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Contemporary Issues in Corporate Governance and Firm Performance
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Contemporary Issues in Corporate Governance and Firm Performance

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Economics and Finance".

Deadline for manuscript submissions: closed (28 February 2023) | Viewed by 23178

Special Issue Editors

Prof. Dr. Alireza Tourani Rad

E-Mail Website
Guest Editor
Department of Finance, Faculty of Business, Economics and Law, Auckland University of Technology, 42 Wakefield Street, Auckland 1010, New Zealand
Interests: corporate finance and governance; financial and commodities markets; international finance; fund performance
Prof. Dr. Aaron Gilbert

E-Mail Website
Guest Editor
Department of Finance, Faculty of Business, Economics and Law, Auckland University of Technology, 42 Wakefield Street, Auckland 1010, New Zealand
Interests: corporate finance and governance; law and finance; financial literacy; NZ superannuation

Special Issue Information

Dear Colleagues,

Over the past 20 years, we have seen a rapid growth in our knowledge of how corporate governance impacts firm performance, both in loacl and international settings. This growth has resulted in attention being paid to governance features that had previously been overlooked such as cultural diversity of the board, social capital of directors, and impact of international institutional investors. While considerable research has been done, and a vast array of governance mechanisms and features have been studied, there is much still to be explored. This is compounded by the rapidly changing ways that firms adopt new governance arrangements. In this special issue, we seek papers addressing how firms and their performance is affected by a broad range of governance mechanisms and features. We invite papers on a range of topics including but limited to:

  • Theories of Corporate Governance
  • The composition and diversity of the board of directors including human and social capital, skills, and experiences
  • Shareholders vs Stakeholders
  • Executive Compensation Schemes
  • Institutional and managerial ownerships including how the nature of the institution impacts corporate governance, i.e., passive vs active funds, impact investors, etc.
  • Firm Disclosure and Reporting including studies based on textual analysis of narrative disclosures

Prof. Dr. Alireza Tourani Rad
Prof. Dr. Aaron Gilbert
Guest Editors

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Journal of Risk and Financial Management is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • Governance
  • Board of Directors
  • Social Capital
  • Ownership structure
  • Disclosure

Published Papers (8 papers)

