title: The Relationship Between Corporate Governance Practices and Financial Performance in New Zealand: An Empirical Investigation

authors: Reddy, Krishna

subjects: Corporate Governance

abstract: Corporate Governance is the set of structures and behaviours by which a company or other business entity is directed and managed (New Zealand Securities Commission, 2003). The structures and behaviours guide how the entity sets objectives, develops strategies and business plans, monitors and reports on performance, and manages risks. They also guide how directors and managers meet all expectations and that they are responsible and accountable in their respective roles. In 2004 the New Zealand Securities Commission (NZSC) adopted a principle-based corporate governance approach which was intended to contribute to high standards of corporate governance in New Zealand entities. The principles/guidelines are broad statement generally applied to the governance of entities that have economic impact in New Zealand or are accountable, in various ways, to the public. The economic entities are required to observe the principles/guidelines to the fullest extent that they reasonably can and depart only where they are subject to competing statutory or public policy requirements (NZSC, 2004). This thesis investigates the effect principle-based corporate governance practices have on the financial performance of publicly listed companies and public corporate entities in New Zealand. The adoption of the principle-based approach was to encourage entities to develop governance structures that are specific to their context. Therefore, this research examines: (i) whether the NZSC recommendations have encouraged institutions to develop entity and/or industry specific governance structures; and (ii) whether the differences in governance practices at entity and industry level contribute to the differences in the financial performance. Prior studies have examined governance practices of larger corporations in large economies. The governance practices of companies in smaller economies have received little attention. This research extends the understanding of responses to smaller entities, both private and public sector, in a small open economy with a mature capital market. The focus of this thesis is on the governance variables that have been highlighted by the NZSC in 2004 and also other governance variables that are supported in the literature as providing an appropriate structure for the institutions in the environment in which it operates. Data for the small and large capitalisation (cap) companies were obtained from the New Zealand Stock Exchange (NZX) Deep Archive. The data for the small cap companies covered the period 1999 to 2006 and for large cap companies the sampling period was from 1999 to 2007. For public sector corporate entities, data were obtained from their respective annual reports for the period 2000 to 2007. Pooled data were analysed using ordinary least squares (OLS) regression and two stages least squares (2SLS) regression techniques to evaluate: (i) whether entities have complied with the NZSC recommendations; (ii) whether those entities that were continuously compliant with the NZSC recommendations have superior financial performance; (iii) the entities’ financial performance post-NZSC recommendations is better than pre-NZSC recommendations; and (iv) the difference in governance practices in different entities and industries and the effect they have on company financial performance. The findings indicate that small cap and large cap companies and public sector corporate entities have universally adopted the Securities Commission recommendations. Results for the large cap companies show that compliance with NZSC recommendations had a positive effect on financial performance, but empirical results show that compliance with NZSC recommendations has had a negative effect on the financial performance of small cap companies and public sector corporate entities. There is also evidence that governance practices in certain industries have contributed towards the differences in entities’ financial performance. This suggests that a principle-based governance approach led to the development of industry-specific governance structures in large cap companies and State-Owned Enterprises (SOEs) as intended. However, the evidence for the small cap companies is specific to the finance/investment sector. As a result of this study, the relationship between ‘soft regulations’ and entities’ financial performance is better understood, and in terms of public/regulatory requirements, the issues associated with compliance cost burdens are better informed. This study offers insights for policy makers around the world who have adopted principle-based approaches and to those jurisdictions that are interested in adopting similar governance approaches in the future.

