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Corporate Governance and the Board of Directors: Performance Effects of Changes in Board Composition
... In a nutshell good corpoprate governance generates better firm performance (Chen et al., 2007), for firms that have more independent directors will generally perform better than firms with more inside directors. On other hand, there are some researchers with adverse results, such as Baysinger and Butler (1985) and , who find no significant relationship between outsiders on the board, board composition and selected corporate performance measures. ...
... Less conflict of interest among participants of a corporation leads to better performance of firm value. Baysinger and Butler (1985) argue that certain factors are important to increasing firm performance through good corpoprate governance, including agency control costs, such as, corporation law, product and capital market competition and the structure of the managerial labour market. Agarwal and Knoeber (1996) add a fourth reason, namely, the debt policy of the firm. ...
... The proxy firm-specific explanatory variables are included in the rating models based on a survey of prior research on the determinants of corporate credit ratings for firm characteristics variables (e.g., Horrigan, 1966;Kaplan and Urwitz, 1979;Boardman and McEnally, 1981;Lamy and Thompson, 1988;Ziebart and Reiter, 1992;Blume et al., 1998;Adams et al., 2003;Galil 2003;Pettit et al., 2004;Altman and Rijken, 2004;Doumpos and Patsiouras 2005;Demirovic and Thomas, 2007), or studies on corporate governance (e.g. Dann and DeAngelo, 1983;Baysinger and Butler 1985;Jensen 1993;Gordon and Pound 1993;Nesbitt 1994;Agrawal and Knoeber 1996;Shleifer and Vishny 1997;Opler and Sokobin 1997;Klein 1998;Bhagat and Black 2000;Imhoff 2003;Yermack 2003), or studies on corporate governance and credit ratings (e.g. Sengupta 1998;Bhojraj and Sengupta, 2003;Skafe et al., 2006). ...
... Usually, the independent directors will be invited to the board to supervise the operation and the management of the board (Baysinger & Butler, 1985). Baysinger and Butler (1985) discovered the connection between board composition and company performance, proposing that companies with more independent directors receive more outstanding performance. ...
... Usually, the independent directors will be invited to the board to supervise the operation and the management of the board (Baysinger & Butler, 1985). Baysinger and Butler (1985) discovered the connection between board composition and company performance, proposing that companies with more independent directors receive more outstanding performance. ...
... Numerous approaches have been proposed by scholars to tackle obstacles regarding corporate governance. One such methodology involves linking the remuneration of senior management to performance metrics in line with the shareholders' long-term interests (Baysinger & Butler, 2019;Larcker & Tayan, 2020;Naciti, 2019). This technique has been identified as a crucial governance practice (Baysinger & Butler, 2019;Larcker & Tayan, 2020;Naciti, 2019). ...
... One such methodology involves linking the remuneration of senior management to performance metrics in line with the shareholders' long-term interests (Baysinger & Butler, 2019;Larcker & Tayan, 2020;Naciti, 2019). This technique has been identified as a crucial governance practice (Baysinger & Butler, 2019;Larcker & Tayan, 2020;Naciti, 2019). Essentially, this approach suggests that companies can ensure that their top executives are incentivised to work towards achieving the organisation's longterm objectives to generate value for their shareholders. ...
This study investigates the critical role of corporate governance in facilitating positive organisational transformations and countering the detrimental impacts of egocentric leadership. By embracing a qualitative descriptive methodology, a comprehensive systematic review of literature was conducted, exploring the myriad
facets of corporate governance, including its principles, processes, systems, legal frameworks, regulations, and corrective mechanisms. Findings from the review reveal an inverse relationship between robust corporate governance and the prevalence of egocentric leadership. A significant challenge identified is the limitation faced by boards of directors, metaphorically described as being “without a spare wheel”, which hinders their capacity to address these governance challenges effectively in today’s dynamic work environment. Furthermore, conflicts of interest were found to severely compromise the integrity of governance practices. It is recommended that boards failing to rectify non-compliance within their tenure should be subject to dissolution, contingent upon the specifics of the case. Additionally, it is imperative that organisations conduct thorough assessments and reviews of the effectiveness of their corporate governance, enhancing internal controls to enforce governance principles rigorously. This study is pioneering in integrating the transformation of corporate governance while delineating the obstacles encountered, concluding that organisations can promote and uphold exemplary governance by implementing stringent measures against violations and by rewarding adherence among stakeholders.
... This is achieved through decisions provided by the BODs, which include providing advice and expertise for problematic aspects of a specific interaction between managers and shareholders, participating in the strategic decision-making process (e.g. initiation and development), managing resources and monitoring performance (Baysinger and Butler, 1985;Fama and Jensen, 1983;Judge and Zeithaml, 1992). ...
... Several studies have shown that the functions of the board can best be performed when directors are independent because they ensure transparency and minimize the opportunistic behaviour of management. For instance, independent directors create ties that assist companies in defeating the forces of market competition through explicit interim coordination of pricing strategies (Baysinger and Butler, 1985;Fama and Jensen, 1983). ...
Purpose
As the benefit of gender diversity continues to receive significant attention, a holistic investigation of its effect on corporate financial distress (CFD) is lacking. Therefore, this study examines the effects of board gender diversity, measured in different forms, such as the presence and proportion of female directors, family-affiliated female directors and the chief executive officer (CEO) gender, on CFD in Pakistan. The study also investigates the interacting effects of family-controlled (20 and 50% family-owned) companies on the association between board gender diversity and CFD.
Design/methodology/approach
The study applied the pooled cross-sectional logistic regression model to examine the effect of board gender diversity (presence and proportion of female directors, family-affiliated female directors and CEO gender) on CFD through a sample of 285 non-financial companies in Pakistan over the period of 2006–2017.
Findings
The results reveal that gender diversity on boards is significantly and negatively associated with CFD in Pakistan. In addition, when family ownership is 50% or more, the interacting effect of family control is found to be significant, while gender effects remain negative. The results suggest that female directors contribute to the long-term viability of companies, especially family-owned companies. Female directors are also found to be more prevalent in family-owned companies compared to their non-family counterparts.
Research limitations/implications
The findings imply that female directors may efficiently manage and control all functions necessary to guarantee the company's long-term prosperity. Similarly, gender effects can outweigh the detrimental impact of family control when female directors are in reasonable numbers and of high quality in the boardroom.
Practical implications
The practical relevance of the findings is that female directors play a significant role on the corporate board. Thus, it is a wakeup call for Pakistani companies to recognize the critical role and uniqueness of women on the corporate ladder. Family companies can also galvanize on the uniqueness of women to improve their governance structure.
Originality/value
This study adds to the literature on the benefits of gender diversity in family and non-family-owned companies. Specifically, this study applied multiple measures of gender diversity and family control in a single study. In addition, the study was conducted in a country that is ranked as the second worst country in the Global Gender Gap Index 2022, implying that investigating this type of research would go a long way towards changing the minds of corporate executives and regulators about the critical role that women can play in the economy.
... En el plano académico las más recientes investigaciones empíricas han volcado su atención sobre tres cuestiones críticas para el buen gobierno de la empresa: el tamaño del consejo (EISENBERG et al., 1998;JENSEN, 1993;YERMACK, 1996), la composición e independencia del consejo (BAYSINGER y BUTLER, 1985;BHAGAT y BLACK, 1998;HERMALIN y WEISBACH, 1988, 1991ROSENSTEIN y WYATT, 1990WEISBACH, 1988) la investigación cabe destacar el efecto negativo que el tamaño del consejo parece ejercer sobre el valor de la empresa, el aparentemente efecto indeterminado de la independencia del consejo sobre el valor, y la posible existencia de una relación endógena entre el nivel de rotación de los directores, la composición del consejo y determinados aspectos externos a la empresa 15 . ...
