1,721,070 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
Why African stock markets should formally harmonise and integrate their operations
Full text linkDespite experiencing rapid growth in their number and size, existing evidence suggests that
African stock markets remain highly fragmented, small, illiquid and technologically weak,
severely affecting their informational efficiency. Therefore, this study attempts to empirically
ascertain whether African stock markets can improve their informational efficiency by formally
harmonising and integrating their operations. Employing parametric and non-parametric
variance-ratios tests on 8 African continent-wide and 8 individual national daily share price
indices from 1995 to 2011, we find that irrespective of the test employed, the returns of all the 8
African continent-wide indices investigated appear to have better normal distribution properties
compared with the 8 individual national share price indices examined. We also report evidence
of statistically significant weak form informational efficiency of the African continent-wide
share price indices over the individual national share price indices irrespective of the test statistic
used. Our results imply that formal harmonisation and integration of African stock markets may
improve their informational efficiency
Director shareownership and corporate performance in South Africa
Full text linkThis paper investigates the relationship between director shareownership and corporate performance in South Africa using a sample of 169 listed firms from 2002 to 2007. Our results suggest a statistically significant and positive association between director shareownership and corporate performance. By contrast, we find no evidence of a non-linear effect of director shareownership on corporate performance. Our findings are robust across a raft of econometric models that control for different types of endogeneity problems and corporate performance proxies. Overall, our results provide support for agency theory, which suggests that director shareownership can reduce agency problems by aligning more closely the interests of shareholders and corporate executives, and thereby improving corporate performance
Corporate ownership and market valuation in South Africa: uncovering the effects of shareholdings by different groups of corporate insiders and outsiders
No full textThis paper examines the connection between shareholdings by different groups of corporate officers (insiders and outsiders), and market valuation in South Africa. Specifically, and distinctively, we examine the effect of shareholdings by employees, chief executive officers, chief financial officers, other executive directors, and non-executive (outside) directors on market valuation. Consistent with past evidence, we find that total ownership by all corporate officers (insiders and outsiders) has a positive effect on market valuation. However, when we examine the link between ownership by individual groups of corporate officers (insiders and outsiders) and market valuation, our results suggest that firms with higher ownership by chief executive officers and other executive directors have lower market valuation, but we do not find any evidence that ownership by chief financial officers has any significant effect on market valuation, except when interacted with ownership by CEOs. In contrast, we find that ownership by employees and non-executive (outside) directors has a positive effect on market valuation. The central tenor of our evidence remains largely unchanged across a number of econometric models that sufficiently address different types of endogeneities and market valuation measures. Overall, our findings are generally consistent with the predictions of agency theory.Keywords: Corporate governance, Market valuation, Corporate officer ownership groups, Agency theory - Convergence-of-interests and entrenchment hypotheses, South Africa, Endogeneit
Board diversity and organizational valuation: Unravelling the effects of ethnicity and gender
No full textOrganizational boards of directors are one of the most important subgroups within most modern organizations, performing critical advisory, monitoring and resource dependence roles. This paper investigates the crucial question of whether the stock market values ethnic and gender diversity within organizational boards. 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. JEL classification: G30, G32, G34, G38Keywords: organizational governance, organizational valuation, board diversity, ethnicityand gender, endogeneit
Monitoring board committee structure and market valuation in large publicly listed South African corporations
Full text linkPurpose: We examine the association between the presence of monitoring board committees (i.e., audit, nomination, and remuneration) and market valuation in South Africa using a sample of 169 listed corporations from 2002 to 2007. Design/methodology/approach: We distinctively employ fixed-effects and two-stage least squares regressions to innovatively investigate the association between the presence of monitoring board committees and market valuation. Findings: We find a significant positive connection between the presence of monitoring board committees and market valuation, but only in corporations that have independent monitoring board committees and/or all three monitoring board committees that we have investigated simultaneously. This implies that the market values corporations with independent and/or the three monitoring board committees more highly. Our results provide empirical support for agency theory, which indicates that the presence of independent board committees increases the capacity of corporate boards to effectively advise, monitor and discipline top management, and thereby improving market valuation.Originality/value: There is an acute dearth of studies examining the connection between the presence of monitoring board committees and market valuation generally, but particularly in developing countries. Therefore, our evidence contributes to the literature by demonstrating how the presence of monitoring board committees affects market valuation in a major developing African country. Further, we distinctively employ a number of econometric models that adequately control for different types of endogeneity problems and market valuation proxies. Article type: Research paper<br/