text: The Relationship Between Corporate Governance Practices and Financial Performance in New Zealand: An Empirical Investigation Corporate Governance is the set of structures and behaviours by which a company or other business entity is directed and managed (New Zealand Securities Commission, 2003). The structures and behaviours guide how the entity sets objectives, develops strategies and business plans, monitors and reports on performance, and manages risks. They also guide how directors and managers meet all expectations and that they are responsible and accountable in their respective roles. In 2004 the New Zealand Securities Commission (NZSC) adopted a principle-based corporate governance approach which was intended to contribute to high standards of corporate governance in New Zealand entities. The principles/guidelines are broad statement generally applied to the governance of entities that have economic impact in New Zealand or are accountable, in various ways, to the public. The economic entities are required to observe the principles/guidelines to the fullest extent that they reasonably can and depart only where they are subject to competing statutory or public policy requirements (NZSC, 2004). This thesis investigates the effect principle-based corporate governance practices have on the financial performance of publicly listed companies and public corporate entities in New Zealand. The adoption of the principle-based approach was to encourage entities to develop governance structures that are specific to their context. Therefore, this research examines: (i) whether the NZSC recommendations have encouraged institutions to develop entity and/or industry specific governance structures; and (ii) whether the differences in governance practices at entity and industry level contribute to the differences in the financial performance. Prior studies have examined governance practices of larger corporations in large economies. The governance practices of companies in smaller economies have received little attention. This research extends the understanding of responses to smaller entities, both private and public sector, in a small open economy with a mature capital market. The focus of this thesis is on the governance variables that have been highlighted by the NZSC in 2004 and also other governance variables that are supported in the literature as providing an appropriate structure for the institutions in the environment in which it operates. Data for the small and large capitalisation (cap) companies were obtained from the New Zealand Stock Exchange (NZX) Deep Archive. The data for the small cap companies covered the period 1999 to 2006 and for large cap companies the sampling period was from 1999 to 2007. For public sector corporate entities, data were obtained from their respective annual reports for the period 2000 to 2007. Pooled data were analysed using ordinary least squares (OLS) regression and two stages least squares (2SLS) regression techniques to evaluate: (i) whether entities have complied with the NZSC recommendations; (ii) whether those entities that were continuously compliant with the NZSC recommendations have superior financial performance; (iii) the entities’ financial performance post-NZSC recommendations is better than pre-NZSC recommendations; and (iv) the difference in governance practices in different entities and industries and the effect they have on company financial performance. The findings indicate that small cap and large cap companies and public sector corporate entities have universally adopted the Securities Commission recommendations. Results for the large cap companies show that compliance with NZSC recommendations had a positive effect on financial performance, but empirical results show that compliance with NZSC recommendations has had a negative effect on the financial performance of small cap companies and public sector corporate entities. There is also evidence that governance practices in certain industries have contributed towards the differences in entities’ financial performance. This suggests that a principle-based governance approach led to the development of industry-specific governance structures in large cap companies and State-Owned Enterprises (SOEs) as intended. However, the evidence for the small cap companies is specific to the finance/investment sector. As a result of this study, the relationship between ‘soft regulations’ and entities’ financial performance is better understood, and in terms of public/regulatory requirements, the issues associated with compliance cost burdens are better informed. This study offers insights for policy makers around the world who have adopted principle-based approaches and to those jurisdictions that are interested in adopting similar governance approaches in the future.

year: 2010

title: Transient liquid phase sintering of high density Transient liquid phase sintering of high density Fe₃Al using Fe and Fe₂Al₅/FeAl₂ powders Part 1: Experimentation and results

authors: Xydas, N.K.

subjects: sintering

abstract: High density Fe[sub 3]Al was produced through transient liquid phase sintering, using rapid heating rates of greater than 150 K min[sup -1] and a mixture of prealloyed and elemental powders. Prealloyed Fe[sub 2]Al[sub 5]/FeAl[sub 2] (50Fe/50Al, wt-%) powder was added to elemental iron powder in a ratio appropriate for producing an overall Fe[sub 3]Al (13•87 wt-%) ratio. The heating rate, sintering time, sintering temperature, green density and powder particle size were controlled during the study. Heating rate, sintering time and powder particle size had the most significant influence upon the sintered density of the compacts. The highest sintered density of 6•12 Mg m[sup -3] (92% of the theoretical density for Fe3Al) was achieved after 15 minutes of sintering at 1350°C, using a 250 K min[sup - 1] heating rate, 1-6 μm Fe powders and 5•66 μm alloy powders. SEM microscopy suggests that agglomerated Fe[sub 2]Al[sub 5]/ FeAl[sub 2] particles, which form a liquid during sintering, are responsible for a significant portion of the remaining porosity in high sintered density compacts, creating stable pores, larger than 100 μm diameter, after melting. High density was achieved by minimising the Kirkendall porosity formed during heating by unbalanced diffusion and solubility between the iron and Fe[sub 2]Al[sub 5]/FeAl[sub 2] components. The lower diffusion rate of aluminium in the prealloyed powder into the iron compared with elemental aluminium in iron, coupled with a fast heating rate, is expected to permit minimal iron-aluminium interdiffusion during heating so that when a liquid forms the aluminium dissolves in the iron to promote solidification at a lower aluminium content. This leads to a further reduction in porosity.

