Impact of corporate network position on strategic risk and company’s performance – evidence from Poland

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Justyna Światowiec-Szczepańska ◽  
Beata Stępień
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Resource Dependence Theory ◽  
Special Focus ◽  
Content Type ◽  
Strategic Risk ◽  
Network Position ◽  
Governance Model ◽  
Corporate Network ◽  
Corporate Governance Model

Purpose The purpose of this study is to investigate the links between a company’s position in a corporate network with its financial performance and strategic risk in the context of the largest Central European stock market. Design/methodology/approach This study integrates the theory of social network analysis (SNA) with corporate governance theory with a special focus on resource dependence theory. Using the framework of network social analysis, the authors use network measures of social capital and embeddedness. Findings The results of studying companies listed on the Polish stock exchange indicate that a company’s corporate network position has a significant negative impact on strategic risk while having no influence on its financial performance. The research also highlights the importance of a firm’s corporate governance model for both performance and strategic risk. Research limitations/implications The data collected, and SNA measures used made it possible to conduct a cross-sectional study. Compared to longitudinal studies, this type of study has a couple of disadvantages addressed in the paper. In the future, the dependencies observed in this study should be tested using longer-term data. Originality/value To the best of the author’s knowledge, this is the first paper integrating the corporate personal and capital networks to test risk and performance dependencies in the context of Poland’s corporate governance model. The findings and conclusions can also be applied to analyzing Central and Eastern Europe stock markets.

scholarly journals Explaining the complexity relationship of CSR and financial performance using neo-institutional theory

2020 ◽  
Vol 27 (3) ◽  
pp. 227-244
Author(s):  
Golrida Karyawati P ◽  
Bambang Subroto ◽  
Sutrisno T ◽  
Erwin Saraswati
Keyword(s):  
Corporate Governance ◽  
Institutional Theory ◽  
Financial Performance ◽  
Developed Countries ◽  
Future Research ◽  
Institutional Factor ◽  
Content Type ◽  
Governance Model ◽  
Corporate Governance Model ◽  
The Relationship

PurposeThis study aims to prove the complexity of the relationship between CSR and financial performance (FP) and to decompose the complexity of the relationship using neo-institutional theory.Design/methodology/approachThis research employs a meta-analysis that integrates 55 various contexts studied between 1998 and 2017 using correlation coefficient as the effect size.FindingsThis study proves that the nature of the relationship between CSR and FP is complex and suggests that the analysis of the relationship between the two variables includes institutional factors to produce generalizable conclusions. Country characteristics, forms and dimensions of CSR, CSR measurements and FP measurements explain the complexity of the relationship between CSR and FP.Research limitations/implicationsFuture research is expected to include industry characteristics and the corporate governance model in the analysis of the relationship between CSR and FP. Differences in industry characteristics affect the selection of CSR forms and dimensions, bringing it the potential to influence the relationship between CSR and FP. The corporate governance model adopted by developing countries and developed countries also has the potential to be an institutional factor to influence the relationship between CSR and FP.Originality/valueThis research proves that the complexity of the relationship between CSR and FP is nature given. This research explores the factors causing the complexity of the relationship using neo-institutional theory, which, to the author's knowledge, has not been done by other researchers.

The association between CEO incentive rewards and earnings management

2014 ◽  
Vol 9 (1) ◽  
pp. 18-36 ◽  
Author(s):  
Habib Jouber ◽  
Hamadi Fakhfakh
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Institutional Factors ◽  
Content Type ◽  
Financial Decisions ◽  
Shareholder Protection ◽  
Governance Model ◽  
Anglo American ◽  
Corporate Governance Quality ◽  
Corporate Governance Model

Purpose – The purpose of this paper is to investigate whether or not there is a link between CEO incentive-based compensation and earnings management and to examine how institutional environment's features influence such link. Design/methodology/approach – To test the predictions, the authors use a panel of 1,500 American, Canadian, British, and French firm-year observation over the period 2004-2008. Findings – The authors find a significant association between earnings management and CEO incentive-based compensation. Moreover, the analysis provides evidence that institutional factors are strong determinants of this association. Specifically, the results show that firms from countries within the Anglo-American corporate governance model, which provides greater protection of shareholder rights, ensures strict enforcement of law, and scores high on board oversight, tend to have lower level of earnings management. The analysis shows however, that beside the formal corporate governance quality, it is relevant to consider weaker shareholder protection and lower law enforcement indexes to explain earnings management in firms from countries within the Euro-Continental corporate governance model. Originality/value – This paper is the first to provide insights regarding the extent to which CEO incentive rewards imply management discretion and to indicate how much institutional features matter. The analysis contributes to two distinct strands of research. It extends prior research on the association between executive compensation and earnings management and adds to the literature demonstrating a relationship between institutional factors and financial decisions.

