scholarly journals FIRM PERFORMANCE AND CONDENSED CORPORATE GOVERNANCE MECHANISM: EVIDENCE OF NIGERIAN FINANCIAL INSTITUTIONS

2019 ◽  
Vol 20 (0) ◽  
pp. 403-416
Author(s):  
Alex Adegboye ◽  
Stephen Ojeka ◽  
Kofo Adegboye ◽  
Emmanuel Ebuzor ◽  
Dayo Samson
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Financial Performance ◽  
Financial Institutions ◽  
Good Governance ◽  
Random Effect ◽  
Governance Structure ◽  
Corporate Governance Structure ◽  
Listed Firms ◽  
The Impact

This paper extends the prior studies on corporate performance by empirically exploring the impact of overall corporate governance structure on firm performance. To unveil the objective of this study, firstly corporate governance index is built using Principal Component Analysis with 6 (six) identified corporate governance mechanisms from prior studies and then examines its effect on firms’ performance. This study draws a sample of twenty-four (24) financial companies from the listed financial institutions in Nigeria for the period of 2013–2017. The formulated hypotheses are tested by employing static panel data estimators that are Fixed effect and Random Effect Regression. The results reveal that while controlling for firms’ characteristics, constructed corporate governance indicator has a significant and negative influence on the firm performance measured by Return on Asset and Return on Equity. This finding supports that larger board, larger board committees and significant executive involvement have a detrimental influence on the performance of firms. The result implies a weak corporate governance structure is detrimental to higher financial performance amidst the weak institutions characterized in Nigeria context. That is, weaker corporate governance exhibits lower financial performance. This study then recommends that the corporate governance structure in Nigeria listed firms should be review with the intention to enhance the firm performance. Furthermore, it encourages the regulatory agencies like Central Bank of Nigeria, National Insurance Commission and Securities and Exchange Commission, to monitor the compliance of the listed firms to good governance endeavour.

Is internal and external mechanism of governance enriching the performance of the banking sector of Pakistan?

2017 ◽  
Vol 17 (4) ◽  
pp. 629-642 ◽  
Author(s):  
Sundas Sohail ◽  
Farhat Rasul ◽  
Ummara Fatima
Keyword(s):  
Corporate Governance ◽  
Banking Sector ◽  
Good Governance ◽  
Random Effect ◽  
Random Effect Model ◽  
General Meeting ◽  
Governance Structure ◽  
Board Structure ◽  
Content Type ◽  
The Impact

Purpose The purpose of this study is to explore how governance mechanisms (internal and external) enhance the performance of the return on asset (ROA), return on equity (ROE), earning per share (EPS) and dividend payout ratios (DP) of the banks of Pakistan. The study incorporates not only the internal factors of governance (board size, out-ratio, annual general meeting, managerial ownership, institutional ownership, block holder stock ownership and financial transparency) but also the external factors (legal infrastructure and protection of minority shareholders, and the market for corporate control). Design/methodology/approach The sample size of the study consists of 30 banks (public, private and specialized) listed at the Pakistan Stock Exchange (PSE) for the period 2008-2014. The panel data techniques (fixed or random effect model) have been used for the empirical analysis after verification by Hausman (1978) test. Findings The results revealed that not only do the internal mechanisms of governance enhance the performance of the banking sector of Pakistan but external governance also plays a substantial role in enriching the performance. The findings conclude that for a good governance structure, both internal and external mechanisms are equally important, to accelerate the performance of the banking sector. Research limitations/implications Internal and external mechanisms of corporate governance can also be checked by adding some more variables (ownership i.e. foreign, female and family as internal and auditor as external), but they are not added in this work due to data unavailability. Practical implications The study contributes to the literature and could be useful for the policy makers who need to force banks to mandate codes of governance through which they can create an efficient board structure and augment the performance. The investments from different forms of ownership can be accelerated if they follow the codes properly. Social implications The study facilitates the bankers in incorporating sound codes of corporate governance to enhance the performance of the banks. Originality/value This work is unique as no one has explored the impact of external mechanism of governance on the performance of the banking sector of Pakistan.

scholarly journals Do Multinational Companies Practice Good Corporate Governance? Empirical Evidence from Bangladesh

