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 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 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 Corporate Governance and the Earnings Quality of Nigerian Firms

2020 ◽  
Vol 11 (5) ◽  
pp. 161
Author(s):  
Festus Oladipupo Olaoye ◽  
Ademola Adeniran Adewumi
Keyword(s):  
Corporate Governance ◽  
Comprehensive Evaluation ◽  
Earnings Quality ◽  
Gender Diversity ◽  
Annual Reports ◽  
Board Independence ◽  
Manufacturing Companies ◽  
Board Size ◽  
Board Gender Diversity ◽  
The Impact

The focus of the study is to examine the impact of corporate governance on earnings quality in listed firms in Nigeria. The specific objective is to investigate the effect of board size, board independence and board gender diversity on earnings quality. This study was carried out with secondary data retrieved from corporate annual reports of the sampled companies and the data was analysed using panel regression on a sample of 37 quoted manufacturing companies for the period 2011-2017. On the overall, the result reveals that Board size, board independence and board gender diversity used for measuring corporate governance show significant impact on earnings quality. In addition, corporate governance variables appear to be quite sensitive to the measure of earnings quality used. Based on the findings, the study recommends the need for comprehensive evaluation of corporate governance systems of companies. The study recommends the need for more level of board independence. The diversity issue though is gaining momentum in corporate governance literature can still be regarded as not as dominant as compared to others especially as it relates to protecting shareholder rights and framing dividend policy. The significance of the variable nevertheless suggests that companies should thrive to achieve an appropriate diversity mix.

The impact of VC backing on the corporate governance of Chinese IPOs

2017 ◽  
Vol 29 (3) ◽  
pp. 330-355 ◽  
Author(s):  
Qing (Sophie) Wang ◽  
Hamish D. Anderson ◽  
Jing Chi
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Independent Directors ◽  
Board Independence ◽  
Board Size ◽  
Content Type ◽  
Shareholder Protection ◽  
Political Ties ◽  
The Impact ◽  
Industry Experience

Purpose The purpose of this paper is to investigate how venture capital (VC) backing influences the board size and independence and how VC backing and board structure impact firm performance in China. Design/methodology/approach Using hand-collected data from 924 initial public offering (IPO) prospectuses covering the period from January 2004 to December 2012, the authors investigate the impact of VC backing on board size, board independence and firm market performance through regression analysis. A two-stage approach is also used to address the endogeneity issue. Findings The authors find robust evidence that VC-backed IPOs have more independent boards, after controlling for CEO and firm characteristics, and the potential endogeneity concerns. Furthermore, firms backed by VCs with management political ties (PTs) have more independent directors with industry relevant expertise than other firms. While no significant relationship is found between board independence and firm performance, the authors present some evidence that IPOs which have a larger percentage of independent directors with industry relevant expertise exhibit higher long-term stock returns, and VCs with management PTs also improve IPO long-run stock performance. Research limitations/implications Although VC is new in China and the Chinese capital market has relative poor corporate governance and weak minority shareholder protection, the authors find support in this paper that VC backing is valuable to IPO firms in China not only through providing funding but also by providing political ties and industry experience. However, Chinese regulatory and institutional settings have strong impact on test results and they change rapidly, so the results may not apply to other period in Chinese markets. Originality/value This paper sheds lights on the influences of VC backing on corporate governance and firm performance in a transitional and emerging economy. It discovers the value of VC investors in a transitional economy as of providing political ties and industry experience. The new definition of independent directors suggested by Suchard (2009) is first used by our paper in the Chinese context.

scholarly journals Corporate Governance and Firm Performance: The Role of the Board and Audit Committee

2018 ◽  
Vol 10 (1) ◽  
pp. 210
Author(s):  
Netai Kumar Saha ◽  
Rehnuma Hoque Moutushi ◽  
Mohammad Salauddin
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Group Dynamics ◽  
Internal Control ◽  
Audit Committee ◽  
Performance Indicator ◽  
Positive Impact ◽  
Board Independence ◽  
Board Size

Corporate Governance (CG) has become a paramount issue due to its greater significance of practicing accuracy, maintaining accountability, establishing effective internal control and regulating organizations for achieving organizational goals. The study is conducted to explore the relationship between corporate governance and firm performance with considering the role of board and audit committee. The multiple liner regression analysis is used as the underlying statistical test on the dependent variables, ROA, ROE and TQ to test the association between the independent variables (board size, board independence, size of audit committee and audit committee composition) with firm performance. Homogeneous purposive sampling has been used. The sample size of the study is 81 listed companies in DSE. The results of the study signify that board independence ratio and audit committee is statistically significant and has positive impact on ROA and TQ. But it is not statistically significant in the case of firm performance indicator ROE in this study. In addition to, Board size is not statistically significant and has negative correlation with firm performance due to group dynamics, communication gaps and indecisiveness of larger groups.

