77 research outputs found
Does family ownership matter in executive pay design?
No full textThe purpose of this study is to analyse the level and structure of executive compensation of family and non-family businesses and if minority shareholders are expropriated by family businesses in the Australian context using excessive pay. Studies on compensation practices of family businesses are limited to the European and North American contexts. This study, for the first time, considers the Australian context, which is unique with its transparent compensation disclosures, and a principle-based corporate governance framework to examine the level of compensation as well as the association between pay and performance
Gender diversity of directors and financial performance: is there a business case?
No full textPurpose – Do women contribute to performance of companies on which they serve as board of directors? Many prior studies examine this issue, but no consensus is reached on the benefits of women taking on leadership positions. The present study considers this thorny issue from a slightly different perspective. Does the association between gender diversity and business performance vary across sectors and economic cycles? Design/methodology/approach – The sample for this study was derived from the firms included in the S&P Australian Securities Exchange (ASX) 300 Index, and the study period of 2004–2016 allowed authors to consider the effects of different sectors as well as different economic cycles on the relationship between gender diversity of boards and business performance. The authors consider the Australian context, which is somewhat unique from the other Western countries, as quotas on boards of directors are not made mandatory and the corporate governance practices are principle-based rather than rule-based. Findings – Employing panel data models, at the aggregate level, the authors find no evidence of board gender diversity impacting business performance. Consideration of sectoral differences and economic cycles in the empirical analyses yielded additional insights. In particular, gender diversity has a beneficial association with performance for businesses in the services and financial sectors after the changes to corporate governance guidelines relating to diversity in 2010. These economic benefits, however, are not evidenced in the resources sector. Research limitations/implications – These findings offer support for critical mass and resource dependence theories. Practical implications – The findings of this study have implications for inclusion and diversity policies of businesses and the society. Specifically, the findings offer support for gender diversity of corporate boards of directors. Originality/value – This study highlights that women bring their unique skills and experiences to create economic value in sectors where they traditionally have more experience and opportunities
Executive compensation among Australian mining and non-mining firms: Risk taking, long and short-term incentives
No full textHow firms determine the pay of their executive employees is a vital research area. In the Australian context, mining firms form a large portion of listed companies. These miners tend to have more volatile earnings, operate with less certainty and higher risk in relation to capital investment. We look at a sample of ASX listed miners and non-miners from 2005 to 2013. We note that miners pay their CEOs less (AUD 1 m vs AUD 1.5 m for non-miners) overall. However, we also note that miners tend to use enhanced contingent long-term remuneration arrangements to significantly boost the pay-performance relationship compared to non-miners particularly during the pre-GFC period. Curiously, non-miners tend to have more generous short-term contingent arrangements linking executive pay and performance. The GFC, as an event, has adversely impacted these arrangements, lessening the generosity of pay-performance among miners, while enhancing these arrangements among non-miners. Overall, the results of the study provide support for optimal contracting theory and do not generally support the managerial power approach for both mining and non-mining firms
Corporate governance ratings and the dividend payout decisions of Australian corporate firms
No full textPurpose - The purpose of this paper is to examine the influence of corporate governance on the dividend payout decisions of Australian firms by considering two related objectives. First, it considers the role of corporate governance ratings (CGRs) on the decision to pay or not to pay dividends. Second, it considers the influence of CGRs on the average dividend payout level of Australian firms. Design/methodology/approach - The sample consists of 413 non-financial firms included in the All Ordinaries Index for the period 2004-2009. A logit model is employed to analyse the decision to pay or omit dividends. Similarly, tobit method is employed to analyse the factors influencing the dividend payout level of Australian firms. To control for unobserved heterogeneity, this study employs random effects panel logit and panel tobit models. Findings - This study finds that CGRs have a significant positive influence on the decision to pay dividends and on the average dividend payout level of Australian firms. Similarly, the present study finds support for signalling hypothesis as profitability has a significant positive influence and a loss dummy has a significant negative influence on the dividend payout decisions of Australian firms. The study also finds support for the life cycle hypothesis as growth opportunities have a significant negative impact on the average dividend payout level of Australian firms. This study finds no conclusive evidence of the existence of dividend tax clientele in Australia. Research limitations/implications - Dividends provide a complementary governance role consistent with the "outcomes model" of the agency cost theory as proposed by La Port et al. (2000). Practical implications - The findings have implications for corporate governance policies. Principle-based governance mechanisms work as well as the rule-based governance mechanisms in an environment characterized by high levels of investor protection and well-developed stock markets. Companies that are well governed may limit the opportunities for managers to expropriate shareholders and thus governance may reduce the contracting costs associated with compensation policies. Originality/value - This is the first study that examines the influence of governance on dividend policy using the CGRs developed by the WHK Horwath/University of Newcastle. Findings are robust and account for unobserved heterogeneity as random effects panel models are employed
