An Empirical Analysis of Director Turnover in US Banks During the Financial Crisis

We examine the impact of bank risk-taking and performance on the director labor market outcomes of 3,263 bank directors associated with 279 publicly listed US banks during the financial crisis and subsequently. We find that risk-taking before the financial crisis increases the likelihood of turnover during the financial crisis for bank directors, particularly if the bank does not perform well relative to its peers. Consistent with the evidence for directors of non-financial firms, we find that directors of banks that performed relatively well during the financial crisis were less likely to experience turnover on the bank board. Surprisingly, the directors leaving the board before turning 70 years of age held fewer committee assignments, were less busy, had smaller networks, were less likely to be independent, and with larger banks and boards. Overall, we find evidence of bank performance influencing director turnover during and after the financial crisis

The Impact of Board Structure on Firm Performance: Evidence from the Nonfinancial Companies Listed on Ghana Stock Exchange

The authors are thankful to the National Science Foundation of China (71371087) for the financial support. Abstract The fundamental aim of this study is to examine the relationship that exit between board structure and firm performance of non-financial Ghanaian listed companies. In order to achieve the objectives of the study, unique data were collected from a sample of 28 non-financial  companies covering five financial year periods 2012-2017 was used and thereafter analysis done within panel data framework/multiple linear regression framework. The variables such as CEO duality, CEO tenure, board size, board composition and its independence were considered as predictors of the firm performance that was measured employing accounting based performance measures such as the return on assets (ROA), return on equity (ROE) and EPS. I found board size to have a positively significant relationship with firm performance. Keywords: Corporate governance, Board composition, Block holder, CEO-duality, Firm performance DOI: 10.7176/RJFA/10-6-12 Publication date:March 31st 201

Overconfidence and the Timing of Share Repurchases

This paper investigates the efficiency of open market repurchases across managerial confidence types and finds that moderately confident managers repurchase shares at relatively lower prices than overconfident managers and do so at prices that are closer to the quarterly low stock price. Additionally, it analyzes bid-ask spreads to investigate whether or not the market perceives repurchases to be wellformed and signaling undervaluation. The results suggest that repurchases by moderately confident managers are informed attempts to time the market, while repurchases by overconfident managers are either ill-informed or made for other reasons

CEO horizon problem and characteristics of board of directors and compensation committee

Extant research finds inconclusive evidence about the CEO horizon problem. One possible explanation is that board of directors, especially compensation committees, intervene to mitigate the CEO horizon problem. In this study, we examine whether the characteristics of board of directors and compensation committee affect their effectiveness in mitigating the CEO horizon problem. We find that retiring CEOs are more likely to reduce R&D expenditures when CEOs have more power, and director tenure is longer; retiring CEOs in firms with large board of directors and compensation committee are less likely to manage accruals.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/163492/1/jcaf22446.pdfhttp://deepblue.lib.umich.edu/bitstream/2027.42/163492/2/jcaf22446_am.pd

Non-executive directorship importance and takeover hostility: Australian evidence

This study investigates the importance of the target firm directorship to target firm non-executive directors during takeovers. Using Australian data and a size-based measure of directorship importance, we find a positive association between takeover hostility and directorship importance after controlling for takeover premiums and target firm size. Further analysis reveals that directorship importance leads to a greater likelihood of offer price revisions following initial rejection of a takeover bid, but not the likelihood of bid success. Our findings are consistent with target firm non-executive directors exhibiting self-serving behaviour at directorships which they consider more important to their reputation

The role of an individual’s immigrant background in outcomes in the director and CEO labour markets

University of Technology Sydney. Faculty of Business.This thesis explores the impact of individuals’ immigrant backgrounds on their careers in the Australian director and CEO labour markets. Prior literature that has examined directors’ and CEOs’ demographic attributes is largely silent on the effect of an immigrant status on career outcomes in the boardroom and in the labour market for executives. This thesis first documents a negative impact of a director’s immigrant background on the likelihood of serving in board leadership roles. This effect is reduced, however, in the presence of other board members with the same ethnicity as the immigrant director. Second, this thesis finds a negative association between a CEO’s immigrant background and their compensation. Third, there is a negative association between a director’s immigrant background and the number of outside board seats held in future periods, regardless of the incidence of negative events. In addition, the thesis shows that immigrant directors are held more accountable for reductions of dividends and poor firm financial performance, as they are more likely to leave the board of the dividend-cutting firm and less likely to increase the number of outside directorships following poor financial performance. Finally, the thesis shows that the presence of immigrant directors on the board has no impact on the effectiveness of board monitoring

