Exploring Paths to High Performance Under CEO Duality: A Configurational Governance Study

The Effect of Corporate Governance Components on Return on Assets and Stock Return of Companies Listed in Tehran Stock Exchange

<p><em>Corporate governance is relevant in both developed and emerging economies. The study investigated the impact of corporate governance on organisational performance, using thirty (30) randomly selected listed companies in the Nigeria Stock Exchange (NSE) in the year 2016. The study focused on three corporate governance variables (i.e., Board Size, Board Independence, CEO Duality/Tenure); and two performance variables - i.e., Returns on Asset (ROA) and Returns on Equity (ROE). The study does not cover the market measure performance variable of Tobin’s Q. The study is an empirical research, with analytical research design. Secondary data, extracted from published annual reports of selected quoted companies and NSE website, is used for the study. The findings revealed a positive correlation between board size, independence directors, and performance variables; but, showed a negative correlation between CEO tenure and performance variables. The result showed that number of directors was not positively related to performance in selected quoted companies in terms of ROA; but, it revealed a positive correlation between board size and performance in terms of ROE. It also showed that the correlation between CEO tenure and performance variables was negative on the two performance variables (ROA and ROE). Regarding relationship between CEO Duality and performance variables (ROA and ROE), the result showed that CEO Duality has a positive correlation with ROA; but had a negative relationship with ROE. Generally, the study revealed that adoption of sound corporate governance practices by listed companies can improve their performance. Companies can benefit from this improved corporate governance practices by way of increased investment from investors and reduced capital cost. Shareholders confidence would be enhanced with attendant improvement in shareholders wealth. The nation’s economy would also benefit from sound corporate governance practices by way of improved GDP. </em></p>

This paper examines the impact of corporate governance mechanisms including board size, independence, and meeting frequency, audit committee size and meeting frequency, CEO duality and ownership concentration on the operational, financial and market performance of Saudi listed firms using a contingent theoretical-based framework drawing on agency theory, stewardship theory and resource dependence theory. This study examines 210 listed Saudi Stock Exchange firms over the timeframe 2017 to 2019. The paper applies both a manual content and regression analysis approach. The results show that firm performance deteriorates with board size and independence, audit committee and meeting frequency, and the presence of CEO role duality, while performance improves with board meeting frequency and ownership concentration. Thus, Saudi firms should respond by maintaining smaller boards and more frequent meetings, keeping the Chair and CEO roles separate, and maintaining smaller audit committees with more focused meetings. Further, the appointment of independent directors only makes a meaningful contribution to firm performance where they are truly independent. Finally, more concentrated ownership tends to encourage better firm performance due to the regime of monitoring and discipline concomitant with more powerful shareholders. The implications of this paper are threefold. First, the implementation by Saudi Arabia of the latest corporate governance regulations and IFRS adoption almost certainly impact firm performance markedly. Second, corporate governance regulations should recognize the role of more frequent board meetings and more concentrated ownership in enhancing corporate performance. Third, stakeholders should apply pressure on investee firms to maintain smaller boards, engage genuinely independent directors, separate the role of Chairman and CEO, and maintain smaller audit committees with fewer and more effective meetings. The results should help corporate boards when deciding on the best corporate governance mechanisms to enhance firm performance. Further, the study should provide policy makers with a better understanding of the corporate governance structures required to promote better performance by drawing on existing theories and the empirical modelling, in an emerging economy setting such as Saudi Arabia, a new and broader data set, thereby informing better future policy and protecting shareholders’ interests.

Despite developments of recent theoretical and numerous empirical studies on the policies effectively adopted by companies, the dividend distribution policy (DDP) remains largely unexplained. In this regard, the main purpose of the current study is to empirically examine the effects of both CEO duality and ownership concentration on DDP during a crisis period. Furthermore, we test, using an interaction variable, the moderating effect of the crisis period on the association between both the degree of CEO duality and the ownership concentration on the DDP by analyzing panel data on selected listed firms in an emerging economy, namely, Tunisia. Based on a sample made up of 576 firm-year observations over the period 1996–2019, the findings of this research indicate that the crisis period plays an important role in mitigating the positive effect of both CEO duality and ownership concentration on DDP. The findings confirm furthermore that the crisis period on the one hand and both CEO duality and ownership concentration on the other represent two competing forces influencing DDP. Our results also support the agency theory on which DDP depends, among other things, family ownership, board and company size, and ROE.

