Sustainable corporate governance and gender diversity on corporate boards: evidence from COVID-19

The unprecedented challenges caused by the COVID-19 pandemic have led to a need to re-examine sustainable corporate governance practices. Within this context, the current study investigates the moderated effect of gender-diverse corporate boards on sustainable corporate governance practices in Malaysian financial and non-financial firms during the period 2011–2020, employing the dynamic estimator (S-GMM). During the COVID-19 pandemic, a negative relationship between ownership constructs and Global Reporting Initiative (GRI) indicators is observed in non-financial firms, whereas the opposite is reported for financial firms. Moreover, the moderated effect of gender-diverse boards is only substantiated in financial firms. The findings reveal that sustainable corporate governance is practised in financial firms but not in non-financial firms. Particularly, we draw significant implications for policymakers and regulatory bodies of Malaysia to carefully monitor the implementation of sustainable corporate governance given uncertain circumstances of COVID-19 pandemic. Further, our study is beneficial for academics, practitioners, and research scholars for their future research endeavours

Assessing the governance mechanisms, corporate social responsibility and performance: The moderating effect of board independence

This article serves two purposes. First, it attempts to examine the joint impact of corporate governance mechanisms and corporate social responsibility (CSR) practice on firm performance. Second, the moderating role of board independence is investigated on 588 non-financial Malaysian firms listed on Bursa Malaysia during the period 2006–2017. Both accounting-based return on assets (ROA) and market-based (Tobin’s Q) performance measures have been used for measuring performance. Dynamic model using Generalized Method of Moments (GMM) has been employed on the data set to control for potential endogeneity, reverse causality and dynamic heterogeneity. Findings indicate that ROA is a better determinant of firm performance than Tobin’s Q, where ownership concentration, managerial ownership and money spent on CSR negatively affect ROA; however, an insignificant relationship is observed with Tobin’s Q. Finally, board independence negatively moderates governance-CSR and firm performance relationship. Findings of this article have implications for Bursa Malaysia and Securities Commission Malaysia to reset the limit of independent directors on board so that their unnecessary interference in operations of management may be avoided. Furthermore, companies need to reassess their CSR strategies whether they are spending on CSR activities or hiding their financial malfeasance in the name of money spent on CSR

The interaction effect of independent boards on corporate governance-corporate social responsibility (CG-CSR) and performance nexus

The financial crises over the past two decades were identified as the main reason for the economic collapse. Malaysia suffered the same fate when many organisations crumpled from inappropriate compliance of governance mechanisms and corporate social responsibility (CSR) disclosure practices. Given this condition, this study intends to examine the effects of governance mechanisms and CSR practice on firm performance and the moderating effect of board independence is investigated on corporate governance-CSR (CG-CSR) and performance nexus of 588 Malaysian companies listed on Bursa Malaysia between 2006 and 2017. Both accounting-based (ROA) and market-based (Tobin’s Q) performance measures have been used for measuring performance. Dynamic model using Generalized Method of Moments (GMM) has been employed on the dataset to control for potential endogeneity, reverse causality, and dynamic heterogeneity. Findings indicate that ownership concentration negatively affects ROA; chief executive officer (CEO) duality positively affects ROA and negatively affects Tobin’s Q. Moreover, investment on CSR is negatively related to both performance measures. Finally, board independence negatively moderates the CG mechanisms, CSR practice, and performance relationship. Findings of the study have implications for Bursa Malaysia and Securities Commission Malaysia to reset the limit of independent directors on board so that their unnecessary interference in operations of management may be avoided. Furthermore, companies need to reassess their CSR strategies whether they are spending on CSR activities or hiding their financial malfeasance in the name of investment on CSR

The dynamic impact of board composition on CSR practices and their mutual effect on organizational returns

