Search results for: corporate governance principles

Authors: Meltem Karatepe Kaya

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The concept of corporate governance is not new but, due to the recent international financial crisis, it has become prominent in contemporary business, accounting and legal debates. There is a wealth of anecdotal evidence which shows that protection of minority shareholders is an important issue in the corporate governance literature. Minority shareholders typically hold low amounts of stocks, so the benefits gained from their participation in shareholder meetings are very asymmetric to the cost. Therefore, the presence of a good corporate governance structure is the proper protection of and respect for the rights and interests of shareholders, particularly those of minority shareholders. The research will attempt to find answers to the following questions: Why minority shareholders’ rights should be protected? How minority shareholders’ rights could be improved? Does the legal framework in the United Kingdom provide adequate protection for minority shareholders? This study will assess regulations about the legal protections of minority shareholders and try to find answer this question: ’Why is it inevitable for company law to treat in a successful way the problems arising from minority shareholders' conflict with other shareholders of a company?’The protection of minority shareholders is not only a corporate governance objective in its own right but also has added importance particularly in developing countries. In the United Kingdom(UK) and the United States of America(USA), there are diffused ownership structures so that any shareholders do not influence the management of the company. This is in stark contrast to companies in developing countries such as Turkey where controlling shareholders and related insiders are a well-known feature of ownership structures, and where companies are often governed and managed by controlling shareholders such as family firms and associated companies through cross-shareholdings and pyramiding ownership structures. In Turkey, the agency problem is not between shareholders and management. Rather it gives rise to another dimension of the agency problem – a conflict of interest between majority shareholders (controlling) and minority shareholders. This research will make a particularly useful contribution to knowledge-based information and understanding of company law in the UK, particularly minority shareholders' remedies. It will not only give information about law and regulations of minority shareholders' remedies but also it will provide some knowledge about doctrinal discussions and relevant cases. The major contribution to study will be in the knowledge of law and regulation in the legal protections of minority shareholders in the United Kingdom and Turkey. In this study, the recommendations will be given for the development of the legal framework and practices of protections for minority shareholders and small investors.

Keywords: controlling shareholders, corporate governance, derivative actions, minority shareholders

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Authors: Edmund Gyimah

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Using data from 146 annual reports of listed firms in Ghana for the period 2013-2020, this study presents indicative findings which inspire practical actions and future research. Firms which prepared and presented sustainability reports were excluded from this study for a coverage of corporate sustainability disclosures centred on annual reports. Also, corporate sustainability disclosures of the firms on corporate websites were not included in the study considering the tendency of updates which cannot easily be traced. The corporate sustainability disclosures in the annual reports since the commencement of the G4 Guidelines in 2013 have been below average for all the dimensions of sustainability and the general sustainability disclosures. Few traditional elements of the board composition such as board size and board independence could affect the corporate sustainability disclosures in the annual reports as well as the age of the firm, firm size, and industry classification of the firm. Sustainability disclosures are greater in sustainability reports than in annual reports, however, firms without sustainability reports should have a considerable amount of sustainability disclosures in their annual reports. Also, because of the essence of sustainability, this study suggests to firms to have sustainability committee perhaps, they could make a difference in disclosing the enough sustainability information even when they do not present sustainability information in stand-alone reports.

Keywords: disclosures, sustainability, board, reports

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Authors: Joel S. Akintayo, Ramat T. Salman

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The stakeholders’ pressure on corporate managers to maintain firm’s profitability has created economic incentives for management to engage in earnings management practices. Therefore, this study examines the effects of audit quality and corporate governance on earnings management of quoted deposit money banks (DMBs) in Nigeria. This study specifically investigates the influence of audit tenure, audit fee, board independence, and board size on earnings management of DMBs. Explanatory research design was employed in carrying out the study while secondary data were sourced from the annual reports and accounts of all the 15 quoted DMBs in Nigerian Stock Exchange as at December 31, 2015 for a period of 10 years covering from 2006 to 2015. The data obtained for the study were analyzed using panel regression analysis approach. The findings reveal that board independence has a negative significant effect on earnings management at a 5% level of significance (p=0.002), while audit fee has a positive significant effect on earnings management at a 5% level of significance (p=0.013) and audit tenure has a negative significant effect on earnings management of DMBs at a 5% level of significance (p=0.003). Surprisingly, board size was statistically not significant at a 5% level of significance (p=0.086). The study concludes that high audit quality and sound corporate governance could improve the earnings quality of DMBs. Hence, the study recommends that the authorities saddled with the responsibility of banking supervision in Nigeria such the Securities and Exchange Commission (SEC) and CBN to advise the National Assembly in Nigeria to pass into law the three years professional requirement for audit tenure.