Mergers and acquisitions (M&A) are a form of corporate entrepreneurship involving strategic decisions that require discussion and approval by the board of directors of the acquiring firm. We focus on board attributes to analyze the entrepreneurial function of the board of directors and its involvement in corporate entrepreneurship. Building on different theories (agency theory, resource dependence theory, stewardship theory, and stakeholder theory), we examine whether board composition affects the number of acquisitions, the risk involved in bids, and the creation of value for the acquirer's shareholders. For a sample of European firms over the period 2002 to 2020, we find that board size and the percentage of external directors are related to the number of acquisitions. However, neither the percentage of women on the board nor CEO duality affects the number of acquisitions by a given firm. We also show that more risky acquisitions are associated with larger firms with a lower proportion of women directors, whereas less risky transactions are related to smaller firms where the CEO is also the chair of the board. Finally, our results indicate that firm acquisitions create value for the acquiring firm and that the market reaction is positively related to board size and CEO duality.

PurposeThis research employs a behavioural approach to investigate the determinants of CEO disclosure tone inconsistency. By examining CEO characteristics and psychological attributes, the study aims to unravel the complexities underlying tone variations in Management Discussion and Analysis (MD&A) reports. Through this exploration, the research seeks to contribute to understanding ethical considerations in corporate communications and provide insights into the nuanced interplay between personal, job-related and psychological factors influencing CEO disclosure tone.Design/methodology/approachThe study utilises a dataset comprising 1,411 MD&A reports from 143 companies listed on the Tehran Stock Exchange between 2012 and 2021. Multiple regression analyses with year- and industry-fixed effects are employed to examine the relationships between CEO gender, tenure, duality, ability and psychological attributes such as narcissism, myopia, overconfidence and tone inconsistency. Data analysis involves MAXQDA software for analysing MD&A reports and Rahavard Novin software for document analysis, supplemented by audited financial statements.FindingsThe findings reveal significant relationships between CEO characteristics, psychological attributes and tone inconsistency. Female CEOs exhibit reduced tone inconsistency, contrasting with previous research trends. CEO tenure correlates negatively with tone inconsistency, whereas CEO ability shows a positive correlation, indicating a nuanced relationship with performance. However, CEO duality does not exhibit a significant association. Psychological attributes such as narcissism and myopia are positively associated with tone inconsistency, while no substantial connection is found with managerial overconfidence.Originality/valueThis research contributes to the inaugural exploration of CEO disclosure tone inconsistency through a behavioural lens, advancing measurement precision in the field. By delving into CEO characteristics and psychological attributes, the study offers unique insights into the roots of tone inconsistency. Applying comprehensive lexicon and phraseology enriches the methodological approach, fostering dialogue among diverse stakeholders and adding distinct perspectives to the discourse on ethical issues in business. Through its meticulous examination of behavioural underpinnings, this study becomes a catalyst for reflection, dialogue and progress in corporate communications and ethical considerations.

This study aims to provide further evidence on the effect of corporate governance on the performance of Ghanaian banks. Two performance measures were used in this study, namely: Return on Asset (ROA) and Cost-Income Ratio (CIR). Data for the analysis were sourced from 21 commercial banks from 2005 to 2015. Regression estimation techniques were employed for analysis purposes. The result revealed that large board size reduces banks’ performance. Furthermore, CEO duality and foreign ownership negatively affect the performance of banks. However, while the effect of CEO duality was significant on CIR, it was not significant in the case of ROA. On the contrary, the effect of foreign ownership was only significant on ROA. Moreover, board independence has a significant positive effect on both CIR and ROA, while audit committee independence has no significant effect on CIR and ROA. The paper argues that for a good corporate governance practice, banks should institute a small board with more than half of the members being independent directors. Furthermore, the role of the board chair should be separated from that of the managing director/CEO. The study provides insight and further evidence to stakeholders and regulators to deal with the crisis in the Ghanaian banking sector.