... La existencia de una mayoría de externos es vista como una garantía de la efectividad del consejo en su tarea de supervisión y conduciría a obtener mayores beneficios (BAYSINGER y BUTLER, 1985;PIERCE y ZAHRA, 1992). Esta idea goza de cierto soporte empírico, pues algunos trabajos han puesto de manifiesto la positiva acogida por parte del mercado del nombramiento de consejeros externos (ROSENSTEIN y WYATT, 1990) y una relación positiva entre la reacción del mercado ante adopciones de píldoras envenenadas y la proporción de consejeros externos (BRICKLEY et al., 1994). ...
El debate académico y empresarial sobre la eficiencia de los mecanismos de gobierno corporativo se centra en la estructura y funcionamiento de los consejos de administración de las empresas. Este trabajo intenta encontrar evidencia empírica adicional al respecto, analizando el efecto que el tamaño, la composición y modo de funcionamiento de los consejos de administración tienen sobre el valor de la empresa.
... The presence of outside directors also makes the board more active in terms of the number of meetings (Brunninge and Nordqvist, 2001). Accordingly, empirical studies in firms associate outside directors with strong firm performance (Baysinger and Butler, 1985;Weisbach, 1988;Byrd and Hickman, 1992;Daily and Dalton, 1992;Shivdasani, 1993;Barnhart and Rosenstein, 1994;Brickley et al., 1994;Wagner et al., 1998;Hillman and Dalziel, 2003;Kiel and Nicholson, 2003). ...
... For Bonn (2005) and Fama (1980), outside directors can serve better the interests of shareholders because they are financially independent. Accordingly, several empirical studies argued that involving outside directors on the board produces better firm performance (Baysinger and Butler, 1985;Weisbach, 1988;Byrd and Hickman, 1992;Daily and Dalton, 1992;Pearce and Zahra, 1992;Brickley et al., 1994;Barnhart and Rosenstein, 1994;Agrawal and Knoeber, 1996;Wagner et al., 1998;Kiel and Nicholson, 2003;Cornett et al., 2008;Ravina and Sapienza, 2009). ...
... The board of directors has two important functions, one is to decide compensation for executives and managers and the second is to monitor the performance of executives and managers due to this the possibility of opportunistic behavior is less in the firm (Lyu et al, 2022). In corporate governance structure the part which is considered important is the board of directors of the company (Baysinger and Butler, 2019). Agency problems are created between shareholders and managers and the reason is separate ownership and control. ...
... In firms where there is a weak corporate governance structure, firm performance is poor because the CEO tries to fulfill his 10 interests rather than that of shareholders by using organizational resources as there is ineffective monitoring of CEO activities by the board of directors of the firm. In a strong governance structure, firm performance is high because a board of directors aligns the interest of the CEO and shareholders and properly monitors the CEO activities (Baysinger and Butler, 2019). The interest alignment between shareholders and managers depends on the pay for the performance of managers (Dinh et al, 2022). ...
The purpose of this research is to examine the relationship of compensation of CEO and management of earnings of firm and further investigated the corporate governance role as a moderator in this relationship in developing country, Pakistan. In this research, a sample of 100 Pakistani listed firms is used from 2012 to 2022. In e-views software, the technique of panel data is performed as the data is both time series and cross sectional, and the results of fixed effect model are used for analysis. The study finds that the impact of compensation of CEO on earnings management is positive and the relationship is moderated by governance structure of the firm. The association between compensation of CEO and management of earnings is positive and it is strengthened in weak governance system of company but this relationship weakens in strong governance system of firm. The sample of the study comprises of only CEO’s of firm. Other top management can be used to conduct this research. This study allows a clear understanding of how top management responds and reacts if corporate governance structure of the firm is weak or strong. Strong corporate governance structure can help the firm to control the manipulative behavior. The structure of CEO compensation may be designed in such a way that the interests of shareholders and managers are aligned and information asymmetry is reduced. This research adds significantly to the current literature by considering governance structure of company as a moderator between compensation of CEO and management of earnings in the perspective of Pakistan.
... Although CSR might occupy scarce resources, it can improve a firm's reputation, brand, and social trust in the long run [12,38], gaining consensus from the institutional environment and improving organizational legitimacy [11,39], attracting customers and employees, and ultimately enhancing profitability and value [40,41]. This strategic view of CSR coincides with the long-term benefit hypothesis of ATPs, suggesting that the protection of managerial positions enables more efficient investment decisions [42] and encourages long-term investments due to decreased managerial myopia [43,44]. For example, ATPs decrease the efficiency pressure that managers face from control markets, which are induced by sluggish share prices, and prevent them from making short-term decisions [3]. ...
We examine how antitakeover provisions (ATPs) impact corporate social responsibility (CSR) disclosure for Chinese listed firms. The empirical results show that the level of CSR disclosure is positively related to the level of ATPs, and this relationship is primarily observed in State-Owned Enterprises (SOEs). Further evidence indicates that this association is most prevalent in observations with lower efficiency or higher legitimacy pressures. Our paper provides new evidence on the mixed motivations for CSR disclosure in Chinese firms and offers insights into the moderating effects of ATPs in the context of weak corporate governance.
... To move on with the issue of corporate governance in emerging nations, the research requires a basic understanding of corporate governance. Depending on the features that are pertinent to their specific study, corporate governance is defined as the environment in which board members and top managers make decisions that are in the best interests of all of the company's shareholders [24,25]. In this approach, major and little shareholders are treat equally. ...
In developing countries such as Jordan, corporate governance plays a crucial role in business operations, as laws, rules, and disclosure standards greatly influence governance practices. With an emphasis on Jordan specifically, this abstract provides an overview of corporate governance in developing countries with respect to disclosure requirements, legal frameworks, and laws. The implementation of corporate governance is greatly influence by regulations. However, it is sometimes difficult to adequately enforce and monitor adherence to present norms in developing countries. A lack of accountability and unethical activity could be the outcome of lax enforcement of regulations. There are ways to address this, include bolstering regulatory bodies, providing adequate funding for supervision and enforcement, and encouraging a culture of compliance. Developing countries like Jordan have the opportunity to raise corporate governance standards despite obstacles. They might apply technological innovations to enhance governance structures, pick up best practices from more developed economies, and grow from their errors. Adopting innovations like digital platforms for reporting and monitoring can improve regulatory compliance, expedite processes, and increase transparency. In general, the laws, rules, and disclosure standards that are in place have an effect on corporate governance in developing countries, such as Jordan. By tackling the problems and seizing the opportunities in these sectors, developing countries may foster an environment of transparency, accountability, and investor trust, which will lead to long-term economic growth and development.
... Hasil penelitian ini mendukung hipotesis awal (H3) bahwa Independent board berpengaruh positif terhadap nilai perusahaan. Juga mendukung penelitian Baysinger & Butler (1985) dan Mak and Kusnadi (2005) yang menyatakan bahwa semakin banyak board yang Independent berhubungan dengan nilai perusahaan yang tinggi (greater firm value). Studi ini juga menilai hubungan antara komposisi board dengan kinerja keuangan dan mengusulkan bahwa perusahaan yang memiliki board independent lebih banyak akan menghasilkan kinerja yang superior. ...
