Ineffective corporate governance: Busyness of internal board monitoring committees

We examine whether the voluntary formation of a Risk Committee (RC) compromises the effectiveness of other monitoring duties carried out by the board members. We argue that adding more monitoring committees increases the board’s internal busyness, which reduces the effectiveness of monitoring by the Audit Committee (AC). Using a sample of financial firms over the period 2007 to 2011 from the Gulf Cooperation Countries (GCC), we find that voluntarily adopting a risk committee impairs the effectiveness of the audit committee, which in turn reduces financial reporting quality. Our findings suggest that multiple layers of monitoring capacity viz-a-viz the existence of both an audit and risk committee may weaken the quality of monitoring provided by the audit committee

Multiple directorships, family ownership and the board nomination committee: International evidence from the GCC

In this paper, we investigate the association between outside board directorships and family ownership concentration. Using a sample of 1091 firm-year observations of non-financial publicly listed firms from Gulf Cooperation Countries (GCC) during the 2005 to 2013 period, we find a positive association between family ownership and the number of outside directorships held by board members. This finding is consistent with the notion that family ownership reduces a board's monitoring capabilities. We also test whether the recent corporate governance reforms in GCC, which were designed to protect investors and minority shareholders, affect firms' incentives to establish a board nomination committee (NC). We find the existence of a board NC and the quality and characteristics of NC membership act to suppress the positive association between outside directorships and family ownership. Our results are robust to the use of alternative measures of outside directorships and family ownership and models that test for endogeneity. Overall, our results suggest that the institutional specificities of emerging economies such as those in the GCC can sustain high levels of multiple directorships, which could impair the quality of corporate governance

Dividend smoothing when firms distribute most of their earnings as dividends

Due to its distinctive institutional background, Oman offers a valuable opportunity to investigate the stability of the dividend policy. In Oman, (1) there are no taxes on dividends, (2) firms are highly levered mainly through bank loans, (3) there is a high concentration of stock ownership and (4) there is variability in cash dividend payments. These factors suggest a diminished role of dividend smoothing in Oman. Our results show that Omani financial firms have erratic dividend policies. These results are inconsistent with the predictions suggested by the relatively weak corporate governance, government ownership and dividend signalling

A novel insertion mutation in the cartilage-derived morphogenetic protein-1 (CDMP1) gene underlies Grebe-type chondrodysplasia in a consanguineous Pakistani family

<p>Abstract</p> <p>Background</p> <p>Grebe-type chondrodysplasia (GCD) is a rare autosomal recessive syndrome characterized by severe acromesomelic limb shortness with non-functional knob like fingers resembling toes. Mutations in the cartilage-derived morphogenetic protein 1 (<it>CDMP1</it>) gene cause Grebe-type chondrodysplasia.</p> <p>Methods</p> <p>Genotyping of six members of a Pakistani family with Grebe-type chondrodysplasia, including two affected and four unaffected individuals, was carried out by using polymorphic microsatellite markers, which are closely linked to <it>CDMP1 </it>locus on chromosome 20q11.22. To screen for a mutation in <it>CDMP1 </it>gene, all of its coding exons and splice junction sites were PCR amplified from genomic DNA of affected and unaffected individuals of the family and sequenced directly in an ABI Prism 310 automated DNA sequencer.</p> <p>Results</p> <p>Genotyping results showed linkage of the family to <it>CDMP1 </it>locus. Sequence analysis of the <it>CDMP1 </it>gene identified a novel four bases insertion mutation (1114insGAGT) in exon 2 of the gene causing frameshift and premature termination of the polypeptide.</p> <p>Conclusion</p> <p>We describe a 4 bp novel insertion mutation in <it>CDMP1 </it>gene in a Pakistani family with Grebe-type chondrodysplasia. Our findings extend the body of evidence that supports the importance of <it>CDMP1 </it>in the development of limbs.</p

One size fits all? High frequency trading, tick size changes and the implications for exchanges: market quality and market structure considerations

This paper offers a systematic review of the empirical literature on the implications of tick size changes for exchanges. Our focus is twofold: first, we are concerned with the market quality implications of a change in the minimum tick size. Second, we are interested in the implications of changes in the minimum tick size on market structure. We show that there is a large body of empirical literature that documents a decrease in transaction costs following a decrease in the minimum tick size. However, even though market liquidity increases, the incentive to provide market making activities decreases. We document a strong link between the minimum tick size regulations and the recent increase in high frequency trading activity. A smaller tick enhances the price discovery process. However, the question of how multiple tick size regimes affect market liquidity in a fragmented market remains to be answered. Finally, we identify topics for future research; we discuss the empirical literature on the minimum trade unit and the recent calls for a minimum resting time for quotes

