Corporate governance and extent of corporate sustainability practice: the role of investor activism

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nusirat Ojuolape Gold ◽  
Fauziah Md. Taib
Keyword(s):  
Corporate Governance ◽  
Corporate Sustainability ◽  
Ordered Probit ◽  
Business Practices ◽  
Probit Regression ◽  
Climate Effect ◽  
Content Type ◽  
Sustainability Practices ◽  
Sustainability Practice

Purpose Following the unceasing pressure on companies to adopt sustainable business practices to mitigate climate effect, this study aims to examine corporate governance (CG) attributes and role of activist investors in influencing extensive sustainability practice for firms in the developed and emerging climes. Design/methodology/approach Using a panel ordered probit regression analysis for 368 companies over 2016 to 2019, the study examined CG attributes that drive extensive corporate sustainability practice. The study addressed endogeneity bias using STATA Extended panel ordered probit regression model with endogenous covariates. Findings The result showed CG attributes is critical for firms, and activist investors play a critical role in driving extensive sustainability practice. Findings further reveal the extent of adoption is relatively low in the emerging climes but showed sign of improvement over the years examined. Research limitations/implications The study focused mainly on larger firms operating in different sectors globally. Hence, findings cannot be generalized for small sized entities. Practical implications The study provides an insightful explanation regarding the extensive sustainability practices and the vital role assumed by activist investors. Social implications The increasing number of companies responding to Carbon Disclosure Project and consequent improvement in scores indicates a corporate commitment to ensuring a sustainable future. Originality/value This research offers significant insights to the extent discussion on attributes of CG critical for sustainability practice. The findings ascertain useful tools to aid the continued adoption of sound sustainability practices around the globe.

Sustainable corporate governance and new auditing issues: a preliminary empirical evidence on key audit matters

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Pietro Fera ◽  
Michele Pizzo ◽  
Rosa Vinciguerra ◽  
Giorgio Ricciardi
Keyword(s):  
Corporate Governance ◽  
Stock Exchange ◽  
Corporate Sustainability ◽  
Quantitative Methodology ◽  
Audit Process ◽  
Governance System ◽  
Content Type ◽  
Corporate Governance System ◽  
The Impact

Purpose This paper aims to investigate the relationship between the quality of internal corporate governance mechanisms and the audit issues disclosed by external auditors in their report, assuming the beneficial effect related to the adoption of a sustainable corporate governance system. Design/methodology/approach This paper investigates the impact of the International Auditing and Assurance Standards Board’s ISA 701 in the European context as a new auditing principle supporting the key audit matters (KAMs) in reporting and disclosing auditing activities. The analysis is carried out through a quantitative methodology using a sample composed of non-financial companies listed on the Italian Stock Exchange. Findings Empirical findings highlight that firms having a high quality and sustainable corporate governance system tend to have fewer KAMs arising from the audit process and then disclosed in the audit report. To ensure the reliability of the empirical analysis, the authors controlled for a set of variables that could affect the audit function and for the mediating role of the overall business complexity (as proxied by the firm size). Originality/value This study is of interest to academics, practitioners and regulators, as it highlights the role of a higher quality internal corporate governance on the perceived corporate riskiness and complexity. It contributes to the recent debate on sustainable corporate governance, corporate sustainability and auditing streams.

An investigation into the role of enterprise information systems in enabling business innovation

2015 ◽  
Vol 21 (4) ◽  
pp. 771-790 ◽  
Author(s):  
Luay Anaya ◽  
Mohammed Dulaimi ◽  
Sherief Abdallah
Keyword(s):  
Information Systems ◽  
Case Studies ◽  
United Arab Emirates ◽  
Clear Understanding ◽  
Business Practices ◽  
Enterprise Information ◽  
Content Type ◽  
Enterprise Information Systems ◽  
Business Innovation

Purpose – The purpose of this paper is to articulate clear understanding about the role of enterprise information systems (EIS) in developing innovative business practices. Particularly, it aims to explore the different ways that make EIS enables innovation development. Design/methodology/approach – The study adopted exploratory case study, based on qualitative approach. Investigations included two case studies each involved interviewing a number of senior information technology staff, working at these cases. Findings – The paper provides empirical insights about the EIS role in enabling innovation. The analysis of the case studies revealed that integrating an EIS with other system(s) or with digital devices can provide new practices that could not be easily available without these technologies. The study also found that applying data analytics tools into data accumulated from EIS, to extract new insights, lead to innovative practices. Practical implications – The study provides a set of recommendations for organizations interested to maximize the benefits from their investments in EIS. Originality/value – The paper provides evidences from cases in United Arab Emirates for the EIS role in enabling business innovation.

scholarly journals Stewardship theory: is board accountability necessary?

