Corporate governance as a mechanism for the deterrence of economic crimes in the Commonwealth Caribbean

2015 â—˝  
Vol 22 (3) â—˝  
pp. 347-353 â—˝  
Author(s):  
Suzanne Cecile Ffolkes-Goldson
Keyword(s):  
Economic Growth â—˝  
Corporate Governance â—˝  
Private Sector â—˝  
Developing Economies â—˝  
International Standards â—˝  
Corporate Misconduct â—˝  
Content Type â—˝  
The Past â—˝  
Commonwealth Caribbean â—˝  
Transparency And Accountability

Purpose – The purpose of this paper is to highlight the need for good corporate governance (CG) as one of the mechanisms to combat corporate misconduct and, by extension, to encourage economic growth and development, with special emphasis on Jamaica, which not only has seen the greatest financial sector meltdown in the region, but has also seen the greatest response to the need for CG initiatives. Design/methodology/approach – For the past 20 years, CG has been at the forefront of discussions, legislation and moral suasion regarding corporate transparency and accountability, especially in the wake of spectacular scandals from the Maxwell debacle in the United Kingdom (1992), to Enron in the USA (2001), to the world economic crisis (2008). Codes have been adopted and legislation drafted to meet the concerns regarding corporate abuse, which have not only had an impact on the corporations and their shareholders, but also on a wider group of stakeholders, which includes, in some cases, the countries in which they operate. Not only have these scandals rocked the developed world, but corporate misconduct has taken an especially debilitating toll on developing economies, such as those found in the Commonwealth Caribbean. The cost of corporate misconduct in the region has included government bailouts, loss of jobs and loss of confidence in the markets. These, in turn, have had some negative impact on the development of many of the countries, which includes slow, stagnant or negative economic growth. Findings – The attention to CG in the Commonwealth Caribbean has grown tremendously in the past 10 years by the introduction of codes and legislation with a focus on transparency and accountability in accordance with international standards. The challenge now appears to be the need to link these initiatives with the anti-corruption project. This may be best achieved through the acknowledgment of the need for the private sector to play a greater role in the prevention of corruption through CG initiatives. Put another way, there may be need for an increased focus on the demand side of bribery and corruption rather than simply on the supply side. Finally, the development of emerging economies relies heavily on the stemming of corruption and mismanagement both in the public sector and the private sector. Originality/value – The original value of this paper is the development of CG principles in the region.

scholarly journals Convergence to shareholder primacy corporate governance: evidence from a leximetric analysis of the evolution of corporate governance regulations in 21 countries, 1995-2014

2019 â—˝  
Vol 19 (5) â—˝  
pp. 849-883
Author(s):  
Navajyoti Samanta
Keyword(s):  
Developing Countries â—˝  
Corporate Governance â—˝  
Financial Crisis â—˝  
Rate Of Convergence â—˝  
Developing Economies â—˝  
Shareholder Primacy â—˝  
Content Type â—˝  
The Past â—˝  
Governance Regime â—˝  
The Continuum

Purpose For the past two and half decades, there has been a marked shift in the corporate governance regulations around the world. The change is more remarkable in developing countries where countries with little or no corporate governance regime have adopted “world class” standards. While there can be a debate on whether law in books actually translates into law in action, in the meantime it might be interesting to analyse the law in books to understand how the corporate governance regime has evolved in the past 20 years. This paper quantitatively tracks 21 countries, most of them being developing and emerging economies, over a period of 20 years. The period covers 1995 to 2014; thus, it traverses the pre and post crisis period in 1999 and 2008. Thus, the paper also provides a snapshot of the macrolegal changes that the countries engage in hoping to stave off the next crisis. The paper uses over 50 parameters modelled on the OECD Principles of Corporate Governance. The paper confirms the suspicion that corporate governance norms around the developing economies are converging on shareholder primacy end of the continuum. The rate of convergence was highest just before the financial crisis of 2008 and has since then slowed down. Design/methodology/approach The paper uses data collected from experts. They filled up detailed questionnaire which quizzed them on the rules relating to corporate governance norms in their country and asked them to retrospectively check their data every five years for the past 20 years. This provided an excellent overview as to how the law has evolved in the past two decades on corporate governance. The data were then tabulated using a scoring sheet and then was put together using item response theory (IRT) which is a Bayesian method similar to factor analysis. The paper then follows a comparative approach using heatmaps to analyse the evolution of corporate governance in developing countries. Findings Corporate governance norms around the developing economies are converging on shareholder primacy end of the continuum. The rate of convergence was highest just before the financial crisis of 2008 and has since then slowed down. Originality/value This is the first time that corporate governance panel data analysis has been carried out on top developing countries across so many parameters for such a long period. This paper also uses Bayesian IRT modelling to analyse the evolution which is novel in its approach especially in the corporate governance literature. The paper thus provides a clear view on the evolution of corporate governance norms and how they are converging on a particular ideology.

