◽  
Board Structure ◽  
Board Size ◽  
Positive Role ◽  
Performance Variables ◽  
Performance Factors ◽  
Governance Indicators ◽  
The Relationship

Corporate governance is, undoubtedly, extremely essential for the performance of the organizations. The structure of corporate ownership has significant impact on the external as well as internal performance factors of firms. The relationship between corporate governance indicators and firm performance has been extensively investigated; however, a little work has been done on how the structure of board can add value to the firm. This paper sheds light on the relationship of some aspects of board structure like board size, board composition, and CEO duality with the performance variables Tobin’s Q and Return on Assets (ROA) by using a sample of 53 firms of cement and sugar sectors of Pakistan for a period of 2005-2007. The results indicate that the firms perform better with moderate board size and the performance is adversely affected if CEO also acts as chairperson of board of directors whereas the external directors can play a positive role for firm performance in Pakistan.

scholarly journals The Impact Of Corporate Governance on The Financial Performance in Malaysia

2021 ◽  
Vol 5 (1) ◽  
pp. 41-58
Author(s):  
NURFATANAH ABDULLAH
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Firm Size ◽  
Audit Committee ◽  
Committee Meeting ◽  
Board Size ◽  
Firm Financial Performance ◽  
Normality Test ◽  
Lm Test ◽  
The Impact

The aim of this study is to investigate the relationship between corporate governance and firm financial performance in Malaysia. This study is mainly focusing on four sections of corporate governance which are board independent, board size, the frequency of audit committee meeting and firm size. The population of this study is Top 30 firms in Malaysia that are public listed in Bursa Malaysia while for the period, this study focusses on year 2016 to 2019 which is 4 years. This study uses Return on Assets (ROA) to measure the firm effectiveness and efficiency. As for statistical analysis, this study uses E-View to run all the test such as Breusch-Godfrey Serial Correlation LM Test, Hausman Test, Ordinary Least Squared (OLS) method, Autocorrelation, Multicollinearity and Normality Test. According to the results of the analysis, board independent has positive insignificant relationship with firm performances while board size and firm performances have negative and insignificant relationship. As for the frequency of audit committee meeting and firm size, the results display that both variables have negatively significant relationship with the performances of the firm. Apart from that this study use two theory which are Prospect Theory and Agency Theory.

Corporate Governance and Firm Performance in an Emerging Market

2020 ◽  
pp. 208-226
Author(s):  
Razali Haron ◽  
Anwar Hasan Abdullah Othman ◽  
Naji Mansour Nomran ◽  
Maizaitulaidawati Md Husin
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Agency Theory ◽  
Positive Relationship ◽  
Emerging Market ◽  
Board Independence ◽  
Board Size ◽  
Huge Data ◽  
Corporate Governance Mechanisms ◽  
Dominant Theory

This study examines the corporate governance mechanisms and how they affect firm performance in Malaysia. After the financial crisis in 1997/98, the CG issues have been the most debated, discussed, and researched in the attempt to improve the CG structure accommodating every economy regardless of the economic landscapes. Using a rich and huge data on Malaysian firms for 16 observation years, this study found that the MCCG has been of a closely referred blueprint by firms in Malaysia to improve firms' performance. Certain CG mechanisms do have significant impact on firm performance. Firms seem to operate in a large board size indicating a positive relationship with performance and board independence. CEO duality is negatively related, in support of separation of roles, complementing the result of board independence and ownership structure as positively related to performance. Agency theory seems to be the dominant theory influencing the CG structure of firms in Malaysia.

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