Corporate governance, affirmative action and firm value in post-apartheid South Africa: a simultaneous equation approach
Full text linkThe post-Apartheid South African corporate governance (CG) model is a unique hybridisation of the traditional Anglo-American and Continental European-Asian CG models, distinctively requiring firms to explicitly comply with a number of affirmative action and stakeholder CG provisions, such as black economic empowerment, employment equity, environment, HIV/Aids, and health and safety. This paper examines the association between a composite CG index and firm value in this distinct corporate setting within a simultaneous equation framework. Using a sample of post-Apartheid South African listed corporations, and controlling for potential interdependencies among block ownership, board size, leverage, institutional ownership, firm value and a broad CG index, we find a significant positive association between a composite CG index and firm value. Further, our two-stage least squares results show that there is also a reverse association between our broad CG index and firm value, emphasising the need for future research to adequately control for potential interrelationships between possible alternative CG mechanisms and firm value. Distinct from prior studies, we find that compliance with affirmative action CG provisions impacts positively on firm value. Our results are consistent with agency, legitimacy, political cost, and resource dependence theoretical predictions. Our findings are robust across a number of econometric models that adequately control for different types of endogeneity problems, and alternative accounting, and market-based firm valuation proxies
Corporate governance, affirmative action and firm value in post-apartheid South Africa: a simultaneous equation approach
No full textThe post-Apartheid South African (SA) corporate governance (CG) model is a unique hybridisation of the traditional Anglo-American and Continental European-Asian CG models, distinctively requiring firms to explicitly comply with a number of affirmative action and stakeholder CG provisions, such as black economic empowerment, environment, and HIV/Aids. This paper examines the association between a composite CG index and firm value in this distinct corporate setting within a simultaneous equation framework. Using a sample of 169 post-Apartheid SA firms from 2002 to 2007, we find a significant positive association between a composite CG index and firm value. Distinct from prior studies, but consistent with political cost, legitimacy and resource dependence theories, we find that compliance with affirmative action CG provisions impacts positively on firm value. The results are robust across a number of econometric models that adequately control for different types of endogeneity problems, as well as alternative accounting and market-based firm valuation measures
Insider ownership and market valuation in South Africa: uncovering the effects of shareholdings by different groups of corporate insiders
No full textPurpose: This paper examines the connection between shareholdings by different groups of corporate insiders and market valuation in South Africa using a sample of 169 listed corporations from 2002 to 2007. Design/methodology/approach: We distinctively employ fixed-effects and two-stage least squares regressions to uniquely examine the effect of shareholdings by employees, chief executive officers, chief financial officers, other executive directors and non-executive directors on market valuation. Findings: We find that aggregate ownership by all corporate insiders have a positive effect on market valuation. However, when we examine the link between ownership by individual groups of corporate insiders and market valuation, our results suggest that firms with higher ownership by chief executive officers and other executive directors have lower market valuation, but we do not find any evidence that ownership by chief financial officers has any significant effect on market valuation. In contrast, we find that ownership by employees and non-executive directors has a positive effect on market valuation. Originality/value: Past studies have mostly examined the association between aggregate insider ownership and market valuation. By contrast, there is an acute dearth of evidence on how ownership by different insider groups influences market valuation. Our evidence contributes to the literature by providing evidence on how ownership by different insider groups affects market evaluation. We also innovatively apply a number of econometric models that sufficiently address different types of endogeneities and market valuation measures. Article type: Research paper<br/
Does the South African stock market values independent dual board leadership structure?
No full textWe examine the crucial policy question of whether the South African (SA) stock market values a dual board leadership structure (DBLS) using a sample of 169 listed firms from 2002 to 2007. We find a significant positive link between DBLS and market valuation, but only in firms with independent chairpersons, implying that the market values firms with independent DBLS more highly. Our results are robust across a number of econometric models that control for different types of market valuation proxies and endogeneity problems. Our findings offer empirical support for agency theory, which suggests that independent DBLS increases the capacity of the board to effectively advise, monitor and discipline top management, and thereby improving market valuation
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