scholarly journals Voluntary social performance disclosure and firm profitability of South African listed firms: Examining the complementary role of board independence and managerial ownership

Author(s):  
Frank Sampong ◽  
Na Song ◽  
Gilbert K. Amoako ◽  
Kingsley O. Boahene
Author(s):  
Frank Sampong ◽  
Na Song ◽  
Gilbert K. Amoako ◽  
Kingsley O. Boahene

Background: There is growing literature promoting corporate governance mechanisms as important elements that could mitigate the inconclusive findings within the corporate social performance and firm profitability research. A key theoretical assumption within the extant literature that provides support for this proposition is that corporate social performance and firm profitability are organisational outcomes in the presence of good corporate governance.Aim: Firstly, the aim is to re-investigate voluntary social performance disclosure (SPD) and long-term profitability association from the perspective of international standards, using the Global Reporting Initiative G3.1 guidelines. Secondly, to examine the joint moderating effect of board independence and managerial ownership (MO) on the voluntary SPD and profitability nexus.Setting: The South Africa institutional setting, where recent corporate governance regimes require firms to voluntarily make corporate governance related disclosures on both shareholder-and stakeholder-related information is used as the study context.Method: Utilising manually extracted data of listed firms, over the period 2010 to 2015, the generalised least square regression and seemingly unrelated regression (with a 1-year lag as the main independent variable) are used to examine the stated hypotheses.Results: We found a positive association between voluntary SPD and long-term profitability. We also found that the presence of non-executive directors positively moderates the association between voluntary SPD and long-term profitability. Thirdly, the proportion of MO significantly positively moderates the association between voluntary SPD and long-term profitability. Lastly, the complementary role of the presence of non-executive directors and the proportion of MO significantly positively moderates the association between voluntary SPD and long-term profitability.Conclusion: This study finds support for scholarly theoretical arguments that organisational outcomes are largely possible in the presence of good corporate governance, which has a long-term implication for firms’ shareholder wealth maximisation. This study contributes to the ongoing research examining the notion of substitutive versus complementary effects of governance mechanisms, and a growing research literature on corporate social responsibility (CSR) disclosure from the perspective of international standardisation. This study therefore makes far-reaching contributions to the corporate governance and social responsibility literature in an African context.


2020 ◽  
Vol 21 (2) ◽  
pp. 201-229 ◽  
Author(s):  
Bakr Al-Gamrh ◽  
Redhwan Al-Dhamari ◽  
Akanksha Jalan ◽  
Asghar Afshar Jahanshahi

PurposeThis study examines the impact of two different types of foreign ownership—by Arab and non-Arab investors on firms' financial and social performance. It then goes on to investigate how the degree of board independence affects the aforementioned relationship between these two types of foreign investors on firm performance.Design/methodology/approachThe sample for the study is a panel of all listed firms in the Dubai Financial Market (DFM) and the Abu Dhabi Securities exchange (ADX) from 2008 to 2012.FindingsResults indicate that while Arab foreign ownership affects firms' financial and social performance negatively, non-Arab foreign ownership does so, positively. Further tests indicate that board independence weakens the negative relationship between firm financial and social performance with foreign Arab ownership and deteriorate the relationship between firm financial and social performance and non-Arab foreign ownership.Research limitations/implicationsFuture studies may extend the coverage of the study by including other countries in the region and other identities of the foreign investors.Practical implicationsThis study may help policy makers in the UAE to improve the implementation and enforcement of existing regulations concerning corporate social responsibility (CSR) and board independence. It also highlights the need to look into the monitoring role of independent board members.Originality/valueThis is the first study to examine the role of board independence on the relationship between foreign ownership and firm's financial and social performance. To the best of our knowledge, this is the first paper that attempts to enrich the understanding of foreign ownership by classifying it into Arab versus non-Arab.


2020 ◽  
Vol 45 (3) ◽  
pp. 141-151
Author(s):  
Hanh Song Thi Pham ◽  
Duy Thanh Nguyen

This article investigates the moderating role of board independence in the relationship between debt financing and performance of emerging market firms. We have used an empirical model in which the firm’s accounting profitability is a dependent variable and the independent variables are debt financing, board independence, the interaction variable made of debt financing and board independence as well as various control variables. Our analysis is based on a panel data set of 300 listed firms in Vietnam between 2013 and 2017. Our study finds that debt financing has a significantly negative effect and that board independence reduces the adverse impact of debt financing on accounting profitability. Our results are consistent across different estimation models and methods.


