An examination of the determinants of corporate ownership structure in an emerging market context / Omar Al Farooque

Using historical data, this study investigates the determinants of corporate ownership structure in an emerging economy in the context of two different but interactive policy directions (or reversal of policy) of market regulators. It also highlights the effectiveness of importing Anglo-Saxon governance models to emerging markets in the name of promoting ‘good corporate governance’. Based on established literature, a single equation approach is applied on a pooled sample of 490 observations listed on the Dhaka Stock Exchange over eight years to identify whether measures of corporate performance and other governance factors do contribute in shaping ownership structure. The findings indicate that while there is support for reducing board ownership level, there is no such support for reducing Top 1 shareholder’s ownership level. It suggests that the ownership restriction imposed by the SEC is unjustified and detrimental to firm performance/growth in emerging countries like Bangladesh. The study has implications for stakeholders, regulators and policy makers to revisit their attempts to limit the founder-family ownership holdings

Does Corporate Governance Have a Say on Dividends in Australian Listed Companies?

This paper investigates whether corporate governance has an impact on dividend policy in Australian listed firms. The empirical studies of corporate governance and dividend policy in the Australian context tend to have a limited scope and the findings are mixed. Unlike the existing literature, this paper provides a more comprehensive examination of the relationship between dividend policy and corporate governance mechanisms. Using a sample of 1,438 firm-year observations for the period of 2005 to 2011 and the panel data approach, this study finds that dividend payout is significantly positively (negatively) correlated with board size, board independence, institutional ownership and use of a Big-4 audit firm (CEO duality and managerial ownership). Moreover, dividend yield is significantly positively (negatively) correlated with managerial ownership (foreign ownership). These findings suggest that dividend policy and corporate governance mechanisms are complementary i.e. firms paying higher dividends are more likely to engage in good governance practices as well as having strong monitoring and control systems in place and therefore both dividend policy and corporate governance are considered as effective tools in reducing agency costs

Users\u27 information requirements and narrative reporting : the case of Iranian companies

This paper investigates whether the narrative section of Iranian companies\u27 annual reports satisfies the information requirements of financial analysts employed by institutional investors. Taking a group of stakeholders (i.e. financial analysts) as the sample, a questionnaire survey was conducted to identify their top three information needs from the narrative sections of company annual reports in each of three information categories: Present, Analytical and Prospective. Following this survey, a checklist was prepared to analyse whether Iranian companies are disclosing this information required by financial analysts. Overall, the results partially support stakeholder theory as there is a general lack of information flow on the part of Iranian listed companies in meeting their stakeholders\u27 information needs. <br /

On the relation between internal corporate governance and bank risk taking : evidence from Gulf Cooperative Council countries

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A Simultaneous Equations Approach to Analysing the Relation between Ownership Structure and Performance in Bangladesh

This paper models the managerial (board) ownership and financial performance relationship in Bangladesh using a simultaneous equations approach. This approach is deemed to be the most appropriate methodology to control for the potential endogenous relationship between managerial (board) ownership and performance. Consistent with recent literature employing this method of analysis in developed markets, we document a ‘reverseway’ causality of relationship between them in Bangladesh listed firms. Using an unbalanced/random pooled sample of 660 firmyears, our results suggest that board ownership does not have a significant impact on performance as measured by Tobin’s Q or Return on Assets (“ROA”). However, performance does appear to have a significant negative impact on board ownership. With few exceptions, other corporate governance and control variables have effects on performance and ownership consistent with both theoretical and empirical expectations. These results imply that despite huge institutional and governance differences between Bangladesh, an emerging market economy, and developed countries (US, UK, Japan, Germany) there is nevertheless similarity in governance mechanisms, in particular, ‘internal governance mechanisms’ and agency problems. Ke

National Governance Index, Corruption Index, and Growth Rate-International Evidence from Sub-Saharan and MENA Countries

In an international setting of developing countries, applying advanced statistical estimation approaches such as the system generalized method of moments (GMM), two-stage least square (2SLS) regressions, and cluster analysis, this paper revisits the impact of macro-level governance quality and the corruption index on the economic growth rate. We use cross-country panel data for 40 sub-Saharan and the Middle Eastern and North African (MENA) countries over the period of 2009–2020. The empirical results document the positive and negative effects of the national governance index and the corruption index on the economic growth rate. Additionally, foreign direct investment and population have a positive impact on the economic growth rate and trade openness has a negative impact. The study evaluates the robustness of these associations through a series of tests. These findings have important policy implications for policymakers and regulators in developing countries. In particular, the study recommends the implementation of an anti-corruption campaign and improving country-level governance quality that could encourage increased foreign direct investment for an accelerated economic growth rate. These will further enhance accountability, transparency, the rule of law, social responsibility, the public voice, and government effectiveness

CSR disclosure, corporate governance and firm value: a study on GCC Islamic banks

