scholarly journals Board Composition and Dividend Decisions of Companies Listed at the Nairobi Securities Exchange Kenya

2019 ◽  
Vol 3 (VI) ◽  
pp. 354-371
Author(s):  
Jackline Naburi ◽  
Fredrick Ndede
Keyword(s):  
Listed Companies ◽  
Primary Data ◽  
Board Composition ◽  
Board Independence ◽  
Top Management ◽  
Board Diversity ◽  
Dividend Payout ◽  
Independent Variables ◽  
Management Staff ◽  
Retained Earnings

Boards play a vital role in the field of corporate governance in corporate by acting as the overall governing body on all affairs of an organization. Dividend decisions determine the amount of retained earnings that serve as an internal source of finance for most listed companies. The main purpose of this study was to determine how board composition affected dividend decisions of companies listed at the Nairobi Securities Exchange. The study was guided by the following specific objectives: to determine the effect of Director Skills on dividend decisions of companies listed at the Nairobi Securities Exchange, to establish relationship between board independence and dividend decisions companies, listed at the Nairobi Securities Exchange, to examine the effect of board diversity on dividend decisions of companies listed at the Nairobi Securities Exchange and to investigate the effect of board tenure on dividend decisions companies listed at the Nairobi Securities Exchange. The study was anchored on the following theories: agency theory, stakeholder’s theory and stewardship theory. The study adopted a descriptive research design. The population of this study consisted of 700 top management staff drawn from all the 64 firms listed at Nairobi Securities Exchange. Stratified random sampling technique was used to select the sample. The sample size consisted of 254 top management staff of all the 64 listed firms at Nairobi Securities Exchange. The study used both secondary and primary data. Primary data was collected using questionnaires which were structured. Collected research data was analyzed using Statistical Package for Social Scientists software. The analysis was done using both descriptive and inferential statistics. This study provides an objective assessment of the available data and studies regarding the effect of board composition on dividend decisions of companies listed at the Nairobi Securities Exchange. The findings are appropriate and relevant for seeking a solution to combating poor board compositions among listed companies which improve their dividend decisions. This study has intellectual importance especially to other companies not listed on Nairobi Securities Exchange but facing similar problems with their board composition. It provides essential information for scholars seeking a wide variety of options towards approaching the issue of board composition and dividend decisions of companies. At 5% level of significance, directors’ skills, board independence and board tenure were found to be statistically significant while board diversity was not significant. The study used the F- statistic to test the overall significance of the regression model and the model was found statistically significant and suitable for this study. The model had an R2 of 0.7769 implying that variations in the four independent variables accounted for 77.7% of variations in the dependent variable which was further proof that the model was statistically significant and suitable for the study since it explained nearly all the variability of the dependent variable. It is against this backdrop that this research study arrived at conclusions including that profitability had the greatest influence on dividend payout for firms listed at the NSE and recommended among others, that companies listed at the NSE observe and manage well their policies dealing with the four independent variables. Finally, the study made various recommendations among them, further similar research using multiple economic factors. This will enable a thorough research as it gives a wholesome approach to establishing determinants of dividend payout for firms listed at the NSE.

Board Independence of Listed Companies in the US and China

2018 ◽  
Vol 9 (3) ◽  
Author(s):  
Wenge Wang
Keyword(s):  
Listed Companies ◽  
Independent Directors ◽  
Board Independence ◽  
Top Management ◽  
Access To Information ◽  
Governance Mechanism ◽  
Chinese Listed Companies ◽  
The Us ◽  
Efficiency And Effectiveness

Abstract This article explores the board independence of listed companies in the US and China – an ongoing and important issue of corporate governance concerning the true independence of independent directors from management in both countries. It aims to identify what elements have an impact on board independence and examine how these influence the independence of independent directors. Four elements, independence from management; dependence on shareholders; access to information; and incentive to monitor, may have a substantial influence on board independence and align with the in-fact independence of independent directors. This article examines how and why these four elements have an impact on the effectiveness of the role of independent directors in monitoring top management and lead to independent directors failing to be truly independent of management. To support this argument, this article also investigates the efficiency and effectiveness of independent directors serving as a governance mechanism in terms of board independence in Chinese listed companies. The aim was therefore to scrutinise whether independent directors in Chinese listed companies are truly independent from management. Based on statistics calculated on data collected from CSMAR, there appears to be little evidence that independent directors serve as a governance mechanism in monitoring top management in Chinese listed companies, which thus shows that independent directors are not independent in China. The implications arising from this article are that solutions addressing the four elements that have an impact on board independence will enable independent directors to become truly independent.