Culture and corporate governance convergence

2016 ◽  
Vol 58 (5) ◽  
pp. 523-544 ◽  
Author(s):  
Rachael Ajomboh Ntongho
Keyword(s):  
Corporate Governance ◽  
Developed Countries ◽  
Cultural Norms ◽  
Content Type ◽  
Emerging Nations ◽  
Governance Model ◽  
Rules And Principles ◽  
Anglo American ◽  
Corporate Governance Model ◽  
The Impact

Purpose This paper aims to analyse the link between culture and corporate governance. In particular, it demonstrates the impact of culture in inhibiting convergence of corporate governance. Overall, the paper provides an appraisal of corporate governance laws in stakeholder-oriented states that have endured market pressure for convergence. Design/methodology/approach The paper utilises historical trend in analyzing changes in corporate governance regulation in six countries covering three continents with stakeholder-oriented corporate governance model to determine the effect of culture in the convergence or divergence of corporate governance. Findings The view that corporate governance is converging towards the shareholder model largely ignores cultural differences in states. An appraisal of corporate governance rules and principles that have endured Anglo-American influence reveals a strong propensity for cultural norms to dictate areas where changes occur. This paper demonstrates nominal changes in corporate governance regulation and ideologies, as states still turn to design corporate governance rules around their cultural philosophy. The paper also reveals weak political authority for convergence vis-à-vis market forces. Practical implications Laws are strongly embedded in the corporate philosophies of states. Thus, the market and managers need to incorporate national culture into corporate practices for effective implementation. Originality/value Few studies have examined the effect of culture on the convergence of corporate governance regulation, especially across different countries. This study does not only analyze corporate governance in developed countries but also examines emerging nations in Africa where research on convergence is very scarce.

scholarly journals Corporate governance model of a state-owned enterprise: evidence from an Asian emerging market

2014 ◽  
Vol 14 (4) ◽  
pp. 504-514 ◽  
Author(s):  
Hisham Yaacob ◽  
Jefri Basiuni
Keyword(s):  
Corporate Governance ◽  
Emerging Market ◽  
Governance Structure ◽  
Content Type ◽  
Governance Model ◽  
State Owned Enterprise ◽  
Anglo American ◽  
The Government ◽  
And Control ◽  
Corporate Governance Model

Purpose – The purpose of this study is to examine a state-owned enterprise corporate governance model in an Asian emerging market. Corporate governance has attracted much attention and is still a hot topic among shareholders, directors and company regulators. Failure of large corporations in the past decades not only affected the shareholders and investors, rather it adversely affects all the stakeholders. Good corporate governance practices are argued to curb company’s failures due to fraudulent activities, collusion schemes and mismanagement. Design/methodology/approach – The study took the qualitative approach. It utilized case study method. The company is designated as Company R, as the study is not allowed to reveal the company’s real name. Findings – The study found that the corporate governance structure of the board is of unitary or one-tier board, which is common in the Anglo-American settings. The board members are selected and appointed by the government. They are chosen from highly capable and trustworthy government officers to represent and safeguard the government’s interest in the company. As for the ownership structure, it is a typical company with the other Asian state-owned enterprises where the state has full ownership and control of the company. Originality/value – The study fills the gap in the corporate governance model literature, especially in the context of Asian emerging economies’ state-owned companies. Furthermore, the authors believe that this study is among the first to examine the corporate governance model in this country. It shed lights on the corporate governance model in terms of governance structure, the ownership and shareholders’ right, roles of the board, regulatory framework and control mechanism and, finally, disclosure and transparency.

scholarly journals Financial Performance in the Light of Corporate Governance in Polish Family Businesses

2017 ◽  
Vol 17 (2) ◽  
pp. 56-70
Author(s):  
Błażej Socha ◽  
Aleksandra Majda-Kariozen
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Empirical Analysis ◽  
Family Businesses ◽  
Governance Model ◽  
Governance Process ◽  
And Control ◽  
Corporate Governance Model ◽  
The Relationship ◽  
The Empirical Analysis

AbstractThe article presents a view (on the basis of theoretical and empirical analysis) of corporate governance models used in Polish family businesses through financial performance. The empirical analysis covered a sample of 24,000 Polish family businesses in the period of 2008–2013. The use of linear regression has allowed the authors to verify the hypothesis concerning the occurrence of differences in profitability ratios in groups of family businesses using variant management models and allowed verifying the relationship between the degree of control and involvement of the owners in management and financial performance. The received results, though inconclusive, indicate that the involvement of the owner in the governance process can affect the financial aspect of a business. The prepared empirical analysis and conclusions of the article contribute to a better understanding of the measures taken on management and control decisions; what is more, they can provide guidance to the owners of family businesses in shaping the corporate governance model.

