The impact of board independence and ownership structure on the timeliness of corporate internet reporting of Irish-listed companies

Purpose – This study seeks to provide valuable new insight into the timeliness of corporate internet reporting (TCIR) by a sample of Irish-listed companies. Design/methodology/approach – The authors apply an updated version of Abdelsalam et al. TCIR index to assess the timeliness of corporate internet reporting. The index encompasses 13 criteria that are used to measure the TCIR for a sample of Irish-listed companies. In addition, the authors assess the timeliness of posting companies’ annual and interim reports to their web sites. Furthermore, the study examines the influence of board independence and ownership structure on the TCIR behaviour. Board composition is measured by the percentage of independent directors, chairman’s dual role and average tenure of directors. Ownership structure is represented by managerial ownership and blockholder ownership. Findings – It is found that Irish-listed companies, on average, satisfy only 46 per cent of the timeliness criteria assessed by the timeliness index. After controlling for size, audit fees and firm performance, evidence that TCIR is positively associated with board of director’s independence and chief executive officer (CEO) ownership is provided. Furthermore, it is found that large companies are faster in posting their annual reports to their web sites. The findings suggest that board composition and ownership structure influence a firm’s TCIR behaviour, presumably in response to the information asymmetry between management and investors and the resulting agency costs. Practical implications – The findings highlight the need for improvement in TCIR by Irish-listed companies in many areas, especially in regard to the regular updates of information provided on their web sites. Originality/value – This study represents one of the first comprehensive examinations of the important dimension of the TCIR in Irish-listed companies.

The East Asian crisis and financing corporate investment:is there a cause for concern?

In view of limited empirical evidence concerning the microeconomic aspects of corporate financial problems in the East Asian countries in the 1990s, this paper analyses the financing pattern of corporate investment in Indonesia, Korea, Malaysia, and Thailand. The analysis is based on an unbalanced panel of listed firms during the period 1989–1997. By using firm size, retention practices, and leverage as three different indicators of financial constraint on firm investment, we have examined the role of various internal and external financing variables on corporate investment in the sample countries. Results indicate that a large number of sample firms depend on free cash flow, especially in Indonesia; there was also a steady increase in debt-equity ratio in all countries. There were signs of agency costs in the use of cash flow in Korea and Malaysia and also in the use of debt financing in Malaysia and Thailand. There was also sign of over-investment among the Thai firms during 1994–1997 though it appears very little if at all was done to redress it in time.

Strategy as practice:Interactive governance spaces and the corporate strategies of retail transnationals

There is growing interest in the role of corporate governance systems within the strategy-making process of firms. Using a 'strategy as practice' perspective, we conceptualize the governance system as a contested space in which management and security analysts mutually adapt/transform and enact corporate strategies vis-à-vis argumentation. Synthesizing this micropractice perspective within corporate governance research, the supple role of securities analysts' arguments in shaping corporate strategies assumes a new significance. It also provides a basis for observing and understanding the contested nature of the retail internationalization process. The implications and opportunities for management studies and economic geography are considered. © The Author (2007). Published by Oxford Press. All rights reserved.

Pathways to leadership:board independence, diversity, and the emerging pipeline in the US for women directors

In the wake of this decade's corporate scandals, crimes and excesses, improving the effectiveness of corporate governance in the United States has become a priority. An important influence on a board's effectiveness at monitoring is its members’ degree of independence from senior management. While the current definition of independence revolves around the absence of familial and economic connections between a firm and its directors, research suggests that this standard may be inadequate in ensuring independent oversight. Rather, diversity along racial, gender and other dimensions has been proposed as a potentially more effective standard for board independence. This is especially welcome news for women, who currently comprise 51 per cent of the US managerial workforce but only 14.8 per cent of the directors on boards of large, publicly traded US corporations. Some explain the current dearth of women board members by claiming that there are no qualified women available for board service and/or that women are not interested in board service. However, there is more anecdotal rather than empirical evidence on the issue. Surveying women at a women's leadership conference in Boston, this research investigates the extent to which women are currently involved in some type of board service and the extent to which women aspire to future board service. We find that women are currently more active in governance activities than prior research on corporate boards suggests and that they aspire to play a continued and expanded role in governance activities.