Abstrak Penelitian ini menguji pengaruh pengungkapan informasi Corporate Social Responsibility(CSR) dan praktik Good Corporate Governance (GCG) terhadap nilai perusahaan (FirmValue). Penelitian menggunakan data sekunder yang diperoleh dari database OSIRIS danBursa Efek Indonesia untuk perusahaan manufaktur periode 2007-2008. Metode pemilihan sampel menggunakan purposive sampling dan diperoleh 31 sampel perusahaan manufaktur. Hasil pengujian hipotesis membuktikan bahwa variabel praktik GCG dan variabel kontrol telahmampu menjelaskan variabel nilai perusahaan sebesar 62,68%. Hasil pengujian hipotesismenunjukkan bahwa pengungkapan CSR tidak signifikan berpengaruh terhadap nilai perusahaan. Sedangkan variabel GCG yaitu jumlah independent board (positif) dan board size(negatif), variabel kontrol size dan sales growth signifikan berpengaruh terhadap nilaiperusahaan (firm value). Kata kunci: tanggung jawab, tata kelola, nilai perusahaan Abstract This study examined the effect of disclosure of Corporate Social Responsibility (CSR) and thepractice of Good Corporate Governance (GCG) with firm value (Firm Value). This study uses secondary data obtained from the OSIRIS database and the Indonesia Stock Exchange for theperiod 2007-2008 of manufacturing companies. The sample selection methods using purposive sampling and sample obtained 31 manufacturing companies. The test results prove thehypothesis that the variables of good corporate governance and control variables have been able to explain the value of the company amounted to 62.68% variable. The results ofhypothesis testing indicate that the disclosure of CSR does not significantly affect the value of the company. While the number of independent variables GCG board (positive) and board size(negative), the size of the control variables and sales growth significantly affects the value of the company (firm value). Keywords: corporate social responsibility, corporate governance, board, firm value
... Internal audit is professed as the most important in minimizing frauds in organizations. A board of directors is responsible for oversight, including controlling expenditures, compensation, top management's activities and ensuring accountability, resolving conflicts of interests among decision-makers, reducing transaction cost and providing continuity in corporations (Baysinger & Butler, 1985;Thorn et al., 2010;Tuggle et al., 2010). As these tasks have a considerable impact on firms at all levels, it becomes a critical issue to ascertain or evaluate the effectiveness of BODs. ...
Objective: The objective of the article was to examine and analyze significant corporate governance issues prevalent in Nigeria's leading state-owned enterprises by identifying the key corporate governance issues that exist within State-Owned Enterprises (SOEs), importance of addressing these critical corporate governance issues in relation to SOEs in Nigeria, explore the various factors that hinder the evaluation of these critical corporate governance issues in Nigerian SOEs and put forth recommendations and strategies for effectively managing these critical corporate governance issues within SOEs in Nigeria. Theoretical Framework: Agency Model Principals (Shareholders) Agents (Management) Performs Hires and Delegates Self Interest Self Interest 257 Talat Afza and Mian Sajid Nazir On the whole, agency theory laid emphasis on the opportunistic behavior of managers; managers try to put their interest first by forgoing shareholders’ interests. Method: The study employed a descriptive survey design, wherein 300 employees were selected through a random sampling process from a pool of over 100,000 employees belonging to various organizations such as Power Holding Company of Nigeria, Nigeria Postal Services, Nigerian Railway Cooperation, Nigeria Water Board Cooperation, and Nigeria Television Authority. The selected employees were representative of the six geopolitical zones in Nigeria. A questionnaire consisting of 20 items was utilized as the primary instrument for data collection. To ensure the reliability and validity of the instrument, the validation process involved the application of Lawshe's content validity template, resulting in a content validity ratio (CVR) of 1. The psychometric properties of the instrument were assessed using Cronbach's alpha. A coefficient alpha of .85 was obtained, surpassing the threshold of .70. This indicates that the instrument demonstrates satisfactory reliability. The data was collected in real-time and subsequently analyzed utilizing frequency count and percentage calculations. Findings: The results indicate that employees possess a comprehensive understanding of crucial corporate governance matters within their respective state-owned enterprises in Nigeria. Assessing these critical corporate governance issues has the potential to yield outstanding returns on investment (ROI) and enhance stakeholder satisfaction. Hence, it is of utmost importance to conduct a comprehensive assessment of critical issues pertaining to corporate governance. Conclusion: This evaluation is essential in order to protect the interests of stakeholders, attain anticipated levels of performance, promote fairness and transparency, optimize return on investment, and ultimately enhance the provision of services to citizens.
... Many studies have found a significant correlation between acceptance of the technology on a given site and such factors as cost, complexity, and compatibility. Other factors that influence adoption include top management support and readiness for IC committees (Baysinger & Butler 2019). In addition, this paper tries to find out what factors encourage or persuade companies in Jordan to undergo scale adoption ultimately. ...
The importance of Generalized Audit Software (GAS) is particularly important for nations' development. Picking 'Over Conduct Theorized Results and Consequences' Poly GAS as a test subject, results have been inconsistent in previous studies on predictor variables and consequences of using GAS. This study aims to investigate the predictors and consequences of using GAS. From the perspective of Resource-oriented technology (Approach (TOE) fitness - View (RBV Environment), It is intended that technology's relative advantage, compatibility, and complexity, as well as organizational readiness top management support IS committee) Villa have an important influence on GAS, which in turn is expected to affect financial performance. Trust will serve as a moderating variable between technological and organizational factors, and GAS. Profession MB. This counts all audit firms in Jordan. The research questionnaire was distributed by purposive sampling for subsequent investigation. As many as 210 valid questionnaires out of all completed questionnaires were gathered from this study by using Smart PLS as the data analysis software. Technological relative advantage, compatibility, and complexity as well as organizational readiness (top management and organizational readiness) have a significant effect on GAS which in turn affects financial performance. Accepted Southern Trustor did not affect the impact of technology and organization factors in GAS. So, the results can provide some ideas to policymakers in Jordan about how to foster the use of GAS to improve financial performance and bring down the new technology adoption costs.
... The return on equity is one accounting-based metric of success used in corporate governance studies (ROE) (Baysinger and Butler 1985;Dehaene et al.,2001). The primary goal of an organization's mission is to produce money for its shareholders. ...