Keywords: audit quality, audit tenure, audit fee, board independence, corporate governance, earnings management

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Authors: Lalla Nezha Lakmiti, Abdelkahar Zahid

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Due to the setbacks on the international scene and the wave of cacophonic financial scandals affecting large international groups, the new Islamic finance industry is not immune despite its initial resistance. The purpose of this paper is to understand and analyze the meaning of the Corporate Governance (CG) concept in Moroccan Islamic banking systems with specific reference to their institutions. The research objective is to identify also the path taken and adopted by these banks recently set up in Morocco. The foundation is rooted in shari'a, in particular, no stakeholder (the shareholding approach) must be harmed, and the ethical value is reflected into these parties’ behavior. We chose a qualitative method, semi-structured interviews where six managers provided answers about their banking systems. Since these respondents held a senior position (directors) within their organizations, it is felt that they are well placed and have the necessary knowledge to provide us with information to answer the questions asked. The results identified the orientation of participating banks and assessing how governance works, while determining which party is fovoured: shareholders, stakeholders or both. This study discusses the favorable condition to the harmonization of the regulations and therefore a better integration between Islamic finance and conventional ones in the economic context of Morocco.

Keywords: corporate governance, Islamic Banks, stakeholders, shareholders

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Authors: Ademola Ajibade

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Previous studies have explored several rationales for hedging strategies, but the evidence provided by these studies remains ambiguous. Using a hand-collected dataset of 2460 observations of non-financial firms in eight African countries covering 2013-2022, this paper investigates the determinants and extent of corporate hedge use. In particular, this paper focuses on the link between country-specific conditions and the corporate hedging behaviour of firms. To our knowledge, this represents the first African studies investigating the association between country-specific factors and corporate hedging policy. The evidence based on both univariate and multivariate reveal that country-level corruption and government quality are important indicators of the decisions and extent of hedge use among African firms. However, the connection between country-specific factors as a rationale for corporate hedge use is stronger for firms located in highly corrupt countries. This suggest that firms located in corrupt countries are more motivated to hedge due to the large exposure they face. In addition, we test the risk management theories and observe that CEOs educational qualification and experience shape corporate hedge behaviour. We implement a lagged variables in a panel data setting to address endogeneity concern and implement an interaction term between governance indices and firm-specific variables to test for robustness. Generally, our findings reveal that institutional factors shape risk management decisions and have a predictive power in explaining corporate hedging strategy.

Keywords: corporate hedging, governance quality, corruption, derivatives

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Authors: Bamidele Olufemi Ifenowo

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The study examined the practice of managing business organizations in Nigeria today without unions. It explored how this phenomenon evolved and became popular in the newly emerging mega banks in Nigeria. Attitudes of selected banks' employees to this phenomenon were surveyed.Simple statistical tools were used for data analysis. The findings revealed that most new employees who form the bulk of the sample never really cared about unionism. On the other hand, old and experienced employees were positively disposed towards unionism. This category of employees abhorred the current display of authoritarianism cum paternalism which seemed to characterize the managerial practice of most new generation banks in Nigeria today.

Keywords: authoritarianism, corporate governance, deunionisation, unionization, paternalism

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Authors: Jeroen De Ceuster

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This study is the first empirical analysis of the link between corporate governance and European Union competition law. Although competition law enforcement is often studied through the lens of competition law, we offer an alternative perspective by looking at a number of corporate governance factor at the level of the board of directors. We find that undertakings where the Chief Executive Officer is also chairman of the board are twice as likely to violate European Union competition law. No significant relationship was found between European Union competition law infringements and gender diversity of the board, the size of the board, the percentage of directors appointed after the Chief Executive Officer, the percentage of independent directors, or the presence of corporate social responsibility (CSR) committee. This contribution is based on a 1-1 matched peer study. Our sample includes all ultimate parent companies with a board that have been sanctioned by the European Commission for either anticompetitive agreements or abuse of dominance for the period from 2004 to 2018. These companies were matched to a company with headquarters in the same country, belongs to the same industry group, is active in the European Economic Area, and is the nearest neighbor to the infringing company in terms of revenue. Our final sample includes 121 pairs. As is common with matched peer studies, we use CLR to analyze the differences within these pairs. The only statistically significant independent variable after controlling for size and performance is CEO/Chair duality. The results indicate that companies whose Chief Executive Officer also functions as chairman of the board are twice as likely to infringe European Union competition law. This is in line with the monitoring theory of the board of directors, which states that its primary function is to monitor top management. Since competition law infringements are mostly organized by management and hidden from board directors, the results suggest that a Chief Executive Officer who is also chairman is more likely to be either complicit in the infringement or less critical towards his day-to-day colleagues and thus impedes proper detection by the board of competition law infringements.

Keywords: corporate governance, competition law, board of directors, board independence, ender diversity, corporate social responisbility

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Authors: Ayman Haddad, Wafaa Sbeiti, Amr Qasem

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The main aim of this paper is to provide an overview of the most influential economic changes and accounting legislation affecting financial reporting and disclosure practices in Jordan. It also provides an overview of disclosure studies conducted in Jordan covering the year(s) between 1986 and 2014. The economic changes in Jordan required conducting economic reform and revising/issuing new regulations and financial market reforms that led to an improvement in disclosure practices. The issuance of Temporary Securities Law and its Directives of Disclosure in 1997, which came into effect in 1998, is considered as the turning point in the improvement of disclosure practice in Jordan. Based on a review of prior disclosure studies, we conclude that disclosure practices have improved overtime. We also observe that that firm size as a factor has always affected the level of disclosure in Jordan and followed by external auditing while liquidity was found to have the least effect. The paper also addresses the disclosure items required in Corporate Governance Codes that exist for listed shareholding companies, banks, and insurance companies. Finally, the paper discusses the quality of accounting education in Jordan since prior studies noted its impact on accounting practice.

