Analyzing Board Characteristics, Ownership Structure and Company Characteristic to CSR Disclosure

This study aims to analyze the effect of board characteristics, ownership structure and company characteristics on CSR disclosure. The population of this study are non-financial companies that listed on the Indonesia Stock Exchange (IDX) which issues sustainability reports separately from the annual report for the year 2017-2018. Based on the purposive sampling method as a method of data collection, a total of 20 non-financial companies have published sustainability reports separately from the annual reports for 2017 and 2018 respectively. Multiple regression analysis used to test the research hypotheses. The results of this study indicate that the proportion of women on the board, board of director ownership concentration, profitability and leverage negatively affect the CSR, while the rest of variables does not affect the CSR disclosure. Keywords: CSR disclosure; board characteristics; ownership structure; company characteristics; sustainability report

Tata kelola perusahaan dan pengaruhnya terhadap struktur modal

This research aims to determine the impact of board composition, ownership structure, and firm characteristics on the capital structure of non-financial companies listed on the Indonesia Stock Exchange. Board independence, Board size, audit committee, director tenure, ownership concentration, family ownership, and director ownership are used as independent variables in this study. Firm size, firm age, firm performance, firm risk, and agency costs are the control variables. Data were collected using the purposive sampling method with a total of 1,695 observational data that met the criteria for 5 years. The Panel regression method is used to analyze the impact of each independent variable on the dependent variable. The fixed-effects model is found to be the best regression model in this research. This study found that board size, director tenure, and family ownership had a significant negative impact on capital structure, while board independence, audit committee, ownership concentration, and director ownership did not impact significantly on capital structure. A larger board size forms strong corporate governance which leads to less risky capital structure decisions. Longer director tenure improves the decision quality of a capital structure, and family ownership helps to maintain firm value by ensuring capital structure decisions made are the best for the company. Ownership factors are encouraged in future studies such as foreign ownership, government ownership, and institutional ownership in examining the impact on capital structure.

Corporate governance and turnaround: Evidence from Australia

We examine the relationship between ownership and outside director attributes and corporate turnaround outcomes using matched samples of 99 turnaround and 99 non-turnaround listed Australian firms during the 2004–2015 period. Based on agency theory principles, we propose that key shareholder groups (block ownership, director ownership, institutional ownership) and outside directors are related to firm-level turnaround outcomes, and particularly changes in these attributes across decline to turnaround periods. Our results provide evidence that turnaround and non-turnaround firms differ in terms of their ownership and board composition structures, and that changes in director ownership and the degree of board independence are important in determining the likelihood of turnaround success. JEL Classification: G33, G34, M40

An Empirical Examination of Mutual Fund Boards

This paper examines how board independence and director incentives in the mutual fund industry affect fund expenses, performance, and compliance. It is based on a hand-collected panel dataset of mutual fund governance characteristics from 1995 through 2004, which covers about 60% of assets listed in the CRSP mutual fund database. The results show that funds overseen by an independent chair charge fees that are 12 basis points lower and that the fraction of independent directors is associated with higher fees during the earlier part of the sample and with lower fees during the latter part. Both measures of board independence are associated with lower fund performance, although funds with higher director ownership and lower unexplained compensation charge lower fees and deliver higher returns. Fund board characteristics do not seem to affect the likelihood of litigation by regulators and shareholders. These results suggest that fund investors do not necessarily benefit from greater board independence if boards negotiate low fees without closely evaluating fund performance. In contrast, higher director ownership and relatively low compensation seem to align incentives between fund boards and investors.

Corporate governance and cost of capital in OECD countries

Purpose This article aims to investigate the impact of corporate governance (CG) mechanisms on cost of capital (COC) in Organisation for Economic Co-operation and Development (OECD) countries. Design/methodology/approach Companies from 34 OECD countries were used between 2010 and 2017. Multiple regression analysis techniques is used to examine the relationships. The findings are robust to alternative measures and endogeneities. Findings The results show that CG index and director ownership are statistically negatively related to COC. In contrast, the results show that block ownership is statistically related to COC. Originality/value This study extends, as well as contributes to the extant CG literature by offering new evidence on the effect of CG mechanisms on COC. The findings will help regulators and policymakers in the OECD countries in evaluating the adequacy of the current CG reforms to prevent management misconduct and scandals.