2017 ◽  
Vol 7 (2) ◽  
pp. 96
Author(s):  
G. M. Wali Ullah ◽  
Sarwar Uddin Ahmed ◽  
Samiul Parvez Ahmed ◽  
Kazi Md. Jamshed
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Stock Returns ◽  
Governance Structure ◽  
Multinational Companies ◽  
Governance Mechanisms ◽  
Corporate Governance Structure ◽  
Corporate Governance Mechanisms ◽  
The Impact ◽  
The Way

Corporate Governance refers to the way an organization is directed, administrated or controlled. It includes the set of rules and regulations that affect the manager's decision and contribute to the way company is perceived by the current and potential stakeholders. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation such as; boards, managers, shareholders and other stakeholders and spells out the rules and procedures and also decision-making assistance on corporate affairs. Corporate governance practices in Bangladesh are gradually being introduced in most companies and organizations (Du, 2006). However, Bangladesh has fallen behind its neighboring countries and global economy in corporate governance (Gillibrand, 2004). Corporate governance structure is mainly considered ambiguous. Specific governance structures or practices will not necessarily fit all companies at all times. Firms with strong corporate governance mechanisms are generally associated with better financial performance, higher firm valuation and higher stock returns. Unfortunately, investors in Bangladesh have a little information about how these corporate values affect the performance of the Multinational Companies (MNCs). This study aims to provide a quantitative contribution to the literature by examining the impact of corporate governance mechanisms on financial performance from the perspective of MNCs. A panel data based Ordinary Least Squared (OLS) regression model was used to measure the quantitative significance of various corporate governance related variables on MNC performance, as identified through a detailed literature review.

The role of national culture in the impact of board gender diversity on firm performance: evidence from a multi-country study

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Navaz Naghavi ◽  
Saeed Pahlevan Sharif ◽  
Hafezali Bin Iqbal Hussain
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Generalized Method Of Moments ◽  
Gender Diversity ◽  
Governance Structure ◽  
Corporate Governance Structure ◽  
Data Set ◽  
Content Type ◽  
Board Gender Diversity ◽  
The Impact

PurposeThis study seeks to add more insights to the debate on “whether”, “how”, and “under which condition” women representation on the board contributes to firm performance. More specifically, the current study aims to investigate if the effect of board gender diversity on firm performance is dependent on macro factors of national cultures.Design/methodology/approachThe authors used the generalized method of moments regression and a data set consists of 2,550 company year observations over 10 years.FindingsThe results indicated that cultural variables interact with board diversity to influence firm performance. Having women on the board in countries with high power distance, individualist, masculine and low-uncertainty avoidance culture influences the firm performance negatively.Originality/valueThe findings indicate that the effects of corporate governance structure on firm performance depends on culture-specific factors, providing support for the argument that institutional norms that are governed by cultural norms affect the effectiveness of corporate governance structure.

Dynamic study of corporate governance structure and firm performance in China

2019 ◽  
Vol 13 (2) ◽  
pp. 299-317 ◽  
Author(s):  
Lin Shao
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Generalized Method Of Moments ◽  
Supervisory Board ◽  
Governance Structure ◽  
State Ownership ◽  
Content Type ◽  
Listed Firms ◽  
The Impact ◽  
The Relationship

Purpose The paper aims to provide a comprehensive investigation of the relationship between corporate governance (CG) structure and firm performance in Chinese listed firms from 2001 to 2015. The authors’ motivation derives from the fact that the CG system in China is different from those in the US, the UK, Germany, Japan and other countries. Design/methodology/approach A large unbalanced sample, covering more than 22,700 observations in Chinese listed firms, was used to explore, by means of a system-generalized method-of-moments (GMM) estimator, the relationship between CG structure and firm performance to remove potential sources of endogeneity. Findings Results show that Chinese CG structure is endogenously determined by the CG mechanisms investigated: there is no relationship between board size (including independent directors) and firm performance; CEO duality has a significantly negative effect on firm performance; concentration of ownership has a significantly positive influence on firm performance; managerial ownership is negatively correlated with firm performance; state ownership has a significantly positive effect on firm performance; and a supervisory board is positively correlated with firm performance. Practical implications The findings provide policymakers and firm managers with useful empirical guidance concerning CG in China. Originality/value Few integrative studies have examined the impact of CG structure on firm performance in China. This study adds new empirical evidence that the relation between CG structure and performance in China is endogenous and dynamic when controlling for unobserved heterogeneity, simultaneity, and dynamic endogeneity.