Keywords: accounting legislation, corporate governance, disclosure practice, Jordan

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Authors: Chaitanya Vyas

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This paper identifies limitations of existing two e-Governance services viz. railway ticket booking and passport service in India. The comparison has been made as to how in the past these two citizen services were operating manually and how these services are taken online via e-Governance. Different e-Governance projects, investment aspects, and role of corporate are discussed. For Indian Railway online ticketing a comparison has been made between state run booking website and popular private firm run booking website. For passport service, observation through personal visit to passport center is described. Suggestions are made to improve these services further to improve citizen service experiences.

Keywords: e-Governance, citizen services, passport, Indian Railways

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Authors: Bi-Huei Tsai

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Previous studies on financial distress prediction choose the conventional failing and non-failing dichotomy; however, the distressed extent differs substantially among different financial distress events. To solve the problem, “non-distressed”, “slightly-distressed” and “reorganization and bankruptcy” are used in our article to approximate the continuum of corporate financial health. This paper explains different financial distress events using the two-stage method. First, this investigation adopts firm-specific financial ratios, corporate governance and market factors to measure the probability of various financial distress events based on multinomial logit models. Specifically, the bootstrapping simulation is performed to examine the difference of estimated misclassifying cost (EMC). Second, this work further applies macroeconomic factors to establish the credit cycle index and determines the distressed cut-off indicator of the two-stage models using such index. Two different models, one-stage and two-stage prediction models, are developed to forecast financial distress, and the results acquired from different models are compared with each other, and with the collected data. The findings show that the two-stage model incorporating financial ratios, corporate governance and market factors has the lowest misclassification error rate. The two-stage model is more accurate than the one-stage model as its distressed cut-off indicators are adjusted according to the macroeconomic-based credit cycle index.

Keywords: Multinomial logit model, corporate governance, company failure, reorganization, bankruptcy

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Authors: Ruchi Agarwal

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In today’s world, companies are operating in dynamic, uncertain and ambiguous business environments. Globally, more companies are failing due to Environmental, Social and Governance (ESG) factors than ever. Corporate governance and risk management are intertwined in nature. For decades, corporate governance and risk management have been influenced by internal and external factors. Three schools of thought have influenced risk governance for decades: Agency theory, Contingency theory, and Institutional theory. Agency theory argues that agents have interests conflicting with principal interests and the information problem. Contingency theory suggests that risk management adoption is influenced by internal and external factors, while Institutional theory suggests that organizations legitimize risk management with regulators, competitors, and professional bodies. The conflicting objectives of theories have created problems for executives in organizations in the adoption of Risk Governance. So far, there are many studies that discussed risk culture and the role of actors in risk governance, but there are rare studies discussing the role of risk culture in the adoption of risk governance from a leadership style perspective. This study explores the adoption of risk governance in two contrasting industries, such as the Insurance and energy business, to understand whether risk governance is influenced by internal/external factors or whether risk culture is influenced by leaders. We draw empirical evidence by comparing the cases of an Indian insurance company and a renewable energy-based firm in India. We interviewed more than 20 senior executives of companies and collected annual reports, risk management policies, and more than 10 PPTs and other reports from 2017 to 2024. We visited the company for follow-up questions several times. The findings of my research revealed that both companies have used risk governance for strategic renewal of the company. Insurance companies use a transactional leadership style based on performance and reward for improving risk, while energy companies use rather symbolic management to make debt restructuring meaningful for stakeholders. Overall, both companies turned from loss-making to profitable ones in a few years. This comparative study highlights the role of different leadership styles in the adoption of risk governance. The study is also distinct as previous research rarely studied risk governance in two contrasting industries in reference to leadership styles.

Keywords: leadership style, corporate governance, risk management, risk culture, strategic renewal

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Authors: Manmeet Kaur, Madhu Vij

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The Board of Directors in a firm performs the primary role of an internal control mechanism. This Study seeks to understand the relationship between internal governance and performance of banks in India. The research paper investigates the effect of board structure (proportion of nonexecutive directors, gender diversity, board size and meetings per year) on the firm performance. This paper evaluates the impact of corporate governance mechanisms on bank’s financial performance using panel data for 28 listed banks in National Stock Exchange of India for the period of 2008-2014. Returns on Asset, Return on Equity, Tobin’s Q and Net Interest Margin were used as the financial performance indicators. To estimate the relationship among governance and bank performance initially the Study uses Pooled Ordinary Least Square (OLS) Estimation and Generalized Least Square (GLS) Estimation. Then a well-developed panel Generalized Method of Moments (GMM) Estimator is developed to investigate the dynamic nature of performance and governance relationship. The Study empirically confirms that two-step system GMM approach controls the problem of unobserved heterogeneity and endogeneity as compared to the OLS and GLS approach. The result suggests that banks with small board, boards with female members, and boards that meet more frequently tend to be more efficient and subsequently have a positive impact on performance of banks. The study offers insights to policy makers interested in enhancing the quality of governance of banks in India. Also, the findings suggest that board structure plays a vital role in the improvement of corporate governance mechanism for financial institutions. There is a need to have efficient boards in banks to improve the overall health of the financial institutions and the economic development of the country.

