Determinants of Good Corporate Governance (Empirical Studies on Companies Listed on The IDX)

The purpose of this study is the role of ownership concentration, firm size, and leverage in influencing good corporate governance. This research design is quantitative. The population used is 45 companies indexed LQ45 on the Indonesia Stock Exchange and with the Purposive Sampling method, obtained 17 companies with 3 years of observation, so the number of samples in this study is 51. The results show that the concentration of ownership, company size, and leverage have a significant effect. The test results show a positive and significant effect on the implementation of corporate governance partially for each variable and simultaneously for all variables.

Independent Directors' Tenure, Expropriation, Related Party Transactions, and Firm Value

This chapter analyses the relationship between related party transactions (RPT) and firm value and whether independent directors' tenure (IDT) strengthens or weakens this relationship. Further, it examines ownership concentration's role on this moderating effect of IDT in Malaysian family and non-family corporations. It is found that that IDT weakens the relationship between RPT and firm value. However, ownership concentration strengthens this moderating effect of IDT. Interestingly, family corporations are more likely to show a stronger impact of ownership concentration which we allude to concerns of maintaining reputation. The research results remain after controlling for technology corporations. The findings' have important implications for policy makers, practitioners and regulators, especially in emerging economies globally.Keywords: Agency Conflict, Corporate Financial Valuation, Independent Directors' Term in the Office, Corporate Governance, Family Corporations, Emerging Markets

Effect of Ownership Structure on Firm Performance Evidence From Non-Financial Listed Firms

In modern organizations, there is a separation between ownership and control of the firm. On the lenses of agency theory, this study statistically examines the relationship between ownership structure (i.e., ownership concentration and owner identity) and firm performance of non-financial listed firms of Pakistan by taking firm-level control variables of size, age, liquidity, financial leverage, and growth of the firm. Secondary data is collected from annual reports of 65 non-financial listed firms for the year 2008 to 2012. The least-square dummy variable model followed by the random effect model has been employed to statistically determining the impact of ownership structure on firm performance. The results of the least square dummy variable model reveal that the ownership concentration has a significant positive impact on firm performance. The owner identity (such as dispersed, family, institutional, and government ownership) has a significant causal effect on firm performance as indicated from t and p values.

Dual Class Model and Shareholder Agreements: An Analysis of Italian Companies

This paper analysed the changes in ownership concentration of the Italian financial market and the recourse to dual class model and shareholder agreements by Italian listed companies in the period 2009-2020. The analysis shows that the control market did not show signs in the period that would lead to presume an increase in the contestability of our companies. The attenuation in ownership concentration, highlighted by the reduction in the value of the Shapley-Shubik index, and the increase in the average market participation did not produce an increase in the contestability of Italian listed companies since the high concentration and limited contestability of control continue to characterize their ownership structures. Findings also show less recourse by the Italian companies to the instruments of separation between ownership and control in the considered period. The reduction in the number of companies that resort to the issue of shares without voting rights and the shareholders' agreements is also reflected in the lower incidence of the capitalization of these companies compared to the market capitalization.

Pyramidal Ownership and Company Value: Evidence from Polish Listed Companies

This paper examines the effects of pyramidal ownership. Using the sample of 162 non-financial companies listed on the Warsaw Stock Exchange during the period 2010-2014, we verify the relation between the adoption of a pyramidal structure and company value. Specifically, we show that the link between pyramidal ownership and company value is more complex than previously thought addressing the aspect of ownership concentration and dual class shares. Our results indicate that the use of pyramids is associated with a higher value measured by Tobin’s Q, supporting the efficient monitoring hypothesis. Contrary to our expectations the combination of pyramidal ownership and dual class shares is correlated with lower Q. Finally, while the adoption of a pyramid by a majority shareholder does not impact firm value, the combination of a pyramid, ownership concentration and dual class shares is associated with higher Q. This finding suggests that the blockholder ownership outweighs the possible cost of excessive disproportionate ownership and that pyramids and dual class shares have different effects on company value.

