bluuebunny/crossref_metadata_2025 huggingface dataset:
Appointment and performance enhancement of independent directors in Malaysia
Authors: Rahman Rashidah Abdul
Published: December 2016

The objective of the study is to gauge the perception of directors in Malaysia on the appointment of independent non-executive directors and the mechanism needed in enhancing their role. A qualitative research design using a face-to-face interview is chosen in this study as it is a valuable tool in understanding the directors’ opinion on the appointment and performance enhancement of independent non-executive directors in Malaysia. The directors interviewed reveal that independence, experience, knowledge of the firm, and contacts are determinants of having independent nonexecutive directors on the board. On the other hand, training programmes, access to information, preparation for meetings, being in committees and effective performance evaluation are necessary factors in enhancing the performance of independent non-executive directors. Due to the lack of published materials in this area in Malaysia, this study will therefore contribute to the existing knowledge on the appointment and performance enhancement of independent non-executive directors. Understanding how independent non-executive directors are chosen and the mechanisms in enhancing their performance is crucial because who gets selected will, in turn, affect the roles they play and how effectively they can play such roles.
Audit committees in West Indian states
Authors: Bowrin Anthony R.
Published: December 2016

This study describes the regulatory framework governing audit committees (AC) of publicly traded companies in the West Indies and examines the extent to which the provisions of these AC regulations are similar to the International Federation of Accountants guidelines for AC. Also, it examines the actual AC policies of publicly traded West Indian firms and determines whether they vary systematically with industry affiliation or firm size. The sample comprised companies traded on Barbados, Jamaica Stock Exchange, and Trinidad and Tobago Stock Exchanges in 2002. Larger companies and those in the financial industry provided better audit committee disclosures than their smaller counterparts and those in non-financial industries.
Issues in Canadian board transparency
Authors: Bart Chris
Published: December 2016

Transparency is considered one of the principles of good corporate governance. But what does it mean – in practice – especially when it comes to Board transparency – i.e. the ability of shareholders to gain knowledge about an organization’s corporate governance practices in order to make an informed assessment of Directors’ individual and collective roles and performance. In a preliminary investigation of Board transparency practices in Canadian listed firms (using data from 2003-2004), it was found that there were wide variations in the nature and quantity of corporate governance practices disclosed. The reasons for these variations are discussed and a number of recommendations for improved disclosure are presented.
Outside directors and the Japanese board room: An in-depth study
Authors: Bebenroth Ralf , Donghao Li
Published: December 2016

The purpose of this paper is to investigate the performance impact at the board level in the corporate governance of Japanese companies. We investigated the composition of outside directors and outside auditors for three years and found evidence, that a higher outside ratio leads to a better performance. As a second step, we cluster Japanese companies into three groups, companies without outside directors, companies which appointed outside directors and companies who apply to the “US-style system.” Companies without outside directors every single year show the weakest performance and US-style Japanese companies the strongest what leads to the conclusion that Japanese companies might be better off having a high ratio of outside directors and outside auditors.
Executive compensation: A multi-tasking model
Authors: Schrenk Lawrence P.
Published: December 2016

This study develops a model of a multi-tasking executive whose behavior is motivated by the specific forms of compensation received. This model extends the theory of corporate finance in two significant ways: first, it examines risk-averse executive behavior in a multitasking environment, and, second, it yields a theoretical understanding of why one form of variable compensation provides different incentive than another. As a generalization, we find that option compensation is more effective than stock compensation in inducing the executive to take on investment risk, while the inverse is true for inducing the executive to issue debt or pay dividends.
Corporate board composition in an emerging market
Authors: Kostyuk Alexander N.
Published: December 2016

The purpose of this research is to find the factors influencing composition of the supervisory boards in a transition economy with application to Ukraine. This paper is based on the research of 50 largest companies in Ukraine. Period of research is 1998-2005. Methodology of research is based on observations (the first stage) and questionnaires (the second stage). Experience of the supervisory board members in Ukraine is quite poor. Only 24 per cent of members of supervisory boards have a five and more year experience as supervisory board members. The supervisory board members had the strong links with the company in the past as executives. Thus, about 74 per cent of members of the supervisory boards in Ukraine worked as executives of the same company at least during a year for the last ten years. This makes the negative impact on the independence of the members of the supervisory boards. Value of this paper is that it explains an influence of a broad range of factors on the board composition in transition economy.
Board effectiveness: Investigating payment asymmetry between board members and shareholders
Authors: Chi Wuchun , Hsu Chung-Yuan , Lin Wan-Ying
Published: December 2016