Keywords: board of directors, corporate governance, GMM estimation, Indian banking

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Authors: Jennifer Martínez Ferrero, Emma García-Meca

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Despite substantial attention to the involvement of women directors in ESG matters, CSR, and sustainability engagement, there is limited understanding regarding the connection between corporate social irresponsibility CSI and the presence of females in leadership roles, including boards. This study contends that gender diversity is inversely correlated with corporate social irresponsibility, primarily due to attributes associated with feminine leadership styles, stakeholder focus, monitoring functions, ethical sensitivity, and risk aversion attitudes. Leveraging a dataset of non-financial European firms, our results offer insights into the effectiveness of gender diversity in preventing corporate social irresponsibility, contingent on women's visibility and legitimacy within the organization, thus supporting both tokenism and critical mass theories. Furthermore, our findings underscore the pivotal role of the institutional context, highlighting that women in board positions are only effective in curbing corporate social irresponsibility in countries where national policies are robust in combating gender inequality.

Keywords: sustainability, board, corporate governance, ESG

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Authors: Lajmi Azhaar, Yab Mdallelah

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This study examines the Tunisian market in which recent events, notably financial scandals, provide an appropriate framework for studying the impact of corporate governance on the audit report lag. Moreover, very little research has been done to examine this relationship in this context. The objective of this work is, therefore, to understand the factors influencing audit report lag, drawing primarily on agency theory (Jensen and Meckling, 1976), which shows that the characteristics of the board of directors have an impact on the report lag (independence, diligence, and size). In addition, the characteristics of the committee also have an impact on the audit report lag (size, independence, diligence, and expertise). Therefore, our research provides empirical evidence on the impact of governance mechanisms attributes on audit report lag. Using a sample of forty-seven (47) Tunisian companies listed on the Tunis Stock Exchange (BVMT) during the period from 2014 to 2019, and basing on the GMM method of the dynamic panel, multivariate analysis shows that most corporate governance attributes have a significant effect on audit report lag. Specifically, the audit committee diligence and the audit committee expertise have a significant and positive effect on audit report lag. But the diligence of the board has a significant and negative effect on audit report lag. However, this study finds no evidence that the audit committee independence, the size, independence, and diligence of the director’s board are associated with the audit report lag. In addition, the results of this study also show that there is a significant effect of some control variables. Finally, we are contributing to this study by using the GMM method of the dynamic panel. We are also using an emerging context that is very poorly developed and exploited by previous studies.

Keywords: governance mechanisms, audit committee, board of directors, audit report lag

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Authors: Raveena Naz

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The concept of ‘Corporate Social Responsibility’ (CSR) has often relied on firms thinking beyond their economic interest despite the larger debate of shareholder versus stakeholder interest. India gave legal recognition to CSR in the Companies Act, 2013 which promises better corporate governance. CSR in India is believed to be different for two reasons: the dominance of family business and the history of practice of social responsibility as a form of philanthropy (mainly among the family business). This paper problematises the actual structure of business houses in India and the role of CSR in India. When the law identifies each company as a separate business entity, the economics of institutions emphasizes the ‘business group’ consisting of a plethora of firms as the institutional organization of business. The capital owned or controlled by the family group is spread across the firms through the interholding (interlocked holding) structures. This creates peculiar implications for CSR legislation in India. The legislation sets criteria for individual firms to undertake liability of mandatory CSR if they are above a certain threshold. Within this framework, the largest family firms which are all part of family owned business groups top the CSR expenditure list. The interholding structures, common managers, auditors and series of related party transactions among these firms help the family to run the business as a ‘family business’ even when the shares are issued to the public. This kind of governance structure allows family owned business group to show mandatory compliance of CSR even when they actually spend much less than what is prescribed by law. This aspect of the family firms is not addressed by the CSR legislation in particular or corporate governance legislation in general in India. The paper illustrates this with an empirical study of one of the largest family owned business group in India which is well acclaimed for its CSR activities. The individual companies under the business group are identified, shareholding patterns explored, related party transactions investigated, common managing authorities are identified; and assets, liabilities and profit/loss accounting practices are analysed. The data has been mainly collected from mandatory disclosures in the annual reports and financial statements of the companies within the business group accessed from the official website of the ultimate controlling authority. The paper demonstrates how the business group through these series of shareholding network reduces its legally mandated CSR liability. The paper thus indicates the inadequacy of CSR legislation in India because the unit of compliance is an individual firm and it assumes that each firm is independent and only connected to each other through market dealings. The law does not recognize the inter-connections of firms in corporate governance structures of family owned business group and hence is inadequate in its design to effect the threshold level of CSR expenditure. This is the central argument of the paper.