The structure and changes of China’s land system

2019 â—˝  
Vol 11 (3) â—˝  
pp. 471-488 â—˝  
Author(s):  
Liu Shouying
Keyword(s):  
Economic Growth â—˝  
Institutional Change â—˝  
Structural Changes â—˝  
Structural Characteristics â—˝  
Institutional Arrangements â—˝  
Reform Process â—˝  
Content Type â—˝  
The Past â—˝  
Land System â—˝  
Rapid Economic Growth

Purpose The purpose of this paper is to analyze the structure and changes of China’s land system. To achieve this aim, the paper is divided into four parts. The first part gives a brief introduction to the structural characteristics of the Chinese land institutional arrangements; the second part analyzes the reform process of the land system in the past 40 years and its path of change; the third part engages the discussion about the historic contribution made by the land institutional change to rapid economic growth and structural changes; and the final part is conclusion and some policy implications. Design/methodology/approach After 40 years of reforms and opening up, China has not only created a growth miracle unparalleled for any major country in human history, but also transformed itself from a rural to an urban society. Behind this great transformation is a systemic reform in land institutions. Rural land institutions went from collectively owned to household responsibility system, thereby protecting farmers’ land rights. This process resulted in long-term sustainable growth in China’s agriculture, a massive rural-urban migration and a historical agricultural transformation. The conversion of agricultural land to non-agricultural uses and the introduction of market mechanisms made land a policy tool in driving high economic growth, industrialization and urbanization. Findings Research shows that the role of land and its relationship with the economy will inevitably change as China’s economy enters a new stage of medium-to-high speed growth. With economic restructuring, low-cost industrial land will be less effective. Urbanization is also shifting from rapid expansion to endogenous growth so that returns on land capitalization will decrease and risks will increase. Therefore, China must abandon land-dependent growth model through deepening land reforms and adapt a new pattern of economic development. Originality/value This paper gives a brief introduction to the structural characteristics of the Chinese land institutional arrangements, analyzes the reform process of the land system in the past 40 years and its path of change, and evaluates the historic contribution made by the land institutional change to rapid economic growth and structural changes.

A systematic literature review of open innovation in small and medium enterprises in the past decade

foresight â—˝  
2021 â—˝  
Vol ahead-of-print (ahead-of-print) â—˝  
Author(s):  
Huma Sikandar â—˝  
Umar Haiyat Abdul Kohar
Keyword(s):  
Literature Review â—˝  
Open Innovation â—˝  
Resource Constraints â—˝  
Developing Economies â—˝  
Small And Medium Enterprises â—˝  
Content Type â—˝  
The Past â—˝  
Prisma Statement â—˝  
Major Factors â—˝  
Medium Enterprises

Purpose There is a growing trend of open innovation (OI) in small and middle enterprises (SMEs) these days, yet the implementation of OI in SMEs is a challenge because of their financial and resource constraints. This study aims to identify and analyze the past trends, barriers and outcomes and major factors influencing the implementation of OI in SMEs. Design/methodology/approach This review is based on 40 published articles from the Scopus database. It selects highly cited papers published from 2010 to 2019. The PRISMA statement template is used to explain the overall process of selection and rejections of the relevant articles. Findings The study contributes in two ways. First, through a comprehensive literature review, the authors highlight the overall development of the concept of OI in the literature over the past 10 years and highlight the findings of the significant studies. Second, the authors provide detailed representations of the OI literature by calculating yearly publications and identifying the SMEs which mostly implement OI practices, journals that publish a relevant article, OI-related publications in different disciplines and geographical locations in which most of the OI studies have been conducted. The study also reveals the most cited articles, journals and authors. Originality/value The authors conclude this paper with the argument that although much research has been done in the OI field, still there is a need to establish tools, models and methods that could facilitate SMEs in OI, especially for developing economies.

