International Journal of Corporate Governance (7 papers in press)
Does Corporate Governance Influence the Working Capital Management of firms: Evidence from India
by Punam Prasad, Narayanasamy Sivasankaran, Palanisamy Saravanan, Manoharan Kannadhasan
Abstract: The study explores the impact of corporate governance on the working capital management of the Indian firms. The research question was investigated using panel data procedures for a sample of 126 Indian firms listed in the Bombay Stock Exchange for the period 2007-2014. A composite corporate governance score was developed and regressed with the proxies for working capital management. We have used ordinary least square (OLS), random effects and fixed effects panel model. Findings of our study indicate that corporate governance plays a definite role in improving the working capital management. The results indicate that the board efficiency indicators have an effect on the working capital management of the Indian firms. The composite corporate governance score results show that it plays a significant and positive role on working capital liquidity decisions. The results of the study will help the practitioners, investors, and analysts to better understand the relation between effective corporate governance practices and working capital management that enables them to make better and informed decisions. Our findings have implications for board efficiency in the quest for improving working capital management of firms. The study limits the generalization of the findings since the data is pooled across all industries.
Keywords: Corporate Governance; Working Capital Management; Bombay Stock exchanges; Liquidity; Indian firms.
Corporate Governance in India- Battle of Stakes
by Neeti Shikha, Rishika Mishra
Abstract: Most of the business conglomerates in India are family-run entities who govern the company, even from a back seat. The promoters, who are in most corporate scenarios also the majority shareholders, rule the roost. The minority shareholders and the board are held hostage to the formers powers. This paper explores the role of promoters in corporate governance in India through two recent corporate debacles of Tata Sons and Infosys that have brought to fore many glaring questions and harsh realities of our governance systems including the role of promoters and independent directors viz a viz the minority shareholders and separation of powers between the promoters and the board. The paper discusses efficacy of legal framework in this regard, and suggest fresh regulatory measures that could catalyze the process of effective governance.
Keywords: Promoters; SEBI; Infosys; Tata; Corporate Governance; Minority Shareholders.
Disclosures of Unethical Practices: Framework for the Promotion of Whistle-blowing in Nigerias Corporate Governance
by Jirinwayo Odinkonigbo, Uchechukwu Nwoke, Ndubuisi Nwafor
Abstract: Modern corporations are governed by policies established in conformity with legislation in the countries where they operate. Nevertheless, certain corporate decisions are oftentimes left to dishonest officials who engage in different kinds of unethical practices. One method of exposing immoral activities in corporations is through whistle-blowing. This paper, using the critical theory framework, evaluates the concept of whistle-blowing and how it can be used to prevent corporate misconducts in Nigeria. While the concept encourages ethical practices and helps in improving internal efficiency in corporations, its use in Nigeria is virtually non-existent. The paper argues that this is attributable to the absence of a comprehensive legislation on whistle-blowing, coupled with the dearth of strong institutions to protect whistleblowers. It suggests that Nigeria needs a comprehensive legal and institutional framework for the regulation of whistle-blowing, if it must enjoy the benefits derivable from it.
Keywords: Corporate Governance; Corporations; Legal Framework; Nigeria; Unethical Practices; Whistle-blowing.
The Nexus between Effective Corporate Monitoring and CEO Compensation
by Anam Tasawar, Mian Sajid Nazir
Abstract: Managerial compensation to top executives, particularly to CEO, has remained a topic of continuing interest in corporate finance literature. Corporations are required to pay a handsome amount to attract and motivate competent business executives to get their jobs done in a befitting manner. Accordingly, executives try to grab higher level of compensation for themselves which might be at the cost of harming firm value and shareholders interests. In this context, various governing mechanism have been introduced to effectively monitor this opportunistic behavior of executives. In this context, current study empirically evaluates the impact of different corporate governance monitoring mechanisms such as institutional shareholders ownership and activism, independence of boards and audit committees, and presence of blockholders in company on level of compensation paid to CEO. The results revealed that more independent board and audit committee members meeting more frequently are helpful in mitigating the higher level of CEO compensation. Moreover, higher financial institutional ownership found positively related to CEO compensation which is in accordance with strategic alliance hypothesis between managers and sponsoring financial institutions.
Keywords: CEO compensation; corporate monitoring; institutional shareholders’ activism; board independence; audit structure.
Influence of Female Board Members on Financial Performance of Listed Companies
in New Zealand
by Greg Clydesdale, Baiding Hu
Abstract: Governments in many countries are under pressure to introduce quotas for women on corporate boards. This paper explores the rationale for quotas, including efficiency and equity arguments. To study efficiency, a qualitative analysis is made of the financial performance of listed companies in New Zealand. This paper finds the efficiency argument is not supported, but then considers the equity argument with a qualitative analysis to determine what factors should be considered in determining equity. This paper makes an important contribution in that it considers both the efficiency and equity arguments. Very little theoretical or empirical work exists on the equity debate, yet it has implications for determining the need for quotas and their size. Quotas for women on boards have been advocated for a number of reasons, however, this paper suggests more empirical research is needed to support it. There is very little literature on what actually constitutes an equitable quota.
Keywords: Board of Directors; Equity; Corporate Governance; Women.
Fair Value Hierarchy in Financial Instruments Disclosure - Do Audit Committee and Internal Audit Matter?
by Lakshi Devi Doorgakunt
Abstract: Purpose This paper investigates the influence of audit committee and internal audit on fair value hierarchy in financial instruments disclosure under the amendments made in March 2009 to IFRS 7 in Mauritius.
Design/methodology/approach Specific data on fair value hierarchy were hand collected from the annual reports of the top 30 listed companies for the period 2010 to 2013. A disclosure index is constructed, and the impact of audit committee and internal audit investigated.
Findings - Banks and insurance companies still need to improve the disclosure of fair value hierarchy (particularly level 3 hierarchies) by 20-25%. The existence of audit committee and the competence of its member(s) are statistically significant whereas its independence is moderately significant. The presence of internal audit function is a positive but moderately significant determinant whereas independence and competence are positively related but not significant.
Research implications/limitations This paper informs regulator(s), practicing accountants/auditors and professional associations on the effective influence of audit committee and internal audit on disclosure practices of fair value hierarchy in financial instruments.
Originality/value - There is no past study which has investigated amended disclosure requirement(s) on fair value in financial instruments in emerging economies.
Keywords: Amended IFRS 7; Disclosure; Fair Value Hierarchy; Mauritius.
Does Dividend Payout Policy Matter for Firm Performance in India?
by Naliniprava Tripathy
Abstract: The present study determined the dividend behavior and firm performance before and after financial crisis period by using Lintners dividend policy model from the year 2000 to 2016. The findings of the study showed that after the crisis, firms are behaving conservatively. The study also indicated that investors are expecting consistent dividends from the firms during post crises period in comparison to the per-crisis period. The study postulated that dividend behavior of the Indian companies is sensitive to the changes in earnings. The study elucidated that dividend policy is relevant for firm performance and upsurge shareholder value.
Keywords: Dividend; Earnings; Payout policy.