Board members may well be responsible for dissension between themselves and shareholders since they are simultaneously the setters and receivers of both board remuneration and dividends. They may act out of their own personal interests at the expense of external shareholders. We investigate the impact of ownership structure, board structure and control deviation on payment asymmetry, where excessively high remuneration is paid to board members but considerably lower dividends are distributed to shareholders. We find strong evidence confirming that the smaller the shareholdings of
board members and outside blockholders are, the more asymmetric the payments are. With controlling family members on the board and a higher percentage of seats held by independent board members, there is a slight reduction in the likelihood and severity of payment asymmetry. In addition, it is abundantly clear that the larger the board seat-control deviation is, the greater is the likelihood and severity of payment asymmetry. While prior research has primarily focused on board-manager agency issues, the board-shareholder perspective could be even more important in that it is the board that is the most directly delegated agent of shareholders, not the managers.
Board characteristics: An empirical study of listed companies in Malaysia
Authors: Ponnu Cyril , Soo Juan , Abidin Nordin
Published: December 2016

This paper investigates five important characteristics of board committee members of various committees in public listed companies in Malaysia. The five characteristics include director type, tenure, age, internal activity and external activity. Sample of 111 listed companies were collected using
simple random five sampling of the annual reports based on financial year 2005 posted online. Sample includes 6 committees with the highest frequency of occurrences – audit, remuneration, nomination, stock option, risk management and executive. Data collected was analyzed using tests of correlation, analysis of variance and regression. The results, however, do not support the hypothesis that members of committees tend to be non-executive directors, older, have longer tenure and show greater evidence of internal and external activities.
Related-party disclosures in the two-tier board system in China: Influences of ownership structure and board composition
Authors: Shan Yuan George , Taylor Dennis W.
Published: December 2016

This study concerns related-party disclosures by listed companies in China, in a corporate context of a high concentration of government-linked ownership, a two-tier board system, and the engagement of directors, key managers and major shareholders in direct and indirect transactions and business relationships with their company. Using content analysis of annual reports of listed companies in China over 5-years from 2001 to 2005, results show that the comprehensiveness of related-party disclosures is positively affected by companies’ domestic ownership concentration and the proportion of independent directors on the corporate board. But the proportion of supervisory board members with professional knowledge and experience is, unexpectedly, found to have a significant inverse relationship with the extent of related-party disclosure. Reasons peculiar to the context in China are proffered, particularly the likelihood of internal censorship of the more professionally qualified members of supervisory boards.
An agenda for board research
Authors: Guerra Sandra , Fischmann Adalberto , Machado Filho Cláudio Antonio Pinheiro
Published: December 2016

Scholarly investigations on the board of directors, although intense from the mid-1990s onward, did not lead to entirely convincing results. This study proposes discussion on building a multidisciplinary and integrated theoretical framework able to capture the complexity and distinctive dimensions of the board as a group decision-making process. This is achieved through an essay developed from analytical and descriptive review of the literature. A synthesis on board research is presented, aiming to understand theoretical models lenses used to study corporate governance issues. The strengths and weaknesses of these models are pointed out, and their influence on board investigation is observed. This essay concludes by proposing a research agenda that considers the addition of psychological and sociological approaches to economic models of the analysis of group decision-making.
Are top executives paid too much? Determinants of directors’ pay in Switzerland
Authors: Rost Katja , Osterloh Margit
Published: December 2016

Executive compensation has become a fashionable topic: Cross-nationally, the earnings of executives and non-executive directors have risen significantly in recent years. Academic literature offers two hypotheses for this trend, a “fat cat” and an “optimal-contract” explanation. Proponents of the “fat cat” explanation state that directors are paid too much due to their unjustified power. Proponents of the “optimal-contract” hypothesis state that competition in the managerial labour market establishes an optimal compensation contract. This study contrasts both hypotheses and presents evidence that the level of directors’ pay in Swiss corporations is to be explained by “optimal contracts” and by managerial power. We give evidence to which degree the two explanations are valid.
The boards functional emphasis a contingency approach
Authors: Collin Sven-Olof Yrjö
Published: December 2016

