Executive remuneration, financial performance and corporate governance in UK and Spanish listed firms

This study examines the relationship between executive directors’ remuneration and the financial performance and corporate governance arrangements of the UK and Spanish listed firms. These countries’ corporate governance framework has been shaped by differences in legal origin, culture and backgrounds. For example, the UK legal arrangements can be defined as to be constituted in common-law, whereas for Spanish firms, the legal arrangement is based on civil law. We estimate both static and dynamic regression models to test our hypotheses and we estimate our regression using Ordinary Least Squares (OLS) and the Generalised Method of Moments (GMM). Estimated results for both countries show that directors’ remuneration levels are positively related with measures of firm value and financial performance. This means that remuneration levels do not lead to a point whereby firm value is reduced due to excessive remuneration. These results hold for our long-run estimates. That is, estimates based on panel cointegration and panel error correction. Measures of corporate governance also impacts on the level of executive pay. Our results have important implications for existing corporate governance arrangements and how the interests of stakeholders are protected. For example, long-run results suggest that directors’ remuneration adjusts in a way to capture variation in financial performance

Corporate governance and accounting conservatism:evidence from the banking industry

Research Question/Issue: In this paper, we empirically investigate whether US listed commercial banks with effective corporate governance structures engage in higher levels of conservative financial accounting and reporting. Research Findings/Insights: Using both market- and accrual-based measures of conservatism and both composite and disaggregated governance indices, we document convincing evidence that well-governed banks engage in significantly higher levels of conditional conservatism in their financial reporting practices. For example, we find that banks with effective governance structures, particularly those with effective board and audit governance structures, recognize loan loss provisions that are larger relative to changes in nonperforming loans compared to their counterparts with ineffective governance structures. Theoretical/Academic Implications: We contribute to the extant literature on the relationship between corporate governance and quality of accounting information by providing evidence that banks with effective governance structures practice higher levels of accounting conservatism. Practitioner/Policy Implications: The findings of this study would be useful to US bank regulators/supervisors in improving the existing regulatory framework by focusing on accounting conservatism as a complement to corporate governance in mitigating the opaqueness and intense information asymmetry that plague banks.

Corporate governance and the central factors influencing the roles of public and private sector board directors in the United Kingdom

DUE TO COPYRIGHT RESTRICTIONS ONLY AVAILABLE FOR CONSULTATION AT ASTON UNIVERSITY LIBRARY AND INFORMATION SERVICES WITH PRIOR ARRANGEMENT

Related party transactions, corporate governance and accounting quality in Greece

Related Party Transactions (RPTs) have been considered recently in research as a phenomenon which is associated with several financial scandals, shareholder’s wealth expropriation and is used for earnings management (EM) purposes by the reporting entity. This study aimed to: (i) assess the extent of EM and RPTs i Greece; (ii) investigate the association between RPTs and EM; (iii) investigate the association between corporate governance and EM; (iv) investigate the association between corporate governance and RPTs; and (v) investigate the impact of RPTs on Accounting Quality. Greece was selected for this study as it provides a special context due to poor investor protection, high levels of EM and unhealthy financial reporting environment where wealth extraction and EM are more likely. This study examines the relationship between earnings management and RPTs for the firms listed on the Athens Stock Exchange (ASE). Moreover, it examines the association between earnings management and corporate governance activities. The results show a negative and significant relationship between EM and RPTs. This finding does not support the conclusion that RPTs are necessarily conducted to mask fraud or the extraction of firm resources. The results show that firms audited by one of the Big 4 audit firms are associated with less EM. Additionally, the study investigates the relationship between RPTs and accounting quality. The findings show that that there is no significant difference in accounting quality between RPTs firms and non-RPTs firms. This study contributes to the EM, accounting quality and corporate governance literatures. This research suggests recommendations for researchers, data providers and policy makers on ways to reduce the problems associated with RPTs.

