scholarly journals Corporate governance and firm performance: Evidence from Ghanaian listed companies

2007 ◽  
Vol 4 (2) ◽  
pp. 123-132 ◽  
Author(s):  
Anthony Kyereboah-Coleman ◽  
Charles K.D. Adjasi ◽  
Joshua Abor
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Stock Exchange ◽  
Governance Structures ◽  
Board Structure ◽  
Board Size ◽  
Firm Level ◽  
Mean Values ◽  
Listed Firms ◽  
Tier System

Well governed firms have been noted to have higher firm performance. The main characteristic of corporate governance identified include board size, board composition, and whether the CEO is also the board chairman. This study examines the role corporate governance structures play in firm performance amongst listed firms on the Ghana Stock Exchange. Results reveal a likely optimal board size range where mean ROA levels associated with board size 8 to 11 are higher than overall mean ROA for the sample. Significantly, firm performance is found to be better in firms with the twotier board structure. Results show further that having more outside board members is positively related to firm performance. It is clear that corporate governance structures influence firm performance in Ghana, indeed within the governance structures the two-tier board structure in Ghana is seen to be more effective in view of the higher firm level mean values obtained compared to the one-tier system.

scholarly journals Board Size and Firm Performance: Case of Kuwait

2021 ◽  
Vol 23 (1) ◽  
pp. 5-21
Author(s):  
Mejbel Al-Saidi
Keyword(s):  
Developing Countries ◽  
Corporate Governance ◽  
Firm Performance ◽  
Performance Measures ◽  
Stock Exchange ◽  
Board Size ◽  
Listed Firms ◽  
Kuwait Stock Exchange ◽  
Empirical Tests ◽  
The Relationship

This study examined the relationship between board size and firm performance using a sample of 110 non-financial listed firms on the Kuwait Stock Exchange (KSE) from 2009 to 2017 (9 years). Empirical tests were conducted using OLS and 2SLS regressions as well as two performance measures to control the issues of endogeneity and causality; the study found that board size negatively affected firm performance. Thus, a small board size is better for non-financial Kuwaiti listed firms, which is consistent with agency theory and the majority of previous studies conducted in developed and developing countries. However, the causality issue does exist. The study makes a number of contributions to the corporate governance literature—namely, it provides a good understanding of the relationship board size and firm performance. In addition, examining such variables without considering the issues of endogeneity and causality would lead to misleading results. Finally, this study provides clear evidence for regulators in Kuwait to design an optimal board size to improve listed firms.

scholarly journals Corporate Governance and Firm Performance: An Empirical Analysis of Manufacturing Listed Firms in Ghana

2018 ◽  
Vol 7 (3) ◽  
pp. 111 ◽  
Author(s):  
Beatrice Sarpong-Danquah ◽  
Prince Gyimah ◽  
Richard Owusu Afriyie ◽  
Albert Asiama
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Manufacturing Sector ◽  
Gender Diversity ◽  
Generalized Least Squares ◽  
Manufacturing Firms ◽  
Board Independence ◽  
Outside Directors ◽  
Board Size ◽  
Listed Firms

This paper assesses the effect of corporate governance on the financial performance of manufacturing firms in a developing country. Specifically, the paper investigates whether gender diversity, board independence, and board size affects return on asset (ROA) and return on equity (ROE) of manufacturing listed firms in Ghana. We use the generalized least squares (GLS) panel regression model to analyze the dataset of 11 listed manufacturing firms from 2009-2013. Our result reveals an insignificant representation of women on boards. Also, the empirical result shows that board independence and board gender diversity have significant positive effect on ROE and ROA. However, there is no statistical significant relationship between board size and firm performance (ROE and ROA). We suggest that manufacturing firms should appoint female board members as well as outside directors on their boards as this can make significant contribution to firm’s performance. Our study provides the first comprehensive explicit exposition of corporate governance-performance nexus using data from the manufacturing sector in Ghana.

scholarly journals The board of directors and firm performance: empirical evidence from listed companies

2019 ◽  
Vol 19 (3) ◽  
pp. 508-551 ◽  
Author(s):  
Alessandro Merendino ◽  
Rob Melville
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Agency Theory ◽  
Ownership Structure ◽  
Listed Companies ◽  
Independent Directors ◽  
Board Structure ◽  
Board Size ◽  
Ceo Duality ◽  
Content Type

