Search Results (18)

The opportunistic use of insider information generates adverse effects on capital markets, making its mitigation through robust corporate governance practices. This research analyzes the corporate governance mechanisms that reduce the signs of opportunistic insider trading, grounded in the assumptions of information asymmetry and opportunistic behavior. The hypotheses posit that firms listed on the Novo Mercado or Level 2 of Corporate Governance, with more independent boards of directors and greater female representation, active fiscal councils, consolidated ESG practices, non-family ownership structures, robust audit committees, and audits not conducted by Big Four firms, are less prone to opportunistic conduct. The sample comprises 237 firms, representing 51% of companies listed on [B]3 between 2010 and 2021, resulting in a total of 2175 firm-year observations. Panel data analysis supports the proposed hypotheses. The findings indicate that higher levels of corporate governance practices are associated with a lower incidence of opportunistic insider trading in the Brazilian capital market. This study contributes to the literature by highlighting the specific features of the largest stock market in Latin America and emphasizing the role of transparency, formal monitoring, and informal mechanisms, such as social and reputational pressure on insiders, in shaping ethical behavior and curbing the misuse of privileged information. Full article

This study analyzes the relationship between family control and the internationalization of family firms in Mexico. Grounded in the resource-based view and socioemotional wealth theory, it addresses the theoretical problem of how familiness and governance mechanisms influence strategic decisions in emerging markets. Based on 326 observations of family businesses (51) listed on the Mexican Stock Exchange (BMV) from 2009 to 2016, and using a probit regression model, five hypotheses are tested regarding the effects of family directors, board independence, CEO duality, tenure, and ownership concentration on internationalization. The results show that board independence and chair tenure foster internationalization, while ownership concentration and family directors discourage it. The findings contribute to understanding the need for governance reforms that promote more independence and leadership stability to foment internationalization strategies among family businesses in emerging markets. Full article

The primary objective of this study is to investigate the intricate relationship between different ownership structures, such as family, institutional, managerial, and foreign ownership, and tax avoidance practices. It also seeks to explore the moderating influence of female board members in shaping these relationships. This study utilizes balanced panel data from 72 industrial and service firms listed on the Amman Stock Exchange during the period of 2018 to 2023. The Generalized Method of Moments (GMM) was employed to estimate the results. The results indicate that family and foreign ownership positively influence tax avoidance practices, suggesting that families may engage in tax avoidance to benefit from rent extraction, while foreign investors may pressure managers to manipulate tax liabilities or shift profits across countries to minimize taxes. In contrast, the presence of female directors as well as institutional and managerial ownership is associated with a reduction in tax avoidance. Female directors play a moderating role in the relationship between ownership structure and tax avoidance. Their presence in interaction with institutional ownership reduces tax avoidance by focusing on tax compliance strategies. However, this effect changes in family and foreign-owned firms, where control over decision-making lies with the families or foreign shareholders, limiting the impact of female directors in promoting compliance and aligning their role with the tax avoidance strategies preferred by the controlling owners. Full article

This research examines how corporate governance (CG) affects corporate social responsibility (CSR) disclosure with government ownership as a moderation factor by analyzing panel data from 30 industrial firms listed on the Amman Stock Exchange during 2018–2022. The study employed board of directors and audit committee characteristics as independent variables to represent CG while developing a CSR disclosure index. The research controlled for company size and financial leverage in its model. The findings demonstrate that corporate governance dimensions affect CSR disclosure, while government ownership significantly enhances this relationship in a positive direction. Government ownership increases R² values, which shows that corporate governance merged with government ownership modifies the corporate governance and CSR disclosure relationship by strengthening the impact when government stakes rise. Statistical analysis revealed that board independence, board duality, audit committee size and independence, along with audit committee meeting frequency, all had positive effects on CSR disclosure. The study found no statistically significant effect of board size, frequency of board meetings, or the financial expertise of audit committee members on CSR disclosure. Based on the findings, this study outlines recommendations to strengthen governance practices that support social disclosure. Full article

This research examines the link between environmental, social, and governance (ESG) risk ratings and board characteristics on corporate performance. Using 2023 data from 117 companies on the Saudi Stock Exchange, the study employs Ordinary Least Squares (OLS) regression and Python for data analysis. Our findings reveal a negative effect of ESG risk scores on financial performance measures, indicating that higher ESG risks hinder firm performance measured by ROE and ROIC. Furthermore, both the size and independence of the board decrease corporate performance in Saudi firms. Family-controlled ownership structures often limit the effectiveness of independent directors in enhancing performance. In Saudi firms, women’s board participation shows an insignificant impact on corporate performance, suggesting that the Tokenism Theory may apply. It is recommended that firms empower women in leadership roles and develop robust ESG risk management frameworks to mitigate risks and enhance financial performance. Full article