A theoretical and econometric evaluation of corporate governance and capital structure in JSE-listed companies

PurposeA vital resource for attracting investments and boosting economic growth is compliance with corporate-governance practices. To achieve firm growth, businesses often rely on leverage as a source of finance, which has tax-saving benefits but could attract financial distress costs. In this context, this study aims to examine the relationship between corporate governance and the use of debt financing in Johannesburg Stock Exchange (JSE)-listed companies.Design/methodology/approachThis study used a six-year period to examine 713 annual reports in an unbalanced panel of 130 JSE-listed companies from 2011 to 2016. The empirical econometric methodology used was the two-step difference generalised method of moments estimation model, which is robust in controlling endogeneity and potential bi-directional causality between leverage and corporate governance.FindingsThis study illustrated that corporate governance practices and firm-specific variables such as profitability, firm size and firm age have a significant influence on the capital structure decisions of JSE-listed firms. This study found support for four out of the six hypotheses. CEO duality and director ownership are positively correlated with leverage, whereas audit committee independence and board size are negatively correlated with leverage. This study also found contraventions of board independence, audit committee independence and CEO duality. The technology sector was the least compliant, with only 40 per cent of their boards being independent. The consumer-services sector had the maximum presence of CEO duality (7 per cent). The industrial sector had the highest average director ownership (18 per cent). The heath-care sector had 28 per cent of their audit committees in contravention of the independence rule.Practical implicationsA useful analysis of the theoretical frameworks used by academic writers are provided. This study revealed the governance practices contravened by the relevant sectors, as well as the associations between corporate governance and leverage.Originality/valueThe study contributes to the literature on capital structure and corporate governance by an emerging economy such as South Africa (SA) which has not been explored. This study’s results have key implications for policy-makers, practitioners, investors and regulatory authorities. This study informs these constituencies about a set of governance attributes that are catalysts and/or inhibitors of leverage.

MODERATING EFFECT OF ENTERPRISE RISK MANAGEMENT ON THE RELATIONSHIP BETWEEN BOARD STRUCTURES AND CORPORATE PERFORMANCE

Risk encroachment into Corporate Governance (CG) remains a continuous process that required an efficient and long-term solution. Using enterprise risk management (ERM) as a moderating variable on the relationship between board structures and corporate performance remains an area unexploited in CG research. This relationship can effectively measure by the extent of ERM interactions between board structures and corporate performance. Despite various studies on CG mechanisms, firm performance, ERM implementation level, and gender diversity, the empirical results appeared inconclusive and the findings are inconsistent. None of the studies have addressed the role play by ERM as a moderator between director ownership, the board size, board independence, the total number of women on the board, number of Muslim directors on the board, and firm performance. It is demonstrated that the ERM has the potential to moderate between the different board structures and corporate performance, and this moderation has never been reported in the literature. It is expected that this ERM moderation may considerably improve corporate performance by determining the strength or weakness of the relationship between board structures and firm performance. Thus, this paper, with regards to available literature, conceptualized that ‘ERM’ moderates the relationship between Board Size, Board Independence, Director Ownership, Total Women in the Board, Muslim directors on the Board, and corporate performance.

Corporate Governance and Firm’s Profitability: An Emerging Economy-based Investigation

This article aims to investigate the impact of corporate governance through board size, female directors, family duality and director ownership on firm’s profitability in Bangladesh. It’s a quantitative study on 110 manufacturing firms listed in Dhaka Stock Exchange. Multivariate pooled Ordinary Least Square (OLS) regressions are applied on 512 sample-year observations from the year 2013 to 2017 to test the hypotheses in the study. On one side, the results reveal that larger board size and female directors on board are positively associated with firm’s profitability, which in turns helps to enhance firm’s profitability. On the other side, it is also found in the results that percentage of shares held by the directors and family duality are negatively related to firm’s profitability and thus reduces firm performance. The outcomes of this study advocate the policymakers to formulate a policy by addressing the percentage of shares held by the directors to be kept at a certain level.

Effect of Corporate Governance on Islamic Banking: Evidence from Listed Firms of Pakistani Stock Exchange

The Purpose of this study is to analyze the influence of corporate governance on firm performance (Islamic Banks) in Pakistan. The study presents a longitudinal assessment of the compliance and implications of the revised code on firm performance. This study uses data from listed firms of Pakistan Stock Exchange (PSE) for the years 2007-2016 to investigate the effect of corporate governance, indices the performance of Islamic Banks. The study uses panel data analysis and random effect model. We used board size, CEO duality, board independence, director ownership, and frequency of meeting as corporate governance indices, ROE, and ROA as performance of Islamic banks proxies. The results have intimation for regulatory authorities, shareholders and directors to take steps to improve the board competencies for better performance.