Introduction - The mechanism through which organisations are directed and managed is known as corporate governance. The impact of corporate governance elements on the financial performance of Sri Lankan listed insurance corporations is investigated throughout the study. This study examines the relationship between corporate governance variables (board size, board composition, board meetings, and audit committee size) and controllable variables (firm age, firm size, growth, and leverage) among performance of the insurance firms. The firm performance is measured using Return of Equity (ROE) and Return on Assets (ROA). The population for this study is listed insurance firms on the Colombo Stock Exchange (CSE where the sample consisted of 11 insurance firms. For the analysis various tests like descriptive analysis, multiple linear regression, Pearson correlation, and collinearity statistics have been performed using IBM SPSS (version 23) software. Secondary sources of data used for the analysis expands from 2015 to 2019. According to this study, corporate governance impacts the financial success of insurance businesses in Sri Lanka. The 36.70% relationship between firm performance ROE and the 26.80 per cent relationship between firm performance ROAs is determined by the independent variables of corporate governance (board size, board composition, board meetings, and board audit committee size) as well as controllable variables (firm age, firm size, growth, and leverage). The study posits, through the Pearson correlation, that there is a positive relationship between board size, board composition, board meetings, firms age, firm size growth, and leverage with ROE and only the audit committee size is negatively related to the ROE. With the ROA board size, board composition, board meetings firm size, growth is positively related while audit committee size, firm age, and leverage variables have a negative relationship. This study's findings will be useful for insurance companies to manage their corporate governance elements towards the profitability. They can be critically concerned about the elements of board size, board composition, board meetings and audit committee size and controlling elements of firm age, firm size, growth, and leverage. Based on the elements top tier management can make accurate and efficient decisions on listed insurance companies. Keywords: Corporate Governance (CG), Board Size, Board Composition, Return of Equity (ROE), Return on Assets (ROA)
... However, the board is accepted as one of the quintessential aspects of the governance structure that aligns the interests of diverse stakeholders through its advisory and monitoring functions, mitigating potential agency issues (Baysinger & Butler, 1985). Nonetheless, the board's effectiveness depends on its composition and activities. ...
This study explores the relationship between financial reporting quality and insurer governance, with the hypothesis that robust governance procedures exert better control over managers’ opportunistic behavior. The analysis is based on a dataset of insurer firms from 2014 to 2021. The econometric results obtained using the two‐step system GMM technique reveal that the overarching influence of corporate governance on enhancing financial reporting quality is evident, with board and risk governance matters the most. Among individual governance attributes, the optimal board size, a higher proportion of independent directors, audit and risk committees’ size, and risk committee independence play a significant role in governing discretionary accruals. The efficacy of governance mechanisms considerably differs across life and non‐life insurers, shedding light on the nuanced dynamics within the Indian insurance market. The results lend empirical support to resource dependency and agency theories within the Indian insurance sector. The implications suggest potential avenues for amending or redesigning governance norms with specificities of insurers and the ultimate goal of fostering an environment conducive to enhancing the reporting quality of Indian insurance firms.
... Strict adherence to rules and regulations, according to Solomon (2020), hinders a company's ability to adapt quickly to changing market conditions or to take advantage of emerging business opportunities. Finally, corporate governance sometimes creates conflicts of interest, particularly about the board's composition (Baysinger & Butler, 2019;Singh et al., 2018). For instance, if a board member also holds a management role within the company (CEO duality), it might challenge the board's ability to provide impartial oversight. ...
Corporate governance is a stewardship system where directors are expected to provide leadership and supervision of the management of an organization and communicate to the absentee owners on the progress and performance of the organization, including through financial reporting. International Financial Reporting Standards (IFRS) were created to ensure corporate transparency, comparability, consistency and integrity of financial reporting. Since corporate governance is to ensure the effective operation of an organization, it is assumed that corporate governance will lead to quality financial reporting all other things being equal. Despite the existence of numerous publications on the relationship between corporate governance and financial reporting quality, the scientific literature still lacks comprehensive studies on the impact of individual firm characteristics on this relationship. The objective of this study is to assess how firm characteristics such as Firm size, Firm age, and ROA influence the relationship between corporate governance and the quality of financial reporting. A regression analysis based on balanced panel data of 598 observations from 46 companies in Ghana with full annual reports from 2009 to 2021 allowed us to assess the impact of such corporate governance variances as Board Size, Board Gender Diversity, and Independence of the Audit Committee on IFRS compliance. Mitigating effects and hypothetical correlations between variables were assessed using the STATA software package. Using the Hausman test, the appropriateness of the fixed effects model was substantiated (model specifications for proxy variables and moderating variables were built). The first part of the study was based on the results of linear regression. The linear regression results suggest that Board Size significantly predict IFRS compliance with a coefficient of 0.003 and p-value of 0.028. The independence of the Audit Committee exhibits a positive and statistically significant relationship with IFRS compliance, with a coefficient of 0.027 and a p-value of 0.018. Board Gender Diversity, despite having a coefficient of 0.024, does not display a statistically significant relationship with IFRS compliance (p=0.682). The second part of the study involved analysis to assess the moderating effect of firm characteristics on the relationship between corporate governance and financial reporting quality (an effect that occurs when a third variable changes the nature of the relationship between a predictor and an outcome, especially in analyses such as multiple regression). In this case, the results were different. In particular, Board Size does not significantly influence IFRS compliance with a coefficient of 0.001 and p-value of 0.477. Board Gender Diversity negatively influences IFRS compliance with a coefficient of -0.882 and is highly significant at the 1% level. The Independence of the Audit Committee is positively associated with IFRS compliance, with a coefficient of 0.233 and significance at the 1% level. In terms of firm characteristics, Firm Size and Return on Assets both exhibit significant negative relationships with IFRS compliance, while Firm Age (FA) has a positive effect, all significant at the 5% level. Again, the findings of the study showed that the relationship between board size and IFRS compliance changes depending on the firm’s return on assets and that there is a significant positive interaction between Board Gender Diversity and firm characteristics. While firm size and firm age significantly moderate the relationship between the independence of the audit committee and IFRS compliance. The findings of the study indicated a significant impact of both Board Gender Diversity and Independence of the Audit Committee on the level of compliance with International Financial Reporting Standards (IFRS). Specifically, the link was shown to be highly influenced by firm characteristics such as size, age, and return on assets. Thus, the study allowed us to confirm the hypothesis that the success of corporate governance in guaranteeing high-quality financial reporting depends on certain characteristics of the organisation. It is advisable for regulatory agencies to consider the modification of governance principles to align with the unique characteristics of specific firms. There is a growing call for firms to actively promote and support gender diversity among their Board of directors, as well as prioritize the independence of their Audit committees. Furthermore, it is advisable for organisations to adopt a proactive stance to enhance internal controls and implement targeted training programmes for board members, with the aim of effectively addressing unique issues faced by the organisation.
... The agency role of the directors refers to the governance function of the board of directors in serving the shareholders by ratifying the decisions made by the managers and monitoring the implementation of those decisions. This role has been examined in a large body of literature (Baysinger & Butler, 1985;Lorsch & MacIver, 1989;Baysinger & Hoskisson, 1990;Daily & Dalton, 1994). According to the perspective of agency theory the primary responsibility of the board of directors is towards the shareholders to ensure maximization of shareholder value. ...
Governance theories form the bedrock of governance mechanisms. But a lot has flowed over the bridge from the time these theories were postulated. The world has become more global, businesses have become more complex, societies have become more aware of their rights, and concerns over the planet, earth, and people, ecological balances have increased and of course, the environment has become more polluted. Business sustainability faces a bigger challenge than ever before because for them to do good business they need to be better corporate citizens and ensure that the profits only do not determine their strategies and goals. With this background, adopting a qualitative approach with an in-depth literature review, the aim of this chapter is to revisit governance theories for understanding the nexus and intersection between ESG and sustainability.
... L'efficacité du conseil d'administration dépend essentiellement de sa composition . En effet, Baysinger et Butler (1985) (Beasley, 1996 ;Peasnell et al., 1998 ;Bedard et al., 2001 ;Klein, 2002a). Par ailleurs, le cumul des fonctions remet en cause l'indépendance du conseil d'administration du fait qu'il accorde un rôle important au dirigeant (Mizruchi, 1983et Daily et Dalton, 1993. ...
