Srikanth Potharla and Balachandram Amirishetty
This study aims to examine the significance of the non-linear relationship of board size and board independence on the financial performance of listed non-financial firms in India.
Abstract
Purpose
This study aims to examine the significance of the non-linear relationship of board size and board independence on the financial performance of listed non-financial firms in India.
Design/methodology/approach
The study draws the sample of the listed non-financial firm in the Indian market from the year 2011–2018 and applied panel least squares regression with and without industry fixed effects on the model with quadratic equation. Quantile regression is also used to test the robustness of the results. The financial performance is measured through one accounting measure (i.e. return on assets [ROA]) and one market-based measure (i.e. Tobin’s Q). The empirical model also controls firm-specific variables which are expected to have an impact on financial performance.
Findings
The study found that the relationship of board size and board independence with the financial performance of a firm is in a non-linear inverted U-shape. The results are qualitatively similar for both ROA and Tobin’s Q after controlling industry fixed effects.
Originality/value
This is the first study in India which tests the non-linear relationship of board size and board independence with the financial performance of the firm. The study contributes to the limited literature on the implications of board characteristics on the performance of the firms in India.
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The purpose of this paper is to examine if certain board characteristics have an impact on the financial performance of manufacturing firms in India.
Abstract
Purpose
The purpose of this paper is to examine if certain board characteristics have an impact on the financial performance of manufacturing firms in India.
Design/methodology/approach
The study draws on data from 275 firms listed in NSE during from 2011 to 2015, using a multiple regression model. The present study examines the effect of board characteristics such as board size, CEO duality, independence and board activity devoted to the effectiveness of firms performance regarding market and accounting based financial performance measures.
Findings
The finding supports an inverse association between the extent of board characteristics and the firms’ performance indicators. The study also finds a statistically significant negative relationship between board size and Tobins Q, ROA and ROE. The evidence also shows that the board independence and meeting frequency moderate the relationship between return on equity and return on assets by enhancing these measures among corporate governance mechanisms.
Research limitations/implications
The present study does not include all possible board characteristics, i.e., large shareholders dominance on the board and promoter’s and institutional shareholding, to support firm’s performance. Further research might include the ownership structure of the board to improve firm’s performance.
Originality/value
The study focuses on the corporate governance issues such as size, duality, independence and activity of the boards and their influence on firm performance. The subject analyzes the possible impact of board characteristics and firm-related features that have received much attention from academic research, which has largely focused on studying the publications of corporate governance in India and Asian context.
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Anuj Aggarwal, Sparsh Agarwal, Vedant Jaiswal and Poonam Sethi
Introduction: Historically, the corporate governance (CG) framework was designed primarily to safeguard the economic interests of shareholders, as a result of political and legal…
Abstract
Introduction: Historically, the corporate governance (CG) framework was designed primarily to safeguard the economic interests of shareholders, as a result of political and legal interventions, developing into an effective instrument for stakeholders and society in general.
Purpose: The core objectives of the study include: identifying journals/publications responsible for publishing CG studies in India, key CG issues covered by CG researchers, the amount of high-impact CG literature across different time periods, sectors/industries covered by CG researchers and different research instruments (quantitative or qualitative) used in CG studies in India.
Design/methodology: The chapter used a sample of 130 corporate governance studies that fulfil the selection criteria, drawn from the repository of over 100 reputed journals that are either recognised by the Australian Business Deans Council (ABDC) or indexed by SCOPUS. A systematic literature review has been carried out pertaining to CG issues in India, based on various statistical tools, data, industries, research outlets & citations, etc.
Findings: The results show an overwhelming number of studies have assessed the relationship between CG variables and firm performance, which could be measured through a variety of performance metrics such as ROA and ROI. Apart from empirical analysis, many conceptual studies use repetitive basic statistical tools like descriptive statistics or regression analysis. The chapter offers insights into current achievements and future development.
Originality/value: This bibliometric study is a useful guide for policymakers, corporate leaders, research organisations and management faculty to draw insights from work produced by eminent researchers in GC in India.
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The purpose of this study is to propose an analytical model that investigates both a direct path between corporate governance quality and earnings quality and an indirect path, in…
Abstract
Purpose
The purpose of this study is to propose an analytical model that investigates both a direct path between corporate governance quality and earnings quality and an indirect path, in which firms' performance is a mediating variable that is influenced by corporate governance quality and that, in turn, influences earnings quality.
Design/methodology/approach
The study employs a structural equation modelling (SEM), to a sample of Egyptian listed firms during 2011–2017, to test the proposed analytical model and to determine the relative importance of both the direct and indirect paths.
Findings
The findings show a statistically significant evidence of both a direct path from corporate governance quality to earnings quality, and an indirect path that is mediated by firms' performance, suggesting that both corporate governance quality and performance have a complementary effect on earnings quality. However, the weight of the evidence favouring the direct path is more important in case of accounting-based performance measures; and the weight of the evidence favouring the indirect path is more important in case of market-based performance measures.