The case for professional boards: an assessment of Pozen's corporate governance model

2014 ◽  
Vol 56 (3) ◽  
pp. 197-214 ◽  
Author(s):  
Thomas A. Hemphill ◽  
Gregory J. Laurence
Keyword(s):  
Decision Making ◽  
Corporate Governance ◽  
Global Financial Crisis ◽  
Content Type ◽  
Governance Model ◽  
Main Factors ◽  
Board Decision ◽  
Board Decision Making ◽  
Corporate Governance Model ◽  
Specific Expertise

Purpose – Robert C. Pozen, Chairman Emeritus of MFS Investment Management and a long-time scholar of corporate governance, has proposed a model of professional board directorship that responds to the three main factors he believes underpin ineffective board decision making: the large size of boards; the lack of specific industry expertise; and inadequate director time commitment. The paper aims to discuss these issues. Design/methodology/approach – The authors critically evaluate the efficacy of Pozen's proposed corporate governance model, addressing the three main factors underpinning ineffective board decision making. Findings – A professional board consisting of retired executives with industry-specific expertise is vulnerable to a groupthink mentality, as well as to the availability of such individuals for board directorship seats. Moreover, while industry-specific expertise is a desired attribute of an independent board director, there are other attributes that firms are looking for, including international, regulatory/governmental, risk, technology, and marketing expertise. Lastly, Pozen's recommendations to reduce board size to seven members, as well as increasing the number of hours that independent directors spend on board-related activities (and commensurate compensation received), should be seriously considered as potential value-adding, corporate governance improvements. Originality/value – The authors critically evaluate a corporate governance model that, based on director-related issues arising from the recent global financial crisis, has resurrected the concept of a “professional board” of directors. The authors utilize state-of-the-art academic literature from the fields of corporate governance and organizational behavior to evaluate the merits and de-merits of the proposed corporate governance model, and present their findings (and recommendations) for improvements in corporate governance practices.

Corporate governance model, stakeholder engagement and social issues evidence from European oil and gas industry

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Federica Doni ◽  
Antonio Corvino ◽  
Silvio Bianchi Martini
Keyword(s):  
Corporate Governance ◽  
Stakeholder Engagement ◽  
Oil And Gas ◽  
Social Performance ◽  
Oil And Gas Industry ◽  
Gas Industry ◽  
Content Type ◽  
Governance Model ◽  
Corporate Social ◽  
Corporate Governance Model

Purpose Lately, sustainability issues are increasingly affecting all sectors, even if oil and gas industry is highly required to improve its social performance because of the societal pressure to environmental protection and social welfare. Sustainability concerns and corporate governance features and practices are more and more connected because sustainability has been perceived as a crucial topic by owners and managers. In this perspective, the empirical analysis aims to explore whether and to what extent, sustainability-oriented corporate governance model is linked with social performance. Design/methodology/approach By adopting a multi-theoretical framework that includes the legitimacy theory, the stakeholder theory and the resource-based view theory, this analysis used a sample of 42 large European-listed companies belonging to the oil and gas industry. The authors run fixed effects regression models by using a dependent variable, i.e. the social score, available in ASSET4 Thomson Reuters, and some independent variables focused on sustainable corporate governance models, stakeholder engagement, firm profitability, market value and corporate risk level. Findings Drawing upon the investigation of a moderating effect, findings display that stakeholder engagement is positively associated with corporate social performance and it can be considered an important internal driver able to shape a corporate culture and most likely to address corporate social responsibility issues. Research limitations/implications This study confirms the need to develop an organizational and holistic approach to corporate governance practices by analyzing internal and external governance mechanisms. From the managerial perspective, managers should opt for a sustainable corporate governance model, as it is positively correlated with corporate social performance. Originality/value There is an urgent need to investigate sustainability issues and their potential association with firm internal mechanisms, particularly in the oil and gas industry. This paper can extend the current body of knowledge by pointing out a positive relationship between stakeholder engagement and firm social performance.

Do disclosure and transparency affect bank’s financial performance?

2019 ◽  
Vol 19 (6) ◽  
pp. 1344-1361
Author(s):  
Isaiah Oino
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Financial Performance ◽  
Financial Institutions ◽  
Content Type ◽  
Loan Portfolios ◽  
Cent Level ◽  
Transparency And Disclosure ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of transparency and disclosure on the financial performance of financial institutions. The emphasis is on assessing transparency and disclosure; auditing and compliance; risk management as indicators of corporate governance; and understanding how these parameters affect bank profitability, liquidity and the quality of loan portfolios. Design/methodology/approach A sample of 20 financial institutions was selected, with ten respondents from each, yielding a total sample size of 200. Principal component analysis (PCA), with inbuilt ability to check for composite reliability, was used to obtain composite indices for the corporate governance indicators as well as the indicators of financial performance, based on a set of questions framed for each institution. Findings The analysis demonstrates that greater disclosure and transparency, improved auditing and compliance and better risk management positively affect the financial performance of financial institutions. In terms of significance, the results show that as the level of disclosure and transparency in managerial affairs increases, the performance of financial institutions – as measured in terms of the quality of loan portfolios, liquidity and profitability – increases by 0.3046, with the effect being statistically significant at the 1 per cent level. Furthermore, as the level of auditing and the degree of compliance with banking regulations increases, the financial performance of banks improves by 0.3309. Research limitations/implications This paper did not consider time series because corporate governance does not change periodically. Practical implications This paper demonstrates the importance of disclosure and transparency in managerial affairs because the performance of financial institutions, as measured in terms of loan portfolios, liquidity and profitability, increases by 0.4 when transparency and disclosure improve, with this effect being statistically significant at the 1 per cent level. Originality/value The use of primary data in assessing the impact of corporate governance on financial performance, instead of secondary data, is the primary novelty of this study. Moreover, PCA is used to assess the weight of the various parameters.

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