The purpose of this thesis is to examine how the effectiveness of corporate governance mechanisms affects the firm's cost of debt for family and non-family firms. Although, US’ companies have a debt oriented financial system, financial institutions have little direct implications in corporate governance structures (such as board of directors and audit committee for example). Thus, those external capital provides might pay attention to the overall quality of monitoring devices set up within companies as well as the quality of financial reporting. Hence, we may expect an inverse relationship between the quality of corporate governance mechanisms and cost of debt. Using S&P 500 index data, over the period 2010 to 2017. The empirical findings reveal that board of directors’ quality and audit committee’s quality have a significant reducing effect on the cost of debt for full sample and non-family firms. Whereas for family firms, board of directors’ quality has is significant reducing effect on cost of debt and audit committee’s quality does not. We further, examine the impact of corporate opacity on cost of debt. we provide that the moderating effect of corporate opacity becomes more pronounced an investor's perception of controlling families’ moral hazard of expropriation is higher. We conclude then that corporate capacity as an important reference in assessing the extent of potential agency for conflict in US.
... The roles of EDs, NEDs and INEDs are different yet complementary (Harris and Shimizu, 2004) and it is their coming together which results in an ideal Board mix (Baysinger and Butler, 1985;Fairfax, 2010). The best way forward is for every entity to find its own balanced Board mix (Boone et al., 2007;Pascual-Fuster and Crespí-Cladera, 2022) because there is no "one-size-fits-all" (Coles et al., 2008;Lehn et al., 2009). ...
... On the other hand, most of their studies argue that independent boards do not have a significant impact on improving company performance (Baysinger & Butler, 1985;Dalton et al., 1999;Hermalin & Weisbach, 1991;Rechner & Dalton, 1991). They have several reasons, including outside directors still have limited in-depth business information in the company compared to inside directors. ...
The agent is granted decision-making authority over the company’s operations to achieve the principal’s objectives (Jensen & Meckling, 1976). However, the existence of the COVID-19 pandemic makes companies get higher risks that have an impact on company performance. The board consisting of board size, board independence, women on board, and chief executive officer (CEO) try to maintain the company’s performance during COVID-19. The purpose of this study is to analyze the role of corporate governance which consists of board size, board independence, women on board, and CEO duality on company performance during the COVID-19 period. The sample of this study is 538 companies listed on the Indonesia Stock Exchange (IDX). The results of this study indicate that COVID-19 has had an impact on decreasing the company’s performance. Then, we also found that board size has a significant positive effect on company performance during the COVID-19 pandemic, while board independence, women on board, and CEO duality do not have a significant effect. Then, we interacted with COVID-19 on the company’s performance. The results of our research showed that board size, women on board, and CEO duality have a significant positive effect on company performance. These results have implications that corporate governance has a very important role in boosting the performance of companies that are under pressure due to the COVID-19 pandemic.
... However, some of the studies documented significant evidence to argue that outside directors improve firm performance. For instance, Baysinger and Butler (1985) and Rosenstein and Wyatt (1990) argued that the market rewards firms for appointing outside directors. Cotter, Shivdasani and Zenner (1997) support this view underscoring the important role of outside directors in protecting shareholders' interest through effective decision control. ...
The capacity of non-executive directors to monitor the behaviours of managers and protect and promote the interests of investors and other stakeholders has been questioned by the dozens of financial and economic crises cum failures of firms that were leaders in their own industries. In a bid to address this concern, this study empirically examined the impact of the most prominent corporate governance mechanism (board composition) on firm performance (return on equity, net profit margin and Tobin's Q) in Nigeria. The effects of institutional factors such as board size, debt and size on firm performance were also investigated. The study employed Generalised Least Squares (GLS) regression analysis comprising fixed and random effects estimators on a panel sample of 95 firms listed on the Nigerian Stock Exchange (NSE) for the period 2004 through 2016. The most commonly used technique of Hausman specification test was conducted on the random estimator to determine the most optimal model. Although, the study did not provide any empirical evidence to support the hypothesis that outside directors significantly influence ROE and Q, it suggests that they play prominent role in determining return on shareholders' equity. The results also indicate that whilst board size impacts positively on Q, Debt influences ROE negatively, firm size plays positive role on NPM and a negative one on Q. Accordingly, the study recommends the need for Nigerian listed firms to strive to maintain the appointment of non-executive directors at the minimum.
... Yönetim kurulu, bir şirketin stratejik yönünü denetlemede çok önemli bir rol oynar ve yönetim kurulunun etkinliği, şirket sonuçlarını önemli ölçüde etkileyebilir (Baysinger ve Butler, 1985;Dalton vd., 1998). Yönetim kurulu büyüklüğü, bağımsızlığı, uzmanlığı, toplantılarının sıklığı ve kadın üye oranı gibi yönetim kurulu özellikleri yönetim kurulu etkinliğinin önemli belirleyicileri olarak söylenebilir (Daily vd., 2003;Hillman ve Dalziel, 2003). ...
... Thus, an active board provides more resources to the CEO, enabling better decision-making which ultimately positively impacts corporate financial performance (Hillman & Dalziel, 2003). The literature on the association between board activity and corporate financial performance is mixed, some studies find a positive association (Ramadan & Hassan, 2021), while others report a negative or insignificant association (Baysinger & Butler, 1985;Li et al., 2021). ...
... Corporate governance refers to the mechanism of intervening in the company's operation and management through the discourse power held by the enterprise's ownership. A good corporate governance structure can effectively alleviate agency conflicts, reduce agency costs, and further improve the enterprise's value (Du Plessis et al., 2018;Baysinger & Butler, 1985). The corporate governance structure will have a positive effect on the company's business performance. ...
At present, the research focus on Environment, Social and Governance (ESG) is mainly on the economic consequences of ESG performance, and research on the influencing factors of ESG overall performance is lacking. The top management team plays a decisive role in the decision of ESG investment. To improve ESG performance and promote sustainable development of enterprises. This research explores the influence of different types of top management team faultlines on the ESG performance by using the panel fixed effects model from 2015 to 2019 for the samples of 347 listed enterprises in China, and tests the moderating effect of management incentives. Results show that the relationship-type top management team faultlines is positively correlated with the ESG performance, whereas the task-type faultlines is negatively correlated with the ESG performance. Management compensation incentive will weaken the positive effect of the relationship-type faultlines on the ESG performance, and the moderating effect of the task-type faultlines on the ESG performance is insignificant. Management equity incentive will strengthen the positive effect of the relationship-type faultlines on the ESG performance and weaken the negative effect of the task-type faultlines. Our findings provide a new perspective for how to improve the ESG performance of listed companies by the optimization of corporate governance structure.
... Resource-based theory suggests that firms' competitive advantage stems from possessing tangible and intangible resources that are difficult for rivals to obtain (Barney, 1991). Meanwhile, research by Baysinger and Butler (1985) proves that the most crucial element in a corporation is the Board of Directors (BOD), which has the power to appoint, fire, or compensate managers and risk bearers. Excellent leadership with a broad view and clear goals will help businesses grow stronger and improve. ...
This study examines the impact of political connections on the firm performance of Vietnamese listed companies in the context of changing legal regulations in two periods: before and after the 2014 Enterprise Law officially takes effect during 2010-2022. Political connections are measured through the relationship of the Board of Directors with state organizations and the background of Vietnamese politicians. Using Pooled Ordinary Least Square regression, the results show a positive relationship between political factors and firm performance in the period 2010-2014, when civil servants are still directly involved in enterprise management. By the period 2015-2022, the influence of political connections on business activities is no longer meaningful. Therefore, the findings could provide implications for stakeholders to enhance the operations of the respective businesses.