International risk management:systems, internal control and corporate governance

This book is very practical in its international usefulness (because current risk practice and understanding is not equal across international boundaries). For example, an accountant in Belgium would want to know what the governance regulations are in that country and what the risk issues are that he/she needs to be aware of. This book covers the international aspect of risk management systems, risk and governance, and risk and accounting. In doing so the book covers topics such as: internal control and corporate governance; risk management systems; integrating risk into performance management systems; risk and audit; governance structures; risk management of pensions; pension scheme risks e.g. hedging derivatives, longevity bonds etc; risk reporting; and the role of the accountant in risk management. There are the case studies through out the book which illustrate by way of concrete practical examples the major themes contained in the book. The book includes highly topical areas such as the Sarbanes Oxley Act and pension risk management.

Corporate governance and related party transactions research:an assessment of theories and methodologies

This paper critically evaluates the paradigm, theory, and methodology that dominate research on related party transactions (RPTs). RPTs have been debated in the literature whether they are a facet of conflict of interest between major and minor shareholders or they are normal efficient transactions that help the firms to achieve asset utilization. Literature has been widely interested in studying the association between corporate governance and RPTs especially that according to the agency theory it is assumed that corporate governance as a monitoring tool should impede the negative consequences of RPTs and ensure they are conducted to achieve better asset utilization.

State control and corporate governance in transition economies:25 years on from 1989

Research Question/Issue - Which forms of state control over corporations have emerged in countries that made a transition from centrally-planned to marked-based economies and what are their implications for corporate governance? We assess the literature on variation and evolution of state control in transition economies, focusing on corporate governance of state-controlled firms. We highlight emerging trends and identify future research avenues. Research Findings/Insights - Based on our analysis of more than 100 articles in leading management, finance, and economics journals since 1989, we demonstrate how research on state control evolved from a polarized approach of public–private equity ownership comparison to studying a variety of constellations of state capitalism. Theoretical/Academic Implications - We identify theoretical perspectives that help us better understand benefits and costs associated with various forms of state control over firms. We encourage future studies to examine how context-specific factors determine the effect of state control on corporate governance. Practitioner/Policy Implications - Investors and policymakers should consider under which conditions investing in state-affiliated firms generates superior returns.

Three essays on corporate governance and meeting-beating or missing analyst forecasts

The beginning of the 21st century was plagued with unprecedented instances of corporate fraud. In an attempt to address apparent non-existent or “broken” corporate governance policies, sweeping measures of financial reporting reform ensued, having specific requirements relating to the composition of audit committees, the interaction between audit committees and external auditors, and procedures concerning auditors’ assessment of client risk. The purpose of my dissertation is to advance knowledge about “good” corporate governance by examining the association between meeting-or-beating analyst forecasts and audit fees, audit committee compensation, and audit committee tenure and “busyness”. Using regression analysis, I found the following: (1) the frequency of meeting-or-just beating (just missing) analyst forecasts is negatively (positively) associated with audit fees, (2) the extent by which a firm exceeds analysts’ forecasts is positively (negatively) associated with audit committee compensation that is predominately equity-based (cash-based), and (3) the likelihood of repeatedly meeting-or-just beating analyst forecasts is positively associated with audit committee tenure and “busyness”. These results suggest that auditors consider clients who frequently meet-or-just beat forecasts as being less “risky”, and clients that frequently just miss as being more “risky”. The results also imply that cash-based director compensation is more successful in preserving the effectiveness of the audit committee’s financial reporting oversight role, that equity-based compensation motivates independent audit committee directors to focus on short-term performance thereby aligning their interests with management, and that audit committee director tenure and the degree of director “busyness” can affect an audit committee member’s effectiveness in providing financial reporting oversight. Collectively, my dissertation provides additional insights regarding corporate governance practices and informs policy-makers for future relevant decisions.^

A transatlantic case: the derivative action as a corporate governance tool

The derivative action as a minority shareholder protection device seems to be almost a dead-letter law in the British Isles as compared with the United States. Whether it can or should be revived through legislative reform and judicial interpretation presents us with important governance questions at first instance, but also raises questions regarding the importance of law, as distinct from non-legally enforceable norms, to the development of corporate governance systems, in particular regarding the director-shareholder relationship.