Keywords: business group, corporate governance, corporate social responsibility, family firm

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Authors: Zahra A. Al Nasser, Domenico Campa

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This paper investigates board of directors and firms’ ownership structure on non-financial companies listed in Gulf Cooperation council (GCC) countries using data from 2009 to 2013. The overall result of the study is that board size and board meeting have increased over years. Additionally, all combined committee variables have improved as well as audit committee size, audit committee meeting and audit committee experience have improved over the years. Furthermore, Oman is the only country that has not shown any statistically significant change in value of its associated variables.

Keywords: corporate governance, GCC countries, board of directors, ownership structure

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Authors: Cindy Woods

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After years of implacable neoliberal globalization, multinational corporations have moved from the periphery to the center of the international legal agenda. Human rights advocates have long called for greater corporate accountability in the international arena. The creation of the Global Compact in 2000, while aimed at fostering greater corporate respect for human rights, did not silence these calls. After multiple unsuccessful attempts to adopt a set of norms relating to the human rights responsibilities of transnational corporations, the United Nations succeeded in 2008 with the Guiding Principles on Business and Human Rights (Guiding Principles). The Guiding Principles, praised by some within the international human rights community for their recognition of an individual corporate responsibility to respect human rights, have not escaped their share of criticism. Many view the Guiding Principles to be toothless, failing to directly impose obligations upon corporations, and call for binding international obligations on corporate entities. After decades of attempting to promulgate human rights obligations for multinational corporations, the existing legal frameworks in place fall short of protecting individuals from the human rights abuses of multinational corporations. The Global Compact and Guiding Principles are proof of the United Nations’ unwillingness to impose international legal obligations on corporate actors. In June 2014, the Human Rights Council adopted a resolution to draft international legally binding human rights norms for business entities; however, key players in the international arena have already announced they will not cooperate with such efforts. This Note, through an overview of the existing corporate accountability frameworks and a study of Newmont Mining’s Minas Conga project in Peru, argues that binding international human rights obligations on corporations are necessary to fully protect human rights. Where states refuse to or simply cannot uphold their duty to protect individuals from transnational businesses’ human rights transgressions, there must exist mechanisms to pursue justice directly against the multinational corporation.

Keywords: business and human rights, Latin America, international treaty on business and human rights, mining, human rights

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Authors: Fatemeh Rouhi, Hadi Nassiri

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Earning forecast is a key element in economic decisions but there are some situations, such as conflicts of interest in financial reporting, complexity and lack of direct access to information has led to the phenomenon of information asymmetry among individuals within the organization and external investors and creditors that appear. The adverse selection and moral hazard in the investor's decision and allows direct assessment of the difficulties associated with data by users makes. In this regard, the role of trustees in corporate governance disclosure is crystallized that includes controls and procedures to ensure the lack of movement in the interests of the company's management and move in the direction of maximizing shareholder and company value. Therefore, the earning forecast of companies in the capital market and the need to identify factors influencing this study was an attempt to make relationship between moral hazard and corporate governance with earning forecast quality companies operating in the capital market and its impact on Earnings Forecasts quality by the company to be established. Getting inspiring from the theoretical basis of research, two main hypotheses and sub-hypotheses are presented in this study, which have been examined on the basis of available models, and with the use of Panel-Data method, and at the end, the conclusion has been made at the assurance level of 95% according to the meaningfulness of the model and each independent variable. In examining the models, firstly, Chow Test was used to specify either Panel Data method should be used or Pooled method. Following that Housman Test was applied to make use of Random Effects or Fixed Effects. Findings of the study show because most of the variables are positively associated with moral hazard with earnings forecasts quality, with increasing moral hazard, earning forecast quality companies listed on the Tehran Stock Exchange is increasing. Among the variables related to corporate governance, board independence variables have a significant relationship with earnings forecast accuracy and earnings forecast bias but the relationship between board size and earnings forecast quality is not statistically significant.