Capital Structure Determinants: Malaysian Evidence
No full textThe present study analyses the capital structure choice of Malaysian firms for the period 1993 - 2003. Debt levels have increased substantially after the 1997 East Asian Financial Crisis. Analysis shows that tangibility has no significant influence on leverage in both pre-crisis and post-crisis periods. This finding contradicts the findings of earlier studies. Similarly profitability does not appear to have any influence on leverage during both pre-crisis and post-crisis periods. Size has significant negative influence on leverage in both pre and post crisis periods. One plausible reason could be that investors have more information about large companies and are willing to supply equity to these firms as suggested by information based theories of capital structure. Growth as expected has significant negative influence on leverage in both periods. This is consistent with information based theories of capital structure that suggest that growth firms face more uncertainty compared to stable mature firms and may therefore choose to have less leverage. Tax-based explanations of capital structure suggest that presence of non-debt tax shields obviates the need for leverage. However, analysis shows that NDTS has positive impact on leverage in both periods thus rendering tax-based explanations untenable in the Malaysian context. Liquidity has significant negative influence during the pre-crisis period while it has no significant influence during the post-crisis period. Volatility has significant influence on leverage though the degree of influence appears to be small in both periods. Stock price performance has negative influence on leverage in both periods indicating possible equity offerings rather than debt offerings as firms may be timing their equity issues. Thus there is support for information based explanations of capital structure
Loss and dividend changes: analysis of Indian firms
No full textThe present study examines the influence of losses on dividend changes of selected Indian firms over the period 1990–2001. The test of signalling hypothesis reinforces the earlier findings that dividend omissions have information content about future earnings. However, analysis of other non-extreme dividend events such as dividend reductions and non-reductions shows that current losses are an important determinant of dividend reductions for firms with an established track record and that the incidence of dividend reduction is much more severe in the case of Indian firms compared to that of firms traded on the NYSE. Further, dividend changes appear to signal contemporaneous and lagged earnings performance rather than the future earnings performance
Seasoned Capital Offerings: Earnings Management and Long-Run Operating Performance of Indian Firms
No full text
Corporate Governance, Cash holdings and Value of a Firm: Evidence from Australian Firms
No full textThe present study analyses influence of board structure and cash holdings on the value of Australian firms for the period 2004 to 2010. Australian Stock Exchange (ASX) adopted the Principles of Good Corporate Governance Guidelines in 2003 and Australian firms have started adopting these principles starting 2004. Similarly the reporting framework of Australian firms is harmonized with the rest of the world with adoption of Australian International Financial Reporting Standards (AIFRS) starting in 2004. Corporate cash holdings despite their significance have not been considered extensively in prior literature outside the US. Cash holdings may have significant influence on the value of the firm as too much excess cash may lead to misuse of these funds by entrenched managers. Corporate governance has a role to play in maintaining appropriate cash holdings and their use. The present has two objectives: it considers the influence of corporate cash holdings on the value of Australian firms; and it examines the role of board structure on the relationship between cash holdings and value of the firm. The present study considers all non-financial firms that are part of the All Ordinaries Index (AOI). The present study constructs Fama French 25 portfolio and estimate the excess return as the difference between actual return and the average return of the relevant FF portfolio. OLS analyses show that board independence has no significant impact on the value of the firm though cash holdings have significant influence. Analysing using panel data methods however unearth the significant influence of board independence on the value of Australian firms
Management of stock exchanges: Automation and demutualisation
No full textDevelopments in information technology have truly revolutionised the activities of stock exchanges all around the world. Their scope of activities appears to have been limited to providing effective order processing and matching mechanisms. However, new services have emerged, in the form of clearing corporations and depository services, which have been entrusted with the responsibility of managing clearing and settlement functions. Stock exchanges have widened their reach with automation and this has certainly helped in reducing order fragmentation. Contemporary stock exchanges can now rightly focus on provision of fair trading and investor education services. However, this calls for significant investment in infrastructure specifically investment in information and communication technology. The need for resources has pushed stock exchanges to reorganise themselves as 'for profit' organisations. The demutualised stock exchanges have realised benefits of separation of ownership and membership and have harnessed financing flexibility, necessary for responding to evolving knowledge economy
- …