scholarly journals Corporate governance structure and firm’ financial performance: Evidences from Egypt

2014 ◽  
Vol 10 (1) ◽  
pp. 49-59 ◽  
Author(s):  
Mohammed M. Soliman ◽  
Aiman A. Ragab ◽  
Mohammed B. Eldin
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Audit Committee ◽  
Audit Quality ◽  
Positive Impact ◽  
Governance Structure ◽  
Corporate Governance Structure ◽  
Ceo Duality ◽  
Firm Financial Performance ◽  
The Impact

Recent financial international scandals have generated hyped interest in the area of corporate governance as a mean to mitigate financial problems faced in developing nations. The purpose of this study is to examine the link between corporate governance structure and firm’ financial performance in Egypt. The data for analysis are gathered from manual review of the financial statements and websites of the thirty enterprises that make up the (EGX 30) covering the four years period 2007-2010. Results from the study indicate that board size; the presence of audit committee; and audit quality significantly have relationship with firm’ financial performance measured by ROA and ROE. The results also, indicate that board independence; and institutional ownership have no significant correlation with firm’ financial performance. For CEO duality, the results indicate that CEO duality has a positive impact upon companies’ financial performance measured by ROE, at the same time, is not correlated with the ROA measure of financial performance. This study is important because it offers evidence on the impact of corporate governance structure on firm financial performance. In addition, it provides useful information that is of great value to policy makers, academics and other stakeholders.

The relationship between women’s presence in corporate positions and firm performance

2018 ◽  
Vol 10 (1) ◽  
pp. 83-100 ◽  
Author(s):  
Jorge Moreno-Gómez ◽  
Jonathan Calleja-Blanco
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Financial Performance ◽  
Family Firms ◽  
Developing Economies ◽  
Governance Structure ◽  
Corporate Governance Structure ◽  
Content Type ◽  
Top Executive ◽  
The Relationship

Purpose The purpose of this paper is to analyze, in the Colombian developing context, the relationship between the presence of women in corporate positions and the financial performance of the company and to know if there are differences between family and non-family firms. Design/methodology/approach Building on the contingency theory of leadership, which emphasizes that leader’s personality and the situation in which that leader operates influences corporate decision-making, the authors use panel data models on a sample of 54 Colombian public businesses for the period 2008-2015 to test the proposed hypotheses on the relationship between women´s presence in corporate governance positions and financial performance, as well as the difference between family and non-family firms. Findings The results support that women´s presence in corporate governance positions is positively associated with firm performance. More concretely, the authors find a relationship between women at the top corporate governance structure (as part of the board of directors, top management team and chief executive officer) and firm profitability. Results also indicate that family business, as a type of organization, (negatively) moderates the positive relationship between female participation in top executive positions (board and top executive team) and firm performance. Research limitations/implications First, this study is limited to women in corporate positions in large companies listed on the Colombia Stock Exchange, and thus, generalizability for smaller entities may be limited. Second, data limitations do not allow us to investigate ways in which women’s presence in corporate governance structures contributes to improve firm goals. Practical implications The authors provide support to the hypothesis that positively relates women’s presence in corporate governance positions and firm performance for the case of Colombia. This serves as a guidance to Colombian regulators, corporate decision-makers and policy-makers to promote the inclusion of women in top hierarchical structures through either mandatory laws or recommendation. Originality/value Few studies have addressed the women´s presence in corporate governance positions and contribution to firm performance in developing economies. This study contributes to better understand how women impact performance in contexts where women are underrepresented in corporate governance structure and where there are no laws that pressure firms to appoint women in corporate governance positions.

scholarly journals Corporate Governance: Theory and Practice Impact of Corporate Governance on Firm Performance

2019 ◽  
Vol 7 (1) ◽  
pp. 66-75
Author(s):  
Rizwan Khalid ◽  
◽  
Tayyab Ali ◽  
Muhammad Usman Javed
Keyword(s):  
Developing Countries ◽  
Corporate Governance ◽  
Firm Performance ◽  
Empirical Studies ◽  
Governance Structure ◽  
Developed Countries ◽  
Theory And Practice ◽  
Corporate Governance Structure ◽  
Equal Importance ◽  
The Impact

