scholarly journals The Effect of Internal Corporate Governance of the Firm’s Performance and Firm Value in Five GCC Countries

2021 ◽  
Author(s):  
Zahra AL Nasser
Keyword(s):  
Firm Performance ◽  
Firm Value ◽  
Research Question ◽  
Family Members ◽  
Fiscal Year ◽  
Institutional Setting ◽  
Royal Family ◽  
Gcc Countries ◽  
Big 4 ◽  
The Board Of Directors

A critical glance at the literature review of GCC countries, firm performance and firm value shows that the literature does not adequately consider the uniqueness of an institutional setting such as the presence of royal family members and government officials’ members on the board. Additionally, noticeable features are not accounted for in the previous literature, such as a large involvement of relatives and the presence of a female on the board of directors. It is important to understand whether these variables matter or not in this region as this then influences the firm’s performance and firm value. Thus, this study focuses on the effect of internal CG of the firm’s performance and firm value in five GCC countries. The final sample consists of 220 firms (1,096 firm-year observations) for the fiscal year 2009 to 2013. The main finding is that there is a positive significant relationship is seen between expertise factors and firm performance. The expertise factor encompasses royal family members on the board as well as hiring one of the Big 4-auditing firms. This result is in line with a theoretical claim (agency theory), the research question expectation and empirical evidence.

The effect of royal family members on the board on firm performance in Saudi Arabia

2019 ◽  
Vol 10 (3) ◽  
pp. 487-518
Author(s):  
Zahra AL Nasser
Keyword(s):  
Saudi Arabia ◽  
Firm Performance ◽  
Board Of Directors ◽  
Firm Value ◽  
Family Members ◽  
Resource Dependence Theory ◽  
Royal Family ◽  
Content Type ◽  
Listed Firms ◽  
The Board Of Directors

Purpose The purpose of this paper is to empirically examine the effect of royal family members on firm performance of publicly listed companies in Saudi Arabia. Design/methodology/approach Using 491 firm-year observations of non-financial publicly listed firms in Saudi Arabia’s stock market between 2009 and 2013, the study employs, besides others, the advanced econometric technique GMM-system estimator. This allows the dynamic nature and control of the endogeneity problem to be accounted for in corporate governance and firm performance. Findings The main result is that the attendance of royal family members at board meetings negatively influences firm performance but does not have an influence on firm value. The results also show that firms with many independent royal family members on the board of directors have better firm performance and firm value. In addition, firms with a high number of royal family members presenting on the board have better firm performance. Research limitations/implications This study offers guidance to assist the further investigation of the SA Royal Family’s BoD membership either in SA or in other monarchy countries. It is interesting to compare these results in order to further understand the different effects that the Royal Family’s BoD membership have in such countries. This study’s results suggest that independent members of SA’s Royal Family on the BoD have some influence on firm performance in both the short and long term. Thus, policymakers should encourage the members of SA’s Royal Family to become more involved in firms’ BoDs. Practical implications This study offers guidance for further investigation of royal family members in the region or in other monarchy countries. It will be interesting to compare these results. The study suggests that royal family members on the board have a partial influence on firm performance, especially the independent ones. Thus, the policymakers should encourage more involvement of independent royal family members on the board. Social implications Foreign and minority investors, who invest in SA’s publicly listed firms, should note that when independent members of SA’s Royal Family are on the BoD their investment will benefit from the reduced risks and uncertainty. Originality/value To the best of the author’s knowledge, this is the first study undertaken to investigate empirically the influence a royal family’s presence on the board of directors has on firm performance. This study is based on both theories, namely the agency theory and resource dependence theory.

scholarly journals The controlling power of royal family members on the board of directors and audit committee effectiveness

Accounting ◽  
2021 ◽  
pp. 987-992
Author(s):  
Khaled Salmen Aljaaidi ◽  
Abdulaziz Alothman ◽  
Raj Bahadur Sharma ◽  
Omar Ali Bagais
Keyword(s):  
Board Of Directors ◽  
Audit Committee ◽  
Family Members ◽  
Family Ownership ◽  
Marginal Effect ◽  
Governance Mechanism ◽  
Royal Family ◽  
The Board Of Directors ◽  
Corporate Governance Mechanism ◽  
Relationship Of

