Principal-principal conflicts: Is it a big problem in ASEAN 4 markets?

This paper examines the issue of principal-principal (PP) conflicts in large public listed companies in four ASEAN countries. The PP conflicts are regarded as a major problem in emerging markets and have attracted considerable attention. The percentage of cash dividend of total assets is used to measure the expropriation depicted in PP conflicts. A sample of companies with total assets of US$1 billion are filtered to select those with single/multiple block holders of shareholdings concentration equal to or greater than five percent. A regression model is estimated with PP conflicts as the dependent variable. The findings confirm the existence of PP conflicts, suggesting that large shareholders do expropriate company wealth by paying higher cash dividends. This expropriation occurs through agency perspective and makes it apparent that PP conflicts are a major problem in ASEAN markets

Board diversity and performance of microfinance institutions (MFIS): Evidence from an emerging economy

Microfinance Institutions (MFIs) are important service providers of finance for unbanked people and have experienced a high growth over the past decades. Alongside the staggering growth of microfinance around the world, there have been some serious complaints of unfair practices and low transparency in their affairs. Therefore, it is questionable whether microfinance contributes to a true reduction in worldwide poverty in the short or long terms. This study examines the corporate governance practices of microfinance institutions (MFIs) in India and their relationship with both financial performance and outreach for the period 2007 to 2012. Using unbalanced panel data for 575 firm-year observations, we report that the financial performance and outreach of Indian MFIs improves when they have international/donor representation on their board. Independent directors and client representatives on board perform favourably on financial performance but no impact on outreach. However, female directors on the board increases outreach to the poor people but decrease the financial performance. This study significantly contribute to a better understanding of board diversity of microfinance sector by providing empirical evidence from one of the dominant countries in South Asian region

Board structure, ownership structure and firm performance: A study of New Zealand listed-firms

This paper investigates the role of board structure and the effect of ownership structures on firm performance in New Zealand's listed firms. Several studies, the majority from the U.S., U.K. and Japan, have examined the relationship between corporate governance mechanisms, ownership structure and firm performance. Those studies yielded different results, affected by the nature of the prevailing governance system for each country. Investigating New Zealand's listed firms could enhance the diversity of the growing body of work that examines this relationship. Though the majority of studies only tested a linear relationship between variables, a number of studies have found a non-linear relationship between board structures, ownership structures and firm performance, and this study confirms the non-linear relationship. Using a balanced panel of 79 New Zealand listed firms, this study employs a Generalised Linear Model (GLM) for robustness. The result reveals that board of directors, board committees, and managerial ownership have a positive and significant impact on firm performance. Meanwhile, nonexecutive directors, female directors on the board and blockholder ownership lower New Zealand firm performance

An empirical investigation of agency costs and ownership structure in unlisted small businesses

The study uses panel data to investigate agency costs, both principal-agent (PA) and principal-principal (PP), in 240 small businesses not listed on the New Zealand Stock Exchange. Results show that both forms of agency cost vary according to industry, the life of the business and size. The results indicate that the degree of owner involvement in the business influences firm PA and PP agency costs. Moreover, this study finds non-linear relationship between agency costs and ownership structure align with convergence of interest hypothesis and managerial entrenchment hypothesis. It is noted that the distortion between equity returns and debt returns gives rise to a preference for quasi-equity and distorts the productive base and effective pricing of risk. The analysis indicates there is considerable variability in the burden of agency cost and that this raises the potential for regulatory and policy reforms that may enhance the productivity and growth in the sector

Corporate governance – Performance relationship in microfinance institutions (MFIs)

The relationship between governance and the performance of microfinance institutions (MFIs) is discussed in this paper. MFI performance encompasses both financial performance and outreach. Good governance in terms of strengthening stewardship, achievement of MFIs’ primary objectives and promoting further development of the industry have been asserted as key elements in the literature pertaining to MFI performance. Similarly, several cases concerning poor governance have been analysed. Good corporate governance has become more important due to the demand for transparency and accountability of funds utilised in microfinance activities. Further, MFIs need to have a solid governance framework to minimise the possibilities of management failures which may jeopardise the efficacious application of received funds from governments and donors. In prior studies, the nature of corporate governance practised by MFIs is less understood and no substantive work using multiple MFI outcomes over a number of years has been undertaken. The concerns raised in reviews of individual MFIs and normative discussions of what should constitute best practice do point to the need for better understanding of the nature of corporate governance practised by the MFIs and also, to understand the nature of the relationship that exists between institutional success and corporate governance especially for developing countries. This study therefore identifies and provides a framework for undertaking corporate governance research relating to MFIs

