scholarly journals Enhancing Board Monitoring Tasks: The Effect of Minority-Elected Directors

2020 ◽  
Vol 15 (7) ◽  
pp. 85
Author(s):  
Sara De Masi ◽  
Andrea Zorzi
Keyword(s):  
Corporate Governance ◽  
Best Practice ◽  
Corporate Boards ◽  
Governance Mechanism ◽  
Minority Shareholders ◽  
Controlling Shareholder ◽  
Agency Relationship ◽  
Management Behaviour ◽  
Board Monitoring ◽  
Board Directors

In companies with a controlling shareholder the agency relationship between controlling shareholders and minority shareholders poses significant issue. Managers may pursue, rather than the interests of the company as a whole, the interest of the controlling shareholder. When there is a controlling shareholder, independent directors may not prove sufficient to monitor the management behaviour, given that they are ultimately appointed by the same controlling shareholder whose possible opportunistic behaviour they are meant to constrain. Therefore, minority shareholders may be given appointment rights to the board: directors elected by minority shareholders may work as a corporate governance mechanism that fosters the board’s willingness and ability to monitor managers’ behaviour, on the assumption that managers are appointed by the controlling shareholder. This paper examines empirically whether having a minority-elected director on corporate boards increases the ability of the board to monitor management behaviour. Using a sample of the largest listed Italian companies in years 2008-2017, we find that minority-elected directors have a positive and statistically significant effect on board monitoring tasks. We also document that this effect is higher when they are elected by institutional investors. Our results have important implications for policy makers and, more generally, corporate governance best practice in all contexts in which companies have a concentrated ownership structure.

Board Effectiveness: An Evaluation based on Corporate Governance Score

Think India ◽  
2015 ◽  
Vol 18 (1) ◽  
pp. 16-23
Author(s):  
Hitesh Shukla ◽  
Nailesh Limbasiya
Keyword(s):  
Corporate Governance ◽  
Good Governance ◽  
Sustainable Growth ◽  
Governance Mechanism ◽  
Minority Shareholders ◽  
Effective Governance ◽  
Performance Orientation ◽  
Corporate Governance Mechanism ◽  
And Performance ◽  
Ethical Governance

Growth, progress, and prosperity of any country depend highly on the corporate governance mechanism of that country. Good governance of a country helps it to sustainable growth and consistency in progress. The good governance should contribute towards the improvement in transparency, ethics, morality, and disclosure. The principles of good governance stand on honesty, trust, integrity, openness, and performance orientation. Our honorable Prime Minister Narendra bhai Modi had given the three E for good governance during his speech on Independence Day i.e. Effective Governance, Electronic Governance, and Ethical Governance. The fundamental concern of corporate governance mechanism is to ensure the protection of minority shareholders/owners of specific firms. Mechanism of a corporate governance specifies the relations among the shareholders, board of directors, and managers. The present paper is an attempt to evaluate the effectiveness of the board by calculating the corporate governance score. The mandatory and non-mandatory guidelines have been considered while assigning points to specific parameters of the corporate governance.

Gendering Corporate Boards and Conditional Effectiveness of Board Processes: Insights from a Sub-Saharan African Country

2021 ◽  
pp. 097215092110362
Author(s):  
Obi Berko O. Damoah ◽  
Yvonne Ayerki Lamptey ◽  
Alex Anlesinya ◽  
Barbara Naa Amanuah Tetteh
Keyword(s):  
Corporate Governance ◽  
African Country ◽  
Board Members ◽  
Corporate Boards ◽  
Corporate Board ◽  
Board Processes ◽  
Board Directors ◽  
Women On Corporate Boards ◽  
Sub Saharan ◽  
Board Level

