Board diversity and total directors’ remuneration: evidence from an emerging market

Abdul, Wahab Effiezal Aswadi; Marzuki, Marziana Madah; Jaafar, Syaiful Baharee; Masron, Tajul Ariffin

doi:10.1108/par-02-2016-0021

Cited by 17 publications

(20 citation statements)

References 102 publications

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“…It can also be noted that management use related party transactions both to direct wealth to themselves and to come up with deceptive financial statements (Kohlbeck & Mayhew, 2010). Gordon et al (2004) and Abdul et al (2018) are among other studies which hold a similar opinion. Kim et al (2019) and Aharony et al (2005) are other studies which hold the opinion that related party transactions are negatively related to firm performance and can therefore encourage financial distress.…”

Section: Page54 Page54mentioning

confidence: 80%

Analysis of the Related Party Transactions in terms of managerial and financial issues for the Kenyan Savings and Credit Cooperatives

Munene

Mugambi²

2021

IJFBS

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Related party transactions are a key factor to the sustainability of Savings and Credit Cooperatives (SACCOs). In view of this fact, loans to directors and staff are viewed as a factor which can greatly influence savings and credit cooperatives into either falling into financial distress or helping them to remain a float and become financially stable entities. The stakeholder theory holds that entities should be managed a manner that will satisfy every stakeholder. The stewardship theory reiterates that managers have the organisation at heart and can it to profitability as if it were their own. However approval of loans and other transactions to managers and staff, may not positively impact the entity. This study was designed to establish the effect of related party transactions on the relationship between board characteristics and financial distress of deposit taking SACCOs in Nairobi County. We applied Descriptive research design on Deposit taking SACCOs in Nairobi County which was identified purposively while a census was conceded for all deposit taking SACCOs in the county. We obtained secondary data from SASRA using a data collection sheet after which we performed panel data analysis by use of STATA software. Findings were presented using tables. The study concluded that related party transactions influenced the relationship between board characteristics and financial distress of Deposit Taking SACCOs in Nairobi County. Related party transactions can be an avenue of causing financial distress and should be kept as low as possible. The regulator should come up with a tool based on Altman’s Z score models to predict financial distress in SACCOs in order to offer timely advice to alleviate more distress and consequent bankruptcy which may lead to closure of SACCOs. Another research may be carried out to establish other factors causing financial distress and how to turn around the SACCOs already in distress.

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Section: Page54 Page54mentioning

confidence: 80%

Analysis of the Related Party Transactions in terms of managerial and financial issues for the Kenyan Savings and Credit Cooperatives

Munene

Mugambi²

2021

IJFBS

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“…They often use their presence in the capital market as a symbol, mainly for attracting funding or government grants (Salverda, 2015). For example, the presence of Malay directors in Malaysia during the early stages of independence was largely ceremonial and served as an indicator of exposing government servants to the capital market (Abdul Wahab et al, 2018).…”

Section: Impact Of Political Connections and Board Ethnicitymentioning

confidence: 99%

Political connections, board ethnicity and value relevance in Mauritius

Mustun,

Abdul Wahab

2023

ARA

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PurposeThe paper aims to investigate the impact of political connections and board ethnicity on the value relevance of earnings and book value in Mauritius.Design/methodology/approachThis study is based on a sample of 541 Mauritian-listed firm-year observations for 2001–2016. Financial and board diversity data have been collected using the listed firms’ annual reports and from reports published by the Stock Exchange of Mauritius. Political connection data was derived from the directory of Chief of State and Cabinet members. The research hypotheses were empirically tested using a modified Ohlson (1995) price model.FindingsThis study shows that political connections negatively impact the value relevance of earnings and book value. The authors find that firms with Franco-Mauritian directors will constrain political connections’ negative impact. The authors find contrasting results for Indo-Mauritian directors since they form an integral part of the government in Mauritius.Originality/valueThis study contributes to the scarce accounting literature in Mauritius. Firstly, no study has investigated the relationship between the value relevance of accounting information and political connections in Mauritius. Secondly, Mauritius’s capital market is dominated by a non-indigenous ethnic group, Franco-Mauritians, who remain the economic elite. Hence, Mauritius presents an opportunity to bring forth another important aspect in the capital market and corporate governance; diversity on the board of directors. Therefore, the study extends to the political connections and board diversity literature.

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“…Accordingly, emerging countries have adopted mandatory gender quotas on boards of directors of firms (Aksoy and Yilmaz, 2023). For example, in 2011, the Malaysian cabinet passed legislation for corporate companies to achieve at least 30% female board representation (Effiezal Aswadi Abdul et al, 2018). In 2014, India imposed a quota of at least one woman on the board of directors (Pandey et al, 2022).…”

Section: Introductionmentioning

confidence: 99%

Board diversity and systematic risk: evidence from emerging markets

Daniel‐Vasconcelos

Crisóstomo

Ribeiro

2023

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Purpose This study aims to investigate the association between board diversity and systematic risk. The theoretical framework used in this study is based on agency and resource dependency theories.Design/methodology/approach Using a panel data set of 788 firms listed in the Morgan Stanley Capital International (MSCI) Emerging Markets index from 2015 to 2020, the authors apply Panel-Corrected Standard Error estimation method to test the three proposed hypotheses and the two-stage least squares method is adopted for the endogenous test.Findings The results suggest that board-specific skills diversity (BSSD) and board independence (BIND) have a negative impact on systematic risk. On the other hand, board gender diversity does not affect systematic risk. The findings reinforce the relevance of board diversity for reducing systematic risk and offer valuable insights for policymakers and investors, suggesting that the presence of directors with specific skills and independent directors could reduce firms’ systematic risk.Research limitations/implications The study extends the scope of agency and resource dependency theories by suggesting that the BSSD and BIND reduce agency costs and bring critical resources to the firm’s survival.Practical implications The findings support policymakers and managers in reducing systematic risk. In addition, the results demonstrate the importance of policies that encourage board diversity and BIND.Social implications The study demonstrates how companies can reduce systematic risk through board diversity and BIND.Originality/value To the best of our knowledge, this is the first study to investigate the association between board diversity and systematic risk only in emerging markets.

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Board diversity and total directors’ remuneration: evidence from an emerging market

Cited by 17 publications

References 102 publications

Analysis of the Related Party Transactions in terms of managerial and financial issues for the Kenyan Savings and Credit Cooperatives

Analysis of the Related Party Transactions in terms of managerial and financial issues for the Kenyan Savings and Credit Cooperatives

Political connections, board ethnicity and value relevance in Mauritius

Board diversity and systematic risk: evidence from emerging markets

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