Audit quality and earnings management by listed firms in Nigeria

PURPOSE: We herein investigate the effect of quality of audit on management of earnings in Nigerian listed firms by (i) ascertaining the effect of audit quality on discretionary accruals, (ii) determining the effect of audit quality on earnings smoothing, as well as (iii) establishing the effect of audit quality on earnings per share.METHODOLOGY: The study follows an ex-post facto research design. It draws data from the annual reports of 10 firms. These consisted of five financial and five non-financial firms, purposively selected for a period of 10 years (2010-2019). Descriptive and inferential analyses were employed in data analyses.FINDINGS: The findings indicate that audit quality significantly affected earnings smoothing. Moreover, audit quality did not significantly affect discretionary accruals and earnings per share. Furthermore, it is recommended that management of firms should put in place policies for predicting earnings (in profit) to help forecast future earnings, which can be achieved by audit quality.ORIGINALITY/VALUE: This study is meant to raise awareness on the need to improve the financial statement/reporting practices of publicly listed companies with respect to earnings management; discretionary accrual, earnings smoothing and earnings per share. It is hoped that the forwarded recommendations support the competent authorities in addressing the identified existing issues, thus enabling them to enhance the financial reporting practices and render them improved vehicles for development in publicly listed companies.peer-reviewe

THE IMPACT OF HUMAN AND SOCIAL CAPITAL ON PREDICTING BANKRUPTCY

The ability to predict corporate bankruptcy is critically important to investors, creditors, borrowing organizations and governments alike. Bankruptcy occurs when an organization is unable to afford its financial obligations or pay its creditors. While research has illustrated the role of financial ratios on predicting bankruptcy, social factors are largely not considered an effective element. In this paper, I investigate the social and human capital determinants of bankruptcy and explore them as new avenues for enhancing predictive power. Specifically, this study develops new models for predicting bankruptcy based on non-financial factors. The two social variables that I examine are (1) networking ability as a proxy of social capital and (2) the power of managers based on their education as a proxy of human capital. I also added to the Altman’s and Zmijewski’s models with two categorizes of financial variables, the first of which includes five that are financially based on the Altman model, and second three that are financially based on the Zmijewski model by industry and year fixed effect. The results demonstrated a significant and negative relationship between social and human capital and bankrupt companies, the most financial ratios of Altman and Zmijewski are also significant. The results are confirmed using Logistic regression, Cox Proportional Hazard Model and Neural Network.Business Administration/Financ

The role of corporate governance and dividend policy as an alignment mechanisms to CEO compensation and firm's performance

Public perception of CEO compensation is evidently unfair as inefficient compensation structures that violate the rights of shareholders result in principal-agent problems. In order to mitigate this issue, theorists argued that executive compensation should be aligned with firm performance. Owing to the prevalence of agency conflicts in Pakistan, this study investigated the effect of firm performance and characteristics on CEO compensation in the capital market of Pakistan. Furthermore, consistent with prior theoretical arguments, this study examined the role of dividend policy and corporate governance as moderators to ensure their effect on pay-performance link. After data cleaning, this study utilized 284 Pakistani- listed companies (PSX) over the period 2010 to 2014. The findings from Multiple Linear regression showed that CEO compensation is positively aligned to operating performance, market performance, firm size and market share, however, no empirical evidence was found regarding the effect of growth opportunities on CEO compensation. The findings also indicated that family owners align their CEO‘s compensation with operating performance, institutional owners with market performance and firm size, and foreign investors with market share. Thus, these ownership structures play vital roles in mitigating agency conflicts in an organization. It was also revealed that optimal board size could strengthen the pay-performance link. On the other hand, CEO duality and dividend policy could distort the pay-performance link. Contrary to theoretical arguments, dividend policy cannot act as a substitute control device in the absence of strong corporate governance. The role of independent directors as an alignment mechanism to operating performance and CEO compensation is evident but due to their lower level of representation on the board, they have no influence over other accounting and market- based performance metrics. The study provides various theoretical and practical implications to improve corporate governance and compensation practices especially in the perspective of Pakistan

Two’s a Crowd? Implications of Economic Geography for Corporate Governance

Although literature on corporate governance and economic geography often explores similar constructs, theories, and other matters, little work has been done examining their joint effects. This two-essay dissertation integrates these literatures in order to partially fill this gap by asking the following research questions: 1.) Do geographic proximity and multiple directorships function as substitutes or complements? 2.) How is the governance of highly innovative firms affected by the presence of Marshallian externalities? While some scholars suggest that multiple directorships lead to board members neglecting their advisory and monitoring obligations, others have embraced the idea that holding multiple board seats can benefit both the firm and the director. The nature of the relationship between multiple directorships and a variety of firm outcomes has remained the subject of theoretical debates, and findings are often contradictory. Essay 1 offers a possible explanation for these issues by incorporating the geographically bounded nature of multiple directorships in an analysis of their effects on firm acquisition activity. Results offer support for a positive contribution to acquisition performance, with that relationship becoming stronger as geographic distance between the target and acquirer increases. My findings suggest that multiple directorships and geographic distance are complements, but substitutes when they overlap with one another. Essay 2 reexamines the relationship between corporate governance at the board level and innovation, examining whether and how agglomeration economies influence these relationships. Using a sample drawn from the semiconductor industry, I demonstrate that while firms within an agglomeration configure their governance in a manner consistent with agency theoretic predictions, more remote firms do the opposite. Thus, this essay extends prior research by incorporating agglomeration theory into governance, and specifically exploring the ways in which Marshallian externalities affect intra-firm safeguards against opportunism