Purpose – The purpose of this paper is twofold. First, it aims to investigate the dynamic impact of board composition (board size, board independence and board diversity) on independent corporate social responsibility (CSR) practices (marketplace, environment, community and workplace). Second, it tends to examine the mutual effect of board composition and CSR practices on organizational returns (return on assets and Tobin’s Q) of 631 Malaysian PLCs listed on Bursa Malaysia during 2006-2017. Design/methodology/approach – The dynamic model (system GMM) provided by Arellano and Bond (1991) and Arellano and Bover (1995) is used for estimations that control for potential dynamic endogeneity, reverse causality, unobserved heterogeneity and simultaneity problems. Findings – Findings reveal weak linkage between board composition and CSR practices where only board diversity is found to be positively linked to marketplace practices of CSR. Further, the mutual impact of board composition and CSR practices on organizational returns suggests board size be positive and board independence to be negative with Tobin’s Q. Board diversity is negative with ROA and positive with Tobin’s Q. Conversely, CSR practices indicate marketplace practices are positive and community practices are negative with Tobin’s Q, environment practices are insignificant with performance, whereas workplace practices are positive with ROA and negative with Tobin’s Q. Practical implications – This research is practically considerable for Bursa Malaysia, Securities Commission Malaysia, policymakers, stakeholders, investors and managers. For academia, the theoretical linkages between agency theory, resource dependence theory, resource-based view and stakeholder theory are highlighted. Moreover, methodological underpinnings are also novel for academicians as well as for practitioners. Originality/value – The paper uncovers multiple aspects: first, it elaborates the dynamic relationship between board composition and CSR practices; second, it examines the combined effect of board composition and CSR practices on company’s accounting and market gains; finally, the study controls for dynamic endogeneity that is the main econometric problem for CG-CSR-performance relationships

Legitimising the role of corporate boards and corporate social responsibility on the performance of Malaysian listed companies

The prime objective of this study is to investigate the legitimate role of corporate boards and corporate social responsibility on the performance of Malaysian listed companies during 2006–2017. Elements of corporate boards include board size, board independence and board diversity, whereas corporate social responsibility (CSR) dimensions constitute marketplace, environment, community and workplace. Both accounting-based (return on assets [ROA], return on equity [ROE]) and market-based (earnings per share [EPS]) performance measures have been employed for measuring performance. Pooled ordinary least squares method (OLS) and multiple regressions are used to estimate the dataset. Findings reveal larger board size and higher board independence positively affect firm performance and significantly legitimise the board role in firms. However, the presence of women on Malaysian corporate boards does not legitimate the performance due to their lower percentage on board, hence insignificantly affecting firm value. Additionally, out of four CSR dimensions, only marketplace is positively and significantly related to EPS and negatively and significantly related to ROA. Conversely, environment, community and workplace are insignificantly related to all performance measures, leaving firms in a questionable legitimate state. This study embraces support from agency theory,resource dependence theory, legitimacy theory and stakeholder theory. However, this research raises questionable insights for regulatory bodies and academicians in the form of corporate legitimacy

Sustainable banking regulations pre and during coronavirus outbreak: the moderating role of financial stability

With the worldwide dispersion of COVID-19, banking sector, among others, needs to adapt to unexpected challenges. For this purpose, this study examines the impact of sustainable banking regulations on bank-specific characteristics pre and during COVID19 period in Pakistan for the period spanning from 2006 to 2020. Moreover, financial stability is employed to test its moderating role on sustainable banking regulations. The dynamic estimator, named the system-Generalized Method of Moments, is used to analyze the endogenous nature of the data. Findings suggest that capital adequacy ratio, deposit ratio, and loan ratio are positive whereas leverage ratios are negatively related to profitability and market return. Overall, findings reveal that sustainable banking regulations influenced the bank-specific characteristics substantially. Importantly, the year-wise averages of variables reveal that Pakistani banks have made significant improvements in profitability, market return, capital adequacy, and deposit ratio pre and during pandemic era. Additionally, the financial stability significantly moderates the relationship highlighting lower default risk and the effectiveness of sustainable banking operations. Practically, despite global lockdowns, economic and trade restrictions during COVID-19, State Bank of Pakistan, sustained health of banking sector through its well-regulated monitoring mechanism

The joint impact of corporate governance mechanisms and corporate social responsibility practices on the performance of Malaysian listed companies