text: Transient liquid phase sintering of high density Transient liquid phase sintering of high density Fe₃Al using Fe and Fe₂Al₅/FeAl₂ powders Part 1: Experimentation and results High density Fe[sub 3]Al was produced through transient liquid phase sintering, using rapid heating rates of greater than 150 K min[sup -1] and a mixture of prealloyed and elemental powders. Prealloyed Fe[sub 2]Al[sub 5]/FeAl[sub 2] (50Fe/50Al, wt-%) powder was added to elemental iron powder in a ratio appropriate for producing an overall Fe[sub 3]Al (13•87 wt-%) ratio. The heating rate, sintering time, sintering temperature, green density and powder particle size were controlled during the study. Heating rate, sintering time and powder particle size had the most significant influence upon the sintered density of the compacts. The highest sintered density of 6•12 Mg m[sup -3] (92% of the theoretical density for Fe3Al) was achieved after 15 minutes of sintering at 1350°C, using a 250 K min[sup - 1] heating rate, 1-6 μm Fe powders and 5•66 μm alloy powders. SEM microscopy suggests that agglomerated Fe[sub 2]Al[sub 5]/ FeAl[sub 2] particles, which form a liquid during sintering, are responsible for a significant portion of the remaining porosity in high sintered density compacts, creating stable pores, larger than 100 μm diameter, after melting. High density was achieved by minimising the Kirkendall porosity formed during heating by unbalanced diffusion and solubility between the iron and Fe[sub 2]Al[sub 5]/FeAl[sub 2] components. The lower diffusion rate of aluminium in the prealloyed powder into the iron compared with elemental aluminium in iron, coupled with a fast heating rate, is expected to permit minimal iron-aluminium interdiffusion during heating so that when a liquid forms the aluminium dissolves in the iron to promote solidification at a lower aluminium content. This leads to a further reduction in porosity.

year: 2003-03

title: Secular schools, spirituality and Maori values

authors: Fraser, Deborah

abstract: New Zealand has had free, state, secular education since 1877, but just what is meant by secularism is changing. Since the 1980s the growth of Maori education initiatives has mushroomed and these place emphasis on Maori values and beliefs, including spirituality. In addition, in 1999 a definition and statement on spirituality appeared in the health and physical education national curriculum document. This statement referred to values, beliefs, meaning and purpose. It also incorporated a Maori model of well‐being which places the spiritual alongside other dimensions of humanity. This article explores the concept of spirituality in secular schooling in New Zealand. Some influences from Maori culture are explored with particular reference to values, ethical decision‐making and spirituality. Interviews with Maori teachers highlight how moral decisions often reflect spiritual beliefs and practices. It is argued that schooling has a moral obligation to reflect indigenous values if understanding, respect and cultural identity are to be promoted and cherished. It is also suggested that spirituality challenges what we have traditionally considered as learning at school.

text: Secular schools, spirituality and Maori values New Zealand has had free, state, secular education since 1877, but just what is meant by secularism is changing. Since the 1980s the growth of Maori education initiatives has mushroomed and these place emphasis on Maori values and beliefs, including spirituality. In addition, in 1999 a definition and statement on spirituality appeared in the health and physical education national curriculum document. This statement referred to values, beliefs, meaning and purpose. It also incorporated a Maori model of well‐being which places the spiritual alongside other dimensions of humanity. This article explores the concept of spirituality in secular schooling in New Zealand. Some influences from Maori culture are explored with particular reference to values, ethical decision‐making and spirituality. Interviews with Maori teachers highlight how moral decisions often reflect spiritual beliefs and practices. It is argued that schooling has a moral obligation to reflect indigenous values if understanding, respect and cultural identity are to be promoted and cherished. It is also suggested that spirituality challenges what we have traditionally considered as learning at school.

year: 2004