Purpose The cost of equity (COE) and corporate governance structure are the most critical factors affecting competition among publicly held companies. Accordingly, the present paper aims to examine the relationship between corporate governance and the COE in the wake of the Islamic State of Iraq and Syria (ISIS) in Iraq. Design/methodology/approach Our statistical sample includes 34 companies listed on the Iraq Stock Exchange from 2012 to 2017. Board structure (i.e. board size, board independence, CEO tenure, board meetings frequency and CEO duality) and ownership structure (managerial ownership, institutional ownership and state ownership) are considered proxies for corporate governance structure. Besides, the authors employ the Capital Asset Pricing Model to measure the COE as our dependent variable. Multiple regression analysis and Exploratory Factor Analysis are also used to estimate the research models. Findings Our results suggest that corporate governance structure plays a significant role in reducing COE during the ISIS era. Furthermore, the authors find that corporate governance can be an alternative to COE reduction in Iraq’s absence of national security. Our findings also indicate that board size, board meeting frequency, managerial ownership and institutional ownership are negatively associated with COE. Research limitations/implications Although this study has been thoroughly considered and cautiously planned, the specific period chosen to conduct the research (i.e. the ISIS era) could be a significant limitation since financial disclosure of listed companies may have been of lower quality during this period. However, to relatively alleviate this limitation and maintain the authenticity of the findings, the authors exclude low-quality financial statements, particularly non-audited financial reports, from the statistical sample. Furthermore, practitioners of emerging markets that are suffering from a weak external corporate governance combination can use the findings of this paper as a guideline to compensate the existing market deficiencies by improving internal corporate governance for observing further cash sources with lower cost. The findings also propose to international agencies that the business environment in Iraq is heavily affected by the ISIS phenomenon and needs financial aid to recover from its side effects. Furthermore, macroeconomists may use this paper to make more decisive macroeconomic indicators predictions. Originality/value This paper is among the pioneer investigations and elaborates on how the agency conflict is resolved effectively. The board and managerial characteristics and different forms of ownership might be applicable to provide cheaper funds for companies listed in emerging markets suffering from weak external corporate governance combinations.

The period from a company's fiscal year-end date to the audit report date is defined as the Audit Report Lag (ARL). The shorter the ARL in releasing audited financial statements, the greater the usefulness and benefits that users can derive from these statements. The purpose of this research is to investigate the impact of company characteristics and IFRS adoption on audit delay in Sri Lankan manufacturing companies, listed in Colombo Stock Exchange (CSE). Accordingly, the current study investigated the influence of corporate size, audit firm statues, CEO duality, ownership concentration, ownership dispersion, board size and IFRS adoption on audit report lag. The data for the study collected from annual audited financial statements of all the listed manufacturing companies of CSE. Data for the period of nine years from 2008/2009 financial year to 2016/2017 financial year are collected. Based on the regression estimate obtained, the study concludes that the audit report delay is significantly influenced by corporate size, audit firm statues, board size and IFRS adoption while CEO duality, ownership concentration, ownership dispersion, and audit complexity have reported an insignificant impact on audit report lag.

Corporate governance is pivotal for company performance, but Malaysian companies are not necessarily confident in their system. For companies on the ACE Market where the degree of adoption for MCCG is lower, the threat of delisting grows greater. This study, by using firm performances as measured by ROA and Tobin's Q, sought to answer whether there is an association between company return on assets (ROA) and Tobin's with the effect of these corporate governance mechanisms. This study using a sample of 103 listed companies in the ACE Market, our study obtained diversified metrics of governance effect on firm performance through OLS during the regression analysis process. Risk management committees and CEO duality had negative impacts on ROA; but their impacts were minor in relation to Tobbins Q. The size of the board and firm age both had a positive effect on ROA; however, the default rate decreased with frequency of board meetings. Our results are consistent with the relational complexity of governance–performance phenomena underdeveloped. It seems that a one-size-fits-all categorical endorsement may not have any impact. The study provides practical implications to the literature for policy decision makers, managers of firms across countries (especially in emerging economies like India, who want to improve their quality of transparency and accountability) and investors.