PurposeThis study aims to reconcile some of the conflicting results in prior studies of the board structure–firm performance relationship and to evaluate the effectiveness and applicability of agency theory in the specific context of Italian corporate governance practice.Design/methodology/approachThis research applies a dynamic generalised method of moments on a sample of Italian listed companies over the period 2003-2015. Proxies for corporate governance mechanisms are the board size, the level of board independence, ownership structure, shareholder agreements and CEO–chairman leadership.FindingsWhile directors elected by minority shareholders are not able to impact performance, independent directors do have a non-linear effect on performance. Board size has a positive effect on firm performance for lower levels of board size. Ownership structure per se and shareholder agreements do not affect firm performance.Research limitations/implicationsThis paper contributes to the literature on agency theory by reconciling some of the conflicting results inherent in the board structure–performance relationship. Firm performance is not necessarily improved by having a high number of independent directors on the board. Ownership structure and composition do not affect firm performance; therefore, greater monitoring provided by concentrated ownership does not necessarily lead to stronger firm performance.Practical implicationsThis paper suggests that Italian corporate governance law should improve the rules and effectiveness of minority directors by analysing whether they are able to impede the main shareholders to expropriate private benefits on the expenses of the minority. The legislator should not impose any restrictive regulations with regard to CEO duality, as the influence of CEO duality on performance may vary with respect to the unique characteristics of each company.Originality/valueThe results enrich the understanding of the applicability of agency theory in listed companies, especially in Italy. Additionally, this paper provides a comprehensive synthesis of research evidence of agency theory studies.

scholarly journals CORPORATE GOVERNANCE AND FIRM PERFORMANCE NEXUS: A CASE OF CEMENT INDUSTRY OF PAKISTAN

2018 ◽  
Vol 1 (1) ◽  
pp. 1-6 ◽  
Author(s):  
Abdul Ghafoor Kazi ◽  
Muhammad Asad Arain ◽  
Payal Devi Sahetiya
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Ownership Structure ◽  
Significant Relationship ◽  
Stock Exchange ◽  
Study Data ◽  
Cement Industry ◽  
Annual Reports ◽  
Board Structure ◽  
The Impact

Corporate governance is the system of rules, practices and method by that business corporations are directed and controlled. The aim of this research is to examine the impact of the corporate governance on the financial performance of the enlisted cement industry on the Pakistan Stock Exchange from the year 2013-17. This research is a “quantitative research” which focuses on numbers and results based on empirical analysis of actual data and logic. Ten out of seventeen cement firms listed at PSX from the period 2013-17 are selected as sample of the study. Data was collected from documents and records. Descriptive statistics, Pearson’s correlation and multiple regressions were used for data analysis. The results showed that there is no significant relationship between leverage and firm performance, the board structure has no significant relationship with firm performance, and firm size has an insignificant relationship with firm performance. The results however suggested that ownership structure has significant relationship with firm performance. The future investors in cement industry of Pakistan must consider above factors before investments. This study helps shareholders and management in decision making about the effect of ownership structure on firm performance and how these can change ownership structure. This study helps students to gain knowledge and understanding about good corporate governance and its impact on firm performance. It will also help them to go through the annual reports of companies and to analyse the financial statements so that they could learn how to analyse the performance of the firm in terms of ROE. Moreover, the study would also be a direction for future researchers and students to further add value to the subject of corporate governance and firm performance.

scholarly journals The South African code of corporate governance. The relationship between compliance and financial performance: Evidence from South African publicly listed firms

2015 ◽  
Vol 12 (2) ◽  
pp. 149-169 ◽  
Author(s):  
Jonty Tshipa ◽  
Thabang Mokoaleli-Mokoteli
Keyword(s):  
South Africa ◽  
Corporate Governance ◽  
Firm Performance ◽  
Financial Performance ◽  
South African ◽  
Small Firms ◽  
Large Firms ◽  
Board Size ◽  
Tobin's Q ◽  
Listed Firms