This study explored how and when female board members make effective contribution to board processes in a sub-Saharan African country (Ghana), a context characterized by low female representation on corporate boards, but highly under-researched with respect to the gender and corporate governance literature. The study is based on interview data from 25 female board directors in Ghana. The results show that women on corporate boards contribute to effective board processes and outcomes when their proposed ideas during board meetings are accepted by other board members, implemented by management and impact positively on organizational outcomes such as enhanced financial, product and staff outcomes. These effective contributions of female board directors to corporate board processes can further be enhanced by suitable female directors’ personal-level conditions such as their human capital (advanced degree and professional qualification, and past board membership experience) and family support (supportive husbands, and having grown up children), as well as board-level conditions like occupying chairperson/leadership position on the board or committees, and regular attendance at board meetings. Consequently, this research study contributed to the gender and corporate governance literature by providing new evidence from under-researched geographical context on how women on corporate boards contribute to effective board processes. It further highlights personal and board-level conditions that are necessary for greater contributions of female directors to corporate board processes and outcomes in male-dominated societies and boards.

scholarly journals Women Do the Job: The Reasons to Set Quota for Women on Boards

2018 ◽  
Vol 13 (12) ◽  
pp. 167
Author(s):  
Sara De Masi ◽  
Agnieszka Słomka-Gołębiowska ◽  
Andrea Paci
Keyword(s):  
Audit Committee ◽  
Empirical Support ◽  
Board Structure ◽  
Corporate Boards ◽  
Controlling Shareholder ◽  
Female Directors ◽  
Women On Boards ◽  
Board Monitoring ◽  
Women On Corporate Boards ◽  
Family Connection

In 2012 Italy introduced quota to increase the number of women on corporate boards. The aim of our research is to shed more lights on how women on boards, after the enforcement of quota law, improve the board functions and the board structure. Our study focuses on all Italian FTSE MIB companies from 2008 to 2015. Italy is a country where the percentage of female directors was very low before quota. Female directors, when present, were linked through a family connection to the controlling shareholder. Our research demonstrates that a higher percentage of women on boards, after the quota, leads to a higher board members attendance and more board meetings, thus a better board monitoring. We document that, after quota, one more women to the board results in increasing the board involvement in strategy and the independence of audit committee. Our findings provide empirical support on the effectiveness of female directors, suggesting important implications of the quota legislation on the “type” of women elected.

Shareholder Activism, Institutional Shareholders and Agency Problems in Malaysia

2016 ◽  
Vol 4 (3) ◽  
pp. 30-36
Author(s):  
Maizatul Akmal Musa ◽  
Shahril Eashak Ismail
Keyword(s):  
Corporate Governance ◽  
Best Practice ◽  
Emerging Market ◽  
Corporate Sustainability ◽  
Agency Problems ◽  
Shareholder Activism ◽  
Governance Mechanism ◽  
Contributing Factors ◽  
Internal Governance ◽  
Institutional Shareholders

Objective - The aim of this paper is to study the effectiveness of institutional shareholder activism in controlling corporate behaviours in Malaysia. Methodology/Technique - this study is investigated by critical reviewing previously published articles. Findings - Earlier researchers have viewed poor corporate governance as one of the main contributing factors to a major corporate disaster. The best practice of corporate governance suggests that shareholders should actively be engaged and involved with the investee companies to provide check and balance to the governance mechanism. This is particularly crucial for companies with suspicions of poor internal governance. The engagements from shareholders, especially the institutional shareholders in critical areas will give impacts to the governance structures and practices of the companies involved. Institutional shareholders usually have the capability to perform interventions throughout the year, not only limited to annual general meetings. Novelty - This study proved that corporate governance provides a structure to facilitate performance and also to enhance corporate sustainability. Type of Paper - Conceptual Keywords: Shareholder activism; institutional shareholders; corporate governance; Emerging Market; Agency problems.

