Corporate governance, value and performance of firms: new empirical results on convergence from a large international database

Krafft, Jackie; Qu, Yiping; Quatraro, Francesco; Ravix, Jacques Laurent

doi:10.1093/icc/dtt007

Cited by 44 publications

(33 citation statements)

References 49 publications

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“…Previous studies have found that liquidity, profitability, firm's performance, and dividend payment have a positive relationship with the effect of code of corporate governance practice (Al-Najjar & Belghitar, 2014;Joh, 2003;Krafft et al, 2014;Prommin et al, 2014). On the other hand, leverage has a negative relationship with the effect of code of corporate governance practice (Arping & Sautner, 2010).…”

Section: Discussionmentioning

confidence: 94%

Monitoring mechanisms and financial distress of public listed companies in Malaysia

Kazemian

Shauri

Sanusi³

et al. 2017

Journal of International Studies

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Abstract. This study examines the relationships between financial distress and financial ratio (liquidity, leverage, profitability, firm's performance, and dividend) among public listed companies, using the Altman Z-Score to determine the financial distress levels among public listed companies in Malaysia. Five-year data has been collected (2010 to 2014) from the annual financial statements and from Data Stream of public listed companies in Malaysia. The findings indicate significant relationships between liquidity, leverage, profitability, firm's performance, and dividend with the financial distress levels among the companies in question. This study also examines the interaction effects of financial ratios and the year after implementation of the Malaysian Code on Soheil Kazemian, Noor Shauri, Zuraidah Sanusi, Amrizah Kamaluddin, Shuhaida Shuhdan Monitoring mechanisms and financial distress of public listed companies in Malaysia 93Corporate Governance (MCCG) in 2012 on financial distress levels. The results suggest that only liquidity and firm's performance have stronger effects on financial distress levels in two years after MCCG implementation. This indicates that after the implementation of the Code, liquidity and firms' performance ratios had strong and significant effect on financial distress levels. Overall, this study could help investors, creditors as well as external regulators in monitoring companies from being classified as financially distressed companies.

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Section: Discussionmentioning

confidence: 94%

Monitoring mechanisms and financial distress of public listed companies in Malaysia

Kazemian

Shauri

Sanusi³

et al. 2017

Journal of International Studies

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“…First, the two‐stage least squares (2SLS) estimator involving instrumental variables has been adopted to alleviate possible endogeneity bias between CFP and firm‐level green practice index (Stone & Rose, ). In this context, we rely on the set of instruments contained within a panel to instrument the GPI variable due to the absence of good external instrumental variables (Krafft, Qu, Quatraro, & Ravix, ; Miroshnychenko, Bozzi, & Barontini, ). Specifically, the third‐ and fourth‐year lagged values of GPI are used as instruments in all the models.…”

Section: Resultsmentioning

confidence: 99%

“…First, the two-stage least squares (2SLS) estimator involving instrumental variables has been adopted to alleviate possible endogeneity bias between CFP and firm-level green practice index (Stone & Rose, 2011). In this context, we rely on the set of instruments contained within a panel to instrument the GPI variable due to the absence of good external instrumental variables (Krafft, Qu, Quatraro, & Ravix, 2014;Miroshnychenko, Bozzi, & Barontini, 2018 This table presents the coefficients and t-statistics (in parentheses) using the 2SLS regressions with HAC standard errors. Q it is the ratio between (book value of total assets − book value of shareholder's equity + market value of shareholder's equity) and (book value of total assets).…”

Section: Resultsmentioning

confidence: 99%

“…Given that corporate governance can exert direct and integrated effects on CEP (Miroshnychenko et al, in press), another potential area for future studies is to understand whether firm‐level greenwashing or brownwashing strategies can be altered via governance mechanisms by which firms are controlled and managed. Corporate governance mechanisms have been found to play an important role in determining corporate financial policies, firm growth dynamics, innovation rates and organizational CSR policies (Krafft et al, ; Sánchez‐Ballesta & García‐Meca, ). However, we still do not know the nature, strength and directionality of the link between corporate governance and the environmental communication strategies of a firm.…”

Section: Discussionmentioning

confidence: 99%

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Does it pay to be a greenwasher or a brownwasher?

et al. 2018

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The growing attention to corporate green practices and the increased competition in global markets have pressed companies to disclose information about their environmental footprints. In doing so, some firms tend to either overstate or understate their environmental commitments by adopting so‐called “greenwashing” or “brownwashing” strategies, respectively. In this paper, we analyze the impact of different types of environmental communication strategies on firm value and operating performance using a panel of 3,490 publicly traded companies from 58 countries and 19 industries. Results show that it does not pay to be a greenwasher, whereas the decision to not properly communicate a firm's environmental commitment is associated with lower financial performance. Therefore, this study highlights the importance of having not only effective green practices, but also coherent communication of environmental strategies. This is the first attempt to empirically model the impact of greenwashing and brownwashing strategies on corporate financial performance in a longitudinal setting.

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“…Therefore, our explanatory model was estimated using the instrumental variable (IV) estimator, namely 2SLS regressions, to alleviate the endogeneity problem that may influence estimates (Rose and Stone, ). Due to the absence of good external instruments, we adopted the second‐ and third‐year lagged values of all endogenous variables ( Size ic,t‐2 , Size ic,t‐3 , R&D ic,t‐2 , R&D ic,t‐3 , Lev ic,t ‐2 , Lev ic,t ‐3 , Cash ic,t‐2 and Cash ic,t‐ 3 ) following a common practice in the literature (Krafft et al ., ). As in Petersen (), robust standard errors clustered at the firm level were used to simultaneously relax both the assumption of homoscedasticity (constant variance for all observations) and the assumption of no autocorrelation (independence of observations) in our panel dataset.…”

Section: Methodsmentioning

confidence: 97%

Firm Growth and Legal Environment

2018

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An effective country‐level legal environment is crucial for promoting access to finance, development, and ultimately economic growth. Based on a sample of large companies listed in Continental Europe in the period 2002–2011, this study suggests that investor protection level is related to firm growth. Specifically, investor protection: a) enhances the growth rate of the firm; b) affects growth sensitivity to leverage and cash flow. These results provide empirical support to recommendations by policy makers advocating for increased investor protection in Europe.

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Corporate governance, value and performance of firms: new empirical results on convergence from a large international database

Cited by 44 publications

References 49 publications

Monitoring mechanisms and financial distress of public listed companies in Malaysia

Monitoring mechanisms and financial distress of public listed companies in Malaysia

Does it pay to be a greenwasher or a brownwasher?

Firm Growth and Legal Environment

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