... In alignment with agency theory, the augmentation of independent directors on boards can help mitigate management opportunism and agency conflicts (Saona et al. 2020). Many corporate governance regulations, guided by agency theory principles, advocate for boards to comprise a majority of independent directors-those without management responsibilities within the parent company or any of its subsidiaries (Baysinger and Butler 2019). Stakeholder theory posits that independent board members are better equipped to represent the interests of the company's external stakeholders, as they maintain fewer personal financial ties to the organization (Kaymak and Bektas 2017). ...
This study investigates the influence of corporate governance mechanisms on debt service obligations within the context of 34 automobile companies listed on the Tokyo Stock Exchange from 2006 to 2021, utilizing a purposive sampling approach. Employing a range of statistical models including the random effect model, fixed effect model, and the generalized method of moments (GMM), the study yields several key findings. Firstly, it reveals a significant and positive correlation between the presence of independent board members and the debt service obligations of Japanese automobile firms. Secondly, a noteworthy negative association is uncovered when the CEO holds a dual role, impacting debt service obligations negatively. Thirdly, the inclusion of non-executive board members on corporate boards is found to be linked to a significant and adverse effect on debt service obligations among these firms. Finally, the study underscores the positive impact of board members' knowledge, skills, and the frequency of meetings on the debt service obligations of automobile companies in Japan.
... The board of directors is the most important factor through which shareholders can control executive management 582 industria textila 2023, vol. 74, no. 5 [86]. In the subject literature of this topic, various empirical studies have been conducted that have investigated various aspects of the relationship between the board of directors and the company's performance [87][88][89]. ...
The present study examines the relationship between the composition of the board of directors, ownership structure, and company performance in companies that are members of the Iranian capital market. This research has been investigated in a statistical sample of 113 companies from the member companies of Iran's capital market between 2011 and 2021. The results of this research have been analysed by the panel analysis method which we use two internal and external criteria to examine the company's performance. Thus the results show that there is a correlation between the proportion of foreign directors on the board of directors and the concentration of ownership with the company's internal performance criteria. Also, another result of this research is that there is a relationship between the proportion of foreign directors on the board of directors and the concentration of ownership with the external measure of the company's performance. Moreover, this research paper analyses companies in the textile industry in Iran during the sample period.
... The focus is primarily on board governance since it is a quintessential aspect of the corporate governance framework that provides strategic guidance and control over discretionary managerial behavior (see, for instance, Hardwick et al. 2003Hardwick et al. , 2011Pacini et al. 2008;Hsu and Petchsakulwong 2010;Kader et al. 2010Kader et al. , 2014Huang et al. 2011;Pooser et al. 2017;Ames et al. 2018;Petchsakulwong and Jansakul 2018;Alhassan and Boakye 2020;Hemrit 2020;Alhassan et al. 2021). Baysinger and Butler (1985) stated that ''the board of directors, which has the power to hire, fire, and compensate senior management teams, serves to resolve conflicts of interest among decision-makers and residual risk bearers.'' However, their effectiveness depends on the boards' composition and activities. ...
Amassing a dataset of 32 empirical studies published between 2003 and 2021, the article meta-analyzes the effect of board and audit governance on insurer performance. Utilizing the Schmidt and Hunter (2015) approach, it also investigates whether variations in findings are attributable to definitions of governance variables, performance measures, corporate governance systems, endogeneity issues, and publication quality. The study particularly focuses on four board (board size, outside directors, CEO duality, and board meetings) and three audit attributes (presence of an audit committee, its size, and independence). The results show that outside directors and the audit committee presence significantly improve insurer performance. However, board size and duality hold a positive influence only in Anglo-American economies. The study advocates that simply occupying the insurer’s board with outside directors is insufficient. Instead, they should be “operationally independent” for the effective functioning of the insurers’ boards. Our study recommends implementing distinct governance norms for insurers aligned with the country’s internal environments instead of reproducing a common set of practices.
... The agency role of the directors refers to the governance function of the board of directors in serving the shareholders by ratifying the decisions made by the managers and monitoring the implementation of those decisions. This role has been examined in a large body of literature Fama & Jensen, (1983); Baysinger & Butler, (1995); Lorsch & MacIver, (1989;Baysinger & Hoskisson, (1990) Daily & Dalton, (1994). Much of this research has examined board composition due to the importance of the monitoring and governance function of the board. ...
... The composition and size of an organization's board of directors have long been regarded as pivotal aspects of corporate governance. Extensive research has examined how board size affects company performance, yielding mixed results (Baysinger & Butler, 2019). Yermack (1996) posits that a larger board may lead to poorer business performance due to potential conflicts and decision-making complexity. ...
The current study aimed to investigate the impact of corporate governance mechanisms on the profitability of listed companies within the Saudi Stock Exchange (SSE). The methodology involved data collection from the SSE for the fiscal year 2021, with a research sample comprising 60 corporations. The study's independent variables encompassed the size of the board of directors, frequency of board meetings, and the presence of risk management practices. The dependent variable was corporate performance, as indicated by the return on assets (ROA). To enhance the evaluation of the relationship between the independent variables and the dependent variable, the study also incorporated a control variable - the size of the corporation. The study's findings unveiled that a larger board size had a positive impact on the performance of Saudi corporations. Furthermore, both an increased frequency of board meetings and the implementation of risk management practices exhibited positive effects on corporate performance. This research contributes significantly by exploring the direct influence of board size, board meeting frequency, and risk management practices on the performance of SSE-listed companies. The study's novelty lies in its comprehensive examination of these specific corporate governance mechanisms and their correlation with return on assets.
... As per fiduciary duties, board members try to ensure the transparency and integrity in the reporting process. A board member who is independent is expected to provide the greatest service to monitor managers and to protect shareholders' interests (Baysinger & Butler, 1985). Researchers find that a firm's performance improves with board independence (Byrd & Hickman, 1992;Brickley et al., 1994;Subrahmanyan et al., 1997;Rosenstein & Wyatt, 1990). ...
This study investigates whether corporate governance can mitigate real earnings management. Specifically, this study investigates the role of the board and institutional owners to mitigate real earnings management. In recent years, firms have been switching from accrual-based earnings management to real earnings management, and the incidence of real earnings management has increased. The role of corporate governance to reduce accrual-based earnings management is well documented in the literature; however, there is no firm evidence regarding the role of corporate governance to constrain real earnings management. In order to fill the gap in the literature, this paper examines whether corporate governance, specifically the board of directors and institutional investors, play any role to reduce real earnings management. In this study, I find the evidence that firms engage in real earnings management either to avoid reporting losses or to meet analysts' forecasts. The cross-sectional analysis reveals that these activities are less prevalent for the firms that have larger institutional investors; however, no evidence regarding the role of the board to prevent real earnings management is indicated.
... This result is consistent with prior studies. Previous researchers also reported a positive relationship between outsider directors and firm performance (Baysinger & Butler, 1985;Brickley, Coles, & Terry, 1994;Dalton & Daily, 1999). With a larger proportion of outsider board members, the firm is expected to achieve better value and profits than with a smaller proportion of outsiders (Kang et al., 2007). ...
