The Impact of Corporate Governance Mandates on Firm-level Foreign Exchange Exposure

2013 ◽  
Author(s):  
Elaine Laing ◽  
Elaine Hutson
Keyword(s):  
Corporate Governance ◽  
Foreign Exchange ◽  
Firm Level ◽  
Foreign Exchange Exposure ◽  
The Impact

Does External Monitoring from Government Improve the Performance of State-Owned Enterprises?

2021 ◽  
Author(s):  
Shengyu Li ◽  
Hongsong Zhang
Keyword(s):  
Corporate Governance ◽  
Production Management ◽  
Geographic Location ◽  
Policy Instrument ◽  
Production Data ◽  
Firm Level ◽  
External Monitoring ◽  
Effective Policy ◽  
The Impact ◽  
Input Prices

Abstract This paper investigates the impact of external monitoring from government on SOE performance, using variation in monitoring strength arising from a nationwide policy change and firms’ geographic location in China. We utilize a structural approach to estimate input prices and productivity separately at the firm level using commonly available production data. We show that enhanced external monitoring, as a key component of corporate governance, can substantially reduce managerial expropriation in procurement (proxied by input prices) and shirking in production management (proxied by productivity). The results suggest that government monitoring can be an effective policy instrument to improve SOE performance.

Corporate Governance and Cash Holdings

2021 ◽  
pp. 305-321
Author(s):  
Ahmed Hassanein
Keyword(s):  
Corporate Governance ◽  
Cash Holdings ◽  
Opportunistic Behavior ◽  
Governance System ◽  
Firm Level ◽  
Corporate Managers ◽  
Country Level ◽  
Corporate Governance System ◽  
The Impact ◽  
Corporate Cash Holdings

Corporate cash induces the opportunistic behavior of corporate managers that can create an agency problem. A corporate governance system controls the opportunistic behavior of managers and can affect the firm's policy on holding cash. This study explains how the aspects of corporate governance, country-level and firm-level governance, can affect the corporate policy on holding cash. First, the study provides the nature, definition, and importance of corporate cash holdings. Second, it outlines various motivations and theories behind holding corporate cash. Third, it explains the relation between firm-level governance and corporate cash holdings. Fourth, it focuses on the impact of firm-specific governance attributes on the level of corporate cash holdings. Fifth, it presents the relation between country-level governance and corporate cash holdings.

Do corporate bond recovery rates monitored by corporate governance mechanisms?

2016 ◽  
Vol 42 (8) ◽  
pp. 830-848
Author(s):  
Mehdi Mili ◽  
Sami Abid
Keyword(s):  
Corporate Governance ◽  
Generalized Method Of Moments ◽  
Corporate Bonds ◽  
Corporate Bond ◽  
Firm Level ◽  
Recovery Rates ◽  
Content Type ◽  
Country Level ◽  
The Impact ◽  
The Relationship

Purpose – The purpose of this paper is to examine the relationship between corporate governance (CG) and firms’ bond recovery rates (RRs). The authors hypothesize that governance features impact RRs by controlling agency costs that result from conflicts between bondholders and shareholders. The authors also test the relationship between CG and RRs during the last crisis. Design/methodology/approach – The authors use a generalized method of moments regression model to test the relationship between CG and firms’ bond RRs. The authors employ a direct measure of recoveries rates from Moody’s ultimate recovery database covering the period from 2003 to 2012. Both firm-level CG and country-level variables are used to examine the determinants of corporate bonds RRs. Findings – The results support a significant impact of CG mechanisms on bond RRs mainly during crisis period. The authors find that firms operating with CEO-Duality decrease their bond RRs during financial crisis. This implies wealth transfers from bondholders to shareholders and provides one explanation why some firms operate with weak governance. Originality/value – This paper provides the first direct evidence that corporate bond RRs are directly related to CG mechanisms. The authors combine firm-level CG and country-level variables to examine the determinants of corporate bonds RRs. Earlier studies focussed on financial firm-level data and macro-economic variables. The authors also test the impact of board composition and ownership structure on bond recoveries.

Corporate governance and the impact to the R&D lab

2019 ◽  
Vol 13 (1) ◽  
pp. 91-110
Author(s):  
Arjan Markus ◽  
Tim Swift
Keyword(s):  
Corporate Governance ◽  
Competitive Advantage ◽  
Generalized Least Squares ◽  
Innovation Theory ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
Generalized Least Squares Estimation ◽  
The Impact ◽  
Exploratory Innovation