Research limitations/implications
The current study has some limitations. First, the study focuses specifically on one proxy for measuring earnings quality which is the absolute value of discretionary accruals. Other proxies of earnings quality could be examined in future research, such as income smoothing, earnings persistence and timely loss recognition. Another limitation is that only financial performance measures were examined, namely, return on assets, return on equity, price-to-earnings ratio and market-to-book value. Notwithstanding, non-financial performance measures could be investigated in future studies, such as balanced scorecard (BSC). Furthermore, considering cultural, political and legislative differences among countries, the results may not be generalised outside the scope of the current sample (i.e. Egyptian listed firms).
Practical implications
The implications of the findings for both theory and practice are discussed.
Originality/value
This study is distinguished by validating an analytical model that has been overlooked by prior studies. Moreover, it provides a new constructed index for measuring corporate governance quality. Furthermore, it uses a new sophisticated statistical technique, which is SEM, for testing the proposed model.
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Maria Elisabete Neves, Adriana Santos, Catarina Proença and Carlos Pinho
The main goal of this paper is to study the influence of some corporate governance, corporate social responsibility (CSR), and corporate-specific characteristics on the…
Abstract
Purpose
The main goal of this paper is to study the influence of some corporate governance, corporate social responsibility (CSR), and corporate-specific characteristics on the performance of Iberian-listed companies.
Design/methodology/approach
To achieve the paper's aim, the authors have used data from 33 Portuguese-listed companies, and 60 Spanish-listed companies, for the period 2011 to 2018. To test the hypotheses, the authors employed the generalized method of moments (GMM) estimation method, developed by Arellano and Bover (1995) and Blundell and Bond (1998).
Findings
The results point out that the performance determinants vary depending on the country under analysis and the variable used to measure performance. Despite being neighbors and historically commercially close, these countries have differences in their governmental, social and economic structure that lead to different stakeholder perceptions on the determinants of corporate performance. Specifically, when the authors use Tobin's Q as a market performance variable, board independence and the existence of a CSR committee have different signs in the two countries. The same happens when return on assets (ROA) is used as an accounting variable for internal management, implying that both, managers and potential investors of the two countries have different understandings about the variables that influence their performance.
Originality/value
To the best of the authors' knowledge, this is the first study to comparatively analyze the two countries of the Iberian Peninsula, analyzing the effect of corporate governance and social responsibility characteristics on the performance. The authors' results show that managers and potential investors have different points of view regarding the importance of corporate governance and social responsibility characteristics in corporate performance.
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Deepika Bansal and Shveta Singh
The purpose of this study is to examine the impact of board structure on financial performance of Indian software companies. It is an empirical study carried out on 92 software…
Abstract
Purpose
The purpose of this study is to examine the impact of board structure on financial performance of Indian software companies. It is an empirical study carried out on 92 software companies from 2011 to 2018.
Design/methodology/approach
The board size, board independence, board meetings, CEO duality, audit, remuneration and nomination committee are used as board structure variables. Two accounting-based measures, return on assets (ROA), return on equity and one market-based measure Tobin's Q are used as a representative of financial performance of software companies. Panel regression is used to test the hypothesis.
Findings
Results demonstrates that board size, board meetings, remuneration and nomination committee have positive impact on more than one performance measures, while audit committee do not have any relation with any of the performance measures. It is also found that CEO duality has negative but significant relation with firm's performance and board independence has negative influence on ROA.
Practical implications
The findings of the study attract the attention of company's policymakers, shareholders to know the importance of board structure in increasing the firm's performance. The outcome of the study has relevance in other developing economies also. The results of the study can be utilised by policymakers and regulatory bodies in the formulation of good corporate government (CG) practices for the enhancement of profitability and market value of companies.
Originality/value
The findings suggest that special attention should be given to quality of CG, specifically board structure while measuring corporate financial performance.
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Maria Elisabete Neves, Catarina Proença and Beatriz Cancela
This paper aims to analyze the corporate governance and corporate social responsibility (CSR) determinants of the Portuguese listed companies’ performance, considering a different…
Abstract
Purpose
This paper aims to analyze the corporate governance and corporate social responsibility (CSR) determinants of the Portuguese listed companies’ performance, considering a different point of view by managers, shareholders and other external stakeholders and investors.
Design/methodology/approach
To achieve this aim, the authors have used a sample of 34 nonfinancial listed companies in Euronext Lisbon between 2015 and 2020. The authors use the panel data methodology to test the hypotheses formulated according to the literature review, specifically the generalized method of moments (GMM) system estimation model proposed by Arellano and Bond (1991).