Board composition, ownership structure and dividend policies in an emerging market: further evidence from CASE 50

Purpose – The purpose of this study is to examine dividend policies in an emerging capital market, in a country undergoing a transitional period. Design/methodology/approach – Using pooled cross-sectional observations from the top 50 listed Egyptian firms between 2003 and 2005, this study examines the effect of board of directors’ composition and ownership structure on dividend policies in Egypt. Findings – It is found that there is a significant positive association between institutional ownership and firm performance, and both dividend decision and payout ratio. The results confirm that firms with a higher return on equity and a higher institutional ownership distribute higher levels of dividend. No significant association was found between board composition and dividend decisions or ratios. Originality/value – This study provides additional evidence of the applicability of the signalling model in the emerging market of Egypt. It was found that despite the high institutional ownership and the closely held nature of the firms, which imply lower agency costs, the payment of higher dividend was considered necessary to attract capital during this transitional period.

Registered social landlords: private enterprise (f)or public good?

Millions of homes previously owned by councils have been transferred to the ownership of registered social landlords. Many of these are run as private companies under the principles first set out in the Combined Code of Corporate Governance. This articled considers whether it is appropriate to apply both the principles of the Code and regulation from the Housing Corporation as forms of control over such companies, and whether extensive government regulation negates the requirement for a board comprising independent directors expected to make strategic decisions while overseeing the executive. Conflict is created when trying to run these companies with a unitary board structure adhering to Combined Code principles while considering the wider interests of the community. It is questioned whether it is inefficient to try to meet these two objectives simultaneously and whether this system produces the best results for the community, the lenders and the end users.

Hierarchy of governance institutions and the pecking order of privatisation

This article discusses property rights, corporate governance frameworks and privatisation outcomes in the Central–Eastern Europe and Central Asia (CEECA) region. We argue that while CEECA still suffers from deficient ‘higher order’ institutions, this is not attracting sufficient attention from international institutions like EBRD and the World Bank, which focus on ‘lower order’ indicators. We discuss factors that may alleviate the negative impact of the weakness in institutional environment and argue for the pecking order of privatisation, where equivalent privatisation is given a priority but speed is not compromised.

Evaluating the impact of institutional logic on the corporate Internet reporting by Egyptian listed companies

This study explores the institutional logic(s) governing the Corporate Internet Reporting (CIR) by Egyptian listed companies. In doing so, a mixed methods approach was followed. The qualitative part seeks to understand the perceptions, believes, values, norms, that are commonly shared by Egyptian companies which engaged in these practices. Consequently, seven cases of large listed Egyptian companies operating in different industries have been examined. Other stakeholders and stockholders have been interviewed in conjunction with these cases. The quantitative part consists of two studies. The first one is descriptive aiming to specify whether the induced logic(s) from the seven cases are commonly embraced by other Egyptian companies. The second study is explanatory aiming to investigate the impact of several institutional and economic factors on the extent of CIR, types of the online information, quality of the websites as well as the Internet facilities. Drawing on prior CIR literature, four potential types of logics could be inferred: efficiency, legitimacy, technical and marketing based logics. In Egypt, legitimacy logic was initially embraced in the earlier years after the Internet inception. latter, companies confronted radical challenges in their internal and external environments which impelled them to raise their websites potentialities to defend their competitive position; either domestically or internationally. Thus, two new logics emphasizing marketing and technical perspectives have emerged, in response. Strikingly, efficiency based logic is not the most prevalent logic driving CIR practices in Egypt as in the developed countries. The empirical results support this observation and show that almost half of Egyptian listed companies 115 as on December 2010 possessed an active website, half of them 62 disclosed part of their financial and accounting information, during December 2010 to February 2011. Less than half of the websites 52 offered latest annual financial statements. Fewer 33(29%) websites provided shareholders and stock information or included a separate section for corporate governance 25 (22%) compared to 50 (44%) possessing a section for news or press releases. Additionally, the variations in CIR practices, as well as timeliness and credibility were also evident even at industrial level. After controlling for firm size, profitability, leverage, liquidity, competition and growth, it was realized that industrial companies and those facing little competition tend to disclose less. In contrast, management size, foreign investors, foreign listing, dispersion of shareholders and firm size provided significant and positive impact individually or collectively. In contrast, neither audit firm, nor most of performance indicators (i.e. profitability, leverage, and liquidity) did exert an influence on the CIR practices. Thus, it is suggested that CIR practices are loosely institutionalised in Egypt, which necessitates issuing several regulative and processional rules to raise the quality attributes of Egyptian websites, especially, timeliness and credibility. Beside, this study highlights the potency of assessing the impact of institutional logic on CIR practices and suggests paying equal attention to the institutional and economic factors when comparing the CIR practices over time or across different institutional environments in the future.