This study investigated the interactive effect of key audit matters (KAMs) and stock ownership on German audit committee (AC) members’ preferences regarding accounting issues in an experimental setting. Specifically, we explored whether the increased accountability of AC members to investors, resulting from KAM disclosures, is influenced by whether an AC member owns shares in the audited company. Our findings suggest that the disclosure of KAMs supports a conservative management accounting preference. However, KAMs can be used by stock-owning AC members as disclaimers that inform the investing public and might serve as legitimation tools for ACs with a preference for less conservative accounting. Hence, our study provides evidence from a two-tier governance country that audit committee members’ accounting preferences based on disclosed KAMs depend on their financial independence. Full article

The growing prominence of global warming has led to a worldwide consensus on the need to reduce carbon emissions. Employing a sample of private industrial enterprises listed on the Chinese stock market from 2008 to 2021, this study explores the effect of directors appointed by non-controlling state shareholders (appointed directors), which is a growing type of mixed-ownership reform, on corporate carbon emission intensity. The results show that appointed directors significantly reduce corporate carbon emission intensity. Mechanism tests suggest that this reduction is achieved through developing environmental strategies and increasing executive compensation incentives. Heterogeneity analyses reveal that the effect of appointed directors is more pronounced for firms with lax regional environmental regulation, in non-heavily polluting industries, with low analyst coverage, and with poor green innovation abilities. Our findings shed light on the effectiveness of mixed-ownership reform from the perspective of appointed directors and offer new implications and evidence for environmental protection and the sustainable development of enterprises in emerging markets. Full article

This study explored the impacts of ownership structure (OS) on intellectual capital (IC) and its components. Data were gathered from 31 Dhaka Stock Exchange-listed banks for five years, from 2017 to 2021, consisting of 155 observations as balanced panel data. The study used the modified value-added intellectual coefficient (MVAIC) model to track the IC efficiency. The robust fixed effects model was employed for regression analysis to test the hypotheses. The research found that sponsor director ownership is negatively associated with the MVAIC, human capital efficiency (HCE), and structural capital efficiency (SCE) but positively with relational capital efficiency (RCE). High institutional and public ownership are positively linked with SCE but negatively with RCE. Foreign ownership is only positively associated with banks’ MVAIC and HCE. The regression results showed that high institutional ownership (IO) significantly enhanced the MVAIC and HCE. Foreign and public ownership positively influenced banks’ MVAIC, HCE, and capital employed efficiency (CEE) but negatively impacted RCE. The findings of this study will help banks’ policymakers with ownership mixes for the optimum utilization of banks’ resources. Management may assess IC’s efficiency level for proper supervision and use of knowledge resources to boost bank profitability. Also, the findings will help investors make prudent investment decisions. This is the first study to focus on OS and IC with diverse elements in Southeast Asia, especially Bangladesh, an emerging market. Full article

This study empirically analyzes the relationship between Vietnamese firms’ earnings management, board characteristics, and ownership structures. I use board size and the proportion of outside directors to reflect board characteristics, and the ownership percentages of the board of directors, outside directors, and the chief executive officer (CEO) to reflect the ownership structures. I use discretionary accruals, measured by the modified Jones model, to proxy for earnings management. From analyzing firms listed on the Ho Chi Minh and Hanoi Stock Exchanges from 2012 to 2017, I find that board size and the ownership percentages of outside directors and CEOs are negatively related to earnings management, whereas the board of directors’ ownership percentage is positively related. The proportion of outside directors is not significantly associated with earnings management. This study provides policy insights for improving Vietnamese firms’ financial transparency. Specifically, corporate laws regulating board composition should be enacted to ensure that all firms meet a minimum number of board members. Moreover, a policy mandating boards to include independent outside directors is necessary, as establishing an independent outside director system within Vietnam’s corporate law can strengthen the sustainability of the board of directors. Full article

This study investigates the interactive effect of ownership structure on the relationship between annual board report readability and stock price crash risk in companies listed on the Tehran Stock Exchange (TSE). The negative skewness model was used to measure the crash risk of stock prices and the Fog index was used for determining the readability of the board of directors’ report. The ownership structure is examined in institutional ownership, significant managerial ownership, and family ownership. The data of companies listed on the TSE from 2013 to 2019 have been used. The statistical method of this research is multiple regressions and, to test the research hypotheses, the data panel model and the ordinary least squares method have been employed. Overall, this study provides new evidence to explain the reporting quality and the crash risk of stock prices from the lenses of the agency theory. It further investigates the interactive effect of ownership structure on the relationship between annual board report readability and stock price crash risk. The results show a significant correlation between the readability of the board of directors’ report and the crash risk of stock prices. Furthermore, the relationship between the readability of the board report and stock price crash risk is not affected by the ownership structure, including institutional ownership, significant managerial ownership, and family ownership. It can be inferred that an ownership structure, which includes institutional shareholders, significant shareholders, and family ownership, increases the supervision of managers and their reports, so they cannot keep adverse information from being released. This will ultimately improve the readability of their reports and reduce the risk of stock price crashes. Full article

