Analyze the Determining Factors of Manager Efficiency in the Generation of Operating Cash Flow

According to the objectives of financial reporting, particularly stewardship objective, the aim of this study is to assess the manager's efficiency of listed firms in the Tehran Stock Exchange in the generation of operating cash flow on the basis of data envelopment analysis (DEA) during the period 2013 to 2019. In this survey, for research hypotheses testing, multivariate regression was employed. The research results indicated that the level of manager efficiency in the generation of operating cash flow is very low and has a decreasing trend. Also, the evidence demonstrated that factors including profitability, CEO's financial knowledge, and percentage of shares owned by institutional shareholders have no significant correlation with the managers' efficiency. Nevertheless, company size, financial leverage, board independence, and competitiveness have a significant correlation with the managers' efficiency in the generation of operating cash flow. Meanwhile, company size has a negative correlation with managers' efficiency and a positive correlation with the remaining items.

Majority of the Minority Approval of Related Party Transactions: the Analysis of Institutional Shareholder Voting

Majority of the minority (MOM) approval of related party transactions (RPTs) has become a popular mechanism to be used in the oversight of RPTs among academics, stakeholders and regulators. Using this mechanism means that for companies, entering into RPTs are subject to the approval of a certain majority of the disinterested shareholders. This article examines the effectiveness of MOM approval as a mechanism to oversee RPTs, i. e. whether it would prevent value-decreasing RPTs while allowing value-increasing ones, by analysing institutional shareholder voting in this context within the US and European legal framework. Specifically, it examines whether institutional shareholders who dominate the shareholding across the world have sufficient incentives to cast informed votes in MOM votes on RPTs and the role of proxy advisors in this regard. Taking account of the relevant theoretical claims and empirical evidence, it provides further policy recommendations to improve the efficacy of MOM approval.

UP THE HILL AND DOWN AGAIN: CONSTRAINING DUAL-CLASS SHARES

The headline recommendation of Jonathan Hill's 2021 UK Listing Review was that dual-class shares structures be permitted on the London Stock Exchange's premium tier. The aspiration was to encourage more high-quality UK equity listings, particularly of high-growth tech-companies, for which dual-class shares are especially beneficial. Dual-class shares allow founders to list their companies, and retain majority-control, while holding significantly less of the cash-flow rights in the company. However, in the UK, dual-class shares are usually discussed in qualified terms, in an attempt to placate sceptical institutional shareholders. Using the UK Listing Review as a platform, this article explores the constraints commonly proposed to be attached to dual-class shares, and argues that, although it is important to protect public shareholders, constraints must not be too severe. A balance must be respected, otherwise UK initiatives to relax rules on dual-class shares could deter the very companies they are intended to attract.

The Role of the Shareholders

This chapter explores the role of the shareholders, who have substantial influence over the company. UK company law is shareholder-centred, but it would be wrong to conclude that shareholders are the principals of the directors or of the company. Shareholders normally appoint the directors and auditors, and they have a mandatory power to remove them. The shareholders are also responsible for approving certain transactions, including share issues, takeover defences, political donations, provisions made for employees on the cessation of business, and (under the Listing Rules) certain large transactions. Taken together, these powers give the shareholders significant influence over the management of the company. The rights of shareholders are, however, also subject to constraints. These constraints operate for the benefit of minority shareholders and creditors. The chapter then examines the UK Stewardship Code, through which the government attempts to exercise pressure on institutional shareholders to refrain from requesting short-term return. It also analyses the reflective loss principle, which restricts shareholders in pursuing damages claims against third parties in circumstances where the company has a competing claim.

An Analysis of ESG Shareholder Resolutions in Australia

This article analyses the recent significant increase in number, prominence and impact of shareholder resolutions focused on environmental, social and governance (‘ESG’) issues in Australia. The analysis is placed in the context of the legal framework for shareholder resolutions and uses two sources of data: information about shareholder ESG resolutions in listed companies between 2002 and 2019, and interviews with representatives of resolution proponents, institutional shareholders, company directors, governance professionals, and the Australian Securities and Investments Commission. It finds a significant increase in the last three years in ESG shareholder resolutions, particularly climate change resolutions, concentrated in a small number of filers, companies and industries. Against a background of modest average levels of support for shareholder ESG resolutions, examples of companies which have recorded high levels of support are notable. Shareholder ESG resolutions are generally recognised as a valuable corporate stakeholder engagement mechanism, producing positive change in some companies.

Monitoring intensity, investment inefficiency and institutional shareholders: Evidence from JSE listed companies in South Africa

This study investigates how variation in monitoring intensity affects the efficiency of firms’ investment decisions in an emerging market in South Africa. The study hypothesis argues that the distraction of institutional shareholders has a statistically significant positive effect on corporate investment inefficiency. Using a more robust Generalized Method of Moments (Sys GMM) estimation approach to analyze data collected for firms listed at the Johannesburg Stock Exchange (JSE) for the period 2004–2019, the results showed that the distraction of institutional shareholders has a positive and statistically significant impact on investment inefficiency. That is, when the attention of institutional shareholders is shifted, the intensity of their monitoring drops, and the executive is involved in investment decisions that are not profitable. This insight has an implication for stakeholders and the value-creating corporate governance mechanism. The study concludes that institutional shareholders must always sustain their monitoring intensity to ensure that corporate decisions are consistent with the firm’s value.

Efek Mekanisme Good Corporate Governance dan Kinerja Keuangan terhadap Nilai Perusahaan

This study aims to examine the effects of institutional ownership, independent board of commissioners, profitability and liquidity on firm value. Goods and consumer manufacturing companies listed on the Indonesia Stock Exchange were sampled in this study with the period 2015 to 2019. Data analysis used statistical methods. The results showed that Institutional Ownership and Profitability had a positive and significant effect on firm value. Meanwhile, the independent board of commissioners has a negative and insignificant effect on firm value, liquidity has a positive and insignificant effect. This study implies that increased monitoring of institutional shareholders and increased performance is an effective way to increase firm value. In addition, the company must continue to improve the supervisory role of the independent board of commissioners and maintain the level of liquidity in order to have a long-term advantage.

The Effect of Multiple Large Shareholders on Banks’ Profitability and Risk

The wide-ranging academic literature on corporate governance in the banking sector includes only a few studies on bank ownership and, specifically, on the comparative power of shareholders within the corporate structure. This paper reports an investigation into the presence of multiple large shareholders and their influence on profitability and risk in the long-term, considering a sample of 697 U.S. and European listed commercial banks from 2008 to 2018. It was found that the number of large and institutional shareholders has a positive impact on profitability, but no effect on risk. However, long-term ownership by multiple large shareholders contributes to decreasing risk in banks.

Impact investment is carrying firm momentum into 2021

Significance Government policies, demographic change and shifting businesses priorities are raising the profile of ESG issues and driving demand for investment. Furthermore, a growing number of empirical studies are finding that investing with impact does not compromise returns. Impacts US President-elect Joe Biden promises more climate action; ESG-focused ETF inflows surged in November and should maintain momentum. Institutional shareholders will gradually embed ESG factors into their monitoring of the corporate governance of publicly listed firms. Tech advances, such as in machine learning, data science, satellite imagery and equipment-mounted sensors, will enhance ESG risk analysis. Investors will monitor the risk of green or social washing, whereby a firm or bond issuer overstates the ESG impact of projects funded.