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Research

21 pages, 1119 KiB  
Article
External vs. In-House Advising Service: Evidence from the Financial Industry Acquisitions
by Jian Huang, Han Yu and Zhen Zhang
J. Risk Financial Manag. 2023, 16(2), 66; https://0-doi-org.brum.beds.ac.uk/10.3390/jrfm16020066 - 23 Jan 2023
Viewed by 1214
Abstract
This study analyzes the wealth impact on M&A deals when the acquirers in the financial industry utilize external versus in-house advising services. A quasi-natural observatory setting is applied to investigate the costs and benefits of retaining a financial advisor. Based on agency theory, [...] Read more.
This study analyzes the wealth impact on M&A deals when the acquirers in the financial industry utilize external versus in-house advising services. A quasi-natural observatory setting is applied to investigate the costs and benefits of retaining a financial advisor. Based on agency theory, information asymmetry and conflict of interest both exist in the setting of M&A deals when acquirers use advisory services. We first find that almost 40% of financial acquirers are more likely to use in-house advising services, the frequency of which is significantly higher than that of non-financial acquisitions previously documented. Further, we find that in certain complex deals of greater information asymmetry, the frequency of retaining advisory services in-house is even higher. This finding suggests that for financial acquirers who possess expertise in the M&A market, the concern of conflict of interests (i.e., misaligned incentives) between the acquirers and their advisors are more salient than the concern of information asymmetry. More importantly, using the two-stage regressions method controlling the endogeneity of the choice between in-house versus external advisory services, this study finds that the three-day abnormal returns around the acquisition announcements are 4.5% higher for the acquirers retaining in-house advisory services, 18.7% higher for the corresponding target, and the combined merger gains are 2.2% higher. Overall, our findings provide direct evidence of the agency cost when an external advisor is hired and document the incremental values that the financial acquirers’ in-house advisory services may create. Full article
(This article belongs to the Special Issue Contemporary Issues in Corporate Governance and Firm Performance)
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16 pages, 821 KiB  
Article
The Impact of CEO Educational Background on Corporate Risk-Taking in China
by Jinyi Zhang, Chunxiao Xue and Jianing Zhang
J. Risk Financial Manag. 2023, 16(1), 9; https://0-doi-org.brum.beds.ac.uk/10.3390/jrfm16010009 - 24 Dec 2022
Cited by 5 | Viewed by 2486
Abstract
This article investigates whether, and how, CEO educational background affects Chinese corporate risk-taking. Using a sample of 4681 firm-year observations from 2012 to 2020, we find that CEO educational background is negatively associated with corporate risk-taking. The nonlinear quadratic regression shows a convex [...] Read more.
This article investigates whether, and how, CEO educational background affects Chinese corporate risk-taking. Using a sample of 4681 firm-year observations from 2012 to 2020, we find that CEO educational background is negatively associated with corporate risk-taking. The nonlinear quadratic regression shows a convex relationship, consistent with the finding that the effect is more profound for the subsample with relatively lower education levels. The negative relationship is stronger for the firms with higher leverage, with lower tangibility, and in non-manufacturing industries. We also address the endogeneity issue using a two-stage least squares regression. This paper may provide valuable insights for shareholders, helping them to hire the most suitable CEOs to achieve shareholders’ objectives and increase the corporation’s competitiveness in the market. Full article
(This article belongs to the Special Issue Contemporary Issues in Corporate Governance and Firm Performance)
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21 pages, 383 KiB  
Article
Disentangling Director Attributes: Human Capital versus Social Capital of Directors
by Angela Andersen, Alexandre Garel, Aaron Gilbert and Alireza Tourani-Rad
J. Risk Financial Manag. 2022, 15(8), 336; https://0-doi-org.brum.beds.ac.uk/10.3390/jrfm15080336 - 29 Jul 2022
Viewed by 1301
Abstract
This study seeks to disentangle the human capital and the social capital of directors to improve our understanding of the value that directors bring to their boardroom. Employing social network analysis (SNA) to measure the social capital of directors and using a unique [...] Read more.
This study seeks to disentangle the human capital and the social capital of directors to improve our understanding of the value that directors bring to their boardroom. Employing social network analysis (SNA) to measure the social capital of directors and using a unique and comprehensive sample of New Zealand publicly listed firms over the period of 2000–2015, we find a positive and significant relationship between the human capital and the social capital of directors, where the human capital appears to predict changes in social capital. We contend that the growing literature in the area of corporate finance and governance investigating the impact of characteristics of directors on corporate outcomes, need to take note of the complementary impact that social capital can have in addition to human capital. Full article
