Bankruptcy and Corporate Governance: The Impact of Board Composition and Structure

1994 ◽  
Vol 37 (6) ◽  
pp. 1603-1617 ◽  
Author(s):  
Catherine M. Daily ◽  
Dan R. Dalton
Keyword(s):  
Corporate Governance ◽  
Board Composition ◽  
Composition And Structure ◽  
The Impact

scholarly journals Influence of Board Size and Independence on Firm Performance: A Study of Indian Companies

2007 ◽  
Vol 32 (3) ◽  
pp. 39-60 ◽  
Author(s):  
Ajay Kumars Garg
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Good Deal ◽  
Independent Directors ◽  
Board Composition ◽  
Board Independence ◽  
Inverse Association ◽  
Board Size ◽  
Minimum Number ◽  
The Impact

Corporate governance issues have attracted a good deal of public interest because of their apparent importance for the economic health of corporations and society in general, especially after the plethora of corporate scams and debacles in recent times. Corporate governance issues flow from the concept of accountability and governance and assume greater significance and magnitude in the case of corporate form of organization where the ownership and management of organizations are distanced. And, it is in this context that the pivotal role played by the board of directors in maintaining an effective organization assumes much importance. A major part of the debate on corporate governance centres around board composition especially board size and independence. Various committees have mandated a minimum number of independent directors and have given guidelines on board composition. However, the relationship of board characteristics such as composition, size, and independence with performance has not yet been established. This paper addresses this question: Does the board size and independence really matter in terms of influencing firm's performance? The findings suggest that: There is an inverse association between board size and firm performance. Different proportions of board independence have dissimilar impact on firm performance. The impact of board independence on firm performance is more when the board independence is between 50 and 60 per cent. Smaller boards are more efficient than the larger ones, the board size limit of six suggested as the ideal. Independent directors have so far failed to perform their monitoring role effectively and improve the performance of the firm. The guidelines on corporate governance should take into account the ‘cross-board’ phenomenon while defining the criteria for eligibility for appointment as an independent director. Lack of training to function as independent directors and ignorance of the procedures, tasks, and responsibilities expected of them could be reasons for the independent directors' non-performance. A bad performance leads to an increase in board size, which in turn, hampers performance. Guidelines are provided for future studies to include different variables to see which board composition is suitable for different companies at different stages of life cycle.

scholarly journals Conceptual Model for Effective Board Composition in the Context of Emerging Markets

2015 ◽  
Vol 8 (1) ◽  
pp. 38
Author(s):  
Madi Almadi
Keyword(s):  
Corporate Governance ◽  
Emerging Markets ◽  
Financial Performance ◽  
Management Practices ◽  
Social Economic ◽  
Board Composition ◽  
Firm Financial Performance ◽  
The Impact ◽  
The Relationship ◽  
Practical Implications

The impact of context has little or no consideration in the mainstream corporate governance literature. The purpose of this paper is to consider social, economic, and political elements of the emerging Saudi Arabian market when developing a multi-theoretical model about the relationship between board composition and financial performance.<strong> </strong>The paper attempts to conceptually inform the conversation about context with regard to board composition and firm financial performance in emerging markets. In particular, it discusses these theoretical feedback loops in conjunction with a proposed research agenda for the field.<strong> </strong>The paper proposes shifting the focus of corporate governance in emerging markets from relying on the predominant Western corporate governance theories to the alignment of those theories with considerations on emerging markets context. Such an approach involves significant implications for corporate governance theories and management practices. The paper describes the conditions in which certain formation of board of directors is composed in the Saudi Arabia may generate a competitive advantage. The consideration of emerging markets context can have implications for society as it may influence firms and governments to improve corporate governance standards and practices<strong> </strong>A literature gap in the corporate governance literature identified in this paper holds theoretical and practical implications. This research will enable comparative studies with other emerging markets, and will provide a conceptual benchmark for future corporate governance research.

scholarly journals Agency costs, ownership structure, and corporate governance in pre-and post-IPO firms

