Corporate governance in developing countries: a case study of Bangladesh

Following the large number of corporate collapses around the world and their profound impact on investors, most research on corporate governance has focused on the mature market situations of developed countries, such as the United States, the United Kingdom, Germany and Japan, investigating whether a control mechanism promotes accountability. Remarkably, there is a dearth of studies on corporate governance in developing countries, such as Bangladesh. Although, there is no serious corporate scandal in Bangladesh to undermine investors\u27 confidence, corporate governance issues have still been prevalent in Bangladesh for few reasons. For example, the existing corporate governance best practices are not comprehensive and adequate. There is no legislative guidelines for controlling share ownership, no legislative guidelines for the directors\u27 duties even legislative guidelines for the appointment of independent directors. Therefore, the company directors are sometimes found to be involved in malpractice and the firm level poor corporate governance practices was identified. This study aims at examining the relationship between various corporate governance mechanisms (such as, ownership structure, board practices, compensation and capital structure) and firm performance. While doing so, this study explains the alternative corporate governance models around the world and attempts to frame a theoretical model of corporate governance in Bangladesh. It is revealed that, similar to corporations in Germany, Japan and East Asia, the corporate control mechanisms in Bangladesh are mostly insider oriented; such as ownership structure and in general, the board of directors. Some of the important external control mechanisms, such as market for corporate control or takeovers are largely absent in Bangladesh corporate sector. Due to the absence of a liquid capital market some other dominant control mechanisms, such as compensation in the form of stock options, debt covenant and effects of dividend policy in corporate monitoring are also absent in Bangladesh corporate sector. However, similar to corporate boards in Anglo-American countries, there is the representation of the outside independent directors on the corporate boards in Bangladesh. Pursuant to the control mechanisms identified in this study, it is further investigated whether these control mechanisms influence the firm performance (promotes accountability) in Bangladesh. More specifically, by using 2-Stage Least Square (2SLS) regression analysis, this study investigated whether different control mechanisms, such as ownership structure, board practices, executive compensation and capital structure influence the firm economic performance in Bangladesh. The empirical findings suggest that firms with majority ownership by insiders are over performing than any other ownership group. A significant positive relationship is found between the blockholding by directors and/or managers and firm performance. However, no significant relationship is found between the institutional ownership and firm performance and outsider ownership and firm performance. It is further revealed that the firm performance enhances within a certain level of insider ownership, implying that a certain level of insider ownership is good for the overall health of the company. These findings suggest that the effective owners\u27 involvement in the firms may reduce the agency conflict and may enhance firm performance. The empirical findings of the relationship between board composition and firm performance suggests that the board composition in the form of proportion of outside independent directors can not influence the firm performance. The empirical finding of the relationship between CEO duality and firm performance suggests that the CEO duality does not influence the firm performance. The empirical findings of the relationship between the ownership structure, firm size and executive pay suggest that there is a significant positive relationship between ownership structure and executive pay; executive pay and firm size. However, there is no conclusive evidence of pay-performance sensitivity. The significant relationship between executive pay and firm performance is found only under the Tobin\u27s Q performance measure. The weak association between pay and performance suggests that executive compensation as a governance mechanism may not be suitable in the context of Bangladesh. This is probably due to the absence of a liquid capital market in Bangladesh. The empirical findings of the relationships between the capital structure and agency cost, and capital structure and firm performance suggest that capital structure can not reduce the agency cost. However, capital structure can influence the firm performance only under the market based performance measures. It implies that the lenders have very little role in firm governance in Bangladesh. Although this study supports the number of earlier studies, it could not provide the conclusive evidence on some important issues. The differences in the results from earlier studies suggest that corporate governance problem in Bangladesh may not be similar to that of other countries. The diversity of this study with the earlier studies implies that the \u27one size does not fit all\u27 or one set of governance arrangements maynot be suitable for every country. Based on both the theoretical discussions and empirical investigations, it is apparent that the corporate governance practices need to be improved in Bangladesh. Therefore, this study finally seeks to assist the regulatory body in framing and/or improving the corporate governance best practice/guidelines for Bangladeshi firms

Corporate governance and performance of small and medium sized enterprise (SME): evidence from Bangladesh

This study examines corporate governance mechanisms and firm performance of medium and small sized enterprises (SMEs) in Bangladesh. From an observation of 769 firm years it is found that there is a significant positive relationship between the following: largest block holding and firm performance; executives pay and firm performance; and debt ratio and firm performance under market based performance measure in Bangladeshi SMEs. . While it is found that there is a significant negative relationship between debt to equity ratio and firm performance under ROA performance measure. However, it is vindicated that there is no relationship between other corporate governance variables with firm performance of SMEs under any of the measures. The findings support mostly the principal-agency relationship instead that of the theory on stewardship principles. The findings imply that the underlying differences among SMEs give rise to a further consideration for good corporate governance practices. As well, the ramification of this study can be considered an extension to the literature on SMEs in the context of a less developed country

Carbon disclosure, carbon performance and financial performance: international evidence

This study examines how carbon performance affects carbon disclosure and how carbon disclosure affects financial performance. With a sample of global firms, the study analyses how relationships between carbon disclosure, carbon performance and financial performance vary in institutional contexts. Our results show that carbon disclosure positively affects carbon performance, consistent with the signalling theory. We find that carbon disclosure negatively (positively) affects financial performance in the short-term (long-term). Our findings have significant implications for investors as some firms use carbon disclosure as part of impression management. Our results help regulators to monitor carbon disclosure and assist investors with investment decisions

Improvement of temperature dependence of carrier characteristics of quantum dot solar cell using InN quantum dot

Improvements of temperature dependence of certain characteristics of quantum dot solar cell using InN as active material of the device structure has been reported in this paper. A numerical analysis of temperature dependence of different parametric characteristics related to carriers within a quantum dot solar cell has been carried out in this research work. Numerical analysis of these solar cell features have been performed using Group-III Nitride trios namely GaN, AlN and InN quantum dot as active layer material of solar cell structure. Among different parameters of quantum dot solar cell drift length and the diffusion length have been analyzed along with the power loss of the carriers to complete the whole process. In this present research work effect of temperature on the characteristics of these parameters has been analyzed using mathematical approach. Numerical results obtained are compared for preferential outcomes. It is revealed from the comparison results that only the drift length of the carrier has been increased but the diffusion length and the power loss of the carriers have been minimized using InN quantum dot in the active layer of solar cell. Hence InN is the auspicious material to fabricate solar cell in upcoming decades