scholarly journals Board of Directors, Audit Committee and the Financial Performance of Listed Companies in Malaysia

2018 ◽  
pp. 951-957
Author(s):  
Ali Thamer Nawafly ◽  
Ali Saleh Alarussi ◽  
Aidi Ahmi
Keyword(s):  
Corporate Governance ◽  
Regression Analysis ◽  
Financial Performance ◽  
Board Of Directors ◽  
Audit Committee ◽  
Listed Companies ◽  
Board Independence ◽  
Return On Equity ◽  
Independent Variables ◽  
Critical Components

The purpose of this study is to examine the relationships between selected components of corporate governance and financial performance of listed companies in Bursa Malaysia. In this study, the most critical components of corporate governance including board independence, board size, board expertise, audit committee size, audit committee independence, and audit committee expertise, have been examined as the independent variables that influence the financial performance of companies listed on Bursa Malaysia. This study used a sample of 150 non-financial listed companies in Malaysia. This study differs than previous studies that separately study the effect of either the board characteristics or the audit committee characteristics. This study concerns on the combined effect of both, board of directors and audit committee, about return on equity. The study is based on companies’ data for the year 2014. Regression analysis is conducted using Statistical Package for Social Science Version 22 (SPSS 22), and the outcomes of this study show significant and positive relationships between all the independent variables and financial performance of companies listed on Bursa Malaysia. The study ended up with positive suggestions based on the limitations that have been faced while conducting this study.

scholarly journals Pengaruh Likuiditas, Profitabilitas, Leverage, dan Market Ratio terhadap Dividend Payout Ratio pada Perusahaan Manufaktur

2017 ◽  
Vol 12 (1) ◽  
pp. 17
Author(s):  
Erna Puspita
Keyword(s):  
Quantitative Research ◽  
Dividend Policy ◽  
Secondary Data ◽  
Cash Dividend ◽  
Financial Policies ◽  
Dividend Payout ◽  
Return On Equity ◽  
Independent Variables ◽  
Equity Ratio ◽  
Retained Earnings

Dividend policy is concerned with financial policies regarding what amount cash dividend paid to shareholders and re-invested as retained earnings. The recent research aimed to test empirically various factors is considered to affect dividend policy. The independent variables in his research included Current Ratio (CR), Return on Equity (ROE), Debt to Equity Ratio (DER), and Earning Per Share (EPS). Meanwhile, the dependent variable was Dividend Payout Ratio (DPR). Quantitative research was used as the research design and the data was secondary data. Furthermore, purposive sampling was selected to get the sample. The result was 14 companies that pay dividend continuously during this research conducted on 2012 - 2014 were selected as the sample of this research. Multiple linier regression was used to analyze the data. The results showed that ROE and EPS has a contribution to the DPR, and then CR and DER has no contribution to the DPR.

scholarly journals BOARD COMPOSITION, OWNERSHIP STRUCTURE AND DIVIDEND POLICY IN PAKISTAN

2015 ◽  
Vol 03 (02) ◽  
pp. 30-39
Author(s):  
Usmna Azher ◽  
◽  
Syed Kahsif Saeed
Keyword(s):  
Ownership Structure ◽  
Dividend Policy ◽  
Positive Impact ◽  
Stock Exchange ◽  
Board Composition ◽  
Board Independence ◽  
Dividend Payout ◽  
Financial Firms ◽  
The Impact ◽  
Decision Board