Does ownership concentration improve M&A outcomes in emerging markets?: Evidence from India

Using firm level data from India, we examine the impact of ownership concentration on post-M&A performance of firms. Our analysis has implications for both the M&A literature, which emphasises the role of agency conflict between managers and owners of widely held companies as a key reason for M&A failures, and the corporate governance literature, especially in the context of emerging market economies. A cautious interpretation of our results suggests that while ownership concentration may reduce the manager–owner agency conflict, it may nevertheless precipitate other forms of agency conflict such that ownership concentration may not necessarily improve post-M&A performance. In particular, our results have implications for the literature on the agency conflict between large (or majority) shareholders and small (or minority) shareholders of a company, especially in contexts such as emerging market economies where corporate governance quality is weak.

Institutions and equity structure of foreign affiliates

Question/Issue: We combine agency and institutional theory to explain the division of equity shares between the foreign (majority) and local (minority) partners within foreign affiliates. We posit that once the decision to invest is made, the ownership structure is arranged so as to generate appropriate incentives to local partners, taking into account both the institutional environment and the firm-specific difficulty in monitoring. Research Findings/Insights: Using a large firm-level dataset for the period 2003-2011 from 16 Central and Eastern European countries and applying selectivity corrected estimates, we find that both weaker host country institutions and higher share of intangible assets in total assets in the firm imply higher minority equity share of local partners. The findings hold when controlling for host country effects and when the attributes of the institutional environment are instrumented. Theoretical/Academic Implications: The classic view is that weak institutions lead to concentrated ownership, yet it leaves the level of minority equity shares unexplained. Our contribution uses a firm-level perspective combined with national-level variation in the institutional environment, and applies agency theory to explain the minority local partner share in foreign affiliates. In particular, we posit that the information asymmetry and monitoring problem in firms are exacerbated by weak host country institutions, but also by the higher share of intangible assets in total assets. Practitioner/Policy Implications: Assessing investment opportunities abroad, foreign firms need to pay attention not only to features directly related to corporate governance (e.g., bankruptcy codes) but also to the broad institutional environment. In weak institutional environments, foreign parent firms need to create strong incentives for local partners by offering them significant minority shares in equity. The same recommendation applies to firms with higher shares of intangible assets in total assets. © 2014 The Authors.

An examination of the comprehensiveness of corporate Internet reporting provided by London-listed companies

Recent changes in the regulatory environment of the London Stock Exchange are aimed at prohibiting selective disclosure and enhancing the credibility of reporting. Using an innovative 143-item disclosure checklist, we examine corporate Internet reporting (CIR) comprehensiveness and its determinants within this new regulatory environment. We also extend the literature linking corporate governance measures to CIR. Our findings indicate that despite this new regulatory environment, there is considerable room for improvement in CIR by London-listed companies. For example, our sample companies provide only 58 percent and 70 percent, respectively, of the credibility and usability items assessed by our comprehensiveness index. After controlling for size, profitability, industry, and high growth/ intangibles, we find the CIR comprehensiveness of London-listed companies is associated with analyst following, director holding, director independence, and CEO duality. Because prior research indicates the U.K. leads Europe in Internet reporting, our results may shed light on how CIR will evolve throughout Europe.

Board composition, ownership structure and dividend policies in an emerging market: further evidence from CASE 50

Purpose – The purpose of this study is to examine dividend policies in an emerging capital market, in a country undergoing a transitional period. Design/methodology/approach – Using pooled cross-sectional observations from the top 50 listed Egyptian firms between 2003 and 2005, this study examines the effect of board of directors’ composition and ownership structure on dividend policies in Egypt. Findings – It is found that there is a significant positive association between institutional ownership and firm performance, and both dividend decision and payout ratio. The results confirm that firms with a higher return on equity and a higher institutional ownership distribute higher levels of dividend. No significant association was found between board composition and dividend decisions or ratios. Originality/value – This study provides additional evidence of the applicability of the signalling model in the emerging market of Egypt. It was found that despite the high institutional ownership and the closely held nature of the firms, which imply lower agency costs, the payment of higher dividend was considered necessary to attract capital during this transitional period.