The aim of this paper was to examine the effect of managerial/board gender diversity and corporate governance structure on firm performance in a Jordanian business environment—a developing economy that has a distinct environment from that of developed economies. The current study focuses on the unique context of an emerging economy (i.e., Jordan). Data were collected from nonfinancial companies listed on the Amman Stock Exchange from 2018 to 2020. Data analysis was carried out using the random-effects estimator, which was considered as the most suitable for this study. The results disclose that female representation on the board of executives of Jordanian companies had a positive but insignificant effect on corporate performance, as measured by the return on equity, indicating that this variable has no effect on the performance of firms in Jordan. Both family ownership and board size had negative significant effects on performance, but for the moderating effect, corporate governance structure had no effect on the relationship among CEO duality, institution ownership, government ownership, independent directors, and firm performance. The current study only focused on Jordanian industrial firms listed on ASE, thus rendering the findings nongeneralizable to other sectors and nations. Further investigations are urged to broaden the context of the study to achieve more enriched findings. Managers can use the findings to achieve a deeper understanding of the way governance structure affects firm performance. Additionally, regulators at the Jordan Securities Commission can attain valuable insight about the adequacy of the current regulations regarding the role of gender diversity and corporate governance structure in Jordan. The current study contributes to the literature concerning the effect of managerial gender diversity and corporate governance structure on performance. Furthermore, this investigation aims to fill the current research gap in the context of Jordan, which is an emerging economy in the Arab region that is under-represented in this field of research. Full article

This paper analyses the effect of family ownership and the characteristics of the board of directors on the risk assumed by Spanish non-financial companies. The sample consists of 176 Spanish non-financial companies listed on Spanish stock exchanges during the period 2012–2015. The results show that the level of family ownership concentration affects the level of exposure to risk non-linearly and confirms the importance of the characteristics of the board of directors in risk-taking. Full article

Corporate governance plays a significant role in the value of shareholders and share prices, hence stock market liquidity is affected. Previous research has mainly focused on the issue in developed markets, whereas in developing countries there is a need to analyze the influence of corporate governance on stock market liquidity. Therefore, the present study aims to examine the impact of ownership structure and board characteristics on stock market liquidity of non-financial firms of South Asian countries such as Pakistan, Sri Lanka, Bangladesh, and India. The data in the study is collected from the DataStream for the 2011–2020 period. The study uses a fixed effect model for the analysis of the data and hypotheses testing and generalized method of moments (GMM) is used to check the robustness of the results. The findings of the study indicate that institutional ownership, board size, board independence, and CEO duality have a significant and positive impact on stock market liquidity, whereas managerial ownership has a significant and negative effect on stock market liquidity. Full article

This paper investigates corporate governance from a cross-country perspective and makes a comparison with Romania. There are studies that examine the corporate governance issues related to Romanian companies, but these studies provide only qualitative and descriptive accounts of the research topic, with limited cross-country analysis. The present paper complements the literature by producing a quantitative analysis of cross-country corporate governance and makes a comparison with Romania. For this purpose, a set of corporate governance indicators from a large sample of 39 advanced and developing countries was collected for the 2006–2020 period. In terms of corporate governance dimensions, it was found that Romania underperforms other developing countries in the dimensions of director liability and ownership and control, while it outperforms them in the dimensions of corporate transparency, disclosure, and shareholder rights. The results indicate that the stagnant corporate governance scores and the low development level of stock markets stand out as important business challenges for the country. The correlation and regression analyses show that stock market development is closely associated with corporate governance dimensions and, overall, corporate governance scores matter greatly for the economic growth of countries, such as Romania, which can benefit greatly from the improvement of corporate governance codes and practices in the private sector. Full article

This study examines the effect of foreign boards on corporate social responsibility, exploring the issues of two-tier board systems (boards of directors and boards of commissioners). Using data for manufacturing firms listed on the Indonesia Stock Exchange over the sample period of 2017–2019, the results suggest that a foreign board engages more in corporate social responsibility activities. Our key finding remains robust with respect to all foreign board measures (foreign ownership, foreign board members, foreign directors, foreign commissioners, foreign CEO, and foreign chairperson) and to alternative estimation methods, and pass a series of endogeneity checks. We established the causal effect from foreign boards to CSR, supporting institutional theory and contesting agency theory. Full article