The aim of this study was to examine the impact of board composition and ownership structure on dividend policy of the firms listed in Karachi stock exchange. For this purpose, the data of 150 non-financial firms from 2008 to 2012 was employed. This study used descriptive as well as fixed effect and logit models for the estimation purpose. Results showed that CEO Duality and ownership concentration have an insignificant impact on dividend policy. Profitability measures and institutional ownership showed a positive significant impact on both dividend payout ratio and dividend decision. Board independence showed a significant positive impact on dividend payout ratio; however, it remained insignificant in case of dividend decisions.

scholarly journals Analysis of the Interaction between Dividend Policy and Firm Performance in Manufacturing Sector

2019 ◽  
Vol 10 (4) ◽  
pp. 14-21
Author(s):  
Shankar Kumar Singh Jha ◽  
Usama Aziz
Keyword(s):  
Firm Performance ◽  
Dividend Policy ◽  
Positive Impact ◽  
Primary Source ◽  
Theoretical Implication ◽  
Manufacturing Firms ◽  
Primary Data ◽  
Top Management ◽  
Dividend Payout ◽  
The Impact

The purpose of this study is to investigate internal determinant factors of dividend policy in manufacturing firms. The study considers the impact of dividend payout ratio, signalling, earnings per share and risk on firm performance. This research also tries to create a link between dividend policy and firm performance. In the same way, the research is also aimed to create a link between these factors. Such as, the current link between the dividend policy and firm performance. It will elaborate this through current and previous studies as a whole. This study used primary data from the listed manufacturing firms in order to check the effects of dividend policy on firm performance. Data was collected from the primary source. The survey questionnaire was used to collect data from top management in order to highlight the impact of dividend policy on firm performance. Multi-regression analyses were undertaken to identify attributes that influence dividend policy. The results of the study demonstrate that all the variables are significant thus they have a positive impact on firm performance. The study established the findings that dividend payout, earning per share, signalling and risk positively and significantly influence the firm’s value. Moreover, companies should consider dividend policy in order to make the financial decision more efficiently. This study tells us that decisions about dividend policy should be made by considering other variables. The study has both practical and theoretical implication for top management in order to consider the dividend policy and its impact on firm performance.

scholarly journals RELATIONSHIP BETWEEN BOARD COMPOSITION AND FINANCIAL PERFORMANCE OF COMPANIES LISTED AT THE NAIROBI SECURITIES EXCHANGE

2017 ◽  
Vol 1 (2) ◽  
pp. 72
Author(s):  
Onesmus Ngulumbu ◽  
Dr. Josiah Aduda
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Goodness Of Fit ◽  
Survey Design ◽  
Listed Companies ◽  
Foreign Ownership ◽  
Board Composition ◽  
Executive Directors ◽  
Independent Variables ◽  
Governance Practices

Purpose: The purpose of this study is to establish the relationship between board composition and financial performance of quoted companies at the Nairobi Securities exchange.Methodology: This study employed correlational survey design. The population of this research consisted of all the listed companies in the Nairobi Security Exchange. The study used secondary data. Financial performance (ROA) was collected for a period of three years (2010 to 2012). Data was analyzed using Statistical Package for Social Sciences (SPSS) and results were presented in frequency tables and figures. The data was then analyzed in terms of descriptive statistics like frequencies, means and percentages.Results: The study findings indicated that the overall financial performance of listed companies was determined by the corporate governance practices. Results also revealed that there was an increasing trend inboard Size, independent directors (non-executive directors), number of board committees, number of founder directors, gender mix, level of education of directors and age of the directors over the three years. Regression analysis was conducted to empirically determine whether independent variables were a significant determinant of profit before tax. Regression results indicate the goodness of fit for the regression between independent variables and dependent variable is satisfactory. ANOVAs results indicated that the overall model is significant. This implied that the independent variables did a good job at predicting profitability.Unique contribution to theory, practice and policy: The study recommends that the management should ensure that corporate governance practices are adhered to strictly as they are good determinants of financial performance. It is also recommended that the firm should have non-executive directors who act as “professional referees” to ensure that competition among insiders stimulates actions consistent with shareholder value maximization. On the same note, the study recommends that non-executive directors/ foreign ownership be handled with care for their participation is significant. Non-executive directors/ foreign ownership should be designed to enhance the ability of the firm to protect itself against threats from the environment and align the firm's resources for greater advantage.

scholarly journals Does board composition have an impact on CSR reporting?