History and development of cooperative business in New Zealand: A case study of Allied Farmers Limited

Cooperatives have been a feature of New Zealand agricultural scene since late 19th century. Although cooperatives did arise in a greater degree in the agricultural sector in New Zealand, evidence show that it has been not too different to that found in other jurisdictions. Using a case study methodology, this study analyses the history and development of cooperative business and explores the establishment and demise of Allied Farmers Limited in New Zealand. Using agency-theoretical perspective and hubris it is argued that Allied Finance Limited’s expansion was of concern from the start and was most likely to cause financial crisis. The evidence supports the view that the managerial overconfidence was the key factors leading to the demise of Allied Farmers Company Limited

Sources of value in mergers and acquisitions

This study investigates sources of value in mergers and acquisitions. While much emphasis is put on operating synergies from acquisitions the evidence provided in this study shows that the difference between the WACCs of the combined firm and the merging firms may have a significant role on the value effect of mergers. These findings suggest that changes in the capital structure of the combined firm, compared to capital structures of the acquirer and the target, play a key role in determining the value of an acquisition. Moreover, findings of this study suggest that reducing the cost of capital of the combined firm, compared to the merging firms, is value creating even in the absence of operating synergies. Furthermore, this study shows that the component of value associated with the difference between the WACCs of the combined firm and the acquirer is mainly determined by leverage of the acquiring firm and the method of payment. While cash payment is value creating, high leverage of the acquirer prior to an acquisition can destroy value by raising the cost of capital of the firm. This is especially important to managers when they are planning an acquisition

Acquisition returns: Does industry matter?

Purpose – This paper aims to illuminate the issue of whether there is a significant difference between long-term abnormal return of acquirers across industries, and which industries achieve better returns. Design/methodology/approach – This paper investigates whether there is a significant difference between abnormal return of acquirers across industries. The impact of timing of the deal on the acquirer returns is also studied in this paper. In the regression analysis, we control for acquirer’s size along with a number of deal characteristics, such as method of payment, the mode of the acquisition, the diversifying nature of the deal and value of the deal, to examine whether the differences in acquirer returns across industries persist when these factors are taken into account. Findings – The results of the study propose discrepancy in acquirers’ long-term abnormal returns across industries. While a number of industries, such as petroleum and natural gas, insurance and machinery, experienced significantly positive abnormal performance, others like business services and medical equipment have demonstrated significantly negative long-term returns. Originality/value – This paper investigates the industry impact on performance of acquirers. The results of this research provide more comprehensive evidence from all of the industries that have been involved in mergers and acquisition deals during the period 1981-2007 so that the returns of different industries can be compared. Most importantly, the evidence rejects the equality of mean abnormal returns across industries at significant levels

Preliminary observations of muscle fibre cross sectional area of flexor digitorum brevis in cadaver feet with and without claw toes

<p>Abstract</p> <p>Background</p> <p>In order to facilitate normal gait, toes require to be in a rectus position during the propulsive phase. This requires a correct balance and sequence of activity of the intrinsic musculature of the feet. Alteration of this balance and sequence may lead to the development of claw toes. Atrophy of the lumbricals occurs in the development of claw toes, but it is not known if changes occur in any other intrinsic muscles, including flexor digitorum brevis. This study set out to investigate whether hypertrophic changes were evident in flexor digitorum brevis in feet with claw toes.</p> <p>Methods</p> <p>Four cadaver feet were investigated, two with rectus toes and two with claw toes. Flexor digitorum brevis was removed from each, and seven anatomically significant tissue sections from each muscle were routinely processed, cut and stained. One hundred and sixty muscle fibre cross sectional areas were measured from each section.</p> <p>Results</p> <p>The mean age of the donors was 81.5 years, and three of the four were female. Results showed that the cross sectional area of fibres from feet with claw toes was 417 μg²significantly greater (p < 0.01) than the cross sectional area of fibres from feet with rectus toes, which was 263 μg².</p> <p>Conclusions</p> <p>Although this study has several limitations, preliminary observations reveal that flexor digitorum brevis muscle fibre cross sectional area is significantly reduced in feet with claw toes. This would indicate a relationship between muscle fibre atrophy of flexor digitorum brevis and clawing of the lesser toes.</p