The financial crises over the past two decades revealed severe shortcomings in corporate governance (CG) mechanisms and corporate social responsibility (CSR) practices globally. Malaysia also suffered the same fate when many organizations experienced weak compliance of CG codes and CSR practices. Given this condition, this study investigated the joint impact of CG mechanisms and CSR practices on the performance of Malaysian listed companies representing 5501 firm-year observations for the period 2006-2017. Furthermore, this study examined the moderating effect of board characteristics on the relationship between CG-CSR and performance relationship. Dynamic panel regressions were utilized assuming that CG-CSR and performance relationships are encountered with dynamic endogeneity and reverse causality; thus, system-GMM provides efficient solutions for such econometric problems. The findings reveal that CG and CSR, mainly, have value destroying impacts on firm performance such that CEO duality, directors’ remunerations, RMC independence, board diversity, environment, community, and workplace practices of CSR negatively and significantly affect firm performance consistent with agency theory predictions and agency cost argument. Contrarily, RMC size, RMC meetings, and marketplace practices of CSR positively determine firm performance parallel with resource dependence theory and the risk management perspective of CSR. Moreover, firm size positively, and leverage negatively affect firm performance. Additionally, ownership structure variables, CEO remuneration, board size, board independence, and money spent on CSR do not affect performance. Besides, an insignificant moderating effect of board characteristics is observed on the CG-CSR and performance relationship. Not with standing sound theoretical support, practically, the findings imply that despite continuous amendments in the Malaysian Code of Corporate Governance (MCCG), an effective monitoring mechanism is required to assess the compliance of the Code and CSR framework provided by the Securities Commission Malaysia and Bursa Malaysia. Thus, Malaysian listed companies should ensure compliance with the Code and CSR framework to attain better performance

Gender and mutual fund liquidity

We examine whether the female-managed U.S. mutual funds have higher portfolio liquidity than their male counterparts. Single female managers’ holdings are 8% to 25% more liquid than those of single male managed funds. When there is a transition from male to female manager, fund holdings liquidity increases compared to a male-to-male transition fund. The findings are consistent with the risk-averse and conservation decision-making behavior of female managers. We do not find evidence to support the excessive trading hypothesis that predicts higher portfolio liquidity of overconfident male fund managers. Our findings add to growing evidence that gender affects professionals’ investment choices

What abates environmental efficiency in African economies? Exploring the influence of infrastructure, industrialization, and innovation

The study investigates the impact of infrastructure, industrialization, and innovation in improving environmental efficiency in Africa toward addressing the pressing needs for environmental sustainability in the region. The study employed both Data Envelopment Analysis (DEA) and Driscoll & Kraay methods to data collected for 19 African countries from 2000 to 2019. The results show a negative and significant relationship between infrastructure, industrialization, and innovation and the environmental efficiency in selected countries. Furthermore, our findings indicate that growth and energy demand have both positive and negative effects on these relationships. This paper has important policy implications, and we conclude that policies aiming at the development of both infrastructure and industry should consider the use of green technology to ensure sustainable development and environmental protection

Systemic risk contagion of green and Islamic markets with conventional markets

Financial markets are exposed to extreme uncertain circumstances escalating their tail risk. Sustainable, religious, and conventional markets represent three different markets with various characteristics. Motivated with this, the current study measures the tail connectedness between sustainable, religious, and conventional investments by employing a neural network quantile regression approach from December 1, 2008 to May 10, 2021. The neural network recognized religious and conventional investments with maximum exposure to tail risk following the crisis periods reflecting strong diversification benefits of sustainable assets. The Systematic Network Risk Index spots Global Financial Crisis, European Debt Crisis, and COVID-19 pandemic as intensive events yielding high tail risk. The Systematic Fragility Index ranks the stock market in the pre-COVID period and Islamic stocks during the COVID sample as the most susceptible markets. Conversely, the Systematic Hazard Index nominates Islamic stocks as the chief risk contributor in the system. Given these, we portray various implications for policymakers, regulatory bodies, investors, financial market participants, and portfolio managers to diversify their risk using sustainable/green investments