Changing governance mechanisms and its impact on Australian Building Societies' performance

This paper examines the relation between the governance mechanism (ownership structure) and performance of Australian building societies. Financial performance measures, provided by financial ratios of the major mutual building societies in Australia are used to explore their behaviour under different governance structures in the 1980s and 1990s. The theoretical and empirical literature has suggested that mutual deposit-taking institutions should have lower profitability and higher operating expenses than their publicly listed counterparts. Accounting ratios are observed over time to investigate if governance change in mutual deposit-taking organizations accounted for any discernable differences in profitability and cost efficiency pre- and postdemutualisation.

On the adoption of family-to-business governance mechanisms in Australian family businesses

This study seeks to identify the adoption of certain family-to-business governance mechanisms and whether the presence of these mechanisms assists family businesses with governance matters.

Corporate governance developments in commonwealth countries

Corporate failures, fraud and rising salaries have directed attention towards the corporate governance mechanisms of companies. A review of governance developments in selected Commonwealth countries is undertaken in order to inform the governance debate and provide an opportunity to discuss governance relating to some countries which may not receive much attention in the debate. The countries covered in this review are the United Kingdom, South Africa, India and Australia. Brief coverage of the respective countries' progressions in the corporate governance debate is provided.

The proposed goodwill impairment test - implications for preparers, auditors and corporate governance

Accounting for goodwill is again controversial as Australia adopts international accounting standards from 1 January 2005. The current method of accounting for goodwill will change dramatically as detailed in the AASB's E0109 and IASB's E03. Goodwill acquired in a business combination will no longer be amortised but rather goodwill will be tested for impairment annually (E03, para 54). This paper explores the potential impact of the proposed changes to goodwill accounting for preparers, auditors and those involved with corporate governance. We compare and discuss the current goodwill treatment and the proposed treatment of goodwill, demonstrating the advantages and complexities of the proposed treatment for preparers and auditors. Auditors will be required in many instances to use their professional judgment and rely on managements' abilities and integrity as well as sound corporate governance mechanisms (such as audit committees) in auditing the 'fair' valuation of goodwill and associated transactions. This paper raises the issues and challenges that preparers, independent auditors and those involved in corporate governance will face with the introduction of the new treatment for goodwill accounting.

Perceptions of corporate boards about standards of corporate governance in Thailand

The aim in this study is to discover the nature and extent of corporate governance in listed companies in Thailand. This includes a consideration of theoretical underpinning for amendments made to the western models of corporate governance that have been implemented by Thai listed companies, and of the effect of corporate governance principles on financial information, including financial reports, used by stakeholders in Thai listed companies. The results in this study show that after the Asian financial crisis corporate governance in Thailand improved especially in enforcement and disclosure, and outside/independent directors and professional organisations are playing leading roles in that process. Better corporate governance has resulted from improved internal corporate governance mechanisms and enhanced accounting standards, information disclosure, and auditing standards. New and up-dated rules, new and revised laws, and increased regulation are in the forefront of improved corporate governance. Process-related activities like monitoring, supervising, enforcing, and higher awareness have increased. Moreover, corporate governance practices are now in the spotlight throughout the financial and investment markets.

Corporate governance and corporate social responsibility disclosures : evidence from an emerging economy

We examine the relationship between corporate governance and the extent of corporate social responsibility (CSR) disclosures in the annual reports of Bangladeshi companies. A legitimacy theory framework is adopted to understand the extent to which corporate governance characteristics, such as managerial ownership, public ownership, foreign ownership, board independence, CEO duality and presence of audit committee influence organisational response to various stakeholder groups. Our results suggest that although CSR disclosures generally have a negative association with managerial ownership, such relationship becomes significant and positive for export-oriented industries. We also find public ownership, foreign ownership, board independence and presence of audit committee to have positive significant impacts on CSR disclosures. However, we fail to find any significant impact of CEO duality. Thus, our results suggest that pressures exerted by external stakeholder groups and corporate governance mechanisms involving independent outsiders may allay some concerns relating to family influence on CSR disclosure practices. Overall, our study implies that corporate governance attributes play a vital role in ensuring organisational legitimacy through CSR disclosures. The findings of our study should be of interest to regulators and policy makers in countries which share similar corporate ownership and regulatory structures.