2014 ◽  
Vol 12 (1) ◽  
pp. 874-889 ◽  
Author(s):  
Mehul Raithatha ◽  
Varadraj Bapat

The paper aims at identifying impact of corporate governance variables i.e. board structure (board size, board independence, board activity and board busyness) and ownership structure (foreign promoters holding, institutional shareholding and CEO duality) on financial disclosures made by the Indian firms. Using cross sectional data of 325 listed firms for the financial year 2009-10, we compute financial disclosure score (using 171 checklist points) based on disclosure requirements of accounting standards. We find average disclosure score of 73%, maximum and minimum being 100% and 46% respectively. Our finding support agency theory in terms of monitoring role of board since board size is found to be significant however we do not find any influence of board independence on the disclosures. The study also supports resource dependency theory in terms of outside directorship which might provide exposure to different corporate environment, brings diverse perspectives and knowledge to the directors and this in turn leads to improved disclosures. We also support the notion that having foreign promoter shareholding improves disclosures


2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mejbel Al-Saidi

Purpose This paper aims to reduce the knowledge gap by using a large sample and different regressions while controlling the endogeneity and causality issues. Design/methodology/approach This study used the ordinary least square (OLS) and two stage least squares (2SLS) regressions to control the endogeneity and causality problems; this estimation strategy allows for comparison of both estimates to identify any inconsistency and biases in the parameters. Findings General speaking, this study found that board independence negatively affected firm performance based on Tobin’s Q only and the relationship between the two variables ran from board independence to firm performance but not vice versa. Originality/value The current independent directors are not adding value to Kuwait’s listed firms. Some directors who represent large shareholders and the conflict between large shareholders and small shareholders could affect the role of independent directors in Kuwait. To best of the researchers’ knowledge, this study is the first to consider board independent after controlling the issues of endogeneity and causality in Kuwait; thus, the results could be useful for Kuwaiti firms, regulators and policymakers.


PLoS ONE ◽  
2021 ◽  
Vol 16 (11) ◽  
pp. e0260040
Author(s):  
Fengchao Li ◽  
Xing Zhang ◽  
Jaime Ortiz

Share pledging has become popular as a method of loan collateral among Chinese shareholders. Our research used a sample of Chinese listed firms between 2008–2018 and produced two main findings. Firstly, we found a negative association between stock price risk and firm profitability. Our second finding was that the interaction effect of share pledging and stock price risk is greater on firm profitability than the effect of stock price risk itself. We examined the role of share pledging by modeling pooled OLS and fixed effects using share pledging behavior, controlling shareholders’ share pledging and the share pledging ratio to reinforce the robustness of our results. Furthermore, we investigated the Davis Double Play effect of share pledging to analyze how share pledging affects stock price risk. We found that higher EPS and investor expectations cannot mitigate the positive impact of share pledging on stock price risk. That is, the reduction of EPS and the deterioration of investor expectations caused by share pledging risk will not further aggravate the stock price risk, as shareholders may have taken some managerial actions to affect the transmission mechanism.


2015 ◽  
Vol 18 (4) ◽  
pp. 608-628 ◽  
Author(s):  
L Kruger ◽  
P Mostert ◽  
LT De Beer

In an industry characterised by fierce competition, cell phone network providers find it increasingly difficult to retain their customers after service failure. It is therefore essential for cell phone network providers to offer effective service recovery when they attempt to restore customer satisfaction following service failure. As it has been argued that relationships between customers and service providers should be considered a key determinant of the service recovery required to restore post-recovery attitudes and behavioural intentions, the purpose of this study was to determine the relationships between South African cell phone customers’ relationship intentions, their perceptions of service recovery and their satisfaction following service recovery. Personal in-home interviews were conducted to collect data from 605 cell phone customers residing in the Johannesburg metropolitan area. In addition to the significant positive relationships found between cell phone users’ relationship intentions, perceived service recovery and satisfaction after service recovery, this study found that perceived service recovery played a mediating role in the relationship between relationship intention and satisfaction following service recovery. The study concludes that, although a direct relationship exists between relationship intention and satisfaction following service recovery, perceived service recovery plays an additional indirect complementary role in this relationship. It is recommended that, in addition to focusing their relationship efforts on customers with relationship intentions, cell phone network providers also offer positively perceived service recovery to these customers, as this would lead to greater satisfaction following service recovery.


Author(s):  
Mark Sanders

When this book's author began studying Zulu, he was often questioned why he was learning it. This book places the author's endeavors within a wider context to uncover how, in the past 150 years of South African history, Zulu became a battleground for issues of property, possession, and deprivation. The book combines elements of analysis and memoir to explore a complex cultural history. Perceiving that colonial learners of Zulu saw themselves as repairing harm done to Africans by Europeans, the book reveals deeper motives at work in the development of Zulu-language learning—from the emergence of the pidgin Fanagalo among missionaries and traders in the nineteenth century to widespread efforts, in the twentieth and twenty-first centuries, to teach a correct form of Zulu. The book looks at the white appropriation of Zulu language, music, and dance in South African culture, and at the association of Zulu with a martial masculinity. In exploring how Zulu has come to represent what is most properly and powerfully African, the book examines differences in English- and Zulu-language press coverage of an important trial, as well as the role of linguistic purism in xenophobic violence in South Africa. Through one person's efforts to learn the Zulu language, the book explores how a language's history and politics influence all individuals in a multilingual society.


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