The understanding of the board of a corporation and its behavior is limited, despite the board’s societal importance. We present a contingency approach to the board’s functional emphasis, considering a fourth function in addition to monitoring, decision making, and service or resource provision. The additional function is conflict resolution (or principal identification). The approach contrasts with mainstream research by assuming that the firm is a nexus of investments, avoiding the empirical assumption that the shareholder is the sole principal. We derive propositions that are not restricted to any empirical category of a corporation, and address praxis implications for managing functional disharmony.
Outsourcing of internal audit and independence of auditors
Authors: Seetharaman Arumugam , Moorthy M. Krishna , Saravanan A.S.
Published: December 2016

Internal audit which is an integral part of any organization has long been overlooked. In fact, most organizations look at internal audit as a routine function in an organization. However, in the recent years, internal audit has taken a front seat for many organizations. Others are also looking at various options such as outsourcing of the internal audit function of their organizations. However, where outsourcing is concerned, one important issue arises, which is the independence of the external auditor to perform the internal audit function. This paper takes a look at the various aspects of the internal audit process as well as the impact and independence of external auditors who perform internal audit.
An exploration into the content of the compensation discussion & analysis document
Authors: Bart Chris
Published: December 2016

This paper presents the results of a survey of Compensation Discussion and Analysis (CD&A) documents from 32 publicly listed U.S. companies. Our aim was to probe the extent to which companies are providing investors, through the CD&A, with an easy to understand and complete assessment of the compensation provided to their highest paid executives. Using a detailed content analysis, the results show that while companies are complying somewhat with regulatory requirements, they are failing to meet the intent of the CD&A, which is, to provide completeness, transparency and understanding regarding a firm’s executive compensation. A number of recommendations for change is also proposed.
International comparison of the remuneration system disclosure
Authors: Franzoni Simona
Published: December 2016

This research is aimed at assessing whether rules and recommendations adopted in European Countries (France; Germany; Italy; Spain; United Kingdom) and non-European Countries (Canada; Japan; Russia; United States) enable companies to have a regulatory framework as a guarantee of information completeness, so that anyone can, on the one hand, assess if the company is transparency-oriented and, on the other, to facilitate the comparison of remuneration systems with other companies in other European contexts or non-European Countries. Finally, this paper aims to examine how the listed companies, operating in the public utilities sector, have implemented remuneration systems disclosure in the corporate behaviour in order to assess if, European and non-European listed companies surveyed behave in conformity with transparency provisions and assure stakeholders, information completeness.
Board diversity in the perspective of financial distress: Empirical evidence from the Netherlands
Authors: Santen Bernard , Donker Han
Published: December 2016

This paper analyses the relationship between board diversity (in gender and in nationality) and financial distress. A summary of the theory behind board diversity precedes an overview of the empirical evidence on the relationship between diversity and company performance. The paper presents empirical research on the relationship between a negative performance measure, financial distress, and diversity on the board. The results show a positive relationship between the presence of foreign non-executive directors and financial distress. It is suggested that this is caused by negative communication and misunderstandings. No relationship is found between the gender of a director and financial distress. On a micro-level, the data do not show evidence for the glass cliff hypothesis.
Non-executive reporting requirements for public companies
Authors: Rome Mark
Published: December 2016

Non-Executive Reporting Requirements should empower non-executive staff of publicly traded companies with a structured process to communicate value-added information directly with analysts, investors and regulators on a recurring basis without fear of reprisal or reprimand. This paper analyses non-executive reporting requirements for public companies in the United States.
Internal governance systems and R&D investment: An international comparison
Authors: Zouari-Hadiji Rim , Zouari Ghazi
Published: December 2016

In the theoretical framework of corporate governance, this article studies the efficiency of the control exerted by the ownership structure and the board of directors on managers for the purpose of privileging investment in R&D. This efficiency is sensitive to national systems of governance. Tests realized on a sample of 531 U.S., Japanese and French firms with the canonical method corroborate the existence of positive relationships between concentration of ownership, the internal administrator dominance and the non-dual structure on the one hand, and the investment in R&D, on the other.
Does firm performance affect board independence?
Authors: Wang Yi , Young Antony
Published: December 2016

This paper seeks to shed some light on the antecedents of board independence. Specifically, it attempts to test the conceptual frameworks which make different predictions about the effect of firm performance on the level of board independence. The results provide support for the perspective that appointing more independent members to the boards may merely represent firms’ attempts to comply with institutional pressures. It is found that higher blockholder shareholdings lead to lower independence on the board, and audit and remuneration committees. Moreover, larger firms have relatively more independent directors sitting on nomination and remuneration committees.
Ownership, board structure, and corporate performance: Evidence of French VC-backed firms
Authors: Hamdouni Amina
Published: December 2016