Corporate governance and firm value: a study on European financial institutions

PurposeThe purpose of this paper is to examine the impact of the characteristics of two corporate governance mechanisms, namely, board of directors and ownership structure, on the firm value of European financial institutions.Design/methodology/approachUsing the market-to-book ratio calculated by the Thomson Reuters Eikon ASSET4 database, this study measures the firm value of 111 financial institutions belonging to 12 European countries listed on the stock exchange during the period 2007–2019. Multivariate regression analysis on panel data is used to estimate the relationship between corporate governance attributes, such as board size, board independence, board gender diversity, ownership concentration and CEO ownership, and the firm value of European financial institutions.FindingsThe empirical results reveal that board gender diversity and CEO ownership are positively related to the firm value, whereas board size and ownership concentration are negatively related. Furthermore, the findings suggest that board independence is insignificantly correlated with the firm value. Regarding the control variables, the results show that financial institutions' size, age and legal system are significant factors in changing the firm value. Nevertheless, financial institutions' leverage and activity sector are not significantly correlated with their value.Originality/valueThis research contributes to the literature by providing the significant links between some corporate governance mechanisms and the firm value of companies from the financial industry, by addressing the information gap for this critical industry in the context of a developed market like Europe.

Does external assurance on CSR reporting contribute to its higher quality? Empirical evidence from China

This paper examines the difference that the assurance brings to the quality of CSR reports in the Chinese institutional setting, in particular, the difference in quality (proxy – RKS ranking) of assured and unassured CSR reports, as well as whether the high ownership concentration and corresponding to it “entrenchment effect” obstruct the positive impact the assurance exerts on the quality of CSR reports. The paper examines CSR reports on 2,292 firm-year observations of large Chinese companies over three years (2015–2018). The hypothesis development process predicates on the signaling and stakeholder theories, whilst this study applies regression analysis to test the hypotheses. Consistent with the predictions of signaling and stakeholder theories, the paper finds that assurance contributes to the higher quality of CSR reports. Moreover, the study finds that assured CSR reports have higher sub-scores in all four aspects of RKS ranking. However, as ownership concentration exceeds 50 per cent and reaches the majority, it thwarts the advancement in the quality of CSR reports through its assurance. The paper provides an initial empirical account of the role of assurance in the emerging CSR reporting practice in China. The paper contributes to the modest body of empirical research on the function of external assurance in the CSR area by explicating the role played both by the accounting (external assurance) and corporate governance (ownership concentration) infrastructure to ensure high quality of CSR reporting. The paper briefs local, international regulatory authorities and the business community about the importance of external assurance for the CSR reporting quality.

Revenue Identification in Attaining Consensus Estimates on Income Predictions: The Function of Ownership Concentration and Managerial Ownership Confirmation from Poland

Financial reliability, along with clearness of business transactions, is one of the mainstays of sustainability. In this research, I investigate whether enterprises expand discretionary revenue when their income before intentional shaping is marginally under the consensus on the income prediction provided by analysts. The innovation of the paper lies in taking into account the role of managerial ownership, ownership concentration, and higher proportions of institutional investors in this situation. Higher ownership concentration and greater percentage of institutional investors in equity were analysed while considering the expropriation hypothesis. In order to assess the concern of managerial ownership for revenue manipulation, I considered the alignment of interest hypothesis. In this research, I certified that enterprises expand discretionary revenue when their revenue and operating income prior to intentional shaping barely miss the consensus forecast. I found that the existence of managerial ownership curtailed the magnitudes of upward discretionary revenue when revenue prior to intentional shaping was marginally below the consensus on revenue. Greater ownership concentration and higher proportions of institutional investors were on the bound of the statistical trend to expand discretionary revenue when net earnings, before intentional shaping, were marginally below analysts’ forecasts.