Keywords: corporate governance, earning forecast quality, moral hazard, financial sciences

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Authors: Agata Ferreira

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Rapidly increasing debates and initiatives in the area of Corporate Social Responsibility (“CSR”) have reached the world of international investment law. CSR standards that focus on the operations of multinational companies are increasingly relevant in the context of international investment policy making. In the past, the connection between CSR standards and legal framework for foreign direct investment has been largely non-existent. Recently, however, there is a growing trend of a more balance approach to rights and obligations as between investors and states under investment treaties. CSR principles join other social and environmental measures slowly being included in the investment treaties to enhance their sustainable development dimension. Issues of CSR are present on negotiation tables of new mega regional investment treaties like TTIP for example. To date, only a very few bilateral investment treaties and a handful of other international treaties with investment provisions include CSR clauses. In addition, the existing provisions tend to be of a soft type, where parties merely acknowledge importance of good corporate governance and CSR for sustainable development or generally affirm their aim to encourage enterprises to observe internationally recognised guidelines and principles of CSR. The relevant provisions often leave it up to the states to encourage enterprises operating within their territories to voluntarily incorporate CSR principles. The interaction between general non-binding CSR standards, domestic laws and policies and provisions of international investment treaties have not been tested by investment tribunals yet. The role of investment treaties in raising awareness and promoting CSR is still in its infancy. The use of CSR standards in the international investment protection regime for promotion of CSR standards, and as a tool for disciplining investors into complying with such standards, pose a number of questions and is met with resistance from investors` lobbies. Integration of these two areas, CSR and international investment law, both consisting of multilayered, diverse and often overlapping instruments is by no means an easy task. Whether international investment world is ready to embrace CSR standards or shrug them off is a matter of uncertain future. The subject however has been raised, first introductions have been made and the time will show whether the relationship between legal framework of international investment and CSR will flourish or remain dormant.

Keywords: corporate social responsibility, foreign direct investment, investment treaties, sustainable development

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Authors: Shekar Babu, Amalendu Jyothishi

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The New Companies Bill-2013 in India has mandated all the companies with a certain profit to spend on Corporate Social Responsibility (CSR). Despite the Corporate Governance (CG) compliances at the strategic level the firms have to engage in social good. For both the Central Public Sector Enterprises (CPSE) and the private companies in India the need for strategic CSR focus through operational efficiency measures are mandated. In this paper the focus is to find out if the Indian companies understand their responsibility towards the society despite government making CSR mandatory. Analyzing both the CPSEs and Private companies the researchers find out which set of companies behave responsibly towards the society. Does any particular industry group(s) impact the society by disclosing their CSR spending activities. The key financial and non-financial parameters that influence CSR spending were identified and through econometric analysis methodologies (logistic regression and OLS models) the results were analyzed. The innovative methods were developed to identify if the firms operate efficiently and at the same time complying with the new CSR laws. An innovative matrix was developed to explain how companies could operate efficiently and be compliant in parallel how some of the companies can strategically realign their spending by operating efficiently.

Keywords: corporate social responsibility(CSR), corporate governance(CG), India, logit function, ordinary least squares (OLS)

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Authors: Lubica Hikkerova, Jean-Michel Sahut

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Environmental protection remains a global challenge but, since 2012, there has been a progressive decline in corporate engagement in environmental protection issues. This study seeks to investigate the role of financial capacity and governance in improving the level of environmental engagement of companies. The regression technique is applied to data on 351 large European companies from the ASSET4-ESG database for the 2007-2015 period. Firstly, the results show that the companies in the sample are fairly engaged in environmental protection, with a strong dispersion representing nearly four times the average. This means that the companies in the sample do not share the same level of engagement in matters of environmental protection, some being more committed than others. Secondly, the results reveal that the financial capacity of the company, as assessed through its indicators, has a significant effect on its level of environmental protection engagement in the present sample. This effect is more positive the higher the profits the company makes, and more negative the more heavily indebted or, the higher the rates of dividends it pays per share. Lastly, the results also show that a better quality of governance plays an important role in the decision to undertake actions leading to environmental protection. More specifically, the degree of management implication in the running of the business, the respect of the rights of the shareholders, the effectiveness of the control exerted by the board of directors, and, to a lesser extent, the independence of the audit committee, are variables which have a positive and significant influence on the level of environmental engagement of companies.

Keywords: financial capacity, corporate governance, environmental engagement, stakeholder theory, theory of organizational legitimacy, theory of resources and capabilities

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Authors: Adebiyi Sunday Adeyanju, Kola Benson Ajeigbe, Fortune Ganda

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In the past three decades, there has been a notable increase in the number of firms delisting from the Johannesburg Stock Exchange (JSE) in South Africa. The recent increasing rate of delisting waves of corporate listed firms motivated this study. This study aims to explore the influence of institutional investor perceptions on the financial distress experienced by delisted firms within the South African market. The study further examined the impact of financial distress on the corporate performance of delisted firms. Using the data of delisted firms spanning from 2000 to 2023 and the FGLS (Feasible Generalized Least Squares) for the short run and PCSE (Panel-Corrected Standard Errors) for the long run effects of the relationship. The finding indicated that a decline in institutional investors’ perceptions was associated with the corporate financial distress of the delisted firms, particularly during the delisting year and the few years preceding the announcement of the delisting. This study addressed the importance of investor recognition in corporate financial distress and the delisting wave among listed firms- a finding supporting the stakeholder theory. This study is an insight for companies’ managements, investors, governments, policymakers, stockbrokers, lending institutions, bankers, the stock market, and other stakeholders in their various decision-making endeavours. Based on the above findings, it was recommended that corporate managements should improve their governance strategies that can help companies’ financial performances. Accountability and transparency through governance must also be improved upon with government support through the introduction of policies and strategies and enabling an easy environment that can help companies perform better.