2017 ◽  
Vol 59 (6) ◽  
pp. 1292-1314 ◽  
Author(s):  
Andrew Keay
Keyword(s):  
Corporate Governance ◽  
Agency Theory ◽  
Design Methodology ◽  
Agency Problems ◽  
Stewardship Theory ◽  
Content Type ◽  
General Terms ◽  
Practical Implications

Purpose The purpose of the paper is to demonstrate that notwithstanding the fact that stewardship theory embraces things like trust of directors, their professionalism, loyalty and willingness to be concerned for the interests of others, as well as rejecting the foundations of classic agency problems that are asserted by agency theory, board accountability is as relevant to stewardship theory as it is to agency theory. Design/methodology/approach The paper applies the theory underlying board accountability in corporate governance, which is so often applied both in the corporate governance literature and in practice with agency theory in mind, to stewardship theory. Findings While the idea of accountability of boards is generally associated with an explanation and conceptualisation of the role and behaviour of directors as agents within classic agency theory, the paper demonstrates that board accountability is a necessary part of board life even if the role of directors is explained and conceptualised in terms of stewardship theory. Practical implications The paper suggests some accountability mechanisms that might be employed in a stewardship approach. Originality/value While many authors have talked in general terms about board accountability and its importance, this is the first paper that has engaged in a substantial study that links board accountability directly with stewardship theory, and to establish that accountability is necessary.

Identification and prioritization of corporate sustainability practices using analytical hierarchy process

2015 ◽  
Vol 10 (1) ◽  
pp. 23-49 ◽  
Author(s):  
Praveen Goyal ◽  
Zillur Rahman ◽  
Absar Ahmad Kazmi
Keyword(s):  
Manufacturing Sector ◽  
Corporate Sustainability ◽  
Pollution Prevention ◽  
Analytic Hierarchy ◽  
Content Type ◽  
Scarce Resources ◽  
Sustainability Performance ◽  
Corporate Sustainability Performance ◽  
Sustainability Practices ◽  
Hierarchy Process

Purpose – The purpose of this paper is to identify and prioritize the corporate sustainability practices to improve the corporate sustainability performance in the manufacturing sector. Further, these practices are being prioritized to find out the essential practices to ensure logical allocation of limited resources. Design/methodology/approach – It examines the corporate sustainability practices which have been shortlisted from both the literature review and experts judgment. Then, analytic hierarchy process has been used to assess the identified 12 practices of corporate sustainability and to find their priorities for improvement of the corporate sustainability performance. Findings – Based on the hierarchical model developed in this study, the analysis reveals market value, environment management and strategy, research and development, pollution prevention, corporate governance and investor responsibility, which have been found to be the most important practices in improving the corporate sustainability performance. Practical implications – The findings of the study would be useful to the practitioners in the proper allocation of scarce resources to optimize the corporate sustainability performance of firms, especially the manufacturing entities. Originality/value – It is a fact that multi-faceted nature of corporate sustainability includes both subjective and objective dimensions. Therefore, prioritization of corporate sustainability at the factor level is one of the important contributions to the literature that has been addressed in the present study. The results of this paper may be generalized to the other sectors.

CEO behavior and sustainability performance: the moderating role of corporate governance

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Amel Kouaib ◽  
Asma Bouzouitina ◽  
Anis Jarboui
Keyword(s):  
Corporate Governance ◽  
Real Estate ◽  
Corporate Sustainability ◽  
Least Square ◽  
Content Type ◽  
Sustainability Performance ◽  
Corporate Sustainability Performance ◽  
Good Corporate Governance ◽  
Governance Practices ◽  
The Impact

PurposeThis paper explores how the tension between a firm's CEO overconfidence feature and externally observable hubris attribute may determine the level of corporate sustainability performance. This work also contemplates the impact of the moderator “corporate governance practices.”Design/methodology/approachThis study uses a sample of 658 firm-year-observations using a sample of European real estate firms indexed on Stoxx Europe 600 Index from 2006 to 2019. To test the developed hypotheses, feasible generalized least square (FGLS) regression is applied.FindingsFindings suggest that a good corporate governance score strengthens the positive effect of the psychological bias (CEO overconfidence) on corporate sustainability performance while it fails to attenuate the negative effect of the cognitive bias (CEO hubris).Research limitations/implicationsThe research provides an overview of the impact of CEO personality traits on the corporate sustainability performance level in the European real estate sup-sector. As corporate governance can have a major impact to control these traits, the authors recommend European real estate companies to improve their corporate governance practices.Originality/valueThis study contributes to the existent literature this gap with two empirical novelties: (1) providing a novel insight into sustainability involvement using a sample of European real estate sup-sector and (2) investigating the moderating effect on the link between CEO psychological and cognitive biases and sustainability performance. This study provides empirical evidence that entrenchment problems arising from CEO hubris would not be mitigated by a good corporate governance practice.