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 The effect of corporate governance on financial performance of rural banks in Ghana

2021 ◽  
Vol 2 (4) ◽  
pp. 305-319
Author(s):  
Alhassan Musah ◽  
Mavis Yaa Adutwumwaa
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Gender Diversity ◽  
Secondary Data ◽  
Positive Association ◽  
Board Independence ◽  
Governance Structures ◽  
Board Size ◽  
Ceo Duality ◽  
Board Gender Diversity

Purpose: The study examined the influence of various corporate governance structures such as board size, board independence, board gender diversity and CEO duality on the financial performance of rural banks in Ghana. Research methodology: The study collected secondary data from the annual report of 30 rural banks for a 10-year period spanning 2010 to 2019. The data was coded into excel and exported into STATA where descriptive statistics, correlation analysis and regression analysis were adopted to answer the research questions. Results: The result shows that there was a positive but statistically insignificant association between CEO duality and ROA and ROE. The study further reveals a positive association between board size and ROA and ROE even though that of ROA was statistically insignificant. Also, board independence was found to be a significant determinant of rural bank financial performance In addition to the above, the study reported a negative association between gender diversity on the boards of the rural bank and ROA and ROE and both associations were statistically significant. Limitations: As a result of the lack of publicly available data on rural banks in Ghana, the study relied on only 30 out of the over 100 rural banks currently operating across the country. Contribution: The result of the study will help the Bank of Ghana and the ARB Apex Bank in their formulation of an appropriate corporate governance framework for rural banks in Ghana and enlighten managers of rural banks on corporate governance structures that enhance their financial performance in Ghana. Keywords: Corporate governance, Rural banks, Return on Assets, Return on Equity, Ghana

scholarly journals Tax Aggressiveness, Corporate Governance and Audit Fees: A Study of Listed Firms in Nigeria

2020 ◽  
Vol 11 (6) ◽  
pp. 278
Author(s):  
E. A. Onatuyeh ◽  
I. Ukolobi
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Gender Diversity ◽  
Female Gender ◽  
Audit Fees ◽  
Board Independence ◽  
Tax Rate ◽  
Tax Aggressiveness ◽  
Listed Firms ◽  
Board Gender Diversity

The concept of audit fee has received immense empirical investigation in literature. However, these vast studies have not sufficiently explored the relation of the concept with tax aggressiveness and corporate governance. This study therefore sought to provide empirical evidence as to whether tax aggressive and corporate governance mechanisms are significantly associated with audit fees among listed firms in Nigeria. Leaning on the agency and stakeholder theories, the study examined the measures of tax aggressiveness of effective tax rate and cash tax rate as well as corporate governance mechanisms of board gender diversity, audit committee diligence, and board independence; and how these variables explain changes in external audit fees. A sample of one hundred and seven (107) firms from the entire firms quoted on the Nigerian Stock Exchange as at December, 2018 was utilised. Data were sourced solely from annual financial statements of the studied firms over a ten-year period (2009 to 2018). The panel regression technique, with preference for the random effect model based on the outcome of the Hausman test, was employed to estimate the balanced panel data. The results of the study showed that cash tax rate, audit committee diligence and board independence all exert positive and significant effect on audit fees. Surprisingly, the study revealed a positive but statistically insignificant link between board gender diversity and audit fees. This result may not be unconnected with the low presence of female directors on the board of the firms investigated. In light of the findings, we therefore recommend that more female gender should be allowed to sit on the boards of listed firms in Nigeria in line with the Norwegian model of 40% female gender representation and the Federal Government 35% Affirmative Action. We also recommend that board independence should be encouraged more so as to enhance their oversight functions, and promote quality financial reporting and audit amongst listed firms in Nigeria.

scholarly journals The Interaction Effect of Financial Leverage on the Relationship Between Board Attributes and Firm Performance; Evidence of Non-financial Listed Companies of Pakistan

2019 ◽  
Vol 5 (1) ◽  
pp. 115-122
Author(s):  
Sajjad Nawaz Khan ◽  
Muhammad Noman Yaseen ◽  
Fakhra Mustafa ◽  
Sidra Abbasi
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Interaction Effect ◽  
Tobin’S Q ◽  
Outside Directors ◽  
Board Size ◽  
Tobin's Q ◽  
Corporate Scandals ◽  
Financial Firms ◽  
Sarbanes Oxley

The eminence of corporate governance (CG) was grasped after the major blunders incorporate strategies and distinct corporate scandals around the world during the global financial crises. Advanced countries have passed numerous laws such as “Say on Pay” or the Sarbanes-Oxley Act to shield the shareholder’s wealth. However, evolving countries are still flourishing to gain recognition in corporate governance (CG) effectiveness. The intention of the study is to probe the link between the CG (board size, outside directors) and firm performance (Tobin’s Q). Leverage has been used as an interaction term in the current study. The data had been collected from 130 non-financial firms from the year 2012 to 2015 and Multiple Regression Techniques will be used as the instruments for data analysis. The results indicate that the board size and Tobin’s Q have a significant association and outside directors’ insignificant association with Tobin’s Q. The interaction effect of leverage found a significant connotation between board size, outside directors, and Tobin’s Q.

scholarly journals Impact of corporate governance on financial disclosures: Evidence from India

2014 ◽  
Vol 12 (1) ◽  
pp. 874-889 ◽  
Author(s):  
Mehul Raithatha ◽  
Varadraj Bapat
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Board Independence ◽  
Board Structure ◽  
Board Size ◽  
Cross Sectional ◽  
Listed Firms ◽  
Disclosure Requirements ◽  
Financial Disclosures

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

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