1,721,157 research outputs found
Corporate governance and performance in socially responsible corporations: New empirical insights from a neo-institutional framework
Full text linkResearch Question/Issue:This paper investigates the relationship between corporate governance (CG) and corporate social responsibility (CSR), and consequently, examines whether CG can positively moderate the association between corporate financial performance (CFP) and CSR.Research Findings/Insights:Using a sample of large listed corporations from 2002 to 2009, we find that, on average, better-governed corporations tend to pursue a more socially responsible agenda through increased CSR practices. We also find that a combination of CSR and CG practices has a stronger positive effect on CFP than CSR alone, implying that CG positively influences the CFP-CSR relationship. Our results are robust to controlling for different types of endogeneities, as well as alternative CFP, CG and CSR proxies.Theoretical/Academic Implications:The paper generally contributes to the literature on CG, CSR and CFP. Specifically, we make two main new contributions to the extant literature by drawing on new insights from an overarching neo-institutional framework. First, we show why and how better-governed corporations are more likely to pursue a more socially responsible agenda. Second, we provide evidence on why and how CG might strengthen the link between CFP and CSR.Practical/Policy Implications:Our findings have important implications for corporate regulators and policy-makers. Since our evidence suggests that better-governed corporations are more likely to be more socially responsible with a consequential positive effect on CFP, it provides corporate regulators, managers and policy-makers with a new impetus to develop a more explicit agenda of jointly pursuing CG and CSR reforms, instead of merely considering CSR as a peripheral component of CG or as an independent corporate activity.Keywords: Corporate Governance, Corporate Social Responsibility, Corporate Financial Performance, Neo-Institutional Theor
Black economic empowerment disclosures by South African listed corporations: The influence of ownership and board characteristics
No full textThis study investigates the extent to which South African (SA) listed corporations voluntarily disclose information on black economic empowerment (BEE) in their annual and sustainability reports and examines the possible motivations and resulting ownership and board factors influencing BEE disclosure behaviour. Using a sample of 75 listed corporations from 2003 to 2009 and a content analysis of BEE disclosures, our results suggest that the extent of BEE disclosures (word count) varies substantially among the sampled companies, but the disclosures have generally improved over the seven-year period. We also find that block ownership and institutional ownership are negatively associated with the extent of BEE disclosures, whereas government ownership, board diversity, board size and the percentage of non-executive directors are positively related to the extent of BEE disclosures. Our results are robust when controlling for conventional firm-level characteristics, such as cross-listing, firm size, profitability, gearing, growth and industry, as well as alternative disclosure proxies. We demonstrate that our results are consistent with agency, legitimacy, resource dependence and stakeholder theoretical predictions.<br/
Corporate Governance, Corporate Health Accounting and Firm Value: The Case of HIV/AIDS Disclosures in Sub-Saharan Africa
No full textSub-Saharan Africa (SSA) has the highest prevalence rate of HIV/AIDS in the world with negative effects on productivity, profitability, economic growth and development. The social responsibility role of public companies in contributing towards reducing the negative effects of HIV/AIDS is priceless. This paper investigates the impact of corporate governance (CG) on social and environmental accounting (SEA) with specific focus on corporate health accounting (CHA) and consequently, examines whether CG can moderate the link between CHA and firm value (FV) with particular focus on HIV/AIDS disclosures. First, employing one of the most extensive data on CG, CHA and FV from a sample of listed SSA companies to-date, our results suggest that companies that are better-governed tend to engage in increased CHA disclosures. Second, we find that the combined effect of CG and CHA on FV is stronger than CHA alone, meaning that the quality of firm-level CG moderates the link between CHA and FV. Our econometric specifications are robust to different traditional firm-level characteristics, endogeneities and alternative CG (corporate board and shareholding structure variables), FV and CHA proxies. We interpret our findings within a framework that attempts to combine Suchman’s (1995) legitimacy theoretical perspective with Ashforth and Gibbs’ (1990) substantive and symbolic legitimacy management strategies
Executive compensation, corporate governance and corporate performance: A simultaneous equation approach
No full textThis paper investigates the association between executive compensation and performance. It uniquely utilises a comprehensive set of corporate governance mechanisms within a three-stage least squares (3SLS) simultaneous equation framework. Results based on estimating a conventional single equation model indicate that the executive pay and performance sensitivity is relatively weak, whereas those based on estimating a 3SLS model generally suggest improved executive pay and performance sensitivity. Our findings highlight the need for future research to control for possible simultaneous interdependencies when estimating the executive pay and performance link. The findings are generally robust across a raft of econometric models that control for different types of endogeneities, executive pay and performance proxies.<br/