2017 ◽  
Vol 15 (2) ◽  
pp. 19-35 ◽  
Author(s):  
Patrick Velte
Keyword(s):  
Corporate Social Responsibility ◽  
Financial Reporting ◽  
Empirical Studies ◽  
Management Control ◽  
Board Composition ◽  
Board Independence ◽  
Board Diversity ◽  
Csr Reporting ◽  
Corporate Social

Corporate social responsibility (CSR) reporting plays a key role in management control, particularly in light of the increased demand for non-financial reporting after the financial crisis of 2008–2009. This literature review evaluates 47 empirical studies that concentrate on the influence of several board composition variables on the quantity and quality of CSR reporting. The author briefly introduces the research framework that underpins current empirical studies in this field. This is followed by a discussion of the main variables of board composition: (1) committees (audit and CSR committees), (2) board independence, (3) board expertise, (4) CEO duality, (5) board diversity (gender and foreign diversity), (6) board activity, and (7) board size. The author, then, summarizes the key findings, discusses the limitations of the existing research and offers useful recommendations for researchers, firm practice and regulators.

scholarly journals Board Characteristics and Capital Structure Decisions of Commercial Banks in Kenya

2021 ◽  
Vol 3 (2) ◽  
pp. 129-143
Author(s):  
Hiltommy Muthiani Mulwa ◽  
Fredrick Ndede
Keyword(s):  
Capital Structure ◽  
Commercial Banks ◽  
Reliability And Validity ◽  
Primary Data ◽  
Board Independence ◽  
Strong Positive Correlation ◽  
Board Diversity ◽  
Board Characteristics ◽  
Inferential Analysis ◽  
The Right

Organizations in the modern society are faced with numerous challenges that require those in charge with governance to make effective decisions that enhance organizations’ overall performance and sustainability. One of the key decisions an organization’s board ought to make involve capital structure. Despite various research that have been conducted relating to board characteristics and capital structure, several authors concurs that the manner in which banks select the best capital structure, and the factors that influence their corporate financing behavior are not well understood. The main aim of this study therefore was to investigate board characteristics and capital structure decisions of commercial banks in Kenya. The study measured board characteristics with respect to board size, board diversity, board independence and board expertise while the capital structure decisions was gauged with capital structure ratio, that is, total debt ratio. These dimensions also formed the specific objectives of the study. The study assessed various literatures covering both theoretical and empirical that elaborates on the study variables providing more insight as well as identified gaps that needed to be filled. The study employed correlation design as it strived to demonstrate the causative connection between study variables. All selected commercial banks formed the target population with chief finance officers and internal auditors being the target respondents in these banks. The primary source of information was both primary and secondary data of this study whereby primary data collection instrument was the questionnaire whose reliability and validity was ensured before collecting data. Collected data was properly assessed and checked before conducting final analysis. Data was analyzed using descriptive and inferential analysis, which was aided by statistical package for social science and the outputs were presented in form of graphs, pie charts, frequency tables and narrations. The findings of the study showed a strong positive correlation between all the study measures as shown by R value of 0.824. From inferential analysis findings, the study concludes that on the overall all the board of directors’ characteristics studied had a significant influence on capital structure decisions of commercial banks in Kenya. The regression coefficients p-values were 0.000, 0.000, 0.002 and 0.001 consecutively which were all less than 0.05 indicating a significant relationship between board characteristics dimensions studied and capital structure decisions; therefore, all the null hypotheses were rejected. The study also established that capital structure of commercial banks in Kenya over a period of 5 years between 2013 and 2017 averaged at 0.841 which was less than 1.00, indicating that these banks finance their assets using equity as opposed to debts. As a result, the study concluded that board characteristics have a significant impact on capital structure decisions made by Kenyan commercial banks. Furthermore, commercial banks in Kenya regard financial flexibility as more important than the tax shelter advantage, implying aversion to debt and a proclivity to follow an inverted pecking order when it comes to external funds. The study therefore recommends that banks’ board and management should manage debt and equity levels rationally to enhance their performance; banks should select the right size of board with the right mix of expertise and diversity who will be able to monitor the management but will not interfere with or infringe on capital structure decisions; banks should also increase board independence in order to benefit from the skills and expatriates of these board members; and finally a selection of banks’ board with divergent skills and qualifications so that banks can reap from the heterogeneity of educational backgrounds and competences.