Corporate governance is one of most widely researched topics in the different fields of management sciences. Additionally, governance plays equal role in firm performance in all countries especially developing countries become more important like Pakistan which contain equal importance to be studied with in subject to developed countries as to be well known in governance values, moreover there is increased interest to observe impact of corporate governance on different dimensions of firm performance. The objective of this paper is to underlay the corporate governance theories and practices and we have studied and try to analysis the impact of corporate governance structure on firm performance. This is a descriptive type of study in which we analysis different studies as coded all studies as they may have different implications in developed countries but here they may have different results as in developing countries and Pakistan is different among other Asian countries because of number of reasons as discussed in introduction with respect to its governance structure. We also have find interesting results as from other empirical studies recently a part of Pakistan perspective research and having number of important implications with respect of changes need to be made in Pakistan’s governance structure. Findings shows there is impact of corporate governance on firm performance and market performance of firm also been effected with governance style

Corporate Governance Structure and Performance of Indian Companies

2010 ◽  
Vol 3 (2) ◽  
pp. 110-121
Author(s):  
Shikha Chauhan ◽  
J.S. Pasricha
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Significant Relationship ◽  
Participation Rate ◽  
Governance Structure ◽  
Least Square ◽  
Corporate Governance Structure ◽  
And Performance ◽  
The Impact ◽  
The Relationship

This study investigates the relationship between corporate governance structure and performance of Indian companies. The main objective of this study is to examine the impact of selected board characteristics and ownership structure on the firm performance. This analysis ranges over a period of six years, from 2001-02 to 2006-07 and is based on Pharmaceutical and IT industry. Least square dummy variable regression model has been used to study the relationship. We find that while board size, listing status of firm and foreign shareholding has positive and significant relationship with firm performance, public shareholding has negative and significant impact. However, independent director proportion, participation rate of independent directors and separation of Chairman and CEO post does not have a significant relationship with firm performance.

scholarly journals Corporate Governance and Firm Performance: An Analysis of Family and Non-family Controlled Firms

2011 ◽  
Vol 50 (1) ◽  
pp. 47-62 ◽  
Author(s):  
Qaiser Rafique Yasser
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Governance Structure ◽  
Jel Classification ◽  
Governance Mechanism ◽  
Governance Mechanisms ◽  
Corporate Governance Structure ◽  
Corporate Governance Mechanisms ◽  
Corporate Governance Mechanism ◽  
The Impact

The aim of this study is to scrutinise the impact of corporate governance mechanism on on the performance of family and non-family controlled firms in Pakistan. It has been found that a corporate governance structure influences the performance of both family and non-family controlled companies significantly. However all corporate governance mechanisms are not significant as the significant variables differ between family and non-family controlled companies. Thus, regulators need to be cautious in setting codes for different companies. JEL classification: G34, L21, L25 Keywords: Corporate Governance, Firm Performance

scholarly journals Corporate governance in financial institutions on transition economies

2013 ◽  
Vol 11 (1) ◽  
pp. 223-232
Author(s):  
Fran Brahimi ◽  
Rezart Dibra ◽  
Geraldina Prodani ◽  
Kesjana Halili ◽  
Ines Dika
Keyword(s):  
Corporate Governance ◽  
Transition Economies ◽  
Financial Institutions ◽  
Financial Institution ◽  
Governance Structure ◽  
Corporate Governance Structure ◽  
Checks And Balances ◽  
Governance Practices ◽  
The Board Of Directors ◽  
The Impact

The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the company objectives are set, and the means of attaining those objectives and monitoring performance." Corporate governance in financial institutions is the set of standards and principals used to create a system of checks and balances over the management of banks and financial intermediaries. It establishes the way financial institutions are directed and controlled, ordinarily through standards set for the conduct of the board of directors and senior management. Countries have different political and regulatory environments, business standards and customs. Additionally, independent legal systems varying from country to country cause significant differences in corporate governance practices. There is, however, an international movement toward universal standards for all multinational financial institutions that has been gaining traction since the late 1990s. The topic of corporate governance of financial institutions and its role in stabilizing the industry has reached new levels of importance since the mid 1990s as a result of the globalization of financial markets, deregulation and technological change. The Corporate Governance in banks is one of the most important discussions overall the world, being reinforced especially after the crises period. This paper (discusion in conference) aims to evaluate the impact of corporate governance on financial performance, in the same time we are analyses corporate governance with focus in financial institution buth with importance of corporate governance in all aspects as a part of transition economies that has implement this CG.

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