Corporate governance and firms in financial distress: evidence from a Middle Eastern country

Salloum, Charbel; Azoury, Nehme

doi:10.1504/ijbge.2012.046102

Cited by 31 publications

(16 citation statements)

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“…Further the FPER on the board is also too low. Our results are consistent with the previous study by Salloum and Azoury (2012). These authors also argue that the lower percentage of females on the board is the reason for insignificant relationship between gender diversity and financial distress.…”

Section: Resultssupporting

confidence: 93%

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Females’ Representation in the Boardroom and Their Impact on Financial Distress: An Evidence from Family Businesses in India

Mittal

Lavina

2018

Indian Journal of Corporate Governance

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This study empirically examine the females' representation (gender diversity) on the board as well as their impact on financial distress by taking the sample of Indianlisted family firms for a period ranging from 2013 to 2016. Descriptive statistics and logistic regression have been used to find out the influence of feminine on financial distress. The results of descriptive statistics show that on an average, there is just 9 per cent share of females on the board to a maximum of 28 per cent and only 2 per cent of firms have female chief executive officer (FCEO). Further, females have a diminutive impact on financial distress since their presence on the board is very low. Only one variable, females' percentage (FPER) on the board is significant and negatively associated with financial distress. However, other insignificant variables are also negatively related with financial distress indicating that gender diversity on the board can minimise the financial distress. Consequently, practical implications derived from the present study are that there should be a considerable share of females on the board and executive positions so that their decisions could considerably impact the firm's performance and be helpful to reduce the financial distress.

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Section: Resultssupporting

confidence: 93%

“…On the other hand, Salloum and Azoury (2012) argue that gender diversity does not have any significant association with financial distress. By taking the sample of Middle Eastern countries, the study describes that due to the low share of females on the board, the impact on financial distress is insignificant.…”

Section: Introductionmentioning

confidence: 92%

Females’ Representation in the Boardroom and Their Impact on Financial Distress: An Evidence from Family Businesses in India

Mittal

Lavina

2018

Indian Journal of Corporate Governance

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“…Board diversity includes characteristics of the board such as the mix of skills, gender, age, ethnicity and geographical orientation. The study adopted the gender perspective of diversity, which was measured by the ratio of female directors to the size of the board, (Sangeeta Mittal and Lavina, 2018;Salloum and Azoury, 2012;Carter, Simkins and Simpson, 2003).Managerial shareholding refers to the shareholding held by the company's management who actively participate in the making of corporate decisions, (Martin, 2017). Institutional investors are specialized financial institutions which manage savings on behalf of investors, (Ching-Chun et al2017) and the variables were indicated by the proportion of their shareholding.…”

Section: Methodsmentioning

confidence: 99%

The Influence of Corporate Governance Practices on Financial Distress of Firms Listed at the Nairobi Securities Exchange: Moderating Influence of Financial Leverage

Geoffrey¹,

Mulwa²,

Omolo³

et al. 2020

theijbm

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The Influence of Corporate Governance Practices on FinancialDistress of Firms Listed at the Nairobi Securities Exchange: Moderating Influence of Financial Leverage IntroductionThere has been an increasing interest in corporate governance over the last three decades to the extent that it has become a global phenomenon. The main driver of evolution of corporate governance has been corporate failures, (Martin, 2017). According to Alexandru and Iulia (2011) most corporations in the world have collapsed because of poor governance practices such as inflated earnings, expenses booked as capital expenditure, looting by management and improper share deals.The collapse of large and trusted corporations like Enron (2001),Worldcom (2002), Parmalat (2003), Global Crossing Limited (2002) and Tyco International Limited (2002) provide evidence of the consequences of weak corporate governance structures, (Victor, 2014).Corporate governance refers to the process and structure used to direct and manage the business and affairs of a firm towards enhancing prosperity and corporate accountability with the ultimate objective of realizing the long term value of shareholders while taking into account the interest of other stakeholders, (The Capital Markets Authority, 2018). The main concern in the corporate governance framework is the accountability of key persons in corporations, (Abdullah, Muhammad and Karren, 2016). A good system of corporate governance guarantees that corporate activities and management policies are in line with the interest of shareholders and all stakeholders in general, (Bernard, 2003;Shleifer and Vishny, 1997). It concerns itself with the appropriate board structure, processes and values to cope with the ever increasing demands of stakeholders, (Alexandru and Iulia, 2011). Essentially, all firms need good governance to ensure that they are run well and that their managers are responsible and accountable, (Youssef and Bayoumi, 2015). However, bad corporate governance practices may results in firms experiencing the detrimental impact of financial distress.Financial distress is a global problem that has afflicted both developed and developing economies, (Baimwera and Muriuki, 2014). Financial distress refers to a situation when a company is experiencing failure and in which the rate of return is less than the cost of capital, (Lakshan and Wijekoon, 2012). It refers to a state of affairs when a company's cash flows are not sufficient to repay principal and interest of debt and may occur when the firm's equity becomes negative,

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“…However, according to the rules of CG in Jordan, at the minimum, a third of the board of members must be independent. Salloum and Azoury (2012) found that the number of outside directors affects the possibility of financial distress negatively. Thus, the following hypothesis is developed:…”

Section: Hypotheses Developmentmentioning

confidence: 99%

Corporate governance and risk taking of Jordanian listed corporations: the impact of board of directors

Al-Smadi

2019

Investment Management and Financial Innovations

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The aim of this study is to evaluate the compliance level of corporate governance rules and examine the impact of this compliance on risk taking of corporations in Jordan. This study used panel data of the listed corporations in Amman Stock Exchange from 2013 to 2017. Corporate governance index was constructed to gauge the compliance level of corporate governance rules. The results show a good level of overall compliance of corporate governance rules. As for the compliance of the categories of corporate governance rules, rules of transparency and disclosure are ranked first, while rules of general meeting assembly are ranked fourth. The regression results report a negative influence of corporate governance and corporate risk taking. In addition, four governance variables concerning the features of the board of directors are used in the study. The results reveal a negative impact of the size of the board of directors, independence of the board, and committees of the board on corporate risk taking. It is expected that the outcomes of the study can be used by management of the corporations in addition to the Jordanian Securities Commission that seek to enhance confidence in the Jordanian capital market.

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Corporate governance and firms in financial distress: evidence from a Middle Eastern country

Cited by 31 publications

References 31 publications

Females’ Representation in the Boardroom and Their Impact on Financial Distress: An Evidence from Family Businesses in India

Females’ Representation in the Boardroom and Their Impact on Financial Distress: An Evidence from Family Businesses in India

The Influence of Corporate Governance Practices on Financial Distress of Firms Listed at the Nairobi Securities Exchange: Moderating Influence of Financial Leverage

Corporate governance and risk taking of Jordanian listed corporations: the impact of board of directors

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