2006 ◽  
Vol 3 (3) ◽  
pp. 88-95 ◽  
Author(s):  
Wallace N. Davidson III ◽  
Amani Khaled Bouresli ◽  
Manohar Singh
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Agency Costs ◽  
Board Composition ◽  
Control Mechanisms ◽  
Publicly Traded ◽  
Publicly Traded Companies ◽  
Before And After ◽  
Venture Capital Firms ◽  
The Impact

Following the approach in Ang, Cole, and Lin (2000), we estimate the impact of CEO ownership on agency costs in pre-IPO firms and again in the post-IPO period when they have become publicly traded companies. We find that CEO ownership is large in both the pre and post-IPO firms. Greater CEO ownership is associated with lower agency costs both before and after the IPO, and CEO ownership in these firms seems to dominate all other agency control mechanisms. Board composition and involvement by venture capital firms does not appear to mitigate agency costs.

scholarly journals Corporate governance impact on bank performance evidence from Europe

2016 ◽  
Vol 13 (4) ◽  
pp. 583-597 ◽  
Author(s):  
Salma Belhaj ◽  
Cesario Mateus
Keyword(s):  
Corporate Governance ◽  
Boards Of Directors ◽  
Gender Diversity ◽  
European Countries ◽  
Bank Performance ◽  
Board Composition ◽  
Board Size ◽  
Ceo Duality ◽  
European Bank ◽  
The Impact

This paper investigates the impact of corporate governance on European bank performance during the period 2002-2011. Using a sample of 73 banks from 11 European countries, we examine the relationship between corporate governance measures more specifically the board size and composition, the gender diversity and the CEO duality on the European bank performance. During the period 2002-2011, our results show that the board size and the gender diversity have a positive and significant impact on bank performance. Large board of directors with more female members led to better bank performance, whereas, the board composition and the CEO duality have no significant effect in explaining the bank performance for the European countries. During the global financial crisis, our findings show that the board size and the board composition are negatively and significantly correlated to the bank performance. Smaller boards of directors with less number of independent (non-executive) directors have outperformed the ones with larger boards and more independent directors during the crisis. However, the gender diversity and the CEO duality have no significant impact on the European bank performance.

scholarly journals BOARD STRUCTURE AND BANK PERFORMANCE: EVIDENCE FROM SERBIAN BANKING SECTOR

2020 ◽  
pp. 057
Author(s):  
Verica Babić ◽  
Jelena Nikolić ◽  
Marijana Simić
Keyword(s):  
Corporate Governance ◽  
Banking Sector ◽  
Bank Performance ◽  
Board Composition ◽  
Board Structure ◽  
Governance Mechanism ◽  
Board Size ◽  
Data Set ◽  
Corporate Governance Mechanism ◽  
The Impact

Traditional perspective relying on agency theory is based on the assumption that the board structure, as an internal corporate governance mechanism, determines board effectiveness and, therefore, financial performance. Board size, board composition and leadership structure are distinguished as relevant variables of the board structure. Since the results of previous empirical studies are often contradictory, examining the correlation between board structural characteristics and corporate performance is a relevant research question, particularly in banking sector. In order to improve effectiveness of internal corporate governance mechanism, and consequently bank performance, the main research objective is to identify the impact of the board size and the board composition on bank performance in the Republic of Serbia using the CAMELS model. We analyze this relation using Ordinary Least Squares regression analysis on balanced panel data-set of 54 observations. The paper contributes to recent research efforts by making conclusions on the effects of board structure on bank performance, in order to define recommendations for improving performance in banking sector. 

scholarly journals The Impact of Corporate Governance on the Financial Distress: Evidence from Pakistani Listed Companies

2017 ◽  
Vol 5 (2) ◽  
pp. 49-53
Author(s):  
Ahmed Hassan Jamal ◽  
◽  
Syed Zulfiqar Ali Shah ◽  
Keyword(s):  
Corporate Governance ◽  
Financial Distress ◽  
Audit Committee ◽  
Positive Impact ◽  
Stock Exchange ◽  
Listed Companies ◽  
Board Composition ◽  
Explanatory Variables ◽  
Governance Practices ◽  
The Impact