Investor protection: effects of takeover convergence

2021 â—˝  
Vol ahead-of-print (ahead-of-print) â—˝  
Author(s):  
Jyoti Dixit â—˝  
Poonam Singh â—˝  
Arunima Haldar
Keyword(s):  
Corporate Governance â—˝  
Common Law â—˝  
Investor Protection â—˝  
Critical Role â—˝  
Emerging Economy â—˝  
International Standards â—˝  
Governance Mechanism â—˝  
Content Type â—˝  
Global Standards â—˝  
Corporate Governance Mechanism

Purpose Takeovers play a critical role as an external corporate governance mechanism to ensure investor protection. There is a long-standing debate on whether the convergence of corporate governance to global standards can enable emerging economies to ensure investor protection. This paper aims to analyse the evolution of the takeover code, namely, Securities Exchange Board of India’s Substantial Acquisition of Shares and Takeovers (2011) in India from the lens of investor protection. It then compares the takeover provisions in India, the USA, the UK, Singapore and Australia to examine the extent of convergence and its implications for investor protection. Design/methodology/approach Using a cross-national comparative analysis of takeover mechanisms in common law countries, the study analyses the extent and relevance of convergence in form. The focus of the comparison is on regulations governing offer size, offer price, creeping acquisition and initial trigger limit for the mandatory open offer. Findings The findings suggest that certain provisions such as the initial trigger threshold for the mandatory offer and the offer prices of the Indian takeover code are converging with the standards in common law countries. However, the offer price determination based on market prices may not reflect true market value in an inefficient market like India. Other provisions such as creeping acquisition and offer size are not only diverging from the international standards but are also inconsistent with the key objective of investor protections of the Indian regulator. Research limitations/implications Indian takeover regulation needs to converge to higher global standards to ensure adherence to improved investor protection. This needs to be done for the initial trigger limit for mandatory bid and offer prices, after accounting for the differences in institutional structure. The Indian regulators need to revisit provisions on the initial trigger, creeping acquisition to converge to the broader principle of investor protection. Originality/value This technical paper provides a comprehensive depiction of takeover mechanisms in an emerging economy context as a means of investor protection. Further using a comparative lens, it analyses the relevance of convergence of takeover laws. Thus, advances the theoretical knowledge of limited extant work on external corporate governance mechanism in an emerging economy context.

Innovation, institutions and economic growth in sub-Saharan Africa – an IV estimation of a panel threshold model

2020 â—˝  
Vol ahead-of-print (ahead-of-print) â—˝  
Author(s):  
Joseph Ato Forson â—˝  
Rosemary Afrakomah Opoku â—˝  
Michael Owusu Appiah â—˝  
Evans Kyeremeh â—˝  
Ibrahim Anyass Ahmed â—˝  
...  
Keyword(s):  
Economic Growth â—˝  
Developing Economies â—˝  
Innovation Policy â—˝  
Threshold Model â—˝  
Sub Saharan Africa â—˝  
Content Type â—˝  
Panel Regressions â—˝  
Sub Saharan â—˝  
The Impact â—˝  
The Relationship

PurposeThe significant impact of innovation in stimulating economic growth cannot be overemphasized, more importantly from policy perspective. For this reason, the relationship between innovation and economic growth in developing economies such as the ones in Africa has remained topical. Yet, innovation as a concept is multi-dimensional and cannot be measured by just one single variable. With hindsight of the traditional measures of innovation in literature, we augment it with the number of scientific journals published in the region to enrich this discourse.Design/methodology/approachWe focus on an approach that explores innovation policy qualitatively from various policy documents of selected countries in the region from three policy perspectives (i.e. institutional framework, financing and diffusion and interaction). We further investigate whether innovation as perceived differently is important for economic growth in 25 economies in sub-Saharan Africa over the period 1990–2016. Instrumental variable estimation of a threshold regression is used to capture the contributions of innovation as a multi-dimensional concept on economic growth, while dealing with endogeneity between the regressors and error term.FindingsThe results from both traditional panel regressions and IV panel threshold regressions show a positive relationship between innovation and economic growth, although the impact seems negligible. Institutional quality dampens innovation among low-regime economies, and the relation is persistent regardless of when the focus is on aggregate or decomposed institutional factors. The impact of innovation on economic growth in most regressions is robust to different dimensions of innovation. Yet, the coefficients of the innovation variables in the two regimes are quite dissimilar. While most countries in the region have offered financial support in the form of budgetary allocations to strengthen institutions, barriers to the design and implementation of innovation policies may be responsible for the sluggish contribution of innovation to the growth pattern of the region.Originality/valueSegregating economies of Africa into two distinct regimes based on a threshold of investment in education as a share of GDP in order to understand the relationship between innovation and economic growth is quite novel. This lends credence to the fact that innovation as a multifaceted concept does not take place by chance – it is carefully planned. We have enriched the discourse of innovation and thus helped in deepening understanding on this contentious subject.