The main purpose of this study is to examine the relationship between board diversity and firm value in firms in the manufacturing and non-manufacturing sectors listed on Bursa Malaysia. The methodology of this study utilized 200 samples of Malaysian listed companies from 2014 to 2016. The board diversity variables in this study were gender, age, educational level, outsider director, and nationality. Diversity data were collected from the annual report, while all financial data, such as firm age, firm value, and firm leverage, were collected from the Eikon database. The findings show that educational level has a negative relationship with firm value, while outsider director has a positive relationship with firm value in the manufacturing sector. In the non-manufacturing sector, gender and nationality have positive relationships with firm value. In conclusion, the manufacturing industry needs outsider directors’ expertise to improve production operations. A higher level of education may lead directors to focus on fewer business aspects rather than the overall business. The non-manufacturing sector requires knowledge and skills that enhance customer satisfaction and thus increase firm value. The practical implication is that regulators such as Bursa Malaysia can enforce boardroom diversity through rules and regulations, which will affect firm value.
... problema de free-riders donde los accionistas no cuentan con incentivos para dedicar recursos al objeto de asegurar que los directivos actúan en su favor (GROSSMAN y HART, 1980). La importancia de la actuación de los Consejos de Administración dentro del gobierno de las empresas ha sido destacada por múltiples tratadistas (véase FAMA, 1980;FAMA y JENSEN, 1983;BAYSINGER y BUTLER, 1985;YERMARK, 1996;FERNÁNDEZ et al., 1998), así como por numerosos estudios empíricos que avalan su validez evidenciando cómo el Consejo de Administración actúa como freno para aquellas actuaciones gerenciales no maximizadoras del valor de la empresa para sus accionistas (LIEBERSON y O´CONNOR, 1972;HELMICH, 1977;SALANCIK y PFEFFER, 1980;JAMES y SOREF, 1981;WAGNER et al., 1984;COUGHLAN y SMITH, 1985;BEATTY y ZAJAC, 1987;WARNER et al., 1988, WEISBACH, 1988GIBBONS y MURPHY, 1990;BOEKER, 1992;KANG y SHIVDASANI, 1995, KHORANA, 1996FERNÁNDEZ, 2000). ...
Los últimos escándalos financieros, así como diversos estudios empíricos, han puesto de manifiesto que los comités de auditoría están fallando en el desempeño del papel para el que fueron creados. Algunos autores lo atribuyen a la falta de independencia respecto a la dirección. Numerosos esfuerzos para reformar el gobierno corporativo apuntan hacia comités de auditoría compuestos exclusivamente por consejeros externos, como medida para reforzar su independencia. El objetivo de este trabajo es determinar el grado de independencia que presentan los comités de auditoría en las empresas españolas. Concretamente, estudiaremos su estructura de composición y los factores que condicionan dicha estructura.
Using a sample of Korean-listed firms, this study investigates whether there is an association between political connections and market reaction. Specifically, we examine the association between the appointment of politically connected outside directors (PCODs) and cumulated abnormal returns and whether politically connected directors affect stock price crash risk. We find that firms appointing PCODs experience a negative market reaction on the announcement date of hiring them. However, firms with PCODs on the board are less likely to experience stock price crash risks. These results can be interpreted as follows: when firms appoint politically connected directors, investors initially criticise this event as political ties may corrupt fair trade. However, it may also be argued that firms with political connections have incentives to improve accounting transparency due to negative public concerns for a possible back-scratching alliance between the government and businesses and attract greater public attention from the media and investors. In other words, although PCODs may impose a negative perception on investors, these directors may contribute to their firm by playing a significant role in advising and/or protecting the firm using their previous work experience and connections.
Corporate governance is an important component of business operations, especially in developing nations like Jordan where laws, regulations, and disclosure standards all have a significant impact on governance practices. This abstract offers a summary of corporate governance in developing nations in terms of legal frameworks, disclosure, and regulations, with a particular focus on Jordan. Regulations have a significant impact on how corporate governance is carried out. However, successfully enforcing and monitoring compliance with current standards is frequently difficult in underdeveloped nations. Lack of responsibility and unethical behavior might result from weak regulatory enforcement. Opportunities exist to solve this through strengthening regulatory agencies, allocating sufficient funds for oversight and enforcement, and fostering a compliance culture. Despite difficulties, developing nations like Jordan have the chance to enhance corporate governance standards. They may use technical breakthroughs to improve governance frameworks, adopt best practices from more advanced economies, and learn from their mistakes. Processes can be streamlined, transparency is improved, and regulatory compliance is improved by embracing innovations like digital platforms for reporting and monitoring. Overall, the legal systems, disclosure norms, and regulations in existence have an impact on corporate governance in developing nations, including Jordan. Developing nations may promote an atmosphere of openness, responsibility, and investor trust by resolving the issues and taking advantage of the opportunities in these sectors, which will result in sustained economic growth and development.
Saudi Arabian firms are evolving from government or family-run businesses to larger corporations due to foreign investments. However, the role of a chief executive officer (CEO) is retained by family members. This study investigates the factors responsible for CEO turnover in Saudi Arabia in relationship to firm performance and compares them against those in other countries. This study is the first to look at CEO turnover in the Saudi context. Using panel data from 169 Saudi firms listed between 2007 and 2014, average marginal effects from a binary probit model, and differences-in-differences analysis, the effects of the following independent variables were assessed: CEO age, retirement age, tenure, pay, shareholdings, duality, board size and composition, firm ownership, and firm performance, with CEO turnover as the binary dependent variable. Results indicated that CEO turnover negatively relates to firm performance, irrespective of whether the dismissal is voluntary or forced, reaffirming a negative turnover—performance sensitivity. Further, CEOs with less than 5% shareholding face a greater likelihood of dismissal by the board, whereas larger shareholders are more entrenched. CEOs in government-owned firms show higher performance-related turnover, while those in family or foreign firms show no such relationship.
Purpose of the Study: The general objective was to investigate the regulatory compliance index effects on the external corporate governance mechanisms and financial performance interactions. It was based on the ideas of agency, stewardship, stakeholders, and resource dependence theory. Statement of the Problem: Despite EAC region partners investing heavily to improve market infrastructure and promote securities integration, the companies cross-listed in these markets have recorded significant decline in financial performance with dwindling liquidity and profitability evidenced by the increasing number of profit warnings issued, closed operations, securities markets suspensions, mergers & acquisitions, and restructuring. Methodology: This study was grounded in the positivistic research philosophy. Explanatory non-experimental research design was used. Through purposive sampling, 9 companies formed the sample size. Secondary panel data extracted from audited annual reports from 2013 to 2022 was used. Diagnostic tests were performed to validate adherence to the principles of the classical linear regression model. Data was analyzed with descriptive and inferential statistics. The Whisman and McClelland (2005) moderation procedure was employed to investigate the effect of the regulatory framework.
Results: The Feasible Generalised Least Squares panel multiple regression analysis yielded a significant relationship between the corporate block holding and ROA however there was no statistically significant association between corporate block holding and Tobin Q. The study also discovered a statistically significant association between product market dominance and ROA. Independent auditors demonstrated an inverse relationship with ROA, while their connection with Tobin Q was not statistically significant. The findings of this study documented that the regulatory framework moderates the correlation between independent auditors, product market dominance, and ROA and does not have a statistically significant effect on corporate block holding and ROA correlations.