Using both Return On Assets (ROA) and Tobin’s Q as proxies for performance, the study seeks to explore if better governed firms exhibit greater financial performance than poorly governed firms. The paper employs a panel study methodology for a sample of 137 Johannesburg Stock Exchange (JSE) listed firms between 2002 and 2011. The results show that the compliance levels to corporate governance in South Africa (SA) has been improving since 2002 when King II came into force. However, the compliance level in large firms appears to be higher than in small firms. Further, the findings show that the market value of large firms is higher than that of small firms. These results largely support the notion that better governed firms outperforms poorly governed firms in terms of financial performance. Notably, the empirical results indicate that board size, CEO duality and the presence of independent non-executive directors positively impact the performance of a firm, whereas board gender diversity, director share-ownership and frequency of board meetings have no impact on firm performance. This suggests that greater representation of independent non-executive director, a larger board size and the separation of CEO and Chairman should be encouraged to enhance firm performance. Unexpectedly, the presence of internal key board committees, such as remuneration, audit and nomination, negatively impact firm performance. Similar to UK, South Africa has a flexible approach to corporate governance, in which listed firms are required to apply or explain non-conformance to King recommendations. This study has policy implications as it determines whether the flexible corporate governance approach employed by SA improves corporate governance compliance than the mandatory corporate governance approach as employed by countries such as Sri Lanka and US, and whether compliance translates into firm performance. The significant finding of this study is that compliant firms enjoy a higher firm performance as measured by ROA and Tobin’s Q. This implies that compliance to corporate governance code of practice matters, not just as box ticking exercise but as a real step change in the governance of South African listed firms. This paper fulfils an identified need of how compliance to corporate governance influences firm performance in South Africa. The findings have implications to JSE listing rules, policy, investor confidence and academia.

scholarly journals Can board mechanism affect the firm value in Pakistan?

2009 ◽  
Vol 6 (3) ◽  
pp. 308-317 ◽  
Author(s):  
Mian Sajid Nazir ◽  
Shafaqat Ali ◽  
Abdul Haque
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Firm Value ◽  
Board Structure ◽  
Board Size ◽  
Positive Role ◽  
Performance Variables ◽  
Performance Factors ◽  
Governance Indicators ◽  
The Relationship

Corporate governance is, undoubtedly, extremely essential for the performance of the organizations. The structure of corporate ownership has significant impact on the external as well as internal performance factors of firms. The relationship between corporate governance indicators and firm performance has been extensively investigated; however, a little work has been done on how the structure of board can add value to the firm. This paper sheds light on the relationship of some aspects of board structure like board size, board composition, and CEO duality with the performance variables Tobin’s Q and Return on Assets (ROA) by using a sample of 53 firms of cement and sugar sectors of Pakistan for a period of 2005-2007. The results indicate that the firms perform better with moderate board size and the performance is adversely affected if CEO also acts as chairperson of board of directors whereas the external directors can play a positive role for firm performance in Pakistan.

Relationship between Corporate Governance Index and Firm Performance: Indian Evidence

2018 ◽  
Vol 19 (3) ◽  
pp. 675-689 ◽  
Author(s):  
Akshita Arora ◽  
Shernaz Bodhanwala
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Performance Metrics ◽  
Market Competition ◽  
Board Structure ◽  
Data Set ◽  
Listed Firms ◽  
Market For Corporate Control ◽  
Governance Index ◽  
The Relationship

The Indian corporate governance norms have been evolving over a period of time but limited number of studies have been undertaken with reference to corporate governance index (CGI) in the Indian context. The study aims to examine the relationship between CGI and firm performance. We construct CGI using important parameters of governance such as board structure, ownership structure, market for corporate control and market competition. Our panel data set comprises of listed firms and the estimation analysis has been carried out using random effects method. The study reveals significant positive relationship between CGI and firm performance metrics. CGI is an important and causal factor in explaining firm performance. The investors would also have positive perception about business firms maintaining high governance standards, thus reducing possible funding costs.

scholarly journals Impact of corporate governance on financial disclosures: Evidence from India

2014 ◽  
Vol 12 (1) ◽  
pp. 874-889 ◽  
Author(s):  
Mehul Raithatha ◽  
Varadraj Bapat
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Board Independence ◽  
Board Structure ◽  
Board Size ◽  
Cross Sectional ◽  
Listed Firms ◽  
Disclosure Requirements ◽  
Financial Disclosures