Corporate governance and bank performance: evidence from Bangladesh

This study investigates the relationship between the corporate governance structure and performance of listed banks in Bangladesh. We find that board independence and board size have a significant positive impact on performance. However, female directors appear to have no impact on performance. Our evidence indicates that the extent of the managerial ownership level has a significant negative impact on bank performance. These results suggest that better corporate governance mechanisms are imperative for every banking company and should be encouraged for the interest of the investors and other stakeholders.

Corporate governance and corporate finance practices in a Kuwait Stock Exchange market listed firm: a survey to confront theory with practice

Purpose– This paper aims to explore the issue of corporate governance mechanisms by including the importance of stakeholders, primary objectives of the firm and the ownership of top financial managers of listed firms in Kuwait in the survey tool. It attempts to investigate whether theory aligns with the behaviour of financial managers in practice in an emerging market case.Design/methodology/approach– A survey was developed to focus primarily on the current corporate finance practices implemented by CFOs in listed companies in Kuwait. The target respondents are listed firms in the Kuwaiti Stock Exchange (KSE). The survey includes questions on topics that are closely related to capital budgeting, capital structure, cost of capital and dividend policy. For example, the survey asks the managers how they estimate their cost of equity (CAPM or other methods) and whether the impact of the weighted average cost of equity is taken into consideration in their capital structure choices.Findings– A surprising number of firms are now widely using IRR for decision making. CAPM is also in use, whereas WACC remains the most popular method used. There is some support for the “bird‐in‐hand” dividend theory in the tax‐free environment. Firms in Kuwait do not have any particular source of capital structure choices when it comes to how best to finance their projects as is the case in the US market. Firms in Kuwait are consciously striving for maximizing profits and those managers are regarded as their most important stakeholders. This may indicate the existence of agency problems.Research limitations/implications– The limitation of this study lies in the absence of empirical investigation on how corporate finance decisions may affect firms' performance in Kuwait. Hence, empirical validation will be performed by the authors in the next stage of this research, which will form the basis for further research. Empirical validation for the impact of corporate governance on performance is needed.Practical implications– This research may benefit managers and decision makers in many aspects, including having an understanding of applying popular and the most suitable corporate finance and corporate governance techniques in the management of their companies. In this research, the authors have identified the gap between practice and academia.Originality/value– To the best of the authors' knowledge, this is the first study to examine comprehensively major areas of financial policies and practices and corporate governance in an emerging market case, especially in the Middle East. Kuwait provides a unique institutional setting in its taxation system. Therefore, this study will make a contribution to the general literature in this field.

Intellectual capital disclosures and corporate governance: an empirical examination

© 2015 Elsevier Ltd. Empirical examinations of the links between corporate governance and intellectual capital are underresearched, particularly from the context of emerging economies where corporate governance mechanisms tend to be largely ceremonial due to family dominance. This study aims to address this gap in the intellectual capital disclosure (ICD) literature by undertaking an empirical examination of the relationship between corporate governance and the extent of ICD of Bangladeshi companies. Inter alia, the key findings of this study suggest that there is a non-linear relationship between family ownership and the extent of ICD. This research also found that foreign ownership, board independence, and the presence of audit committees are positively associated with the extent of ICD. Conversely, family duality (i.e., where the positions of CEO and chairperson are occupied by two individuals from the same family) is negatively associated with the extent of ICD.

Globalisation, the environment and recent trends in international trade

The process of globalization has had far-reaching social as well as economic effects. The term "globalization" is generally taken to mean an increase in international transactions in markets for goods, services and factors of production and a growth in institutions .that straddle international borders. This development has also meant that the corporate-governance mechanisms have to be reinforced to ensure fairness and transparency as well as social responsibility. Finally, international infrastructure and institutions have to evolve to facilitate and ameliorate the effects of the growth in this world trade on the environment, sustainable development and bio-diversity. This paper provides an overview of the current developments in all these areas.

Outsourcing and benchmarking in a rural public hospital : does economic theory provide the complete answer?

