scholarly journals The Impact of Business Group Affiliation and Country-Level Institutions on Corporate Governance of Emerging Market Firms

2020 ◽  
Author(s):  
Bruce Hearn ◽  
Lars Oxelheim ◽  
Trond Randoy
Keyword(s):  
Corporate Governance ◽  
Emerging Market ◽  
Business Group ◽  
Group Affiliation ◽  
Country Level ◽  
Emerging Market Firms ◽  
Business Group Affiliation ◽  
The Impact

Corporate social responsibility, business group affiliation and shareholder wealth: evidence from an emerging market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Eswaran Velayutham ◽  
Vijayakumaran Ratnam
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Emerging Market ◽  
Business Group ◽  
Shareholder Wealth ◽  
Group Affiliation ◽  
Content Type ◽  
Business Group Affiliation ◽  
Corporate Social ◽  
The Relationship

Purpose This paper aims to examine the relationship between corporate social responsibility (CSR) and shareholder wealth arising from announcement returns of security issuance from a frontier market. It also explores the role of business group affiliation (BGA) on this relationship. Design/methodology/approach The study uses short-term scenarios to examine the link between CSR and shareholder wealth using the event study methodology which helps us mitigate the reverse causality problems related to studies of the relationship between CSR and firm value. Abnormal returns surrounding the security issue announcements were generated using the market model. Findings This paper finds that security issuers with high CSR scores are associated with higher shareholder value. However, this paper finds that CSR activities of security issuers with BGA are value-destroying which is consistent with the agency perspective of CSR. Research limitations/implications This study is limited to only one nascent market, namely the Colombo Stock Exchange. Originality/value This study documents that CSR and BGA are important determinants, among others, of stock price reactions to security offerings in emerging markets.

Value Constraining or Value Enabling? The Impact of Business Group Affiliation on Post-Acquisition Performance by Emerging Market Firms

2020 ◽  
Vol 16 (2) ◽  
pp. 261-291
Author(s):  
Manish Popli ◽  
Radha Mukesh Ladkani
Keyword(s):  
Emerging Market ◽  
Business Groups ◽  
Governance Structure ◽  
Group Affiliation ◽  
Acquisition Performance ◽  
Theoretical Perspectives ◽  
Organizational Inertia ◽  
Empirical Context ◽  
Business Group Affiliation ◽  
The Impact

ABSTRACTLiterature has advanced two contrasting theoretical perspectives related to the governance structure of business groups: the ‘value-constraining’ perspective, which focuses on principal–principal agency conflict and organizational inertia theory, and the ‘value-enabling’ perspective, which emphasizes the role of business groups in mitigation of institutional voids. Building on these two competing lenses, we develop hypotheses to examine post-acquisition performance of affiliate firms relative to stand-alone firms. As our empirical context, we study 440 majority-stake, domestic and cross-border merger and acquisition deals closed by Indian firms during the period 2002–2013. The results imply that in emerging markets, despite concerns of organizational inertia and principal–principal agency issues, the value-enabling impact of group affiliation persists. We also examine the contextual impact of intergroup heterogeneity owing to group diversification on post-acquisition performance and find that greater group diversification leads to better performance for affiliate acquirers.

scholarly journals CORPORATE GOVERNANCE AND FIRM VALUE IN EMERGING MARKETS AN EMPIRICAL ANALYSIS OF ADR ISSUING EMERGING MARKET FIRMS

2012 ◽  
Vol 2 (1) ◽  
pp. 38-51 ◽  
Author(s):  
Aysun Ficici ◽  
C. Bulent Aybar
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Firm Value ◽  
Emerging Market ◽  
Market Value ◽  
Governance Structures ◽  
Market Values ◽  
Good Corporate Governance ◽  
Emerging Market Firms ◽  
The Impact

This study explores the value implications of good corporate governance for a sample of 54 ADR issuing emerging market firms (EMFs) from 9 countries primarily located in the regions of Asia, Eastern Europe and Latin America and the and employs recently constructed company composite corporate governance metric along with some alternative corporate governance measures associated with the origin of the issuing firm. Although the ADR literature primarily focuses on the impact of subscription to US disclosure requirements we contend that company and country specific corporate governance standards play a significant role in the risk reduction and ensuing value capture.  The fundamental inquiry in this study has the following foci: The primary focus is on the impact of corporate governance structures on firm performance as to whether adherence to standards creates market value for ADR issuing EMFs.  Do good corporate governance practices affect the value of EMFs? The secondary focus is concerned with whether the impact of corruption level and legal system in a firm’s home country affect the corporate structures of EMFs thus affecting the market value of firms.  In this study, we utilize Tobin’s q as the measure of firm performance/market value.  Our findings suggest that there is a significant correlation between corporate governance structures of ADR issuing EMFs and their market values and/or performances.  The results also indicate that the level of corruption and legal structures in home countries of EMFs strongly impact the corporate governance structures of these firms and sequentially affect their market values. Therefore, this research further contributes to the scholarly findings and suppositions that corporate structures of firms do create consequences on firm value.