Keywords: delisting wave, institutional investors, financial distress, corporate performance, investors’ perceptions

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Authors: María-José Palacin-Sanchez, Filippo Di Pietro, Reyes Samaniego-Medina

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This article examines, in an institutional context such as Spanish one, the corporate board structure characteristics and determinants in entrepreneurial firms to go public. Specifically, it explores these issues through all the initial public offerings in the Spanish Alternative Equity Market (MAB), which is a market segment for smaller growing companies. The results show that: a) firm size, age of the company, and the reputation of the auditor and the nominated advisor and Corporate Governance Code favour a larger and more independent board structure that enhances its monitoring functions; and b) leverage, opportunities of growth, sector risk and ownership by executive directors all lead towards a smaller broad of directors where the role of entrepreneurship provided by executive directors remains crucial. This reflects the delicate balance of power between small-business entrepreneurs and financial equity market forces, which demand more transparency and monitoring in the companies.

Keywords: board composition, board size, corporate governance, IPO, SMEs

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Authors: Busari Moshood Olanyi

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Good governance remains the expectation of every political party in power, especially in this democratic dispensation of the Nigerian Nation. The need to ensure that the citizenry enjoys the dividends of democracy as often promised during various electioneering campaigns is envisioned to be the motif for different agendas and political slogans by different administrations. Unfortunately, different political agendas towards the security of lives and properties, halting the pillage of the economy by corrupt public officials and creation of employment opportunities for the youths, have a record of setback in the history of political leadership and governance in Nigeria. Therefore, the paper examined the principles of Islamic theocracy in its advocacy for a paradigm shift in the Nigerian political system, with a view to engendering good governance. Islamic political terms such as Shūrā (mutual consultation), ‘Adālah (equality and justice), Khilāfah (succession and stewardship) Majlis ash-Shūrā (consultative forum) and Muḥāsabah (accountability) were espoused as sacrosanct to implementing Islamic theocracy as an alternative system of government in Nigeria. The paper concluded by being flexible on the nomenclature of the suggested political system, considering the multi-religious nature of the country as a political entity. Among other recommendations, infusion of politics into our moral/religious system and not the other way round was considered a good step in the direction of a political paradigm shift for ensuring good governance and guaranteeing its sustainability in Nigeria.

Keywords: Nigerian nation, democracy, good governance, Islamic theocracy, paradigm shift

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Authors: Katarzyna Olejko

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The need to redefine the goals and adapt the operational activities carried out in accordance with the concept of sustainable management to these goals results in the increasing importance of information on the company's activities perceived from the perspective of the effectiveness and efficiency of environmental goals implementation. The narrow scope of reporting data on a company's impact on the environment is not adequate to meet the information needs of modern investors. Reporting obligations are therefore imposed on companies in order to increase the effectiveness of corporate governance and to improve the process of assessing the achievement of environmental goals. The non-financial reporting obligations introduced in Polish legislation increased the scope of reported information. However, the lack of detailed guidelines on the method of reporting resulted in a large diversification of the scope of non-financial information, making it impossible to compare the data presented by companies. The source of information regarding the level of the implementation of standards in Environmental, social and corporate governance (ESG) is the report on compliance with best practices published by the Warsaw Stock Exchange. The document Best Practices of Warsaw Stock Exchange (WSE) Listed Companies (2021), amended by the WSE in 2021, includes the rules applicable to this area (ESG). The aim of this article is to present the level of compliance with good practices in the area of ESG by selected companies listed on the Warsaw Stock Exchange The research carried out as part of this study, which was based on information from reports on the compliance with good practices of companies listed on the Warsaw Stock Exchange that was made available in the good practice scanner, have revealed that good practices in the ESG area are implemented by companies to a limited extent. The level of their application in comparison with other rules is definitely lower. The lack of experience and clear guidelines on ESG reporting may cause some confusion, which is why conscious investors and reporting companies themselves are pinning their hopes on the Corporate Sustainability Reporting Directive (CSRD) adopted by European Parliament.

Keywords: reporting, ESG, corporate governance, best practices

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Authors: Sewe Silvanus Odhiambo

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Globally, many governments have publicly recognized private security firms as essential services providers. The private security firms face a lot of challenges, but the COVID-19 situation also has exacerbated them to another level. This paper locates its relevance in the post-coronavirus era. The COVID-19 pandemic has redefined the world operation, which shows a higher impact on the security field. Accordingly, the purpose of the study was to examine the role of corporate governance on the performance of private security firms in a post-covid pandemic era in Kenya. The study employed a descriptive research design, which included a quantitative approach and secondary data. The study was carried in the month of July 2021 from the registered private security firms. After targeting all private security firms, only 54 firms had disclosed their annual report by the time of conducting the study. The results depicted that pandemic has affected the performance of private security firms measures unfavorably. Further, boards of directors show a positive association with security firm performance. The study recommends that there is need board of directors to enhance management’s risk assessments in the midst of COVID-19; ensure that there are business continuity plans; there is organizational resilience; there is need for the development of new digital strategies; enabling the digital workforce in the firms and have effective communication plans with both internal and external stakeholders to deal with uncertainties and develop more post-COVID practices for boards of directors to improve performance of private security firms in Kenya. The practical implications of the study are that the research outcomes might assist regulatory bodies, investors, policymakers, and the security sector in general in their formulation of public and corporate governance strategies concerning future emergency preparedness and responses. This study also provides a unique contribution to the literature of COVID-19 and security firm performance in emerging economies context.