PurposeThis study aims to explore the corporate social responsibility disclosure (CSRD) practices of the Islamic banks in the Gulf Cooperation Council (GCC) countries during the period 2010-2014 and examines the determinants of CSRD and its effects on firm value.Design/methodology/approachBased on the Accounting and Auditing Organization for Islamic Financial Institutions Governance Standard No. 7 guidelines and using content analysis, the paper develops a comprehensive CSRD index for GCC Islamic banks. The study applies ordinary least squares regression analysis for hypothesis testing and for finding determinants of respective dependent variables.FindingsThe results show a very low level of CSRD among the sample Islamic banks in GCC countries. When using corporate governance characteristics to examine the determinants of CSRD, this study provides evidence of a significant positive association between board size and CSRD practice in Islamic banks and a significant negative relationship of chief executive officer (CEO) duality with CSRD, as per expectation. For the economic consequences of CSRD, the study documents an inverse performance effect of CSRD while board size, board composition and CEO duality indicate significant positive effects on firm value.Research limitations/implicationsThe relatively small sample size of GCC Islamic banks may limit the application of the findings to other Islamic financial institutions such as Takaful and the Islamic unit trust company.Practical implicationsThe findings of this study initiate the global debate on the need for corporate governance reform in Islamic banks by providing insights on the role played by corporate governance mechanisms in encouraging and enhancing CSRD practices among Islamic banks. The findings also have important implications for investors, managers, regulatory bodies, policymakers and Islamic banks in the GCC countries.Social implicationsThe results of the study do not support the idea that Islamic banks operating on Islamic principles can meet their social responsibilities through promoting corporate social responsibility (CSR) activities and by differentiating themselves from non-Islamic banks.Originality/valueThis is the first study to examine the determinants of CSRD in GCC Islamic banks using comprehensive CSRD and corporate governance variables and, therefore, adds value to the existing CSR literature in banking.<br

Impact of environmental information disclosure and real estate segments on cost of debt: Evidence from the Chinese real estate industry

The novel part of this paper is to examine the individual and joint effects of the real estate segments (RETs) and environmental information disclosure (EID) on the cost of debt (COD) in the real estate industry in China. Building on extant literature, using 1,250 firm‐year observations from 2006 to 2016 and applying both Feasible General Least Squares and Two‐stage Least Squares Instrumental Variable approaches, we provide evidence that the commercial RET leads to an increase in the COD, while EID leads to a decrease in the COD. The joint effects of the RETs and EID on the COD indicate a significantly positive relationship with the COD. This signifies that even with the increased levels of EID in commercial real estate sectors, its COD is higher than for residential real estate sectors. These findings have important policy implications for environmental risk assessments for real estate sectors, their lending institutions and wider stakeholder groups

The Relationship between facebook, religiosity and academic performance

Our study empirically examines the effect of student activities on Facebook and religion on academic performance. We extend prior research in this area in a number of ways. First, given the paucity of the research in this area particularly from the Asian context, we provide the evidence from developing country like Malaysia. Second, our sample drawn from Sultan Idris Education University in Malaysia, where graduates from these universities are unique since they are expected to be able to work in both education and industry environment, and presumed to play significant roles in shaping the development of future student’s intellectual at the Malaysian secondary school and Malaysian economy in general. Third, we control for religiosity aspect when examining the association between Facebook and academic performance, something that has been predominantly neglected by the prior studies. Fourth, unlike prior studies that circulating around the Christian sphere in measuring religiosity, we provide evidence from the Islamic perspective where the act of worships and practices are much more comprehensive rather than the Christian counterparts. Fifth, we examine whether Facebook activities and religiosity are complementary or substitutive each other in improving student’s academic performance. Our sample comprise of 60 undergraduates. Our result exhibit that students with high number of friends on Facebook and frequent engagement on Facebook activities, such as sharing links, send message, posting photo, tagging video as well as spending long hours on Facebook generally are associated with lower academic performance. Our results also reported that student’s engagement in religious activities promotes better academic performance. When we examine the potential interaction effect between Facebook and religiosity, our result revealed that religiosity is effective in reducing student’s interest on Facebook, hence lead to better academic achievement. In other words, religious student will be less interested in joining activities on Facebook and make them more perform than their counterparts. Our findings from this study should be able to assist the university management in shaping university policies and curriculum to regulate and manage student’s activities in order to enhance overall student’s quality. Moreover, the findings from this study are also of use to the policy maker such as Malaysian Communication and Multimedia Commissions to regulate the policy on the student’s access and activities on Facebook

The governance, risk-taking, and performance of Islamic banks

We examine whether the difference in governance structures influences the risk taking and performance of Islamic banks compared to conventional banks. Using a sample of 52 Islamic banks and 104 conventional banks in 14 countries for the period from 2005 to 2013, we conclude that the governance structure in Islamic banks plays a crucial role in risk taking as well as financial performance that is distinct from conventional banks. Particularly, we show that the governance structure in Islamic banks allows them to take higher risks and achieve better performance because of product complexities and transaction mechanisms. However, Islamic banks maintain a higher capitalization compared to conventional banks. These results support the research on Islamic investment and risk taking. Our results add a new dimension to the governance research that could be a valuable source of knowledge for policy makers and regulators in the financial services sector