Recommendation: This study proposes that market policy makers should work together to develop and administer the regulations and guidelines on board independence to bolster the significance of board autonomy and boost transparency to improve decision-making.
Corporate governance and Corporate Social Responsibility (CSR) are integral components of sustainability in the oil and gas industry, shaping the sector's environmental and social impact. This review explores current trends, challenges, and best practices in corporate governance and CSR for sustainability within the oil and gas sector. The review examines how corporate governance frameworks influence CSR strategies, highlighting the importance of board oversight and stakeholder engagement in driving sustainable practices. It also delves into the evolving role of oil and gas companies in addressing environmental concerns, such as climate change and resource depletion, through CSR initiatives and transparent reporting. Challenges faced by the industry, such as regulatory complexity, stakeholder expectations, and balancing short-term profitability with long-term sustainability, are analyzed. The review underscores the need for robust governance structures and effective CSR programs to navigate these challenges and maintain social license to operate. Best practices in corporate governance and CSR are explored, emphasizing the importance of integrating sustainability into core business strategies. Case studies illustrate successful approaches to CSR implementation, showcasing how companies can create shared value for stakeholders while driving positive environmental and social outcomes. In conclusion, the review calls for a proactive and holistic approach to corporate governance and CSR in the oil and gas industry. It advocates for increased transparency, stakeholder engagement, and alignment of CSR efforts with the Sustainable Development Goals (SDGs) to enhance sustainability and mitigate risks in the sector.
The purpose for this paper is to recognize female presence in ACs and experience female CFO as working in ACs as a chief in Audit firms, impact of the female with Audit fee and non-audit fee on audit quality, just as their relationship with financial reports of the non-financial sector of Pakistan. Using a combination of publicly available and manually collected data, using OLS regression, Fixed Effects Regression and Random effects and the Pakistan non-financial industries subsequently 2015 to 2019.Results show that this investigation tracks down an affirmative relationship between female directors on ACs and AQ. More, it proves that this affiliation is reliant upon the community bookkeeping aptitude of female ACs individuals and female presence in the ACs. This research adds to AQ literature and to the exploration distinguishing attributes driving female directors' checking. In addition, it adds to the clashing proof identified with female accounting specialists on ACs and accounting reports observing, that the outcomes propose that the blended proof might be determined by the scientists' inability to isolate economic ability. Likewise adds to the discussion on economic or non-economic mastery improves economic detailing observing. Additionally, it applies the hypothetical structure of uniting RDT (resource dependence theory) and AT (agency theory) to women directors on ACs. Moreover, the investigation upholds strategy producers' endeavors towards more noteworthy presence of Women directors, it suggests this they ought to likewise deliberate the public bookkeeping aptitude of women directors.
This study introduces a conceptualization of board of directors' intrafirm knowledge network and a methodology for its construction, assessment, and analysis. We use network theory and analytical techniques to construct boards of directors' intrafirm knowledge networks based on directors' functional domain and committee affiliations. We demonstrate the utility of this approach for governance research by examining the intrafirm knowledge network of the board of directors of General Electric and offer testable propositions that link key director turnover with the properties of and the structural changes in the board's knowledge network and the firm outcomes of strategic change and innovativeness. Our approach bridges the human and social capital perspectives on boards of directors by considering the mechanisms through which turnover of key directors influences firm‐level outcomes. Directors are increasingly expected to not only fulfill their monitoring responsibilities but also provide firms with resources and service (e.g., involvement in strategy‐making). The enactment of these responsibilities is contingent on the effective collaboration within board intrafirm networks. Our conceptualization of intrafirm board ties as a knowledge network can help practitioners identify key directors, analyze the implications of director turnover, and develop succession plans. We make important contributions to corporate governance research and offer insights into understanding the knowledge dynamics in small team‐like settings, such as boards of directors and their impact on firm strategy and innovativeness.
This study examined the effect of grey directors on earnings management of selected non-financial firms in Nigeria. Earnings management was used as dependent variable while grey director's presence, grey director's size, grey director's gender diversity and grey director's stock holding were used as independent variables. A sample of 44 selected non-financial firms were used for the period of ten years spanning 2012 to 2021. The study employed ex-post facto and cross-sectional research design. The secondary sources of data were collected from annual reports of the selected non-financial firms and four (4) specific objectives and hypotheses were subjected to some preliminary data tests like descriptive statistics, Pearson correlation analysis and Variance Inflation factor (VIF) were analyzed using panel regression analysis after taking cognizance of hausman effect tests. Using a sample of 440 firm-year observations, the result revealed that grey director's presence and grey directors gender diversity have a negative and significant effect on earnings management of selected quoted non-financial firms in Nigeria which was statistically significant at 5% level of significance respectively while grey directors stock holding has negative but insignificant effect on earnings management of quoted non-financial firms in Nigeria. Based on the findings above, the study recommends among others, that shareholders of non-financial firms in Nigeria should ensure that there is presence of grey directors in their team of management to help curtail the opportunistic behavior of managers and contend earnings management practices. Again, having more women as grey directors in top management should be the priority of every non-financial firms in order to reduce earnings management practices of the firms.
Implementation of good corporate governance and CSR need to be considered by companies in achieving more firm values. Those value depending on public interpretation, which is affecting to their stock prices. This research aims to proof linkage among corporate governance, CSR, and firm risk by theoretical and practical implications. Regarding theoretical implications, this study provides a model linking corporate governance, CSR, and firm risk. We use a sample data from 262 Indonesia listed firms and 1,252 firm year observations from 2010 to 2015. Our result show firms that adopt better corporate governance have a lower firm risk. Specifically, higher independent managerial ownership will reduce agency problem by combining their interest. Firms that spend high CSR expenses tend to have less volatile stock prices. This research conduct to provide such an information for corporate and investors to consider and analyze corporate governance and CSR in their decision making. Keywords: Corporate Governance; Corporate social responsibility; Firm Risk; Stakeholder Theory
The recent pandemic has had a negative impact on the market and related industries, primarily due to the forced closure of businesses by governments. However, the main cause of this impact is ineffective organizational strategies and their poor implementation. In today's business environment where profitability is the sole focus of management, there is a lack of strategy creation and implementation. In this scenario, the board of directors needs an additional resource to provide precise and well-researched information. This resource can be called the metaverse. Metaverse can be used in the corporate world to improve various processes and operations and provides assistance to make effective decisions. This chapter applies agency theory to show how the metaverse can act as a board member and improve the effectiveness of development strategies. This chapter introduces a new concept for organizational governance. It will be useful for regulators, policy makers, and boards of directors.
The advocates of “doing well by doing good” have advised firms to invest in corporate social responsibility (CSR), but firms may get lost on how to invest their limited resources in it since CSR is a complex concept involving many activities and different types of stakeholders. In this work, we draw upon the perspective of stakeholder saliency and the stakeholder resource‐based view (SRBV) to propose that stakeholders may have different levels of expectations for CSR and contribute to firm value creation differently. Therefore, firms using different CSR to treat different stakeholders (high CSR variability) will have better financial performance. We further propose that context, in particular media coverage and state ownership, moderates the relationship between CSR variability and firm performance, as stakeholders of highly visible firms and state‐owned enterprises (SOEs) may frown upon a discriminate treatment in CSR. Findings based on a sample of 3313 publicly listed firms and 15,324 firm‐year observations in China's stock markets during the 2010–2018 period provide good support for our predictions.
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