Translating sustainability strategies into performance: does sustainability performance management matter?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ruzita Jusoh ◽  
Yazkhiruni Yahya ◽  
Suria Zainuddin ◽  
Kaveh Asiaei
Keyword(s):  
Performance Management ◽  
Resource Constraints ◽  
Corporate Sustainability ◽  
Content Type ◽  
Sustainability Performance ◽  
Mediating Role ◽  
Management Accountants ◽  
Accounting Control ◽  
Indirect Relationship

Purpose Drawing on the natural resource-based view (NRBV) of the firm, this study aims to investigate the mediating role of sustainability performance management (SPM) practices in the relationship between corporate sustainability strategy (SS) and sustainability performance (SP). The conceptualization of SS and SPM practices follow the NRBV resources and capabilities to promote sustainability for competitiveness. Design/methodology/approach Data for the study were collected through a questionnaire from 114 small-medium to large organizations within environmentally sensitive industries operating in Malaysia. Findings The results indicate the indirect relationship between SS and SP through SPM practices. The results suggest that SS can only be realized through a broader management accounting control system (such as SPM practices) that provides information to generate, analyze and control environmental, social, economic and governance performance. Practical implications As some organizations may face their resource constraints, this study may help managers and management accountants prioritize their focus on SS and adopt the necessary SPM practices to enhance their SP. Originality/value This study sheds new light on the role of the SPM practices adopted by firms to manage their SS.

Economic role of politics and corporate governance: reforms captured in Malaysia’s setting

2017 ◽  
Vol 59 (6) ◽  
pp. 839-853 ◽  
Author(s):  
Nurul Nazlia Jamil
Keyword(s):  
Corporate Governance ◽  
Emerging Market ◽  
Political Influence ◽  
Political Agenda ◽  
The Political ◽  
Content Type ◽  
Economic Role ◽  
Corporate Governance Reforms ◽  
Governance Reforms

Purpose This study aims to examine the economic role of politics on corporate governance reforms in one of emerging market, namely, Malaysia. Design/methodology/approach The paper is based upon a literature review analysis. Findings The Malaysian economic, political and social settings have resulted in undue state and detrimental political influence on business, and yet the corporate governance reforms undertaken seemed not be able to resolve the matter. It is suggesting that it would be beneficial for Malaysia to have more independent regulatory bodies representing a wide variety of stakeholders to improve the transparency and accountability to ensure that the reforms are effectively enforced without conflicting with the political agenda. Legal institutional reforms also may be needed to improve the structure, capacity and performance of judicial system, as it is capable to capture reliance of economic role of politics and promoting accountability in Malaysia. Research limitations/implications The economic role of politics on corporate governance reforms is merely to broaden the political strategy in the corporate sector as the change in politics can improve the effectiveness of corporate governance reforms. Moreover, the economic role of politics raises the tone of the corporate governance reforms, and it implies that policymakers need to have effective corporate governance strategy in dealing with the reforms initiatives in areas that have strong political interventions. Originality/value Regulatory and judicial implications are offered as a means to improve corporate governance in Malaysia.

Determinants of voluntary formation of risk management committees

2014 ◽  
Vol 29 (7) ◽  
pp. 649-671 ◽  
Author(s):  
Nkoko Blessy Sekome ◽  
Tesfaye Taddesse Lemma
Keyword(s):  
South Africa ◽  
Risk Management ◽  
Corporate Governance ◽  
Management Practices ◽  
Emerging Economy ◽  
Board Structure ◽  
Content Type ◽  
Listed Firms ◽  
Practical Implications