Macroeconomic factors, corporate governance and financial malpractices in Nigerian banks

2020 â—˝  
Vol ahead-of-print (ahead-of-print) â—˝  
Author(s):  
Alexander Ehimare Omankhanlen â—˝  
Ediomi Abasi-Favor Tometi â—˝  
Ese Urhie
Keyword(s):  
Corporate Governance â—˝  
Holistic Approach â—˝  
Fraud Triangle â—˝  
Macroeconomic Factors â—˝  
Content Type â—˝  
The Past â—˝  
Triangle Theory â—˝  
Code Of Corporate Governance â—˝  
Practical Implications â—˝  
Actual Loss

Purpose Many studies have traced the collapse of most banks in the past to weak corporate governance. In response to this, the Central Bank of Nigeria established a Code of Corporate Governance which was made mandatory for all banks in Nigeria since 2003. Fifteen years after this provision the amount of actual loss attributed to financial malpractices in banks is still substantial. Available statistics show that the number of fraud cases has been on the increase in recent times. Design/methodology/approach This study examined the extent to which corporate governance has mitigated or moderated the effect of two macroeconomic factors – unemployment and inflation – on fraud in Nigerian banks. An interactive model was specified and estimated with PROCESS – a computational tool developed by Andrew Hayes. Findings The result revealed that while the structure of corporate governance by banks in Nigeria moderates the effect of unemployment, the reverse is the case for inflation. Practical implications This goes to show that the motivation factor stipulated by the fraud triangle theory holds sway in Nigeria. Originality/value It is recommended that efforts to bring a lasting solution to the challenge of financial malpractices in Nigerian banks must adopt a holistic approach.

scholarly journals Employment targeting in a frictional labor market

2019 â—˝  
Vol 12 (2) â—˝  
pp. 242-262 â—˝  
Author(s):  
Chetan Ghate â—˝  
Debojyoti Mazumder
Keyword(s):  
Labor Market â—˝  
Public Sector â—˝  
Private Sector â—˝  
Informal Sector â—˝  
Developing Economies â—˝  
Job Creation â—˝  
Friction Model â—˝  
Search And Matching â—˝  
Content Type â—˝  
The Public

Purpose Governments in both developing and developed economies play an active role in labor markets in the form of providing both formal public sector jobs and employment through public workfare programs. The authors refer to this as employment targeting. The purpose of the paper is to consider different labor market effects of employment targeting in a stylized model of a developing economy. In the context of a simple search and matching friction model, the authors show that the propensity for the public sector to target more employment can increase the unemployment rate in the economy and lead to an increase in the size of the informal sector. Design/methodology/approach The model is an application of a search and matching model of labor market frictions, where agents have heterogeneous abilities. The authors introduce a public sector alongside the private sector in the economy. Wage in the private sector is determined through Nash bargaining, whereas the public sector wage is exogenously fixed. In this setup, the public sector hiring rate influences private sector job creation and hence the overall employment rate of the economy. As an extension, the authors model the informal sector coupled with the other two sectors. This resembles developing economies. Then, the authors check the overall labor market effects of employment targeting through public sector intervention. Findings In the context of a simple search and matching friction model with heterogeneous agents, the authors show that the propensity for the public sector to target more employment can increase the unemployment rate in the economy and lead to an increase in the size of the informal sector. Employment targeting can, therefore, have perverse effects on labor market outcomes. The authors also find that it is possible that the private sector wage falls as a result of an increase in the public sector hiring rate, which leads to more job creation in the private sector. Originality/value What is less understood in the literature is the impact of employment targeting on the size of the informal sector in developing economies. The authors fill this gap and show that public sector intervention can have perverse effects on overall job creation and the size of the informal sector. Moreover, a decrease in the private sector wage due to a rise in public sector hiring reverses the consensus findings in the search and matching literature which show that an increase in public sector employment disincentivizes private sector vacancy postings.

Legal analysis of Qatar’santi-money laundering and combating terrorist financing legislation and regulation amidst the summer 2017 GCC crisis

2020 â—˝  
Vol 23 (4) â—˝  
pp. 793-804
Author(s):  
Mohammed Ahmad Naheem
Keyword(s):  
Money Laundering â—˝  
International Standards â—˝  
Legal Analysis â—˝  
Content Type â—˝  
Non Profit â—˝  
Terrorist Financing â—˝  
The Past â—˝  
Regulatory Bodies â—˝  
The Government â—˝  
Financing Of Terrorism

