Prior research suggests that Corporate Environmental Performance (CEP) enables businesses to build strong corporate image and reputation, thus leading to improved firm financial performance. However, studies relating to the relationship between CEP and firm risk are scarce. This research intends to bridge the gap in the literature by examining whether CEP helps firms to reduce their financial risk. Results of the Ordinary Least Squares regression with fixed effects provide strong evidence that environmental performance is negatively associated with firm volatility and firm downside risk. The results are robust after controlling for moderating effects such as financial, institutional and environmental management.
Purpose – The purpose of this paper is to investigate the relationship between Chief Executive Officers’ (CEOs) compensation and corporate governance practices of publicly listed companies in New Zealand for the period 2005-2010. Design/methodology/approach – Prior literature argues that corporate governance systems and structures are heterogeneous, that is, corporate governance mechanisms that are important tend to be specific to a country and its institutional structures. The two corporate governance mechanisms most important for monitoring CEO compensation are ownership structure and board structure. The authors use a generalised least squares regression estimation technique to examine the effect ownership structure and board structure has on CEO compensation, and examine whether ownership structure, board structure, CEO and director compensation have an effect on company performance. Findings – After controlling for size, performance, industry and year effects, the authors report that internal features rather than external features of corporate governance practices influence CEO compensation. Companies that have their CEO on the board pay them more than those who do not sit on the board, suggesting CEOs on boards have power to influence board decisions and therefore boards become less effective in monitoring CEO compensation in the New Zealand context. Companies that pay their directors more tend to reward their CEOs more as well, thus supporting the managerial entrenchment hypothesis. Research limitations/implications – The results confirm the findings reported in prior studies that institutional investors are ineffective in monitoring managerial decisions and their focus is on decisions that benefit them on a short-term basis. Practical implications – The findings indicate that although the proportion of independent directors on boards does not significantly influence CEO compensation, it does indicate that outside directors are passive and are no more effective than insiders when it comes to the oversight and supervision of CEO compensation. Originality/value – Being a small and open financial market with many small- and medium-sized listed companies, New Zealand differs from large economies such as the UK and the USA in the sense that CEOs in New Zealand tend to be closely connected to each other. As such, the relationship between pay-performance for New Zealand is found to be different from those reported for the UK and the USA. In New Zealand, the proportion of institutional and/or block shareholders is positively associated with CEO compensation and negatively associated with company performance, suggesting that it is not an effective mechanism for monitoring CEO compensation.
The aim of this study is to examine the relationship between corporate governance (CG), in terms of its internal significance, and cost of capital (COC), based on a sample of listed firms of Pakistan Stock Exchange (PSX) over the period of 2009-2015. We used Pakistan as a case study mainly because we expect that key features of Pakistani setting in terms of CG and financial markets will have impact on the relationship between CG and COC. Drawing on a sample of 120 PSX listed firms, we find that CG compliance and disclosure (CG index [CGI]) has improved over time among PSX listed firms. The findings also reveal a positive relationship of institutional, government and director ownership with both CGI and COC, while this relationship becomes negative with block ownership. The findings of 2SLS reveal a significant negative association between CG compliance and COC; hence, firms with higher CG score enjoy a lower COC. Interestingly, gender diversity and board size have a negative association with CG compliance and COC, while audit firm size reveals a positive association with CG compliance and disclosure while a negative association with COC. The study contributes to existing literature dealing with CG and determinant of firm value (COC) in emerging markets, particularly in Pakistan, which has not been extensively explored in existing research.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.