Keywords: COVID-19, corporate governance, firm performance, private security firms

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Authors: Suleiman Ahmed Badayi

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Corporate governance literature is very wide and involves several empirical studies conducted on the relationship between board structure, composition and firm performance. The separation of ownership and control in organizations were aimed at reducing the losses suffered by the investors in the event of financial scandals. This paper reviewed the theoretical and empirical literature on the relationship between board composition and its impact on firm performance. The findings from the studies provide different results while some are of the view that board structure is related to firm performance, many empirical studies indicates no relationship. However, others found a U-shape relationship between firm performance and board structure. Therefore, this study argued that board structure is not much significant to determine the financial performance of a firm.

Keywords: board structure, composition, firm performance, corporate governance

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Authors: Nico Rosamilia

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The study evaluates the importance of non-financial disclosure practices for regulators, investors, businesses, and markets. It aims to create a sector-specific set of indicators for environmental, social, and governance (ESG) performances alternative to the ratings of the agencies. The existing literature extensively studies the implementation of ESG rating systems. Conversely, this study has a twofold outcome. Firstly, it should generalize incentive systems and governance policies for ESG and sustainable principles. Therefore, it should contribute to the EU Sustainable Finance Disclosure Regulation. Secondly, it concerns the market and the investors by highlighting successful sustainable investing. Indeed, the study contemplates the effect of ESG adoption practices on corporate value. The research explores the asset pricing angle in order to shed light on the fragmented argument on the finance of ESG. Investors may be misguided about the positive or negative effects of ESG on performances. The paper proposes a different method to evaluate ESG performances. By comparing the results of a traditional econometric approach (Lasso) with a machine learning algorithm (Random Forest), the study establishes a set of indicators for ESG performance. Therefore, the research also empirically contributes to the theoretical strands of literature regarding model selection and variable importance in a finance framework. The algorithms will spit out sector-specific indicators. This set of indicators defines an alternative to the compounded scores of ESG rating agencies and avoids the possible offsetting effect of scores. With this approach, the paper defines a sector-specific set of indicators to standardize ESG disclosure. Additionally, it tries to shed light on the absence of a clear understanding of the direction of the ESG effect on corporate value (the problem of endogeneity).

Keywords: ESG ratings, non-financial information, value of firms, sustainable finance

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Authors: Fatemeh Norouzi

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Today, financial performance has become one of the important issues in accounting and auditing that companies and their managers have paid attention to this issue and for this reason to the variables that are influential in this field. One of the things that can affect financial performance is corporate governance, which is examined in this research, although some things such as issues related to auditing can also moderate this relationship; Therefore, this research has been conducted with the aim of investigating the relationship between corporate governance and financial performance with regard to the moderating role of feedback and internal control weakness. The research is practical in terms of purpose, and in terms of method, it has been done in a post-event descriptive manner, in which the data has been analyzed using stock market data. Data collection has been done by using stock exchange data which has been extracted from the website of the Iraqi Stock Exchange, the statistical population of this research is all the companies admitted to the Iraqi Stock Exchange. . The statistical sample in this research is considered from 2014 to 2021, which includes 34 companies. Four different models have been considered for the research hypotheses, which are eight hypotheses, in this research, the analysis has been done using EXCEL and STATA15 software. In this article, collinearity test, integration test ,determination of fixed effects and correlation matrix results, have been used. The research results showed that the first four hypotheses were rejected and the second four hypotheses were confirmed.

Keywords: size of the board of directors, duality of the CEO, financial performance, internal control weakness

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Authors: Mateusz Rak

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Objective: The paper aims to present various sources of competitive advantage which may occur when an enterprise strategically applies its concept of corporate philanthropy. Methodology: The review of the literature and available reports on the research regarding corporate philanthropy. Results: Strategic philanthropy is a positive phenomenon. Unfortunately, enterprises in Poland do not see all positive sides of such activities yet. Three kinds of corporate philanthropy may be described. They are to fulfil a social duty, improve the company reputation and gain a competitive edge. Practical implications: Showing enterprises the advantages of taking philanthropic actions, in particular, a large role of strategic philanthropy in gaining a competitive edge in the market as well as how to avoid negative consequences of corporate philanthropy. The paper presents corporate philanthropy on a few layers: as a CSR element, actions generating values in products, actions improving a corporate image in the market, altruist actions of employees.

Keywords: corporate philanthropy, corporate social responsibility, corporate foundations, CSR

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