The purpose of this paper is to examine the effect of ownership structure and board structure on performance in VC-backed firms. Using 106 French VC-backed firms, our methodology in this paper is to estimate four equations. A regression analysis is then used to study the impact of ownership structure and board structure on performance and also to analyze whether ownership structure (ownership concentration, director ownership, venture capital ownership and employee ownership) and board variables (size, outside directors, COE-chairman duality, proportion of VC directors, proportion of employee directors and board meeting frequency) are significant determinants of VC-backed firm performance. Results indicate a strong positive relation between ownership concentration and performance and between director ownership and performance measured by ROE. And strong negative relation between ownership concentration and performance and between director ownership and performance measured by ROA. No strong relation was found between venture-capital ownership, employee ownership and firm performance. Results show also a strong negative relation between board size and performance measured by ROE and positive relation between board size and performance measured by ROA, Tobin’s Q and MVA. The proportion of independent outside directors on the board was positively associated with ROE and negatively associated with ROA. The presence of a dual leadership structure is negatively associated with ROE and positively associated with ROA. No strong relation was found between the proportion of venture-capital in board, the presence of employee in board, or board meeting frequency and firm performance.
Board composition in family-influenced firms: A dynamic perspective
Authors: El Manaa Wiem , Khlif Wafa , Ingley Coral , Karoui Lotfi
Published: December 2016

This paper uses a sample of 76 family businesses in Tunisia to investigate the impact of the family firm dynamic on the composition of their boards of directors. We argue that whether or not a transition in ownership is planned, firms have different governance needs and characteristics depending on the generational phase. The empirical results show that board composition is positively influenced by both generational evolution and succession planning.
This study provides evidence of an increase in the appointment of outside directors to boards of family firms from the third generation of ownership. This result implies that it is important to consider the generational phase and succession process of the family firm in order to better understand its governance system.
Critical mass theory and women directors’ contribution to board strategic tasks
Authors: Torchia Mariateresa , Calabrò Andrea , Huse Morten , Brogi Marina
Published: December 2016

In this article we offer an empirical test of the critical mass arguments in the discussion of women on corporate boards. The literature in the women on corporate board debate concludes that there must be at least three women on a board before the women really make a difference. These arguments are frequently used in the public debate about the understanding the impact of women on corporate boards, but they have never really been empirically tested on a large sample. In this paper we use a sample of 317 Norwegian firms. Our dependent variable is board strategic involvement. The findings support the critical mass arguments. This study offers useful insights to policy-makers interested in defining legislative measures mandating the presence of women directors in corporate boards by showing that “at least three women” may be particularly beneficial in terms of contribution to board strategic tasks.
Corporate governance and the board’s locus of control – The case of the ABI’s treatment of footprints
Authors: Main Brian G M
Published: December 2016

This paper discusses the degree to which codes of corporate governance and the guidelines that develop around them tend to shift the locus of control away from the board of directors. It is argued that even in principles-based codes of governance such outcomes are an unavoidable consequence and that policy makers should weigh such consequences carefully before promulgating codes and guidelines. The case of the treatment of footprints (incentive plan performance averaging periods) by the UK’s Association of British Insurers (ABI) is analysed to illustrate the problem.
Board leadership structure and firm performance: An examination of resource dependence role
Authors: Rashid Afzalur
Published: December 2016

This study examines if the CEO duality influence the firm economic performance in Bangladesh and the moderating effects of board composition in the form of outside independent directors. While doing so, it examines the relationship between CEO duality and firm performance during the pre appointment of outside independent directors and post appointment of outside independent directors (the role of other corporate governance mechanism as moderating variable). The finding is that there is there is a negative (non-significant) relationship between CEO duality and firm performance before appointment of outside independent directors in the
board. However, independent leadership structure and firm performance is found to be positively related following the acquisition of resource (outside independent directors in the board) supporting the ’resource dependence theory’. The findings of this study partially support the ’agency theory’ and ’resource dependence theory’ but do not support the stewardship theory.
This study contributes to the literature on CEO duality in the context of less a developed country.
Measuring earnings quality: Evidence from New Zealand
Authors: Houqe Muhammad Nurul , Fatema Islam Tahmin
Published: December 2016