Purpose The purpose of this paper is to determine whether the strength of corporate governance influences the firm’s ability to retain their key knowledge workers or inventors. Design/methodology/approach This paper links agency and innovation theory to develop the hypotheses. Agency theory predicts that the interests of employees are counter to those of firm owners. The authors predict that as shareholder power grows as corporate governance strengthens, inventors who are highly productive, and those who pursue risky but valuable exploratory innovation will leave the firm. Given prior scholarship in innovation theory establishing the critical contributions that new knowledge creation and exploratory innovation make to firms’ competitive advantage, the authors consider whether stronger firm-level corporate governance leads to the erosion of the firm’s competitive advantage. The hypotheses are empirically tested using generalized least squares estimation on a data set that combines data on firms, their patents and the governance provisions these firms adopt. Findings Using a 10-year sample of publicly traded US firms, the authors find that stronger corporate governance erodes the very foundation of a firm’s innovation capabilities. Stronger corporate governance reduces management job security, which makes managers more risk-averse. This heightened “managerial myopia” results in increased departures of highly valuable inventors employed by the firm. The authors show that these departing inventors are more productive inventors than those who remain and engage in more exploratory R&D than the remaining inventors at the firm. Originality/value The findings raise questions on the appropriateness of the adoption of governance provisions strengthening shareholder rights in firms pursuing innovation.

Room for improvement: the impact of bad losses on board quality

2014 ◽  
Vol 15 (3) ◽  
pp. 255-272 ◽  
Author(s):  
Mark B. Mulcahy
Keyword(s):  
Corporate Governance ◽  
Quality Indicators ◽  
Stock Exchange ◽  
Control Sample ◽  
Firm Level ◽  
Content Type ◽  
Research Stream ◽  
The Uk ◽  
The Impact ◽  
The Relationship

Purpose – The purpose of this paper is to study the relationship between reporting a loss and changes in board quality. Low quality corporate governance is associated with adverse accounting outcomes and is characterised by the lack of non-executive and independent directors on the board. Changes in these board quality indicators in response to the reporting of a loss and conditioned by the severity of the loss are examined. Design/methodology/approach – This study uses four years of board information spanning the report of an initial loss for companies listed on the UK stock exchange. An industry and size matched control sample is used in a difference-in-difference analysis to isolate the impact of the loss from underlying changes in board quality. Findings – Overall the results indicate that more severe initial loss events precipitate improvements in board quality over and above the control sample as well as less severe loss events. Research limitations/implications – Although unambiguous, the reporting of a loss is only one measure of underperformance. Also the board quality indicators used in this study are two from several individual corporate governance variables and amalgamations used in the extent literature. Practical implications – The findings demonstrate that the relationship between corporate governance and performance is endogenous and that the majority of any improvement in board quality actually anticipates the reporting of the loss. Any celebration of improvements in governance need to be tempered by an understanding of the precariousness of the firms at which these improvements are made. Originality/value – This study contributes to a research stream that examines negative shocks, and losses in particular, as an event likely to precipitate firm-level changes in board quality, i.e. firms tend not to make improvements to board quality without the impetus to do so.

The Relationship Between CSR, Corporate Governance, and Firm Performance

2020 ◽  
pp. 289-304
Author(s):  
Souhaila Kammoun ◽  
Sahar Loukil ◽  
Youssra Ben Romdhane ◽  
Abdelmajid Ibenrissoul
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Governance Mechanism ◽  
Firm Level ◽  
Social Commitment ◽  
Level Data ◽  
Drivers Of Csr ◽  
Data Survey ◽  
Social Engagements ◽  
The Impact

Research has been conducted to extend our understanding of CSR by revealing CG mechanism antecedent effects on firm social engagements. In spite of this, few studies aimed to understand the impact of the performance of those mechanisms on CSR. To our knowledge, our study is the first to measure CG performance and its role in the expansion of CSR in an emerging country. We also analyze some component of firm performance that could potentially affect a firm's social commitment. Using a data survey questionnaire consisting of 37 items assessing CSR engagement measured by a self- constructed index and firm level data of 76 listed Moroccan firms, empirical results underline the impact of corporate governance performance and firm's performance on CSR. These results suggest that governance mechanism performance and firm performance are principal drivers of CSR particularly for big business. Debts have shown a reducing effect. Thus, our study of CSR commitment index allows for a clearer and more robust assessment of CG on Moroccan firm CSR activities.

VOLATILITY OF CRUDE OIL PRICES, FOREIGN EXCHANGE EXPOSURES, AND COMPANY’S PERFORMANCE: EMPIRICAL EVIDENCE FROM TAIWANESE 3PL INDUSTRY

2018 ◽  
Vol 6 (1) ◽  
pp. 53-60
Author(s):  
Hsiao Chiu-Ming ◽  
Chen Chih-Hung ◽  
Lin Chun-Hsuan ◽  
Fang Bo-Wei ◽  
Tang Yen-Ju ◽  
...  
Keyword(s):  
Exchange Rate ◽  
Crude Oil ◽  
Stock Returns ◽  
Foreign Exchange ◽  
Negative Impact ◽  
Oil Prices ◽  
Foreign Exchange Rate ◽  
Firm Level ◽  
Crude Oil Prices ◽  
The Impact