(This article belongs to the Special Issue Contemporary Issues in Corporate Governance and Firm Performance)
23 pages, 411 KiB  
Article
Does Board Cultural Diversity Contributed by Foreign Directors Improve Firm Performance? Evidence from Australia
by Olga Dodd and Bowen Zheng
J. Risk Financial Manag. 2022, 15(8), 332; https://0-doi-org.brum.beds.ac.uk/10.3390/jrfm15080332 - 27 Jul 2022
Cited by 5 | Viewed by 2620
Abstract
Australian firms hire an increasing number of foreign directors who bring various cultural perspectives to their boards’ conversations. We evaluate the effect of board cultural diversity contributed by foreign directors on firm performance for a sample of Australian companies, constituents of ASX200. We [...] Read more.
Australian firms hire an increasing number of foreign directors who bring various cultural perspectives to their boards’ conversations. We evaluate the effect of board cultural diversity contributed by foreign directors on firm performance for a sample of Australian companies, constituents of ASX200. We employ Hofstede’s six cultural dimensions to estimate board cultural diversity. We document a positive relationship between board cultural diversity and firm performance as measured by Tobin’s q and ROA after controlling for various board and firm characteristics. This suggests that more culturally diverse boards may bring benefits to their firms that outweigh the potential costs of conflict and miscommunication caused by cultural differences. Our finding holds after controlling for firm and time fixed effects, implementing an instrumental variable approach, controlling for a firm’s foreign operations and presence, and using alternative cultural diversity measures. We find that not all aspects of cultural differences matter, and it is the diversity in masculinity, uncertainty avoidance, and long-term orientation dimensions that positively determine firm performance. This finding on the positive effect of board cultural diversity for Australian firms contrasts with the evidence from other countries, highlighting that the value of cultural diversity can differ across countries and over time. Full article
(This article belongs to the Special Issue Contemporary Issues in Corporate Governance and Firm Performance)
28 pages, 2118 KiB  
Article
Residual State Ownership and Firm Performance: A Case of Vietnam
by Manh Hoang Nguyen and Thi Quy Vo
J. Risk Financial Manag. 2022, 15(6), 259; https://0-doi-org.brum.beds.ac.uk/10.3390/jrfm15060259 - 09 Jun 2022
Cited by 1 | Viewed by 2294
Abstract
Privatization has played an important role in national economic reform in Vietnam. However, unlike other transitional countries in Central and Eastern Europe, Vietnam has chosen a partial and gradual privatization where the government still holds significant ownership in most privatized firms. Whether partial [...] Read more.
Privatization has played an important role in national economic reform in Vietnam. However, unlike other transitional countries in Central and Eastern Europe, Vietnam has chosen a partial and gradual privatization where the government still holds significant ownership in most privatized firms. Whether partial privatization can enhance privatized firms’ performance or full privatization should have been implemented is a critical question that needs to be answered. This paper utilizes semiparametric regressions to study the relationship between residual state ownership and firm performance. The results indicate an inverted U relationship between state ownership and firm performance. We show that the performance of privatized firms improves with an increase in the level of state ownership until around 40%, after which the effect of state ownership on firm performance tends to decline. This demonstrates that in a transitional context, relinquishing governmental control via privatization can significantly benefit privatized firm performance. However, further reduction of state ownership may decrease the performance of privatized firms. Overall, the study contributes significantly to the growing body of evidence on the nonlinear effects of state ownership. This suggests that in the transitional context of Vietnam, due to weak corporate governance and limited protection of minority shareholders, there could be a temporary optimal position where state and private investors hold balanced ownership to simultaneously supervise operations and promote the performance of privatized firms. Full article
(This article belongs to the Special Issue Contemporary Issues in Corporate Governance and Firm Performance)
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17 pages, 344 KiB  
Article
The Impact of CEO Duality and Financial Performance on CSR Disclosure: Empirical Evidence from State-Owned Enterprises in China
by Cosmina L. Voinea, Fawad Rauf, Khwaja Naveed and Cosmin Fratostiteanu
J. Risk Financial Manag. 2022, 15(1), 37; https://0-doi-org.brum.beds.ac.uk/10.3390/jrfm15010037 - 15 Jan 2022