The paper aims at identifying impact of corporate governance variables i.e. board structure (board size, board independence, board activity and board busyness) and ownership structure (foreign promoters holding, institutional shareholding and CEO duality) on financial disclosures made by the Indian firms. Using cross sectional data of 325 listed firms for the financial year 2009-10, we compute financial disclosure score (using 171 checklist points) based on disclosure requirements of accounting standards. We find average disclosure score of 73%, maximum and minimum being 100% and 46% respectively. Our finding support agency theory in terms of monitoring role of board since board size is found to be significant however we do not find any influence of board independence on the disclosures. The study also supports resource dependency theory in terms of outside directorship which might provide exposure to different corporate environment, brings diverse perspectives and knowledge to the directors and this in turn leads to improved disclosures. We also support the notion that having foreign promoter shareholding improves disclosures

Corporate governance, resources, FDI commitment and firm performance

2014 ◽  
Vol 8 (3) ◽  
pp. 313-332 ◽  
Author(s):  
Ming-Tien Tsai ◽  
Wen-Hui Tung
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Stock Exchange ◽  
Chief Executive ◽  
Governance Structure ◽  
High Tech ◽  
Corporate Governance Structure ◽  
Ceo Duality ◽  
Content Type ◽  
Mean Values

Purpose – This study aims to explore the effects of corporate governance structure and resources on foreign direct investment (FDI) commitment and firm performance. Design/methodology/approach – The data are collected from high-tech firms listed by the Taiwan Stock Exchange. All selected 137 firms have complete FDI and other required data during 2007-2009. The mean values of the variables during the three-year period were used for analysis. Findings – The results indicate that both chief executive officer (CEO) duality and government shareholding affect a firm’s FDI; and the higher the management shareholding ratio, the lower the return on equity. Moreover, a large ownership of substantial shareholders can enhance a firm’s performance; and higher institutional ownership can lead to higher firm performance. Research limitations/implications – This study analyses the limited data from 137 high-tech firms in Taiwan during the three-year period of 2007-2009. Further analyses of other industries, countries and time periods are needed to generalize the conclusions. Practical implications – A firm with CEO duality should increase the ratio of government holding to mitigate the influence of CEO on FDI decisions. When a firm’s performance is poor, the ratio of managerial holdings should be reduced; conversely, the firm could attract more holdings from domestic securities and funds to improve performance. Originality/value – This study provides guidelines for shareholders to analyze governance structure and formulate their investment strategies. Corporate policymakers may use these as the principles for designing a corporate governance structure that could engender optimal firm performance.

scholarly journals Do Cross-Listed Firms Have a Better Governance Structure and Lower Agency Costs? Evidence from Chinese Firms

2021 ◽  
Vol 13 (4) ◽  
pp. 1734
Author(s):  
Dong-Soon Kim ◽  
Eunjung Yeo ◽  
Li Zhang
Keyword(s):  
Corporate Governance ◽  
Agency Costs ◽  
Fixed Effects ◽  
Stock Exchange ◽  
Governance Structure ◽  
Least Square ◽  
Board Size ◽  
Chinese Firms ◽  
Listed Firms ◽  
Cross Listing

This study examines whether an influence from a difference in corporate governance structure exists on firms’ agency costs between Chinese companies cross-listed on the Hong Kong Stock Exchange (HKSE) and those that are domestically listed ones. We determine that, overall, companies with an HKSE cross-listing had better corporate governance than those without. The corporate governance advantage of the HKSE cross-listed firms holds if we control for firm fixed effects and resolve the potential endogeneity problem between corporate governance and agency costs by using two-stage least square (2SLS) regression analysis with instrumental variables. Specifically, the HKSE cross-listed firms had better corporate governance in terms of board size and institutional ownership. By contrast, domestically listed firms experienced the adverse effects of institutional owner’s roles and higher board pay. The advantages of HKSE cross-listed firms may stem from the benefits of having a larger board size and the effective monitoring of the management by the institutional stockholders. Implications are drawn for the debate on cross-listing and the future challenges of Chinese firms, and a more robust monitoring is necessary for sustainable finance of their stock markets.

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