We utilize two basic approaches to measure the quality of earnings which control two different dimensions of earnings management. The research design is structured primary on the basis of calculating two different measures of the quality of earnings on the industry level and on the company level. We calculate earnings quality for New Zealand public firms from the OSIRIS (http://www.osiris.com) database for 2004-2007. This research concludes that various stakeholders should apply more than one measure for the quality of earning in order to have strong evidence about the level of quality before taking any corrective action or making any decision related to that company. If one company is having low quality of earning according to one technique and high quality of earnings according to another, the stakeholders cannot have a final conclusion about that company and they need more investigations and analysis to assess the quality of earnings
In search for the determinants of share repurchases policies in the Italian equity capital market: An event study
Authors: Capizzi Vincenzo , Giovannini Renato
Published: December 2016

In the last decade the number of buyback transactions involving listed companies in the Italian equity capital market has experienced a huge growth. However, no clear understanding of this phenomenon has yet been reached, also because of the limited information available on such financial decisions. The purpose of this paper is to check the main hypotheses behind the determinants of share repurchases, analysing the effect of own share buyback announcements specifically on the performance of the listed companies before and after the discontinuity introduced in Italy through the Reform of the financial markets. The first major outcome coming from the empirical analysis deals with the strong incentive played by the reform mentioned above, which introduced stricter corporate governance criteria, leading to a sharp increase in the volume and frequency of share buyback announcements, as well as in the number of companies getting access to this instrument. Secondly, the analysis strongly supports the replacement hypothesis theory, which states that buybacks have become a better substitute for dividends as a remuneration policy for shareholders.
Board quality and the performance of Indonesian listed companies
Authors: Abidin Shamharir , Ahmad-Zaluki Nurwati A. , Ilona Desi
Published: December 2016

This paper provides an analysis on the effect of board quality on company performance. Using a sample of 133 companies listed on the Jakarta Stock Exchange in the year 2007, this study specifically examines whether multiple directorships, director shareholding and board independence (i.e. proxies for board quality) can be associated with company financial performance. This study also investigates the effect of audit committee characteristics (as proxied by audit committee independence and financial expertise) on company performance, while controlling for the effects of leverage and size.
With regard to board quality, the results indicate that only board independence is found to be associated with performance, though in the opposite direction. The direction of influence suggests that having too many independent directors (i.e. non-executive) might slow down the business as they might have a lack of detailed knowledge about the company’s business, and are more concerned about their gatekeeper role. As expected, leverage and size are found to have a significant influence on company performance.
Director ownership, outside directors and commitment to corporate social responsibility
Authors: Ying Chen , Leung Sidney
Published: December 2016

This paper examines the effects of director ownership and the proportion of outside directors on firms’ commitment to corporate social responsibility (CSR). Using a sample of 453 Hong Kong listed companies for 2005, we find that there is a non-linear relationship between the level of director ownership and firms’ engagement in CSR behavior. Commitment to CSR first increases as the proportion of director ownership increases up to 50% and then decreases as that proportion of ownership grows higher. Further, the proportion of outside directors on the board exhibits a positive relationship with the level of CSR commitment. These results provide explanations for firms’ commitment to CSR from the corporate governance perspective.
Top managers’ compensation and governance in Spanish firms: Evidence and reflections
Authors: Sanchez-Marin Gregorio
Published: December 2016

In Spanish listed firms, taking into account the predominant modes of ownership structure, which are characterized by a high concentration of shares in the hands of a few shareholders who are strongly represented on the board of directors, it might suppose that there are strong stimulus for a close top managers’ supervision and a straight interest alignment. However, the empirical evidence indicates the opposite, and this paradox needs to be explained within the theoretical framework of institutional theory. The high concentration of ownership and the high level of cross-holdings generate conflicting interests by those who have multiple roles as directors and top managers, suggesting that board’s supervisory effectiveness may be compromised by social pressures in search of legitimacy. These features of Spanish firms are undermining governance mechanisms, and may explain the high pay levels, the low variable packages and, in general, the lack of connection between top managers’ compensation and firm performance in comparison with those in other countries of Continental Europe.
Voluntary carbon disclosure of Australia’s top 100 companies
Authors: Johl Shireenjit K. , Jackling Beverley , Kothalawala Dimuthu A.
Published: December 2016

This paper examines disclosure practices of the top 100 Australian firms prior to the mandatory reporting of carbon practices. Specifically, the study investigates the relationship between voluntary carbon related disclosure and governance mechanisms, such as board and audit committee independence, audit committee financial expertise and the existence of a voluntary committee dedicated to environmental/climate change related matters. This paper utilises quantitative approach employing two regression based estimations. The results suggest that two governance-related variables, namely, audit committee financial expertise and the existence of a voluntary committee dedicated to environmental/ climate change strongly influences the level of voluntary carbon disclosure. This paper adds to the much needed research on carbon reporting and its implication for accounting.
Private benefits and board size: International evidence.
Authors: Shinozaki Shinya , Uchida Konari
Published: December 2016