Corporate Governance Regulation

2019 ◽  
pp. 223-334
Author(s):  
Carsten Gerner-Beuerle ◽  
Michael Schillig
Keyword(s):  
United States ◽  
Corporate Governance ◽  
Best Practice ◽  
Incomplete Contracts ◽  
Social Function ◽  
The United States ◽  
Corporate Boards ◽  
Corporate Governance Codes ◽  
The Uk ◽  
Over Time

This chapter first analyses whether the corporation is merely a profit-maximizing entity or performs a more inclusive, social function. It then discusses some basic economic concepts that are important to understand the underlying conflicts that corporate governance regulation seeks to address, such as efficiency, incomplete contracts, and agency costs. Next, it examines the goals that corporate governance regulation in the United States, the UK, Germany, and France pursues, and gives an overview of the evolution of the corporate governance movement, which started in the United States in the 1970s. The chapter then introduces the most important corporate actors—officers, directors, and shareholders—and explores whether the ownership structure of public stock corporations has changed over time and continues to differ between countries. The final section analyses how corporate boards are designed, and how best practice standards contained in corporate governance codes shape the composition of boards.

Mandatory Dividend Policy, Growth, Liquidity and Corporate Governance: Evidence from Chile

2020 ◽  
Vol 23 (03) ◽  
pp. 2050025 ◽  
Author(s):  
Sakthi Mahenthiran ◽  
David Cademartori ◽  
Tom Gjerde
Keyword(s):  
Corporate Governance ◽  
Dividend Policy ◽  
American Economic Review ◽  
Market Liquidity ◽  
Governance Mechanism ◽  
Minority Shareholders ◽  
Dividend Smoothing ◽  
Corporate Governance Mechanism ◽  
Pros And Cons ◽  
Retained Earnings

Chilean publicly listed companies are required by law to pay out a minimum 30% of distributable earnings after taxes as dividends on common stock. The study extends Lintner’s [Lintner, J (1956). Distribution of incomes of corporations among dividend retained earnings and taxes. American Economic Review, 46, 97–113.] model of dividend smoothing and Banerjee [Banerjee, S, VA Gatchev and PA Spindt (2007). Stock market liquidity and firm dividend policy. Journal of Financial and Quantitative Analysis, 42(2), 369–398.] logistic model of the likelihood of a firm paying a dividend to investigate the signaling, liquidity, corporate governance, and information risk-based theories of dividends. The results show that Chilean firms’ excess dividends are smoothed in relation to the prior period level of excess dividends, and lagged earnings do not drive excess dividends even though the mandatory minimum dividend is defined in terms of lagged earnings. This insight establishes that dividend decisions regarding the size of the excess dividend and the likelihood of paying an excess dividend are distinct from the mandatory dividend payment. Additionally, the size of excess dividends and their likelihood are higher at firms with higher growth opportunities, a result consistent with the use of excess dividends as a signaling device. Results also demonstrate that greater transparency is associated with a greater likelihood of paying an excess dividend, but transparency does not drive policy regarding the size of the excess dividend. Moreover, the corporate governance mechanism creditor monitoring influences the size of excess dividends but not the likelihood of paying excess dividends. These results have implications for securities regulators evaluating the pros and cons of a mandatory dividend policy to protect minority shareholders in emerging markets.

scholarly journals Ubuntu or Botho African Culture and Corporate Governance: A Case for Diversity in Corporate Boards

2017 ◽  
Vol 6 (4) ◽  
pp. 64
Author(s):  
Tebogo Israel Teddy Magang ◽  
Veronica Goitsemang Magang
Keyword(s):  
Corporate Governance ◽  
Best Practice ◽  
Future Research ◽  
Corporate Boards ◽  
African Culture ◽  
Executive Management ◽  
Value System ◽  
Corporate Compliance ◽  
Culture Of Impunity ◽  
The Relationship

This paper aims to provide a theoretical analysis on the relationship between nationality/ethnicity and compliance with international best practice corporate governance principles. Using Hofstede-Gray cultural-accounting dimensions, the paper attempts to demonstrate that the Ubuntu/Botho culture may in some instances promote/not promote compliance with international best practice corporate governance principles because of the value system(s) of this culture. In view of this, the paper further attempts to present a case for diversity in corporate boards and executive management to enhance corporate compliance with best practice corporate governance principles, performance, disclosure etc. in line with the literature and theoretical arguments on diversity.On one hand, this paper provides future research an opportunity to empirically assess the relationship between corporate compliance with international best practice and nationality/ethnicity (Ubuntu/Botho culture). Future research could also investigate whether the Ubuntu/Botho values hold true today in view of the autocratic regimes in the African continent which have perfected a culture of impunity, corruption and bad governance.