Purpose of the study: In this paper, we investigate the impact of the changes in crude oil prices and fluctuation of foreign exchange rate on the operating performances of Taiwanese 3PL industry.Methodology: Vector Autoregression Models. Through the empirical model, we find that all the 3PL companies are more suffered to the volatility of WTI and Dubai crude oil prices, but Dubai is insignificant to the warehousing companies. In the fluctuations of foreign exchange rate, some have positive effect and some are negative.Main Findings: All the Taiwanese 3PL companies are more suffered to the volatility of WTI and Dubai crude oil prices, however Dubai is insignificant to the warehousing companies. Moreover, we find an interesting result, that is, for some companies operating performance, the impact on the volatilities of crude oil have the same sign but in opposite direction. For example, in our empirical results, the stock returns are positively correlated to volatilities of Dubai and Brent crude oil prices, however, WTI’s volatility has negative impact on them.Implications: It implies that the company can make a “natural hedge” strategy to hedge the crude oil volatility risk by forming a portfolio which pools these three commodities together. In this way, we made recommendations to the company’s decision-making reminding that the company should make a portfolio of foreign exchange and crude oil price fluctuations in the hedge strategy to enhance the company’s risk management operations and to reduce the loss caused by these factors.Novelty/Originality of this study: This study contributes in the existing literature for an empirically study of a firm-level evidence from Taiwanese 3PL companies.

An assessment of corporate governance reforms in Italy based on a comparative analysis of earnings management

2014 ◽  
Vol 14 (3) ◽  
pp. 407-423 ◽  
Author(s):  
Domenico Campa ◽  
Ray Donnelly
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Good Governance ◽  
Firm Level ◽  
Content Type ◽  
Good Corporate Governance ◽  
The Uk ◽  
The Impact ◽  
Corporate Governance Reforms ◽  
Governance Reforms

Purpose – The purpose of this paper is to evaluate the impact of corporate governance reforms in Italy. Design/methodology/approach – The authors argue that the effectiveness of corporate governance can best be assessed with reference to the choices made by management or controlling shareholders. They use the curtailment of earnings management as a desirable and measureable outcome of good corporate governance to assess Italy’s progress since the 1990s. The UK is used as a reference point because it is a European Union (EU) economy of comparable size and there is evidence that its firms managed earnings to a much lesser extent than their counterparts in Italy in the 1990s. A matched sample of UK and Italian firms was used for the empirical analysis. Findings – It was found that in contrast to the situation in the 1990s, firms in Italy do not manage earnings to a greater extent than their UK counterparts after the corporate governance reforms. In addition, firm-level governance has a greater effect on earnings management in Italy than in the UK. The authors attribute this to firm-level governance compensating for deficiencies in national institutions. Research limitations/implications – The restriction of earnings management is just one positive consequence of good governance. Other positive outcomes require to be studied to form a complete picture of the impact of governance reforms in Italy. Originality/value – This paper is the first to use an outcome-driven approach to evaluate the impact of governance reforms.

Corporate governance and the variability of stock returns

2014 ◽  
Vol 10 (4) ◽  
pp. 494-510 ◽  
Author(s):  
Hardjo Koerniadi ◽  
Chandrasekhar Krishnamurti ◽  
Alireza Tourani-Rad
Keyword(s):  
Corporate Governance ◽  
Stock Returns ◽  
Stock Option ◽  
Data Availability ◽  
Firm Level ◽  
Policy Makers ◽  
Content Type ◽  
Governance Quality ◽  
The Impact ◽  
Practical Implications

Purpose – The purpose of this paper is to analyze the impact of firm-level corporate governance practices on the riskiness of a firm's stock returns. Design/methodology/approach – The authors constructed an index of governance quality incorporating best practices stipulated by regulators. The authors employed regression analysis. Findings – The empirical evidence, using an index of corporate governance, shows that well-governed New Zealand firms experience lower levels of risk, ceteris paribus. In particular, the results indicate that corporate governance aspects such as board composition, shareholder rights, and disclosure practices are associated with lower levels of risk. Research limitations/implications – A limitation of the study is that the corporate governance index constructed is somewhat arbitrary and due to limitation of data availability the authors may have excluded some factors such as share trading policy of directors and policies regarding provision of non-auditing services by auditors. The research supports the view that institutional context could have an impact on governance outcomes. The work has three implications for managers, investors, and policy makers. First, the results imply that well-governed firms have lower idiosyncratic risk and that this reduction is most likely due to the reduction in agency costs and information risk. Second, in the absence of features like an active corporate control market and stock option based managerial compensation, managers have little incentives to take on risky projects that increase firm value. Third, the results suggest that the managers of well-governed firms are not more risk averse with respect to investment decisions compared to poorly governed firms. Practical implications – The work has practical implications for managers, investors, and policy makers. Well-governed firms face lower variability in stock returns compared to poorly governed firms. Firms that have independent boards that protect its shareholders’ rights and disclose its governance-related policies experience lower firm-level risk, other things being equal. Originality/value – This study is the first one to examine the impact of a composite measure of corporate governance quality on stock return variability in a non-US setting. The results suggest that firms can use specific corporate governance provisions to mitigate firm-level risk. The findings of the paper are therefore relevant and useful to corporate managers, investors, and policy makers.

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