In our analyses of 10,390 companies from 51 countries, we find that in countries that have small capital markets free cash flow is positively related to board size. However, this positive relation becomes significantly weak for companies in large securities markets. This result suggests that managers in underdeveloped capital markets have an incentive to construct less effective boards to extract private benefits. However, the distorted managerial incentive is alleviated in developed countries that have various disciplinary mechanisms to ensure good governance practices. We do not find clear evidence that legal protection of shareholder rights mitigates the managerial incentive to construct less effective boards.
Institutional change and corporate governance reform
Authors: Mertzanis Harilaos
Published: December 2016

The global financial crisis has posed challenges to financial institutions governance. Meeting these challenges requires an understanding of governance dynamics in relation to institutions’ performance within a changing environment. The nature and scope of institutional response to a changing environment depends upon inherited governance structures, including socioeconomic conventions and rules of behavior at the macro level and time, expertise and common commitment of directors at the micro level. Innovation and learning-by-doing in governance can be an effective reform strategy. Innovation in governance may include the establishment of new norms of economic behavior and the transformation of decision-making process and the reallocation of responsibilities to directors and senior management. This may also inform regulatory approaches in strengthening financial institutions governance, based on improved disclosure, independent and competent boards.
Executives’ remuneration and company performance: An evaluation
Authors: Istiaq Azim Mohammad , Ai Mei Joyce Chua , Rahman Samina
Published: December 2016

Executive pay became a much discussed issue during the recent global financial crisis. Substantial research has been done in the United States and United Kingdom, while research in Australia is still limited, especially in terms of using the data for the financial crisis. This paper will investigate the relationship between Australian executives’ remuneration and their companies’ performance during the global financial crisis. Two approaches were used to examine the relationship: firstly, an investigation of the pay-for performance relationship that existed during the global financial crisis; and secondly, checking the robustness test by using one year before-and-after data. The sample is taken from the Top 200 companies from the Australian Stock Exchange (ASX) list for 2007 and 2008. In order to achieve a better understanding of this relationship, a conceptual model has been developed. Results show that Australia’s business reward system is quite effective because executives’ remuneration were reduced by their respective companies when they underperformed during this particular crisis.
Overall, this study concludes that there is a positive and significant relationship between executives’ remuneration and company performance during the global financial crisis, with higher sensitivity to market-based performance measures than accounting-based performance measures.
Audit committees in the Greek banking institutions: A qualitative investigation of effectiveness
Authors: Koutoupis Andreas G.
Published: December 2016

In order to obtain access to well-developed financial markets, Greek banks need to win and maintain investors’ confidence, not only in a symbolic and rules-based approach (complying as closely as possible with international best practices and regulations), but pursue a principlesbased approach in order to achieve the desired goal of effective audit committee. The question that this paper seeks to answer is: “What are the key drivers for an effective audit committee in countries where audit committees are relatively new?” The overall aim of this research is to identify the main drivers which may contribute to the effectiveness of audit committees and provide a framework for their successful operation in the Greek banking institutions.
An exploration of boards of directors’ quality: The development of an index for directors attributes and the relation with firm value and performance
Authors: de Almeida Jose Elias Feres
Published: December 2016

In an environment with poor quality of Corporate Governance Mechanisms, the quality of directors’ attributes might exert an important role to improve firm’s value and performance. I developed an index to explore the quality of Board of Directors based on Brazilian and international corporate governance codes to measure directors qualitative attributes. The sample consist in 24 Brazilian firms that traded at NYSE in the period over 1999-2006. The results show us that board of directors with high types of attributes can improve value measured individually and by the quality index. The main results indicate that firm value improved with high types of professionals, accountants seated in boards, directors with high level of education and that participated in executive training.