Purpose The recent diplomatic split between members of the Gulf Cooperation Council (GCC) and Qatar with accusations of terrorist financing (TF). This paper aims to study Qatar’s domestic legislations, which specifically targets money laundering and TF activities. The country has stringently worked in compliance with international standards on combating financing of terrorism (CFT) and anti-money laundering (AML) practices by imparting autonomous power to regulatory bodies, such as the Qatar Central Bank and other agencies. Design/methodology/approach This paper studies independent legislations passed under the Emir’s decree over the past decade advancing Qatar’s AML ranking, with significant effort in CFT regulations. The paper also analyses the advancement in AML/CFT regulation and their validity with respect to international standards set by various governmental, intergovernmental and non-profit agencies. Findings The analysis finds Qatar in compliance with strong AML/CFT regulations. Further, it finds the government to have provided transparent oversight to international organizations that attest to the findings of the legislative efforts. This paper disproves claims and accusations that have possibly been presented to the GCC and subsequently led members to abruptly end diplomatic relations with Qatar over allegations of TF activities, amongst others. Originality/value The paper offers insight into Qatar’s legislative and regulatory advancement with respect to the AML/CTF in the past decade. The paper also discusses Qatar’s legislative advancement in relation to the evolutions of the country’s financial system, adopting a more robust mechanism to combat financing of terrorism and ML.

scholarly journals Does regulation matter? Changes in corporate governance in China and its impact on financial market growth: an empirical analysis (1995-2014)

2019 â—˝  
Vol 19 (5) â—˝  
pp. 985-998
Author(s):  
Ding Chen â—˝  
Navajyoti Samanta â—˝  
James Hughes
Keyword(s):  
Corporate Governance â—˝  
Financial Market â—˝  
Outcome Variable â—˝  
Content Type â—˝  
Market Growth â—˝  
The Past â—˝  
Market Index â—˝  
Technological Control â—˝  
Oecd Principles â—˝  
Financial Index

Purpose Over the past two decades, China’s stock market has experienced rapid growth. This period has seen the transplantation of many “OECD principles of corporate governance” into the Chinese corporate regulatory framework. These regulations are dominated by shareholder values. This paper aims to discover whether there is a causal relationship between the changes in China’s corporate governance and financial market growth. Design/methodology/approach This paper uses data from 1995-2014 to create a robust corporate index by looking at 52 variables and a financial index out of five financial market parameters. Subsequently, data are subject to a panel regression analysis, with the financial market index as the outcome variable, corporate governance index explanatory variable and a variety of economics, social and technological control variables. Findings This paper concludes that changes in corporate regulation have in fact had no statistically significant impact on China’s financial market growth, which must therefore be attributed to other factors. Originality/value The study is the first in the context of Chinese corporate governance impact studies to use Bayesian methodology to analyse a panel dataset. It uses OECD principles as the anchor to provide a clear picture of evolution of corporate governance for a 20-year period which is also longer than previous studies.

Internal audit as an antecedent of economic growth

2020 â—˝  
Vol ahead-of-print (ahead-of-print) â—˝  
Author(s):  
Abdulaziz Alzeban
Keyword(s):  
Economic Growth â—˝  
Corporate Governance â—˝  
Internal Audit â—˝  
Content Type â—˝  
Internal Auditors â—˝  
Transparency International â—˝  
Chi Squared â—˝  
The Impact â—˝  
Audit Standards â—˝  
Professional Standing

PurposeThis paper reports a study that examines the role of the internal audit function as a cornerstone of corporate governance, on economic growth.Design/methodology/approachData were obtained from 108 countries for the period 2011–2015. The World Bank, the Institute of Internal Auditors Research Foundation and the Transparency International Corruption Perception Index were the data sources. Two statistical techniques were used: regression analysis to test the study hypotheses and the Chi-squared test to determine whether variations between countries.FindingsThe findings suggest that conformance with internal audit standards and maturity (in years) of the internal audit department contribute to economic growth. They also reveal a relationship between the professional standing of internal audit staff (represented by professional qualifications and number of training hours annually) and the contribution to economic growth, that being that the greater the professional standing of staff, the greater internal audit conformance to the standards and the higher the contribution to economic growth. Further, the findings reveal that the impact of internal audit on economic growth varies among countries according to income classifications.Originality/valueThe consideration of internal audit as one of the four fundamental bases of corporate governance, and therefore, its relationship with economic growth is a neglected topic in the research arena. This study addresses that shortcoming by providing worldwide evidence on the contribution of internal audit to economic growth and, thus, makes a new contribution to the literature. Further, evidence is provided to enlighten poorly performing economies of the value of mandating the presence of internal audit and the compliance of it with international internal audit standards.

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