Cited by 12 | Viewed by 5279
Abstract
This paper studies the effects of a firm’s financial performance (FP) and chief executive officer’s (CEO) duality on the quality of corporate social responsibility (CSR) disclosure in the context of state-owned enterprises (SOEs) among Chinese A-share-registered companies. The results depict a negative relationship [...] Read more.
This paper studies the effects of a firm’s financial performance (FP) and chief executive officer’s (CEO) duality on the quality of corporate social responsibility (CSR) disclosure in the context of state-owned enterprises (SOEs) among Chinese A-share-registered companies. The results depict a negative relationship between CEO duality and CSR disclosure. Our results demonstrate that better-performing firms disclose CSR information more frequently and of higher quality compared with firms with poor financial performance. This role of financial performance in the quality of CSR disclosure is generally valuable in public enterprises; however, it is relatively sluggish in state-owned enterprises the outcomes indicate that the dual leadership structure reduces assessments and renders CEOs less liable to their stakeholders. Therefore, this study offers valuable information and details for regulators to improve corporate governance and CSR from the perspective of stakeholder theory. Full article
(This article belongs to the Special Issue Contemporary Issues in Corporate Governance and Firm Performance)
15 pages, 338 KiB  
Article
Does Board Diversity Attract Foreign Institutional Ownership? Insights from the Chinese Equity Market
by Shoukat Ali, Ramiz Ur Rehman, Muhammad Ishfaq Ahmad and Joe Ueng
J. Risk Financial Manag. 2021, 14(11), 507; https://0-doi-org.brum.beds.ac.uk/10.3390/jrfm14110507 - 21 Oct 2021
Cited by 4 | Viewed by 1996
Abstract
The study aimed to empirically investigate the impact of board diversity variables (age, gender, nationality, education, tenure, and expertise) on the investment preferences of foreign institutional investors in an emerging market, China. For this, sample data consisted of 1374 nonfinancial Chinese firms from [...] Read more.
The study aimed to empirically investigate the impact of board diversity variables (age, gender, nationality, education, tenure, and expertise) on the investment preferences of foreign institutional investors in an emerging market, China. For this, sample data consisted of 1374 nonfinancial Chinese firms from 2009 to 2018. The study used OLS regression as a baseline regression, a fixed effect model to control omitted variable bias, and the two-step systems GMM model to control the endogeneity problem. The study revealed that board diversity variables (gender, nationality, education, and financial expertise) are positively associated with foreign institutional ownership in Chinese nonfinancial firms, implying that foreign institutional investors own a high percentage of Chinese nonfinancial firms with diversity of gender, nationality, education, and financial expertise. Age and tenure of board diversity, on the other hand, have little correlation with foreign institutional ownership. Further, the robustness regressions also confirmed the relationship between board diversity and foreign institutional ownership. This study made a unique attempt to provide empirical evidence that firms having diverse boards attract foreign institutional ownership by reducing asymmetric information. Full article
(This article belongs to the Special Issue Contemporary Issues in Corporate Governance and Firm Performance)
20 pages, 385 KiB  
Article
The Effect of Misalignment of CEO Personality and Corporate Governance Structures on Firm Performance
by Irene M. Gordon, Karel Hrazdil, Johnny Jermias and Xin Li
J. Risk Financial Manag. 2021, 14(8), 375; https://0-doi-org.brum.beds.ac.uk/10.3390/jrfm14080375 - 15 Aug 2021
Cited by 5 | Viewed by 4039
Abstract
We utilize the IBM Watson Personality Insights service to analyze CEOs’ verbal communication during conference calls to infer CEOs’ Big Five personality traits, which we employ to estimate their risk tolerance levels. We then explore whether the misalignment of CEO risk tolerance and [...] Read more.
We utilize the IBM Watson Personality Insights service to analyze CEOs’ verbal communication during conference calls to infer CEOs’ Big Five personality traits, which we employ to estimate their risk tolerance levels. We then explore whether the misalignment of CEO risk tolerance and governance structures is associated with company performance. Using a two-stage contingency approach, we test two hypotheses: (1) CEO risk tolerance and corporate governance structures are associated; and (2) misalignment of these structures with risk tolerance is negatively associated with financial performance. Based on a sample of 8208 firm-year observations during 2002–2013, we find support for both predictions. Our results support upper echelons theory and suggest that knowledge about CEOs’ inherent personality traits is important and relevant for governance mechanisms to work effectively. Full article
(This article belongs to the Special Issue Contemporary Issues in Corporate Governance and Firm Performance)
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