Keywords: Board of Directors’ Quality, Corporate Governance, Firm Value, Directors Qual
Perception of activity based costing in Australian universities
Authors: Zaman Monir , Elsayed Mohamed
Published: December 2016

The study examines the perception of activity based costing (ABC) in Australian universities. Using a questionnaire survey, data was collected from twenty-six finance directors and/or chief financial officers in Australian universities. The perception of ABC implementation in Australian
universities depends on many variables including the understanding of ABC, consideration of ABC as a strategic cost management system, the role of ABC in reduction of expenses, consideration of ABC as a valuable tool to enhance overhead cost allocation, and consideration of ABC as an effective strategic cost management system designed to incorporate the university’s critical input, output, and process variables resulting in value creation. The result of regression analysis provides significant and positive association between the decision to implement ABC in Australian universities and both the treatment of ABC as a strategic cost management system and the degree of both senior management and internal champion support. The findings indicate substantial differences in the allocation of the overhead costs between ABC and traditional costing systems. The result also reveals that many Australian universities using the ABC method receive benefits in improving cost reduction and better resource allocation with revenue surplus. Furthermore, the study develops a generic model of cost pools and drivers of ABC implementation in Australian universities.
International private benefits of control: Cross-sectional and time-series analysis
Authors: Nguyen Nhut H. , Liu Yubo
Published: December 2016

The 1998 Asian Financial Crisis and more recent corporate scandals in the U.S. have triggered growing attention of researchers and policy makers on the agency problem between controlling shareholders and minority investors. One respect of this problem is private benefits of control. In this paper, we extend the findings in Dyck and Zingales (2004) and show that the degree of investor protection still matters in curbing private control benefits for the period 1999–2007. More importantly, we find that private benefits of control have decreased significantly over time. Finally, our analyses show weak evidence of differential decreases in the value of control between weak and strong investor protection countries.
Effect of corporate governance on the firms’ structural capital
Authors: Dhaouadi Karima
Published: December 2016

The study seeks to understand how the firm‟s ownership structure and the board of directors‟ composition influence the structural capital. The latter is apprehended by three main levers: TMT compensation, innovation, and firm‟s reputation. By mobilizing several panel linear regressions on 274 American firms, the results show that the firms which heavily invest in structural capital are more successful and chaired by the younger and heterogeneous TMT. No disciplinary effect of the board on structural capital has been found. The results support the cognitive theory assumptions. The classic perspective failed to explain the structural capital phenomena. In order to enhance their structural capital, firms must pay a close attention to their board cognitive contribution and not to its disciplinary role.
Determinants of nomination committee: New Zealand evidence
Authors: Uddin Bhuiyan Md. Borhan , Habib Ahsan
Published: December 2016

A sizable volume of corporate governance literature documents that an independent and competent board of directors matter for organizational success. In order to function effectively, board comprises of different sub-committees and the three most common sub-committees are audit committees, compensation committees and nomination committees. Surprisingly, there is a paucity of research in understanding the determinants of nomination committee notwithstanding the importance of an independent nomination committee in board selection process. We contribute to the nomination committee literature by investigating the factors associated with the determination of nomination committees in New Zealand. We find that cross-sectional variation in the firm-specific characteristics affect the existence of nomination committees. This finding casts doubt on the „one-size-fits all‟ approach of corporate governance. Our logistic regression of the nomination committee determinants indicates that firm size, governance regulation and busy directors are positively associated with the existence of nomination committees, whereas firm leverage, controlling shareholders, and director independence are negatively related to the formation of nomination committees.
Particular aspects of corporate governance in limited companies
Authors: MILOUD Tarek
Published: December 2016

The article examines the „political‟ principles in the running of a limited company focusing, in particular, on the political aspects of the decision-making process. As the board of directors acts as a controlling interface between the shareholders and the directors, we will study the main aspects of corporate governance in relation to the board of directors of a limited company. Finally, we will present the different systems of corporate governance and we will end with the distinctive characteristics of each of these systems
Governance attributes in Indonesia and earnings quality
Authors: Rusmin Rusmin , Hossain Mahmud , Evans John
Published: December 2016

This research investigates the relationship between corporate governance structure and attributes and the quality of reported earnings in a sample of Indonesian firms. The findings of our research reveals that both concentrated and family ownership are associated with lower earnings quality. In addition we find that independent members of a board committee act as an effective monitoring mechanism to oversee the accounting and financial reports processes of a company.
Non-compliance with Australian stock exchange recommendations on board independence
Authors: O’Keefe Patricia
Published: December 2016