Alternative Governance and Corporate Financial Fraud in Transition Economies: Evidence From China

2018 ◽  
Vol 45 (7) ◽  
pp. 2685-2720 ◽  
Author(s):  
Daphne W. Yiu ◽  
William P. Wan ◽  
Yuehua Xu
Keyword(s):  
Corporate Governance ◽  
Transition Economies ◽  
Strategic Alliances ◽  
Business Group ◽  
Financial Fraud ◽  
Group Affiliation ◽  
Government Ownership ◽  
Governance Mechanisms ◽  
Institutional Conditions ◽  
Business Group Affiliation

How corporate governance mechanisms function in transition economies is a key topic for corporate governance researchers and policy makers. We propose that alternative governance mechanisms are in place to mitigate corporate fraudulent behaviors in the fluid state of transition economies where the establishment and enforcement of corporate governance legislation are presently insufficient. Drawing on the twin set of institutional logics—the institutional embeddedness logic and the institutional substitution logic—we posit that three salient types of prevailing alternative governance mechanisms (relational, administrative, and foreign governance) play important roles in transition economies because they are complementary to the institutional conditions at the time of the transition process. Conducting a bivariate probit analysis of a matched sample of corporate financial fraud cases in China, we find that strategic alliances, business group affiliation, nontradable state shares, local government ownership, use of foreign auditors, and foreign listing can deter corporate financial fraud, while foreign listing is also effective in detecting fraud. We also find that the deterrence effects of strategic alliances and business group affiliation become weaker as law development improves, while foreign listing and legal governance are completely substitutive. Our study provides a contextualized view of corporate governance that connects its effectiveness with institutionalization and the institutional state of a country. Our study also enriches our understanding of some unfamiliar forms of governance mechanisms that are in place and complementary to a country’s institutional conditions.

Corporate governance, firm performance, and business group affiliation: evidence from India

2019 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Neeti Khetarpal Sanan ◽  
Dinesh Jaisinghani ◽  
Sangeeta Yadav
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Empirical Evidence ◽  
Emerging Economies ◽  
Chief Executive ◽  
Business Group ◽  
Independent Directors ◽  
Group Affiliation ◽  
Content Type ◽  
Business Group Affiliation

Purpose The purpose of this paper is to investigate whether, in emerging economies, the relationship between a firm’s corporate governance (CG) and its performance is associated with firm’s affiliation to a business group. Design/methodology/approach A total of 209 publicly listed firms in India during a 10-year period from 2007 to 2016 were studied, and the random effects model was employed for analysis. Findings Empirical evidence showed that board size and institutional shareholding positively impacted firm performance, whereas the proportion of independent directors negatively impacted performance. In group-affiliated firms in emerging economies, chief executive officer duality negatively impacted, whereas institutional shareholding positively impacted performance. These results are consistent with the principal–principal agency theory. The study found no discernible impact of proportion of independent directors on firm performance in group-affiliated firms. Originality/value In analyzing the governance–performance relationship and its association with business groups, this study extends current understanding by connecting business group research in emerging economies with CG and firm performance research. In examining firms from several industries over a long period of time after controlling for firm size, capital structure and spends on research and development and marketing, the results of this study offer rich empirical evidence that contributes to the extant literature on the nature of the governance–performance relationship.

scholarly journals Business Group-Affiliation and Corporate Social Responsibility: Evidence from Listed Companies in China

2021 ◽  
Vol 13 (4) ◽  
pp. 2110
Author(s):  
Xin Huang ◽  
Xianling Jiang ◽  
Wei Liu ◽  
Qian Chen
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Emerging Market ◽  
Business Groups ◽  
Listed Companies ◽  
Business Group ◽  
Vital Role ◽  
Group Affiliation ◽  
Business Group Affiliation ◽  
Corporate Social

Business groups have played a vital role in the development of emerging markets. However, we share very limited understanding in the role of business group that act on affiliated firms’ CSR performance. Using manually sorted data on A-share listed companies and business groups in China from 2010–2017, we examine whether a company’s business group-affiliation affects its corporate social responsibility (CSR) performance and the mediating mechanisms of this association. Our empirical models show that group companies bear a higher level of social responsibility compared to independent companies. This positive relationship between group-affiliation and social responsibility relies on resource allocation through internal capital markets, rent-seeking initiatives, and consideration of corporate reputation. Moreover, group affiliation benefits the firm’s CSR performance in employee’s responsibilities, consumers’ responsibilities and environmental responsibilities, while significantly lower the shareholders’ responsibilities. Our empirical valuation of group companies’ CSR levels can serve as a benchmark for emerging market companies implementing social responsibility policies.

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