Corporate governance: a conscious approach for Asia and emerging economies

Rajablu, Mahmoud

doi:10.1108/ijlma-04-2015-0017

Cited by 5 publications

(6 citation statements)

References 36 publications

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“…Directors, as the responsible party in running the company, have a susceptibility to optimise their interests at every opportunity by misapplying the firm’s resources, at the expense of shareholder or called agency costs. Directors strive to elevate profits in order to earn higher remuneration (Rajablu, 2016).…”

Section: Literature Review and Hypothesismentioning

confidence: 99%

“…Consequently, they control the behaviour of senior managers to ensure their actions are according to the stakeholders’ interests. Corporate governance acts as a substantial part in defining the accomplishment of a business and the company’s transparency and accountability (Rajablu, 2016). Corporate governance analyses the strategy and transparency of ways the organisation manages the company’s resources.…”

Section: Literature Review and Hypothesismentioning

confidence: 99%

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Does internal corporate governance mechanism control firm risk? Evidence from Indonesia’s three high-risk sectors

Hatane

Supangat

Tarigan

et al. 2019

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Purpose This study aims to examine the control of corporate governance towards firm risks for a sample of Indonesian firms in agriculture, mining and property industries. This study highlights the impact of four indicators of internal mechanism of corporate governance, i.e. board size, board independence, board gender and board ownership, on three measurements of firm risks, i.e. total risk, asset return risk and idiosyncratic risk. Design/methodology/approach Panel data analysis is conducted using a sample of 62 companies of agriculture, mining and property industries listed in Indonesia Stock Exchange from 2013 to 2017. Pooled ordinary least square with hetero-corrected is the statistical approach conducted to test the hypotheses. Findings The result indicates that board size and board gender insignificantly influence firm risks. While board independence gives varied impacts towards firm risks, it gives positive influence towards total asset return risk, insignificant towards idiosyncratic risk and negative towards total risk. Other interesting results are found in board ownership that has insignificant influence on asset return risk and negative influence on idiosyncratic and total risk. Research limitations/implications Firms should incorporate corporate governance, especially the impactful roles of board independence and board ownership as they serve as tools in reducing firm risk. Moreover, investors may have a better understanding of corporate governance and factors that are influencing firm risks. Therefore, this study can assist them to make the right investment decision. Originality/value This study is notably the first to use comprehensively three measurements of firm risks in Indonesia. Risks can come from internal and external, thus the company should understand the various types of risks facing the company. Total risk measures both the internal and external risks, while asset return risk gives another perspective using overall market perception about the equity and assets of the company. Finally, this study also measures internal risk, which is the only risk that can be controlled and minimised by the board of the company.

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Section: Literature Review and Hypothesismentioning

confidence: 99%

Section: Literature Review and Hypothesismentioning

confidence: 99%

Does internal corporate governance mechanism control firm risk? Evidence from Indonesia’s three high-risk sectors

Hatane

Supangat

Tarigan

et al. 2019

View full text Add to dashboard Cite

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“…In term of the liability, most of the companies will not bear the responsibility of the debt due to the private limited status. All the governance models have the common components that function as the backbone of the corporation (Rajablu, 2016). Nonetheless, each of the governance model has its own distinctive advantages and disadvantage that required to be greatly taken care without compromising the negative impact that delivered to the stakeholders.…”

Section: Governance Modelsmentioning

confidence: 99%

Principal-Principal Conflicts and Socioemotional Wealth in Family Firms

Kuan

Fei

Tan

et al. 2017

IJEF

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Corporate governance is the concern of all the parties throughout the world regarding their viability in order to ensure the sustainability of the firm. As the family firms are listed in the public exchange, there are different kind of the investors in the corporation produce the resolution that are opposing to each other. Moreover, the large capital that is injected by the institutional investor complicates the role played in the corporation that shapes the culture and philanthropy. The phenomenon leads to the complex relationship in one corporation due to the different types of interest. Board composition and board independence are stretched by numerous scholars regarding the core importance in the corporation. Executive compensation is another area of corporate governance that is widely discussed by the scholars regarding the relationship with the long-term firm performance. Therefore, this review paper will focus on the application of the Principal-principal Conflicts theory and Socio-Emotional Wealth theory to narrate the whole scenario of the governance practice in the family firm. Throughout the paper, current rigorous practice of the family firms will be deeply investigated to cover the deep insights of the current phenomenon. The meticulous review of this paper is able to synthesize the significance of these theories towards the general governance setting in the family firms. Eventually, the working paradigm of the family firm can be clearly justified with the rationale that is justified. At the end of the review, the two main theories are concluded to be equally essential to illustrate the corporate governance practice in family firms across the globe.

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“…Corporate governance is important as it is not only strengthening the business's capability in attracting investment and growing, but also developing companies to be more efficient and accountable. Corporate governance also contributes to economic and financial crisis promotion and prevention, scandal as well as transparency and accountability (Rajablu, 2016;Campbell & Minquez-Vera, 2008). In term of agency theory, corporate governance can be used to mitigate the agency problems which occur in the company, thus the interest of both managers and shareholders can be aligned.…”

Section: Introductionmentioning

confidence: 99%

“…Additionally, World Bank (2010) stated that corporate governance refers to "the structure and processes for the direction and control of companies." Corporate governance has a key role in business success or failure and company's accountability and transparency (Rajablu, 2016). Good corporate governance contributes to sustainable economic development by increasing the company's performance (World Bank, 2010).…”

Section: Introductionmentioning

confidence: 99%

Board Structures and Managerial Ownership in Identifying the Financial Distress Likelihood

Hatane¹,

Chandra²,

Tarigan³

2019

Proceedings of the 3rd International Conference on Accounting, Management and Economics 2018 (ICAME 2018)

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This study investigates the impact of board structures and managerial ownership on the ability in preventing financial distress in the context of Indonesia and Malaysia consumer goods companies. Board structure consists of board size, composition and gender diversity. Ability in preventing in financial distress is measured by profitability (EBIT), financial expense (FE) and retained earnings (RE). This research study examines the consumer goods companies in Indonesia and Malaysia for the period of 2011 to 2015 with the total sample of 24 Indonesia companies or 120 firm-years observations and 98 Malaysia companies or 490 firm-years observations. The data examined by Partial Least Square (PLS) under the Structural Equation Model concept. The findings of this study present mixed results. Board size and board composition have significant impact on the ability in preventing financial distress in Indonesia whereas it is found insignificant in the case of Malaysia companies. On the contrary, in Indonesia, the managerial ownership has impact on the financial distress prevention, while Malaysia's result shows there is a significant impact. Additionally, this study has found that gender diversity has a significant impact on the ability in preventing financial distress in both Indonesia and Malaysia. Gender diversity also serves as moderating variable in both countries regardless of the type of moderation between both countries.

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Corporate governance: a conscious approach for Asia and emerging economies

Cited by 5 publications

References 36 publications

Does internal corporate governance mechanism control firm risk? Evidence from Indonesia’s three high-risk sectors

Does internal corporate governance mechanism control firm risk? Evidence from Indonesia’s three high-risk sectors

Principal-Principal Conflicts and Socioemotional Wealth in Family Firms

Board Structures and Managerial Ownership in Identifying the Financial Distress Likelihood

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