An agency theory perspective is adopted to explain the high levels of non-compliance with recommendations concerning board structure of the Australian Stock Exchange’s (ASX) Corporate Governance Principles and Recommendations. The study compares groups of compliers and non-compliers drawn from members of the ASX All Ordinaries Index. The results indicate that, in the presence of mitigating factors such as less complexity, higher levels of managerial ownership of equity and higher ownership concentration, entities are less likely to comply with the recommendations on board independence. The results suggest that the compliance decision might be influenced by mitigating factors that reduce the need for board independence.
Ownership structure, charaсteristic differences and the size of corporate board of commissioner: The case of Indonesia state-owned enterprises
Authors: W. Astami Emita , Rusmin Rusmin , Hartadi Bambang
Published: December 2016

This study scrutinises the association between ownership identity and board size in a unique institutional setting: state-owned enterprises in Indonesia, a country incorporating a two-tier management structure. It investigates whether the ownership identity explains the size of the board of commissioners by using the year 2006 data set from 155 SOEs in Indonesia consisting of 112 of fully SOEs and 43 of partially- privatised SOEs. This study hypothesizes that SOEs with a higher level of private sector ownership will have a greater incentive to monitor the performance of executive management through board of commissioners than those SOEs that are fully owned by the state government. It finds that compared to those fully SOEs, the partially-privatised SOEs are likely to have more board of commissioners. Even though this result is not statistically significant and, therefore, the proposed hypothesis is not statistically supported, the regression statistical analysis reveals that control variables assist in explaining the size of board of commissioners. The size of the board of directors as a control variable is significantly associated with the size of the board of commissioners. Other control variables including size of the SOE as well as the return on equity measure moderately explain the size of the board of commissioners. The findings give insight to stakeholders such as regulators or the private sector investors interested in making investment decisions in Indonesia considering the ownership structure and the effect on the effectiveness of the board of commissioners.
Monetary policy responses to the global financial crisis: A case study of Egypt
Authors: Abdel-Baki Monal
Published: December 2016

Among the triggers of the Arab Spring are the declining living standards of the middle and lower income groups. Undoubtedly, the global financial crisis (GFC) is to be partially blamed for weakening the economies of these nations. But was monetary policy ineffective in combating inflation and reducing the meltdown? This paper employs a dynamic stochastic general equilibrium model to assess the effectiveness of the monetary policy in the wake of the GFC. Egypt is selected as a case study due to its overdependence on imported food, the prices of which are relentlessly soaring. The results of the study reveal that the ideal operating targets for the Central Bank of Egypt are the overnight rate and legal reserve requirements. Interest rates are more suitable for long-run impact on the ultimate goals of growth, price stability and job creation. The study culminates in designing a framework to enhance central bankers’ political independence and transparency, which is imperative for nations with high levels of corruption. The study is not only informative to the new Egyptian policymakers, but also to other developing and emerging economies that suffer from symptoms of chronic inflation and looming socio-political turmoil.
Busy boards: How does the simultaneous participation of directors in multiple companies affect the board’s activities?
Authors: Guerra Sandra , Santos Rafael Liza
Published: December 2016

We analyze the simultaneous participation of directors in multiple companies and its effects on boards’ roles and activities. By sitting in multiple boards, directors may face time scarcity and they may be too busy to adequately perform their tasks. Using survey questionnaires about board’s activities, which were directly sent to firms and their directors, this paper founds that busy boards are considered to be less active, less independent and less relevant to firms. Additionally, these boards are less committed to their responsibilities, such as hiring/firing the CEO and evaluating executives’ performance. They also do not monitor the firm’s risk properly. Our results present an insider perception of the board’s roles and activities, which can be useful for market regulators and policy-makers.
Audit committee effectiveness: A synthesis of the audit committee literature
Authors: Wu Julia , Habib Ahsan , Weil Sidney
Published: December 2016

The purpose of this paper is to add a meaningful critique to the existing audit committee (AC) literature by providing (i) a critical analysis of the AC literature grounded on agency theory; (ii) a discussion of the emerging new theories of AC, which investigate the people serving on and working with ACs, and (iii) a description of the relationship between these two groups of literature. A number of qualitative AC studies have provided new insights by investigating the actual people serving on and working with audit committees. This review paper summarizes these findings and provides a comparative evaluation with the agency theory-based AC research. This review documents, among others, that the attributes of ACs, as measured by the quantitative literature, have hardly been reflected by qualitative investigation, whereas qualitative analysis of the data contributed by people who have actual experience of ACs questions the fundamental propositions, not only of why ACs exist, but also how they function. This paper provides a cross-examination of the afore-mentioned two paradigms of literature on AC effectiveness and invites corporate scholars to reflect on the differences between the two groups of AC studies.