Corporate Ownership and Control

Journal Information
ISSN / EISSN : 1727-9232 / 1810-0368
Published by: Virtus Interpress (10.22495)
Total articles ≅ 2,752
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Moataz Elmassri, Aisha Yusuf, Aya Khalf Allah, Maryam Al Shamsi, Rizvana Kaniyamparambil, Shauq Majdi Al Ahbabi
Corporate Ownership and Control, Volume 19, pp 158-167; https://doi.org/10.22495/cocv19i3art12

Abstract:
The current study examines the attributes of the sustainability reports produced by public listed companies in the United Arab Emirates (UAE). This is achieved through the adoption of the legitimacy theory (LT) perspective to determine how the reports represent strategic development goals. Global Reporting Initiative (GRI Standards) disclosure standards have been used as a benchmark to assess the quality of UAE companies’ sustainable report in respect of Sustainable Development Goal 11 (SDG 11). We adopt Tsalis, Malamateniou, Koulouriotis, and Nikolaou (2020) methodology in scoring the disclosure quality of SGD 11. 130 sustainable reports were analyzed, it was found that there is a poor overall quality of corporate sustainability reports, not least in respect of SDG 11. There were no major changes to SDG 11, with managers tending to function symbolically in terms of their roles in the level and quality of SDG 11-related disclosures. Thus, the UAE corporate reporting is not significantly influenced by the UAE vision 2030 Agenda (United Nations [UN], 2015).
Mohammad A. Ta’Amnha, Omar M. Bwaliez, Ghazi A. Samawi, Mohammad F. Al-Anaswah
Corporate Ownership and Control, Volume 19, pp 147-157; https://doi.org/10.22495/cocv19i3art11

Abstract:
The purpose of this study is to investigate the relationship between transformational leadership (TL) and change-oriented organizational citizenship behavior (OCB) based on basic assumptions of the job demand-resource (JD-R) model, social exchange theory (SET), and behavioral plasticity theory (BPT). In addition, this study explores the role of the organizational level of resources and individual level of resources on employee wellbeing and attitudes. Based on 698 responses from Jordanian insurance employees, the mediating role of employee wellbeing and the moderating role of core self-evaluation (CSE) were investigated between TL and change-oriented OCB. Data were analyzed based on multiple regression, hierarchical regression, and macro process plugin. The results indicate that transformational leadership is positively related to change-oriented OCB, and this relationship is mediated by employee wellbeing. Moreover, moderated path analysis shows that the positive CSE strengthens the direct effect of TL on employee wellbeing and work attitude, as well as the indirect impact of TL on employee work attitude. The results also suggest that organizational level of support is a critical factor for enhancing employee wellbeing and change-oriented OCB, and this support is more powerful with a high level of personal resources (i.e., positive CSE). The research model provided in this study is the first framework that suggests the mediating effect of employee wellbeing on the direct relationship between TL and change-oriented OCB, as well as the moderating effect of CSE on this indirect relationship.
Yu-Hsin Lu, , Fang-Ci Gu
Corporate Ownership and Control, Volume 19, pp 133-146; https://doi.org/10.22495/cocv19i3art10

Abstract:
Fraud cases have become more common in recent years, highlighting the role of auditors’ legal liability. The competent authorities have called for stricter control and disciplinary measures for auditors, increasing auditors’ legal liability and litigation risk. This study used machine learning (ML) techniques to construct a litigation warning model for auditors to assess audit risk when they evaluate whether accept or terminate an engagement, thus improving audit quality and preventing losses due to litigation. Otherwise, a sample matching method comprised of 64 litigated companies and 128 non-litigated companies was used in this study. First, feature selection technology was used to extract six important influencing factors among the many variables affecting auditors’ litigation risk. Then a decision tree was used to establish a litigation warning model and a decision table for auditors’ reference. The results indicated that the eight outcomes provided by the decision table could effectively distinguish the level of a litigation risk with an accuracy rate of 92.708%. These results can provide useful information to aid auditors in assessing engagement decisions.
Rawia Ahmed, Randika Eramudugoda,
Corporate Ownership and Control, Volume 19, pp 123-132; https://doi.org/10.22495/cocv19i3art9

Abstract:
The board of directors serves two functions in the organization: monitoring and resource provision. Agency theory mainly addresses the former, while resource dependence theory focuses on the latter. However, these theories consistently assume that board members are not only able but also consistently willing to fulfill their roles. From a resource dependence perspective, this means that board members are generally inclined to share their resources (information, social and political connections, and functional experience) with the CEO. We challenge this assumption by postulating that in the context of dyadic conflict between the CEO and board chair, these resources will not be accessible to the CEO, hence the resource provision function of the board will be interrupted. We, therefore, unpack the black box of the board dynamics by merging resource dependence theory with conflict literature to a) present an in-depth description of the CEO-board chair conflict and b) its implications for the CEO (heightened turnover intentions), the board (board cohesion and board’s monitoring role), and the organization. Theoretical and practical implications are discussed.
Chia-Wei Chen, , Meng Zhao, Qiancheng Zheng
Corporate Ownership and Control, Volume 19, pp 112-122; https://doi.org/10.22495/cocv19i3art8

Abstract:
This paper investigates whether and how female board representation will affect firms’ capital structure using a sample of 16,477 firm-year observations during the period from 2006 to 2017 obtained from Taiwan Economic Journal (TEJ). While 67% of Taiwanese firms have female directors, most firms have only one female director. We find that firms with female directors use more debt financing, particularly, more short-term debt. Our results support the notion that female board representation is associated with increased monitoring through increased use of debt, particularly short-term debt. Our results remain consistent with various robustness tests using alternative samples, measures, and methodologies.
Corporate Ownership and Control, Volume 19, pp 101-111; https://doi.org/10.22495/cocv19i3art7