INTRODUCTION: The ideology and pronouncements of the Australian Government in introducing 'competitive neutrality' to the public sector has improved efficiency and resource usage. In the health sector, the Human Services Department directed that non-clinical and clinical areas be market tested through benchmarking services against the private sector, with the possibility of outsourcing. These services included car parking, computing, laundry, engineering, cleaning, catering, medical imaging (radiology), pathology, pharmacy, allied health and general practice. Managers, when they choose between outsourcing, and internal servicing and production, would thus ideally base their decision on economic principles. Williamson's transaction cost theory studies the governance mechanisms that can be used to achieve economic efficiency and proposes that the optimal organisation structure is that which minimises transaction costs or the costs of exchange. Williamson proposes that four variables will affect such costs, namely: (i) frequency of exchange; (ii) asset specificity; (iii) environmental uncertainty; and (iv) threat of opportunism. This paper provides evidence from a rural public hospital and examines whether Williamson's transaction cost theory is applicable. d into an analysis that relies solely on transaction

Implications of the IFRS goodwill accounting treatment

Purpose – This paper aims to critically examine the change in accounting treatment for goodwill pursuant to international financial reporting standards (IFRSs) by reference to the Australian reporting regime.

Design/methodology/approach – The paper discusses and compares the former Australian and the new IFRS treatments for goodwill. This comparison focuses on the advantages and potential complexities of the new method, with the aim of identifying the issues and challenges that preparers, independent auditors and those involved in corporate governance face in complying with the new requirements.

Findings – The paper highlights that the identification and valuation of cash-generating units and goodwill require numerous assumptions to be made in estimating fair value, value in use and recoverable amount. Considerable ambiguity and subjectivity are inherent in the IFRS requirements.

Research limitations/implications – Findings suggest that future research should examine how financial report preparers and corporate governance mechanisms are dealing with the complex change required by the new goodwill accounting treatment and how the many critical issues involved in auditing the resulting figures are being addressed.

Practical implications – The research has practical implications for financial report preparers in identifying the issues that must be addressed in complying with the international goodwill accounting treatment. In turn, the paper highlights conceptual issues of relevance to auditors in their role of providing assurance on the resulting accounting numbers. It also has implications for others involved in corporate governance, such as audit committee members, in emphasising the areas in which they should be providing oversight of the accounting judgments. These issues are of relevance in any reporting regime based on IFRSs.

Originality/value – While much has been written about the mechanics of the new goodwill accounting requirements, there has been a lack of critical research highlighting the many problems and ambiguities that will arise in the application of those rules.

Internal auditor perceptions on audit committee interactions : a qualitative study in Malaysian public corporations

Audit committees (AC) and the internal audit function (IAF) are two key corporate governance mechanisms. The primary objective of this study is to provide insights into internal auditors' perceptions of their interactions with AC members in Malaysia. The paper thus contributes to the extant literature by providing additional evidence from a South-east Asian country which is recognised as being characterised with a high power distance culture and a developing capital market. The findings are based on in-depth interviews of the heads of the internal audit function (HIAFs) from 11 publicly listed companies. The results indicate infrequent informal communications and limited private meetings between the HIAFs and ACs, and a need for clear reporting lines. Further, ACs are seen to be held in high esteem for their authority and are expected to take on greater leadership in the inquiry of management's decision-making. These findings highlight the importance of the leadership role of ACs in supporting the IAF.

The impact of ownership structure on corporate debt policy : two stage least square simultaneous model approach for post crisis period : evidence from Kuala Lumpur Stock Exchange

Ownership concentration as a governance mechanism has received considerable attention among academician, practitioners as well as policy makers because large-block shareholders are increasingly active in their demands that corporations adopt effective governance mechanisms to control managerial decisions, which include corporate debt policy. Earlier study on the agency model of the firm widely recognizes that the managerial ownership and external debt play an important role in mitigating agency conflicts and enhancing firm value. They also found that increase in the external monitors, for example the institutional investors, can actually play a useful role in limiting agency problems in the firm. This paper, using 100 Composite Index companies from Brusa Malaysia between 1998 to 2002 explores the impact of institutional holdings on managerial ownership and debt policy in an integrated framework by using a simultaneous equations estimation procedure (2SLS). The findings show that there is a significant impact of institutional ownership which serves effective control mechanism on managerial ownership and corporate debt policy as hypothesized. Findings of such evidence suggest that institutional holding thus have played an important role in managers' strategic management decision and reduce agency conflict. In addition, corporate debt policy too is governed by managerial ownership and exhibited a negative relation.