Ruling Family Political Connections and Risk Reporting: Evidence from the GCC

© 2016 University of IllinoisThis study examines whether the presence of ruling family members on boards of directors influences the extent and the quality of risk reporting. Based on a sample of publicly listed financial firms of the Gulf Cooperation Council countries between 2007 and 2011, our regression results show that ruling family board members reduce the quality and extent of risk disclosures. Firms with ruling family board members also disclose significantly less during periods of financial distress and when they are subject to higher levels of risk. We find that risk reporting is negatively associated with the existence of a ruling family director acting as the board chairperson, negatively associated with increasing proportions of ruling family directors on the board, and negatively associated with increasing numbers of board members who are connected to ruling family directors. Our results suggest that politically connected directors seize private benefits at the expense of their firms' shareholders. Our regression results hold after a series of robustness checks that control for endogeneity and for alternative measures of ruling family membership

Dividend stability in a unique environment

© 2010, © Emerald Group Publishing Limited. Purpose – This paper aims to examine the stability of dividend policy using a unique data set. Design/methodology/approach – The paper is based on the Lintner model that is used to test the dividend smoothing behavior. The specific econometric method used for panel data is Tobit regression. Findings – The evidence shows that Omani firms adopt a policy of smoothing dividends. This stability of dividends does not support the predictions suggested by the high bank leverage, absence of taxes, and the variability of dividend payments in Oman. Research limitations/implications – This study highlights the need for further research in order to examine whether these results have any effect on dividend initiations and omissions in Oman. Practical implications – The findings of this study show that there are differences in dividend policies between the Omani companies and those in developed markets. Potential investors in the Omani market should be aware about these differences in making their investment decisions. Originality/value – This paper examines stability of dividend policy in a unique environment where firms distribute almost 100 percent of their profits in dividends, firms are highly levered mainly through bank loans, there are no taxes on dividends and capital gains, and there is variability in cash dividend payments. These factors suggest a diminished role of dividend stability in Oman. It is an empirical issue to examine whether this is indeed true. The authors are not aware of any other study on dividend stability using data with these unique factors

Market risk disclosures and corporate governance structure: Evidence from GCC financial firms

© 2017 Board of Trustees of the University of Illinois. In this study, we examine the relationship between corporate governance and the disclosure of market risk among financial firms from the Gulf Cooperation Council (GCC) region between 2007 and 2011. Using a comprehensive measure of the disclosure of market risk, our regression results suggest that the level of market risk disclosure is positively and significantly associated with the strength of a firm's corporate governance structure. Economically, the regression coefficient implies that a 3.25% increase in market risk disclosures is associated with a one standard deviation change in the strength of corporate governance. In addition, when we decompose our corporate governance index into its constituent items, we find that directors' independence and the dual roles of the CEO and chairman of the board reduce the extent and quality of market risk disclosures. Our results are robust to alternative specifications and endogeneity tests

Market risk disclosures, corporate governance structure and political connections: evidence from GCC firms

This paper investigates the joint effect of political connections, in the form of the royal family member on board, and corporate governance on the market risk disclosures of the Gulf Cooperation Council (GCC) financial firms from 2007 to 2011. Previous research suggest that politically connected firms reduce the level of transparency in the GCC. However, we find that better corporate governance improves transparency and can be used as an effective tool in curbing the potentially adverse impact of politically connected board members on firms’ transparency. Our results have important implications for policy makers and can be generalized to other emerging markets

Investment Committee Characteristics and Investment Efficiency

This study investigates the association between existence of a board investment committee and that committee’s characteristics and corporate investment efficiency. Using a sample of industrial firms from six Gulf Cooperation Council (GCC) countries over the 2005–2013 period, we find that the existence of an investment committee reduces both under- and over-investment by these firms. We also find that financial expertise of committee members positively affects firms’ investment efficiency. These findings are consistent with the assertion that a board investment committee assists with the monitoring and control of firms’ investments. We also find that the existence of an investment committee is likely to reduce over- and under-investment in firms with high levels of foreign ownership concentration. The tenets of agency theory suggest that the existence of an investment committee aligns a firm’s investment activities with the objective of shareholder wealth maximization. These results are robust to a battery of additional tests that use alternative measures of investment efficiency and tests relating to self-selection bias and endogeneity