Editorial – Toward a Global Theory of Corporate Governance

Empirical evidence on the association between firm value and corporate governance has mixed results depending on the chosen attributes for governance and firm value. The study investigated this relationship for financial services firms in India. Based on the literature review, four attributes of corporate governance were chosen: ownership concentration, institutional ownership, board independence, and CEO duality. Tobin’s Q value was taken as a proxy for firm value. The dataset consisted of 20 companies formin part of the National Stock Exchange financial services index. An additional two control variables are included in the model: the firm’s size and leverage ratio. All data were sourced from the annual reports of the companies, and the period of study is from 2016 – 2020. The panel data were analyzed using the generalized method of moments. The empirical findings revealed a positive and significant impact of ownership concentration, institutional ownership, and board independence on firm value, while the CEO duality role had no impact on firm value. The study contributed to the corporate governance literature of financial services firms in India.

The present study aims to assess the relationship between some corporate factors and managerial entrenchment in companies listed on the Tehran Stock Exchange during 2011-2017. Panel data regression models were used to test the hypotheses. The obtained results indicated that four corporate factors, namely real earnings management, predictable earnings management, institutional ownership, and board independence, have a significant relationship with the managerial entrenchment. In this study, the mixed index of managerial entrenchment is calculated using the principal component analysis based on four governance mechanisms of the percentage of shares available to the CEO, CEO duality, CEO compensation logarithm, and CEO tenure. This process has made the present study distinct from the previous ones, in which individual indexes were used for evaluating the entrenchment.

The 1997 Asian financial crisis highlighted the importance of Good Corporate Governance (GCG) practices in developing countries, including Indonesia, which to this day still faces challenges in improving the quality of corporate governance, especially in the infrastructure sector. Good GCG practices are believed to be able to reduce the cost of equity by increasing transparency and investor confidence, however their implementation in Indonesia is still not optimal even though various regulations have been made. This research aims to provide a deeper understanding of how Good Corporate Governance practices can influence the cost of company equity in this strategic sector. This research uses a quantitative approach with a population of infrastructure sector companies listed on the Indonesia Stock Exchange (BEI) during the 2019–2023 period. The sampling technique uses a purposive sampling method, namely selecting samples based on certain criteria. Data was collected through documentation methods, namely by accessing company annual reports from the official IDX website and each company's website. The data analysis technique used is panel data regression with the help of the Eviews 10 application, which involves the Chow test, Hausman test, and Lagrange multiplier test to determine the best model, as well as partial tests (t tests), simultaneous tests, and coefficient of determination tests to test the research hypothesis. The research results show that the variables that have a significant influence on the cost of equity include Block Ownership which has a positive influence, Insider Ownership, Institutional Ownership, and Foreign Ownership which each have a negative influence, as well as Independent Non-Executive Directors which have a positive influence. Meanwhile, the variables Non-Executive Directors, Board Size, Board Meeting, Gender Diversity, CEO Duality, CEO Tenure, and Political Connections do not show a significant influence on the cost of equity. This shows that the ownership structure and role of independent directors play a more important role in determining the cost of equity than board characteristics and other aspects.

Earnings management in a practical level is the deliberate actions carried out by the company's management to affect earnings in the process of preparation of financial statements that are used to assess a company and usually management provides information about the economic benefits which were not experienced by the company for personal purposes as well as to increase the value of the company. This study aimed to examine the effect of the Return on Assets (ROA), institutional ownership, the percentage of public shares, the board of directors, audit committees and leverage partially or simultaneously on earnings management during the period 2010-2015. The population in this study is a sub company's automotive sector and the components listed in the Indonesia Stock Exchange by using purposive sampling method. Data were analyzed using multiple linear regression analysis. The results of hypothesis shows that (1) partially there is influence between the Return on Assets (ROA), commissioners and leverage to earnings management, but there is no influence between institutional ownership, the percentage of public shares and the audit committee on earnings management (2) is simultaneously a influence between the return on Assets (ROA), institutional ownership, the percentage of public shares, the board of directors, audit committees and leverage to earnings management.Keywords: earnings management, Return on Assets (ROA), institutional ownership, the percentage of public shares, the board of directors, audit committee, leverag