A simple best practice guide for making governance and risk management disclosures by governing boards and senior managers
No full textA central objective of the project, therefore, was to identify, develop and disseminate ‘best risk management and governance disclosure practice guide’ to be used not only within the UK HE sector, but also governors, councillors, senior managers and trustees of all types (e.g., private, public, sciences, humanities, religious, liberal, new, old, large and small) HEIs around the world. It is within this context that this simple and easy to use best practice guide or toolkit for making governance and risk management disclosures in HEIs has been prepared from the larger project report prepared for the LFHE entitled: “Governance and Risk Disclosure Practices in UK Higher Education Institutions in an Era of Austerity and Reform”. Both the governance and risk management framework presented were developed based on extensive review of best practice risk management and governance documents, related prior studies and actual or current practices of 117 UK HEIs over a six year period (i.e., 2009 to 2014 inclusive). Specifically, the study sought to: (i) develop and investigate the level of compliance with, and disclosure of, good recommendations contained in the HE risk management guidance documents relating to best risk management practices in UK HEIs; and (ii) develop and investigate the level of compliance with, and disclosure of, good recommendations contained in the HE good governance codes (guidance documents) relating to best governance practices in UK HEIs
Corporate Boards and Ownership Structure as Antecedents of Corporate Governance Disclosure in Saudi Arabian Publicly Listed Corporations
Full text linkWe investigate whether and to what extent publicly listed corporations voluntarily comply with and disclose recommended good corporate governance (CG) practices, and distinctively examine whether the observed cross-sectional differences in such CG disclosures can be explained by ownership and board mechanisms with specific focus on Saudi Arabia. Our results suggest that corporations with larger boards, a big-four auditor, higher government ownership, a CG committee and higher institutional ownership disclose considerably more than those that are not. By contrast, we find that an increase in block ownership significantly reduces CG disclosure. Our results are generally robust to a number of econometric models that control for different types of disclosure indices, firm-specific characteristics and firm-level fixed-effects. Our results have important implications for policy-makers, practitioners and regulatory authorities, especially those in developing countries across the globe
Governance and risk disclosure practices in UK higher education institutions in an era of austerity and reform
No full textThe aim of this project was to examine risk and governance disclosure practices in UK higher education institutions (HEIs) in a period of increased austerity and reform. Specifically, the project sought to investigate the extent to which UK HEIs voluntarily disclose information relating to their internal governance mechanisms and risk management in their annual/audit committee reports with the objective of identifying, developing and disseminating ‘best practice’ within the sector. Content analysis method was employed in collecting and analysing three main types of data from HEIs' annual/audit committee reports. First, a comprehensive weighted (i.e., scored from 0 to 6) best practice risk disclosure index, containing 127 risk items with three main sub-sections, consisting of: (i) financial; (ii) operational; and (iii) strategic risks, was developed based mainly on the HEFCE (2001a, b, 2005) good practice guides for risk management in HEIs. Second, a comprehensive unweighted (i.e., scored from 0 to 1) good governance disclosure index containing 100 governance items with five sub-sections, consisting of: (i) governors and governing boards; (ii) processes and structures; (iii) performance evaluation, remuneration and rewards; (iv) auditing, accounting and accountability; and (v) dialogue with stakeholders and social responsibility, was developed based on the 2009 and 2014 CUC, 2008 CUC audit handbook, and 2013 CSC Scottish good governance codes. Third, a wide range of governance data relating to governing boards, governing board committees, senior management teams and financial data relating to UK HEIs were collected. The entire population of 164 UK publicly funded HEIs were longitudinally sampled from 2009 to 2014. The full data required was obtained for 117 (71%) HEIs and therefore, were included in the final sample. The main findings are as follows:Overall, the level of transparency and disclosures relating to risk management practices by UK HEIs are relatively low (e.g., compared with similar sized for profit organisations), but the distribution varies widely, ranging from a minimum of 6.96% to a maximum of 31.76% with an average of 17.31%. •Of the three main types of risk items examined, disclosures relating to financial risk were highest, compared with operational and strategic risk disclosures. Specifically, the average UK HEI disclosed 30.83% of the financial risk items compared with 12.66% operational risk items and 16.91% strategic risk items.