Findings
The main results point out that the determinants of the corporate performance vary depending on the dependent variable considered. From the managers’ perspective, the existence of an audit committee and expenses with the environment increase costs and reduce results, negatively influencing corporate performance, but the company’s maturity adds synergies in resource management and positively influences performance. Shareholders consider that gender diversity and board independence positively influence performance, whereas, for external stakeholders and long-term investors, gender diversity and the social responsibility committee harm the performance of Portuguese companies. However, environmental and social expenditures have a positive effect, showing that the market’s perception is that, in the long run, it is essential to eradicate poverty and protect the environment.
Originality/value
To the best of the authors’ knowledge, this study is the first one to analyze corporate governance and CSR determinants on the performance of listed Portuguese companies. This study shows that in a small banking-oriented country, there is still a long way to go in terms of increasing social responsibility and governance among different stakeholders. It is essential to promote actions that lead to effective governance and awareness of social responsibility.
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Evaluating existing literature can lead to a better understanding of a scientific journal's state of the art. In this sense, this study aims to analyze the global research…
Abstract
Purpose
Evaluating existing literature can lead to a better understanding of a scientific journal's state of the art. In this sense, this study aims to analyze the global research evolution of the Revista Europea de Dirección y Economia de la Empresa (REDEE) and the European Journal of Management and Business Economics (EJMBE).
Design/methodology/approach
A bibliometric analysis was conducted to acknowledge the most contributing authors, impactful articles, publication trends, keyword analysis, co-occurrence networks and collaboration networks. A total of 454 articles published between 2006 and 2022 were analyzed.
Findings
The results suggest that the international strategy set in 2014 has resulted in a steadily growing number of publications and a significant increment in citations. Relationship marketing and the connections between innovation, performance and entrepreneurship are topics of interest for the EJMBE.
Originality/value
Mapping existing EJMBE research through identifying the contributing authors, most impactful articles, publication trends, keyword analysis, co-occurrence networks and collaboration networks is missing to encourage new research projects.
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Rexford Abaidoo and Elvis Kwame Agyapong
This study examines how specific micro-level macroeconomic indicators influence corporate performance volatility among US corporate bodies in the short run.
Abstract
Purpose
This study examines how specific micro-level macroeconomic indicators influence corporate performance volatility among US corporate bodies in the short run.
Design/methodology/approach
The study employs error correction autoregressive distributed lagged (ARDL) model (ECM) to examine how micro-level variables influence volatility associated with corporate performance in the short run.
Findings
This paper finds that disaggregated or micro-level variables examined, tend to exhibit features that are not readily apparent from the aggregate variable from which such variables are derived. For instance, reported empirical estimate suggests that, growth in expenditures on services and nondurable goods tend to lower volatility associated with corporate performance, whereas government expenditures and expenditures on durable goods rather worsens volatility associated with corporate performance, all things being equal. Additionally, presented empirical estimates further provide evidence suggesting that macroeconomic uncertainty and inflation uncertainty significantly moderate or influence the extent to which disaggregated variables impact corporate performance volatility.
Originality/value
Compared to related studies in the reviewed literature, this study rather examines volatility associated with corporate performance instead of the corporate performance indicator itself. Additionally, this paper also examines how disaggregated variable instead of aggregate variables impact such volatility. Finally, the moderating role of key macroeconomic conditions in such a relationship is also examined.
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Luis Antonio Orozco, Jose Vargas and Raquel Galindo-Dorado
The purpose of this paper is to investigate the relationship between board size (B-SIZE) and financial and reputational corporate performance in top companies ranked by the…
Abstract
Purpose
The purpose of this paper is to investigate the relationship between board size (B-SIZE) and financial and reputational corporate performance in top companies ranked by the Business Monitor of Corporate Reputation – MERCO in Colombia.
Design/methodology/approach
This paper conducts correlations and cluster analysis in order to classify firms based on performance and control variables, using a sectional sample of 84 large companies in Colombia over the period 2008-2012.
Findings
This research founds that large boards are associated with high performance on corporate reputation, as stated by the resource dependence theory, and a low-financial performance, as predicted by the agency theory. However, the results indicate that there is no relation between financial and reputational performance.
Research limitations/implications
This research considered only large companies listed by MERCO. Therefore, the results can only be generalized for top firms in Colombia according to this list. However, results add empirical evidence to theoretical debate between B-SIZE and firm performance considering financial and reputational indicators.
Practical implications
According to the OECD manual of good corporate governance practices, the optimal B-SIZE has between five to nine core members. The board structure has a direct impact over the firm’s financial and reputational performance and must be carefully analyzed by shareholders to balance the size according to expected results and firm’s features like family ownership, exportation activities and norms of stock markets.
Originality/value
This paper contributes to the existing literature on the relationship between B-SIZE and corporate performance with the evaluation of financial and reputational results for the case of an emerging economy. In Latin America, this analysis must go beyond OECD recommendations, and shall consider the context of an emerging country based on empirical evidence.