Corporate Governance in China: A Survey*

2020 ◽  
Vol 24 (4) ◽  
pp. 733-772 ◽  
Author(s):  
Fuxiu Jiang ◽  
Kenneth A Kim
Keyword(s):  
Corporate Governance ◽  
Agency Problems ◽  
Future Research ◽  
Minority Shareholders ◽  
Controlling Shareholder ◽  
Controlling Shareholders ◽  
Agency Conflict ◽  
Concentrated Ownership ◽  
The Usa ◽  
Corporate Social

Abstract This article surveys corporate governance in China, as described in a growing literature published in top journals. Unlike the classical vertical agency problems in Western countries, the dominant agency problem in China is the horizontal agency conflict between controlling and minority shareholders arising from concentrated ownership structure; thus one cannot automatically apply what is known about the USA to China. As these features are also prevalent in many other countries, insights from this survey can also be applied to countries far beyond China. We start by describing controlling shareholder and agency problems in China, and then discuss how law and institutions are particularly important for China, where controlling shareholders have great power. As state-owned enterprises have their own features, we separately discuss their corporate governance. We also briefly discuss corporate social responsibility in China. Finally, we provide an agenda for future research.

Agency Costs of Controlling Shareholders' Share Collateral with Taiwan Evidence

2007 ◽  
Vol 10 (02) ◽  
pp. 173-191 ◽  
Author(s):  
Anlin Chen ◽  
Lanfeng Kao ◽  
Yi-Kai Chen
Keyword(s):  
Corporate Governance ◽  
Agency Costs ◽  
Legal Regulation ◽  
Governance Mechanism ◽  
Minority Shareholders ◽  
Control Rights ◽  
Controlling Shareholders ◽  
Corporate Governance Mechanism ◽  
Cash Flow Rights ◽  
And Control

Controlling shareholders' share collateral is a new source of the deviation of cash flow rights and control rights leading to minority shareholder expropriation. However, controlling shareholders' share collateral is not forbidden and has not received particular restriction leading to its popularity in the capital markets. Neglecting the potential agency costs resulting from controlling shareholders' share collateral would hurt the interests of creditors and minority shareholders. We need legal regulation on controlling shareholders' share collateral to reinforce corporate governance mechanism to protect the interests of creditors and minority shareholders.

Effects of board and ownership structure on corporate performance

2014 ◽  
Vol 4 (1) ◽  
pp. 117-130 ◽  
Author(s):  
Houda Arouri ◽  
Mohammed Hossain ◽  
Mohammad Badrul Muttakin
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Positive Association ◽  
Bank Performance ◽  
Corporate Boards ◽  
Governance Mechanism ◽  
Government Ownership ◽  
Significant Positive Association ◽  
Content Type ◽  
Gcc Countries

Purpose – The purpose of this paper is to examine the effect of ownership structure and board composition on bank performance as measured by Tobin's Q and market to book value in Gulf Co-Operation Council (GCC) countries. Design/methodology/approach – A dataset of 58-listed banks of GCC countries for the period 2010 is used. The methodology is based on multivariate regression analysis. Findings – The result shows that the extent of family ownership, foreign ownership and institutional ownership has a significant positive association with bank performance. However, government ownership does not have a significant impact on performance. Other governance variables such as CEO duality and board size appear to have an insignificant impact on performance. Practical implications – Better corporate governance mechanisms are imperative for every company and should be encouraged for the interest of the investors and other stakeholders. The study implies that ownership by corporate governance is more effective for GCC countries. The study also suggests that unlike in western countries, corporate boards may not be an effective corporate governance mechanism in GCC countries. Originality/value – The paper extends the findings of the corporate governance and bank performance relationship in GCC countries that are neglected in the previous literature.

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