•Overall, and similar to the risk disclosures, the level of transparency and disclosures relating to governance practices by UK HEIs were relatively low (e.g., compared with similar sized for profit organisations), with the distribution equally varying widely, ranging from a minimum of 8.00% to a maximum of 75.00% with an average of 40.02%. •Of the five main types of governance mechanisms investigated, disclosures relating to the governors and governing boards were the highest, whilst those relating to performance evaluation, remuneration and rewards were the lowest. Specifically, the average UK HEI disclosed 52.65%, 49.67%, 40.07%, 31.52%, and 24.98% of the governance structures examined relating to governors and governing boards, auditing, accounting and accountability, dialogue with stakeholders and social responsibility, processes and structures, and performance evaluation, remuneration and rewards, respectively.•A positive finding is that a steady increasing pattern can be observed with respect to both disclosures relating to the risk items, and governance structures that were examined over time. For example, the average UK HEI’s level of good risk (governance) disclosures were 16.31% (37.37%), 16.63% (38.96%), 17.07% (39.66%), 17.47% (40.46%), 17.97% (41.14%) and 18.41% (42.51%), respectively, in 2009, 2010, 2011, 2012, 2013 and 2014, accounting for about 13 (14) percentage points increase over the six years investigated. These increasing patterns are also observable in the sub-indices. However, and on average, disclosures relating to governance mechanisms were higher than those relating to risk management practices.<br/
Location Advantages, Governance Quality, Stock Market Development and Firm Characteristics as Antecedents of African M&As
Full text linkThis study explores firm- and country-specific antecedents of African M&As. We use one of the largest datasets to-date consisting of 1,490 unique African firms (11,183 firm-year observations) from 1996 to 2012. Our results suggest that improvements in time-varying country-level factors, including location advantages (market size, human capital and efficiency opportunities), national governance quality, and stock market development are associated with an increase in the volume of M&A activity. Consistent with the resource-curse paradox, high resource endowments are not associated with increased levels of M&A. In support of the management inefficiency but contrary to the traditional firm size hypotheses, African targets are generally characterised by declining stock returns and accounting profitability but are more likely to be larger firms; suggesting the presence of information asymmetry concerns in their selection. Notwithstanding, we find evidence of heterogeneity across countries with inconsistent support for established target prediction hypotheses. A model which combines firm- and country- specific factors better explains observed variations in African M&A activity
Writing a positive empirical accounting and finance journal article using data from developing and emerging economies: reflections from selected African studies
No full textThere has been significant increase in the amount of empirical studies published in accounting and finance journals that use data exclusively sourced from developing and emerging economies in Africa, Asia, Eastern Europe, Middle East, South America and the Caribbean that employ positivist approaches, relying almost exclusively on quantitative research methods. Whilst this growth is commendable, a considerable number of such studies have been criticised for ‘blindly’ or ‘naively’ applying theories and approaches (‘naïve empiricism’) that are often more appropriate to developed economies contexts rather than the ones on developing and emerging economies. This tends to impair their distinctiveness, and consequently, their unique role in contributing to the broader extant debates within the positivist empirical accounting and finance literature. In this paper, I set out to briefly address some of the key issues that authors of such studies may take into account when conceiving, designing and executing their studies based largely on my personal reflections, efforts, experiences, insights and lessons learnt, including from other co-authors, colleagues, managers, mentors, supervisors and students over the years. Specifically, I argue that authors of such studies need to fully understand and carefully consider the unique contextual developmental issues, draw insights from appropriate theories, and employ suitable quantitative data and data analyses techniques in executing their studies. I hope that in doing so, that the distinctive contribution/s of such studies may be enhanced
Board diversity and organizational valuation in South Africa: unravelling the effects of ethnicity and gender
No full textOrganizational boards of directors are one of the most important subgroups within most modern organizations. This paper investigates the crucial policy question of whether the stock market values ethnic and gender diversity within South African organizational boards using a sample of 169 publicly listed organizations from 2002 to 2007. We find that board diversity is positively associated with market valuation. We distinctively demonstrate further that ethnic diversity is valued more highly by the stock market than gender diversity. By contrast, we do not find any evidence of a significant non-linear link between board diversity and market valuation. Our findings are robust across a number of econometric models that deal with different types of endogeneities and market valuation measures. Overall, our results are consistent with agency and resource dependence theoretical predictions. Keywords Organizational governance, organizational valuation, board diversity, ethnicity and gender, South Africa, endogeneityJEL Classification G30, G32, G34, G3
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