Journal Corporate Ownership and Control-
Corporate Ownership and Control, Volume 17, pp 165-182; doi:10.22495/cocv17i2art14
Abstract:The main goal of the paper is to understand if the shareholder composition must be considered as a part of the corporate governance framework or as a monitoring factor, only. A related goal of the paper is to investigate if the shareholder composition is part of the loop connecting corporate governance and corporate performance. We analyze a sample made of 10,520 firms over the years 2006-2015, in 8 European countries having very differentiated governance frameworks, shareholder composition and corporate performance. The paper gives new insights to the current debate on the relations between governance and performance as well as the one on the components of the corporate governance framework. According to our evidence, governance contributes to corporate value by reducing agency in funding, rather than having an impact over returns. Moreover, we give evidence that corporate governance should be considered as a tool contributing to the efficacy of monitoring capabilities of the shareholder composition of equity, but no clear evidence is about the composition of equity to be considered as part of the corporate governance framework.
Corporate Ownership and Control; doi:10.22495/coc
Corporate Ownership and Control, Volume 17, pp 157-164; doi:10.22495/cocv17i2art13
Corporate Ownership and Control, Volume 17, pp 142-156; doi:10.22495/cocv17i2art12
Abstract:The aim of this study is to examine the perceived level of importance with respect to each pre-suggested determinant of audit fees in Egypt. In particular, the perceptions about auditor related attributes and client-related attributes according to external auditors and client’s representatives (auditee). This study is based on the results of a survey conducted in Egypt. A questionnaire is designed to request the opinions of external auditors and client representatives about 28 audit fees determinant. The questionnaire was sent to 150 participants out of whom 63 responses are found usable. Data is analyzed using SPSS program and Mann-Whitney U test is performed. The results reveal that the perception of all attributes is greater than 3, implying that all pre-suggested determinants are perceived as relatively important, important or highly important. The most three important attributes are: the good reputation of the audit firm, the fact of being one of the Big Four and the level of complexity of the auditee. Furthermore, the results show that there is no significant difference in perceptions of both group of participants regarding the importance of each audit fees determinant. It is also evident that auditor-related attributes are perceived to be of higher importance than client-related attributes. This is the first study conducted in Egypt examining the determinants of audit fees, knowing that audit fees figures are neither available nor publically disclosed. Moreover, the study takes into account the Egyptian revolution which started in 2011 by adding two new determinants to the questionnaire; economic and political stability. This is in order to cope with the country’s situation and to check the extent of such environmental attributes’ effect on audit pricing.
Corporate Ownership and Control, Volume 17, pp 124-141; doi:10.22495/cocv17i2art11
Abstract:Auditor independence and the quality of audit report is of growing concern to regulators, institutional investors and stakeholders as a series of accounting scandals have undermined the professionalism of auditors. The findings from this study produced an insight of how auditor’s independence improve audit quality and that abnormal audit fees is as a result of additional effort for auditor to carry out rigorous audit engagement as a result of wider audit scope; that mandatory audit firm rotation will enhance auditor independence, and that audit committee with nonexecutive independence will promote audit quality. The study also finds that in terms of auditor size, smaller audit firms that belong to professional bodies will provide higher audit quality. The main conclusion of this research is that where an auditor is fully independent in carrying out audit engagement with strong resistance to fees pressure will enhance audit quality. This research provides insight into the impact of IFRS adoption on audit fees.