Purpose – The aim of this paper is to examine the nexus between firm-specific attributes and a company’s decision to setup a separate risk management committee (RMC) as a sub-committee of the board within the context of an emerging economy, South Africa. Design/methodology/approach – The authors analyse data extracted from audited annual financial reports of 181 non-financial firms listed on the Johannesburg Securities Exchange (JSE) by using logistic regression technique. Findings – The results show a strong positive relationship between the existence of a separate RMC and board independence, board size, firm size and industry type. However, the authors fail to find support for the hypotheses that independent board chairman, auditor reputation, reporting risk and financial leverage have an influence on a firm’s decision to establish RMC as a separately standing committee in the board structure. The findings signify the role of costs associated with information asymmetry, agency, upkeep of a standalone RMC, damage to the reputation of directors and industry-specific idiosyncrasies on a firm’s decision to form a separate RMC. Research limitations/implications – As in most empirical studies, this study focuses on listed firms. Nonetheless, future studies that focus on non-listed firms could add additional insights to the literature. Investigating the role of firm-specific governance attributes other than those considered in the present study (e.g. gender of directors, ownership structure, etc.) could further enhance the understanding of antecedents of risk-management practices. Practical implications – The findings have practical implications for the investment community in assessing the quality of risk management practices of companies listed on the JSE. Furthermore, the results provide insights that are potentially useful to the King Committee and other corporate governance regulators in South Africa in their effort to improve corporate governance practices. Originality/value – The present study focuses on firms drawn from an emerging economy which has profound economic, institutional, political and cultural differences compared to advanced economies, which have received a disproportionately higher share of attention in prior studies. Thus, the study contributes additional insights to the literature on corporate risk management from the perspective of an emerging economy.

The effectiveness of e-corporate governance: an exploratory study of internet voting at shareholders’ annual meetings in France

2020 ◽  
Vol 20 (4) ◽  
pp. 673-702
Author(s):  
Sonia Abdennadher ◽  
Walid Cheffi
Keyword(s):  
Corporate Governance ◽  
Practical Implementation ◽  
Business Law ◽  
Content Type ◽  
Internet Voting ◽  
Documentary Analysis ◽  
Governance Effectiveness ◽  
Voting System ◽  
The Relationship

Purpose E-corporate governance or the use of technologies and information systems (ISs) in corporate governance, is still a subject that is too seldom addressed in business research. This paper is at the intersection between two fields of research (corporate governance and the management of ISs), which are interdependent in ways that are still unexplored. The paper analyzes the implications of internet voting (IV) at shareholders’ annual meetings (SAM) for the corporate governance of listed companies in France, in particular for the relationship between executives and shareholders. Most of the studies that have dealt with IV at SAM have focused on techno-legal issues and were often conducted by business law researchers. The purpose of this paper is to investigate the implications of the new voting system through the prism of corporate governance. Design/methodology/approach The authors proceeded by triangulation of methods. This qualitative study is based on observations, interviews and documentary analysis. It assessed the IV implications for both the issuing companies and the shareholders. Findings The new voting system brings undeniable competitive advantage to the issuing company and facilitates shareholders’ activism, yet it has serious risks both for the corporations and for certain categories of the shareholder. Interestingly, the authors propose an original and field-grounded typology that distinguishes the risks and benefits associated with IV in relation to executives’ attitudes. Social implications The paper shows that the resolving of identified deficiencies with IV development could contribute to the alignment of companies’ interests with those of shareholders. Moreover, the study calls for policymakers to appoint an official body to regulate the practical implementation of the new system and to prevent its dissemination being held hostage to the executives’ willingness. Originality/value An original aspect of this research lies in the effective operationalization of the constructs of corporate governance effectiveness with a view to examining corporate governance as a set of technologically mediated practices. Moreover, this study emphasizes the key role of the construct of “executives’ willingness” in facilitating/impeding IV diffusion. This underlies their attempts to reverse the corporate governance relationship.

scholarly journals Can compensation committees effectively mitigate the CEO horizon problem? The role of co-opted directors

2020 ◽  
Vol 34 (1) ◽  
pp. 1-21
Author(s):  
Ruonan Liu
Keyword(s):  
Corporate Governance ◽  
Research And Development ◽  
Empirical Evidence ◽  
Design Methodology ◽  
Ceo Compensation ◽  
Content Type ◽  
Horizon Problem ◽  
Accruals Management ◽  
Compensation Committees

Purpose This study aims to examine whether compensation committees dominated by co-opted directors are less effective in mitigating the CEO horizon problem. Design/methodology/approach The author uses a sample of 7,280 firm-year observations from 1998 to 2011. Findings In this study, the author finds evidence of opportunistic research and development (R&D) reduction and accruals management in firms with retiring CEOs and compensation committees dominated by co-opted directors. Moreover, it is found that R&D reduction and income-increasing accruals are less discouraged when determining the compensation for retiring CEOs by compensation committees that are dominated by co-opted directors. The results suggest that compensation committees dominated by co-opted directors are less effective in adjusting CEO compensation to mitigate the CEO horizon problem. Originality/value The study reveals that co-opted directors are weak monitors. Moreover, the study adds empirical evidence to the debate of organizations’ CEO horizon problem. Finally, the study adds to the literature on corporate governance, revealing that compensation committees play an important role in mitigating an organization’s CEO horizon problem by adjusting CEO compensation.

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