This paper examines the association of the presence of royal family members on the board of directors with audit committee effectiveness. The sample of this study consists of 444 listed manufactured firms in Saudi Arabia for the period 2012-2019. Using the Pooled OLS regression, the result of the study shows that royal family ownership is associated with audit committee effectiveness, giving support to the substitution hypothesis. The result indicates that members from the royal families are good monitors imposed into the companies' managements as both taking the role of decision makers and owners who may substitute the effectiveness of the audit committee. The presence of royal family members on the board has an alternative for the effectiveness of the audit committee. The marginal effect of audit committee effectiveness as an internal corporate governance mechanism is substituted by the presence of royal family members on the board. This study provides insightful evidence to regulators and policy makers at the company and country levels on the relationship of royal family ownership and audit committee effectiveness.

scholarly journals Board of directors, performance and firm value in Brazilian listed state-owned enterprises

2020 ◽  
Vol 18 (2) ◽  
pp. 1
Author(s):  
Carolina Coletta ◽  
Roberto Arruda de Souza Lima
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Board Of Directors ◽  
Firm Value ◽  
Board Structure ◽  
Agency Conflicts ◽  
Governance Practices ◽  
The Board Of Directors ◽  
Structure Index ◽  
Corporate Governance Practice

<p>This paper investigates the relationship between the board of directors' structure and firm performance and the value of Brazilian listed state-owned enterprises (SOEs), from 2002 to 2017, totaling 327 observations using an unbalanced panel data with fixed and random effects regressions. The evolution of corporate governance practices adopted by the boards is presented for this period, using a Board Structure Index (BSI). The results indicate a significant positive relation between the board's structure and firm performance, measured by ROE and ROA, and firm value, measured by Tobin's <em>q</em>. These findings are consistent with corporate governance literature, in the sense that the board's role of monitoring management reduces agency conflicts. The results also show an improvement in adopting corporate governance practice on Brazilian SOEs' boards over the last decade.</p>

scholarly journals Are controlled companies underperforming?

2020 ◽  
Vol 19 (4) ◽  
Author(s):  
Linh Le ◽  
Dongfang Nie
Keyword(s):  
United States ◽  
Firm Performance ◽  
Ownership Structure ◽  
Capital Market ◽  
Keyword Search ◽  
Research Question ◽  
The United States ◽  
Fiscal Year ◽  
The Us ◽  
Important Player

Research Question: Are controlled companies underperforming in the United States? Motivation: Anecdotal evidence shows that the average market capitalization of controlled firms increased from $8.3 billion in 2005 to $20.6 billion in 2015. Given the rapid increase in capitalization, the group of controlled companies has become an important player in the US capital market. However, little is known about controlled companies. Idea: We examine whether controlled companies are underperforming relative to non-controlled companies in the United States. Data: The data sample consists of 351 listed companies in the United States for the fiscal year 2014. Tools: 176 controlled companies were manually collected by performing the keyword search “controlled company” from the U.S. Securities and Exchange Commissions (SEC) website via “www.seekedgar.com/”. Specifically, we search “controlled company” from proxy statement DEF 14A. Each controlled company is verified after reading through the proxy statement. Findings: Using 176 controlled companies and 176 random sampled non-controlled companies, we find that controlled companies are underperforming compared to non-controlled companies. Contribution: To the best of our knowledge, we are the first to collect the group of controlled companies in the US and we are among the first to study how firm performs under the type II agency problem (Pantzalis et al. 1998). We contribute to the stream of literature on how ownership structure (e.g., family-controlled firms) affects firm performance (Anderson & Reeb, 2003). Consistent with the findings from family-controlled firms, we show that ownership structure affects firm performance. Out study sheds light on the important role of controlled companies in the US capital market.

scholarly journals Royal Family Members and Financial Reporting Timeliness: Evidence from UAE

2021 ◽  
Vol 5 (1) ◽  
pp. 8-27
Author(s):  
Mohammed Ali Almuzaiqer
Keyword(s):  
Board Of Directors ◽  
United Arab Emirates ◽  
Financial Reporting ◽  
Audit Committee ◽  
Family Members ◽  
Reporting Quality ◽  
Listed Companies ◽  
Financial Reporting Quality ◽  
Royal Family ◽  
The Board Of Directors