The dynamic impact of board composition on CSR practices and their mutual effect on organizational returns

2019 ◽  
Vol 14 (4) ◽  
pp. 463-479 ◽  
Author(s):  
Sitara Karim ◽  
Norlida Abdul Manab ◽  
Rusmawati Binti Ismail
Keyword(s):  
Mutual Effect ◽  
Resource Dependence Theory ◽  
Board Composition ◽  
Board Independence ◽  
Tobin’S Q ◽  
Dynamic Impact ◽  
Board Size ◽  
Tobin's Q ◽  
Board Diversity ◽  
Content Type

Purpose The purpose of this paper is twofold. First, it aims to investigate the dynamic impact of board composition (board size, board independence and board diversity) on independent corporate social responsibility (CSR) practices (marketplace, environment, community and workplace). Second, it tends to examine the mutual effect of board composition and CSR practices on organizational returns (return on assets and Tobin’s Q) of 631 Malaysian PLCs listed on Bursa Malaysia during 2006-2017. Design/methodology/approach The dynamic model (system GMM) provided by Arellano and Bond (1991) and Arellano and Bover (1995) is used for estimations that control for potential dynamic endogeneity, reverse causality, unobserved heterogeneity and simultaneity problems. Findings Findings reveal weak linkage between board composition and CSR practices where only board diversity is found to be positively linked to marketplace practices of CSR. Further, the mutual impact of board composition and CSR practices on organizational returns suggests board size be positive and board independence to be negative with Tobin’s Q. Board diversity is negative with ROA and positive with Tobin’s Q. Conversely, CSR practices indicate marketplace practices are positive and community practices are negative with Tobin’s Q, environment practices are insignificant with performance, whereas workplace practices are positive with ROA and negative with Tobin’s Q. Practical implications This research is practically considerable for Bursa Malaysia, Securities Commission Malaysia, policymakers, stakeholders, investors and managers. For academia, the theoretical linkages between agency theory, resource dependence theory, resource-based view and stakeholder theory are highlighted. Moreover, methodological underpinnings are also novel for academicians as well as for practitioners. Originality/value The paper uncovers multiple aspects: first, it elaborates the dynamic relationship between board composition and CSR practices; second, it examines the combined effect of board composition and CSR practices on company’s accounting and market gains; finally, the study controls for dynamic endogeneity that is the main econometric problem for CG-CSR-performance relationships.

scholarly journals Corporate Governance Factors Drive Firms’ Earning Per Share: Evidence from Pakistan Stock Exchange Listed Companies

2021 ◽  
Vol 2 (2) ◽  
pp. 123-132
Author(s):  
YASIR KHAN ◽  
MUHAMMAD AMJAD ◽  
DR.SAIMA BATOOL ◽  
OBAID ULLAH BASHIR
Keyword(s):  
Corporate Governance ◽  
Stock Exchange ◽  
Ownership Concentration ◽  
Board Independence ◽  
Regression Result ◽  
Board Diversity ◽  
Ceo Duality ◽  
Independent Variables ◽  
Firm Financial Performance ◽  
The Impact

The aim of this study is to examine the corporate governance factors that drive the firms’ earning per share (EPS) sample of firms listed on Pakistan Stock Exchange (PSX) over the period of 2011 to 2016. This paper analyzed the impact and relationship of dependent variable (Earning per Share) and independent variables (Board Independence, Ownership concentration, CEO duality and Board diversity). The panel data collected from the sample of top 20 companies (market capitalizations) listed in Pakistan stock exchange. To investigate the relationship between variables the Pearson correlation and regression applied and to identify the impact of independent variables (board independence, ownership concentration, CEO duality and Board diversity) on dependent variable (earning per share) used regression tool. The study result of correlations and regression result revealed that board independence, ownership concentration and Board diversity have significant impact on performance while CEO Duality has negative impact on Firm financial performance.

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