Realisable climate change narratives in public discourse: an East/West comparative analysis of environmental, social, and corporate governance (ESG) as a response to global climate change

This thesis looks at how non-experts develop an opinion on climate change, and how those opinions could be changed by public discourse. I use Hubert Dreyfus’ account of skill acquisition to distinguish between experts and non-experts. I then use a combination of Walter Fisher’s narrative paradigm and the hermeneutics of Paul Ricœur to explore how non-experts form opinions, and how public narratives can provide a point of critique. In order to develop robust narratives, they must be financially realistic. I therefore consider the burgeoning field of environmental, social, and corporate governance (ESG) analysis as a way of informing realistic public narratives. I identify a potential problem with this approach: the Western assumptions of ESG analysis might make for public narratives that are not convincing to a non-Western audience. I then demonstrate how elements of the Chinese tradition, the Confucian, Neo-Confucian, and Daoist schools, as presented by David Hall and Roger Ames, can provide alternative assumptions to ESG analysis so that the public narratives will be more culturally adaptable. This research contributes to the discipline by bringing disparate traditions together in a unique way, into a practical project with a view towards applications. I conclude by considering avenues for further research.

Corporate governance and cost of capital: evidence from Pakistani listed firms

This thesis investigates the effectiveness of Corporate Governance (CG) reforms in Pakistan. Using a sample of 160 Pakistani firms from 2003 to 2013 and governance data collected manually from the annual reports, this thesis investigates seven closely related and important corporate issues that are related to the compliance of governance rules. Specifically, it aims to : (i) investigate the degree of CG compliance with 2002 Pakistani Code of CG (PCCG); (ii) determine whether the introduction of 2002 PCCG has improved Pakistani CG practices; (iii) investigate the determinants of CG compliance and disclosure for Pakistani listed firms; (iv) test the nexus between CG compliance with the 2002 PCCG and firms’ cost of capital (COC); (v) investigate the impact of different individual CG mechanisms on listed firms COC; (vi) examine how different ownership structures impact on firms’ COC; and (vii) analyse relationship between CG structures and Cost of Equity (COE) as well as Cost of Debt (COD) for Pakistani listed firms. These empirical investigations report some important results. First, the reported findings suggest that Pakistani firms have responded positively to governance disclosure requirements over the eleven year period from 2003 to 2013. The results also show that the introduction of the PCCG in 2002 has improved CG standards by Pakistani listed firms. Second, the reported results related to the determinants of CG compliance demonstrate that significant and positive association between institutional, government and foreign ownership with CG compliance. However, findings relating to the determinants of CG compliance show a negative and significant association between board size and block ownership with CG compliance and disclosure. The study finds no significant relationship between director ownership, audit firm size and the presence of female board members with the constructed Pakistan Corporate Governance Index (PCGI). Third, the investigation on the relationship between CG and COC report a significantly negative nexus between PCGI and firms’ COC. The investigation on the association between ownership structures and COC report a negative and significant nexus between block ownership with firms’ COC. Further, a number of robustness analyses performed in this study suggest that the empirical results reported in this study are generally robust to the alternative CG variables, alternative COC variables and potential endogeneity problems.

Corporate governance : value creation and performance in credit unions

In this study, we examine the relationship between good corporate governance practices and the creation of value/performance of credit unions from 2010 to 2012. The objective was to create and validate a corporate governance index for credit unions, and to then analyse the relationship between good governance practices and the creation of value/performance. The problem question is: do good corporate governance practices provide value creation for credit unions? The research started by creating indices from factor analysis to identify latent dependent variables related to value creation and performance; next indices were created from the principal component analysis for the creation of independent latent variables related to corporate governance. Finally, based on panel data from regression models, the influence of the variables and indices related to corporate governance on the indices of value creation and performance was verified. Based on the research, it became evident that the Corporate Governance Index (IGC) is mainly impacted by Executive Management, with 40.31% of the IGC value, followed by the Representation and Participation dimension, with 34.07% of the IGC value. The contribution for academics was the creation of the Corporate Governance Index (IGC) applied for credit unions. As for the contribution to the system of credit unions, the highlight was the effectiveness of the mechanisms for economic-financial and asset management adopted by BACEN, credit unions and OCEMG.