Corporate Ownership and Control, Volume 17, pp 104-123; doi:10.22495/cocv17i2art10
Abstract:Using a UK panel data set drawn from 1675 Chief Executive Officer (CEO) year observations and 1540 Chief Financial Officer (CFO) year observations, we examine the relationship between CEO and CFO equity incentives and earnings management. In addition, we examine the moderation effect of corporate governance mechanisms on the relationship between executives’ equity incentives and earnings management. We use multivariate regression models to test our hypotheses. We find that CEO equity incentives are related to higher absolute and income increasing earnings management. These results support the managerial power theory argument that CEOs exploit equity-linked compensation to obtain more personal benefits without causing public anger. Contrary to CEO equity incentives, we could not find any significant relationship between CFO equity incentives and any of the earnings management proxies. In addition, we find that corporate governance quality (measured by individual mechanisms and overall index) has no effect on the relationship between executives’ equity incentives and earnings management. This result indicates that whereas some corporate governance mechanisms can reduce earnings management in general, they do not affect wealth driven incentives to manipulate accruals. In total, results question the effectiveness of the corporate governance system in mitigating opportunistic behavior motivated by executives’ compensation structures
Corporate Ownership and Control, Volume 17, pp 97-103; doi:10.22495/cocv17i2art9
Abstract:Indonesia’s financial sector is highly dominated by the banking industry than the non-bank. It controlled almost 74% of Indonesia’s financial assets in 2014. After post-crisis restructuration, the banking sector has become stronger, with a higher capital adequacy ratio and profitability. While, the non-bank financial industry is expected to solve the problems in the Indonesian economy, as well as becoming one of the long-term economic instruments. The purpose of this study is to test and analyse the effect of financial performance and the implementation of corporate governance on the non-bank financial industry stock prices on the Indonesia Stock Exchange in 2012-1016. The research population includes the non-bank financial industry listed in IDX, as many as 37 companies. This study found the probability, managerial ownership, institutional ownership and the composition of the independent commissioner partially and simultaneously does not significantly influence the stock price of the non-bank financial industry.
Corporate Ownership and Control, Volume 17, pp 88-96; doi:10.22495/cocv17i2art8
Abstract:Top management succession may be a real threat to the long-term profitability of companies, in particular when it involves the founder whose name also identifies their brand and their products. This is extremely important in the luxury sector where loyalty, trust and the image of brands in consumers’ minds may be affected by the succession process, especially when the founder has no direct heir to ensure continuity of the family firm. Through an analysis of three case studies, as well as a questionnaire distributed to active consumers of luxury products, this study aims to understand whether and how a brand can successfully survive after the death of its founder and whether the purchasing behaviour of customers changes after a founder succession takes place. Our findings reveal that the lack of a clear and structured succession plan may significantly threaten the survival of companies. In addition, our evidence indicates that the purchasing intention of luxury consumers is linked more to the bond and the values that they share with the founder than to the quality of the goods purchased. Accordingly, our results provide insights and suggestions concerning the optimal approach to follow when companies with heirless founders are planning a succession and highlights that the success and the survival of such entities is linked to consumers’ perceptions of the extent to which there are continuity and alignment between the values of the founder and those of their successors.
Corporate Ownership and Control, Volume 17, pp 77-87; doi:10.22495/cocv17i2art7
Abstract:Ownership structure plays a vital role in stock market liquidity. We analyze the impact of ownership concentration, institutional ownership and earnings management on stock market liquidity. We select 114 firms from manufacturing sector of Pakistan, India, Australia and Singapore. We extract data from DataStream from 2010 to 2018 of selected countries. We apply Generalized Method of Moments (GMM) to analyze the data. We find that ownership concentration, institutional ownership and earnings management significantly affect the stock market liquidity.
Corporate Ownership and Control, Volume 17, pp 65-76; doi:10.22495/cocv17i2art6
Abstract:Today, to integrate sustainable development goals into business, an overall integrated sustainable performance management system — to implement and measure these global goals — is needed. In a short timeframe, the benefit impact assessment (BIA) — elaborated by B Lab, utilized by benefit corporations (a new and emerging hybrid type of prosocial business) and adopted by the United Nations — became the most comprehensive indicator to evaluate company practices against SDGs. Italy was the first sovereign country to insert the benefit corporation legislation after the US and analyze the effectiveness of the BIA. This prompted us to address our attention to the integration of benefit-driven indicators, adopted by Italian B Corps into their performance management systems, and to analyze if these indicators are used by managers to support internal decision-making. To achieve this goal, cross-sector semi-structured interviews were conducted in seven Italian certified benefit corporations. Relevant to both researchers and practitioners, our review provides a useful snapshot of how the BIA is developing as an assessment and how value-based organizations are moving toward an integrated sustainable performance management system.