This study intends to assess how corporate governance affects the financial distress in non-financial listed companies in Pakistan. Sample of 53 companies was obtained from non-financial institutes listed in Pakistani stock exchange. Regression analysis is used to estimate the impact of explanatory variables including size of board, composition of board, audit committee independence and duality of CEO on the financial distress. The findings show that size of board, composition of board and CEO duality has a positive impact on Z-score of Pakistani listed firms. This implies that better the corporate governance practices in companies, lower will be the financial distress and vice versa.

scholarly journals Different board structures and R&D: Evidence from Japanese corporation

2015 ◽  
Vol 11 (2) ◽  
pp. 171-201
Author(s):  
Takahiro Nishi
Keyword(s):  
Corporate Governance ◽  
Panel Data ◽  
Agency Theory ◽  
Institutional Investors ◽  
Board Composition ◽  
Board Structure ◽  
Specific Relationship ◽  
The Impact ◽  
D Investment

This study examines the effect of different board style and ownership, and board composition on R&D investment in Japanese corporation. I explore how different board structure contribute to R&D investment in varied way and the impact of different type of governance on R&D investment incorporation. I analyze it with 2010-2014 panel data regarding Japanese corporate governance. I found that different type of corporate governance make impacts on R&D in corporations indicating the specific relationship between corporate governance and R&D, not explained by agency theory. This study observed that Board composed of insider avoid interference of institutional investors by caring about investor’s interests.

Board composition and corporate risk-taking: a review of listed firms from Germany and the USA

2019 ◽  
Vol 20 (4) ◽  
pp. 526-542 ◽  
Author(s):  
Zahid Irshad Younas ◽  
Christian Klein ◽  
Thorsten Trabert ◽  
Bernhard Zwergel
Keyword(s):  
Corporate Governance ◽  
Risk Taking ◽  
Audit Committees ◽  
Board Composition ◽  
Corporate Boards ◽  
Content Type ◽  
Listed Firms ◽  
The Usa ◽  
Corporate Risk ◽  
The Impact

Purpose Corporate governance is a crucial factor when considering excessive corporate risk-taking. Since corporate boards play such an important role in corporate governance, the purpose of this paper is to empirically examine the impact of board composition and further board characteristics on excessive corporate risk-taking. Design/methodology/approach This study investigates listed firms from Germany and the USA from 2004 to 2015 based on data from Thomson Reuters Data Stream. The authors apply the fixed effect and random effect estimation method to demonstrate the impact of board composition on corporate risk-taking. Findings This study provides empirical evidence that an increase in the proportion of independent directors is associated with less corporate risk-taking. These effects are stronger among German firms. Lastly, the effects of board size and audit committee effectiveness (AUCE) on risk-taking have mixed results. Research limitations/implications The results favor continued efforts to strengthen the composition of corporate boards and improve the effectiveness of audit committees to curb unhealthy corporate risk-taking. The recommendations from the research will provide regulators and corporate management with the necessary information needed to design an appropriate independent board structure, and board size (BOSI). The research will, furthermore, fortify the indispensability of financial experts on audit committees. Originality/value This study contributes to the agency theory debate with these findings. Stronger board independence enables a better monitoring of the CEO, which leads to decision making based on a more appropriate level of risk.

scholarly journals Intellectual capital disclosure and corporate governance structure among Malaysian government-linked companies

2013 ◽  
Vol 9 (3) ◽  
pp. 6-17
Author(s):  
Rashidah Abdul Rahman ◽  
Musliha Musman
Keyword(s):  
Corporate Governance ◽  
Content Analysis ◽  
Intellectual Capital ◽  
Annual Report ◽  
Governance Structure ◽  
Board Composition ◽  
Board Structure ◽  
Board Size ◽  
Corporate Governance Structure ◽  
The Impact

This study examines the level of intellectual capital disclosure among the 32 Malaysian GLCs by comparing with the Non-GLCs for the period 2007-2009. In addition, this study also investigates the impact of board structure on the intellectual capital disclosure of Malaysian GLCs. The board structure mechanisms comprise; board composition, role duality, board size and cross directorship. The control variables consist of the company-specific characteristics –leverage, profitability and age of the company. The content analysis is used to extract the intellectual capital disclosure items from the annual report. The results show that the GLCs disclosed more intellectual capital information than Non-GLCs. Board size and leverage are significant and positively related to the intellectual capital disclosure of Malaysian GLCs.

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