Abstract:
The purpose of this research is to investigate the role of enterprise risk management (ERM), Big4 auditors and firm characteristics on firm value. This population study was conducted in the Indian manufacturing sector. Annual panel data for 11 years (2007–2017) was collected from 60 firms on the National Stock Exchange (NSE). Empirical findings prove that there is variation in Tobin’s Q but no difference in return on assets (ROA) and return on equity (ROE) among firms that have implemented ERM and included Big4 audit firms. The study documents that Q was influenced by the implementation of ERM, liquidity, firm age and firm size. Findings reveal that ERM, firm size, leverage, firm age, liquidity and firm complexity impacted ROA. The study outcome also shows ROE was affected by leverage, firm size, liquidity and firm complexity. This study is a valuable addition to the existing studies on the Indian manufacturing sector and has contributed incredible insights to the empirical literature on firm value from the multidimensional outlook of the purchasers, management, and investors. The findings have several implications for investors, managers and researchers.
Yuwei Wang, Shang-Yin Yang, Chia-Wei Chen
Corporate Ownership and Control, Volume 19, pp 92-100; https://doi.org/10.22495/cocv19i3art6

Abstract:
We study the relationship between directors’ liability insurance and board meeting attendance. We find that directors’ liability insurance and board meeting attendance are positively associated. This suggests that directors’ liability insurance may actually serve a governance role because an insurer definitely has incentives to thoroughly scrutinize the insured. As a result, director’s board meeting attendance rate increases because more monitoring of directors leads to more responsible behaviors of directors. With 98,524 yearly observations at the director level and 8,968 yearly observations at the firm level of listed firms in Taiwan during the period from 2008 to 2015, our empirical findings suggest that, on average, the board meeting attendance rate of insured firms is 2.9 percent higher than that of uninsured firms.
, , Emmanuel Junior Tenakwah
Corporate Ownership and Control, Volume 19, pp 74-91; https://doi.org/10.22495/cocv19i3art5

Abstract:
Recent global events and actions toward climate change have heightened the urgency of sustainability in all aspects of life. However, few studies exist on the incorporation of sustainability principles into the corporate governance practices of small and medium-sized enterprises (SMEs). This study aims to review the current state of the literature on the incorporation of sustainability principles in corporate governance practices of SMEs, validate the outcomes and set future research agenda. This research was conducted using a systematic literature review (SLR). Findings suggest female executives, board size, firm size, board diversity, board independence and ownership concentration are the dominant themes in sustainable corporate governance (SCG) of small businesses. Studies are predominately conducted in the European context with some studies in Asia and North America while studies in Africa and South America are limited. The study showed that corporate governance models of SMEs have excluded pertinent issues such as climate change, digitization, and racial equality. Although the study concentrated on limited but highly relevant literature, the results establish the basis for further studies and enhance debates on sustainable models for corporate governance practices of SMEs. Compared to existing studies, the outcomes of this study emphasise the need to prioritise sustainability-inspired research of SMEs and provide solutions to integrate sustainable practices in small businesses. The study offers a guiding framework for managers and policy makers to promote progressive and sustainable practices in managing SMEs.
Francesco Agliata, Danilo Tuccillo, , Maria Rita Filocamo
Corporate Ownership and Control, Volume 19, pp 64-73; https://doi.org/10.22495/cocv19i3art4

Abstract:
This work is part of the academic debate focused on the information inadequacy of public administrations and the consequent need to imagine an overall reporting system for a fruitful dialogue with the reference community. Financial sustainability requires the implementation of policies that ensure the feasible provision of public services to the present generation, while protecting the needs of future ones, thus ensuring intergenerational equity. Such information does not normally fall in the domain of traditional financial reports; therefore, one naturally questions how information about financial sustainability can be disseminated to the users of local governments. For these reasons, governments should be interested in developing an integrated popular report (IPR). The present research, using a theoretical-deductive methodology, proposes some characteristics and content that an effective integrated popular report should contain in order to respond to the information needs of public sector user groups — citizens, in particular. The research objective can be summarized in the proposition of IPR as a new transparency and communication tool for citizens, which simplifies the existing voluntary reporting in order to jointly acquire the unique benefits of integrated reporting (IR) and popular reporting (PR).
Snow Han
Corporate Ownership and Control, Volume 19, pp 42-63; https://doi.org/10.22495/cocv19i3art3

Abstract:
Industry incumbent firms (existing public peer firms) experience significant negative stock returns around large initial public offerings (IPO) events in the same industry (Hsu, Reed, & Rocholl, 2010), implying a competitive advantage shift resulting from IPO events. We investigate whether such large IPO events generate real impact in the long run and increase the risk and thus cost of equity of incumbent firms. Using data from 1998–2019, we found that within three years after large IPO events, industry incumbents exhibit positive abnormal returns even after controlling for known asset pricing factors. In addition, their default probability also increases. Using intertemporal capital asset pricing model (ICAPM), we show that incumbent firms’ stock returns become more sensitive to economic conditions, in other words, riskier. Following Hou and Robinson (2006), we propose that the increased risk to incumbent firms comes from industry competition. We provide empirical evidence that this is the case. Specifically, firms in industries with low product differentiability, a large number of public firms, and smaller market size have larger increases in expected returns. As robustness tests, we document that industry incumbents exhibit declines in unexpected earnings, which contradicts the notion that the observed positive returns can be attributed to persistent positive cash flow for industry incumbent
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