This study aims to examine the association between Royal family members on the board of directors and financial reporting quality in the United Arab Emirates (UAE). UAE has two markets, namely Abu Dhabi Exchange Security (ADX) and Dubai Financial Market (DFM). The data of the current study were collected from these two markets listed companies for the periods of 2011 to 2018 which resulted in 437 observations. The results of this study showed that the existence of royal family members on the board of the UAE listed companies is significantly associated with financial reporting timeliness. This study provides evidence on the role played by the elite groups (Royal Family members) in UAE in enhancing the role of the board of directors. The findings also reported that board independence, audit committee size, audit committee expert, and firm profitability are significantly associated with financial reporting timeliness. The findings of this study contribute to the existing theory and empirical evidence of how the existence of Royal family members on the board of directors adds values to the company and improves its financial reporting quality.

KB Kookmin Bank in Korea

2016 ◽  
Vol 20 (02) ◽  
pp. 283-304
Author(s):  
Moon-Kyung Cho ◽  
Ho-Young Lee ◽  
Dan-Bee Song
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Private Information ◽  
Institutional Investors ◽  
Firm Value ◽  
Governance Structure ◽  
Inside Information ◽  
Corporate Governance Structure ◽  
Independent Analysis ◽  
The Board Of Directors

KB Kookmin Bank (KB) was the most prominent commercial bank in Korea. However, KB faced two challenges: declining firm performance and a lack of transparency in corporate governance at the level of its financial group, KB Financial Group (KBFG). By the end of 2012, KB was not a market leader in Korea any more. In addition, a conflict arose between the CEO and some members of the board of directors (BOD) of KBFG when an insider leaked private information to the International Shareholders Services (ISS). The insider reported that certain BOD members decreased firm value by disrupting the senior management’s strategic plan to increase the firm’s long-term competitiveness, which required attention from institutional investors. KBFG had three issues based on the inside information provided and an independent analysis. First, its CEO had been selected from outside KBFG, and he was under pressure to improve firm performance before his term was over. Second, some KBFG BOD members did not represent the interests of the company’s general shareholders, including foreign institutional investors and the National Pension Services of Korea. Finally, the heavy influence of the Korean government was culturally ingrained within the corporate governance structure of KBFG.

scholarly journals Conflict-induced forced CEO turnover and firm performance

2018 ◽  
Vol 44 (9) ◽  
pp. 1134-1154
Author(s):  
Kuntara Pukthuanthong ◽  
Saif Ullah ◽  
Thomas J. Walker ◽  
Jing Zhang
Keyword(s):  
Firm Performance ◽  
Univariate Analysis ◽  
Ceo Turnover ◽  
Main Role ◽  
Corporate Boards ◽  
Firm Characteristics ◽  
Stock Performance ◽  
Content Type ◽  
Strategic Direction ◽  
The Board Of Directors

Purpose The purpose of this paper is to examine operational and stock performance changes around forced CEO turnovers caused by conflicts between corporate boards and CEOs over the strategic direction of the firm. In addition, the authors investigate whether changes in performance can be explained by board, CEO, or firm characteristics. Design/methodology/approach The authors apply propensity score matching to choose matching firms that do not forced CEO turnover but have similar characteristics with the sample firms. The authors compare their operating and stock performances. The authors apply both univariate analysis and multivariate regression analyses. Findings The authors find that the CEO turnovers caused by conflicts between corporate boards and CEOs over the strategic direction of the firms tend to be preceded by significant declines in a firm’s operating and stock performance and that corporate performance improves after turnovers. In addition, the authors find that an increase in long-term incentives and firm size and a decrease in turnover improve firm performance. Originality/value While the existing corporate governance literature emphasizes oversight as the main role of the board of directors and identifies the CEO as the leader who sets the strategic direction of the firm, in cases of conflict-induced forced CEO turnover, it is the board that sets the strategic direction. This paper is the first to provide evidence regarding the implications of conflict-induced forced CEO turnovers.

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