Determinants of Board Independence in the Banking Sector of Bangladesh

Karim, Md. Rezaul; Mitra, Ranjan Kumar; Khan, Ibrahim

doi:10.31014/aior.1992.03.01.178

Cited by 7 publications

(4 citation statements)

References 6 publications

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“…Jensen and Meckling (1976) argue that conflicts between shareholders and creditors increase with firms' leverage. The demand for monitoring by independent directors is then expected to be higher among high leveraged firms (Karim et al, 2020)Therefore, we expect that firms with a higher leverage tend to voluntarily appoint independent directors.…”

Section: Methodsmentioning

confidence: 99%

Voluntary appointment of independent directors: evidence from Taiwan

Kao

Hodgkinson

Jaafar

2021

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Purpose Using a data set of Taiwanese listed firms from 2002 to 2015, this paper aims to examine the determinants to voluntarily appoint independent directors. Design/methodology/approach This study uses panel estimation to exploit both the cross-section and time-series nature of the data. Further, this paper uses Tobit regression, generalized linear model (GLM) in the additional analysis and the two-stage least squares to mitigate for a possible endogeneity issue. Findings The main findings show that Taiwanese firms with large board sizes tend to voluntarily appoint independent directors and firms that already have independent supervisors more willingly to accept additional independent directors onto the board. Furthermore, ownership concentration and institutional ownership are positively associated with the voluntary appointment of independent directors. On the contrary, firms controlled by family members are generally reluctant to voluntarily appoint independent directors. Research limitations/implications The findings are important for managers, shareholders, creditors and policymakers. In particular, when considering the determinants of the voluntary appointment of independent directors, the results indicate that independent supervisors, outside shareholders and institutional investors are significant factors in influencing effective internal and external corporate governance mechanisms. This research work focuses on the voluntary appointment of independent directors. It would be interesting to compare the effectiveness of voluntary appointments with a mandatory appointment within Taiwan and with other jurisdictions. Originality/value This study incrementally contributes to the corporate governance literature in several ways. First, this study extends the earlier research by using a more comprehensive data set of non-financial Taiwanese firms and using alternative methodologies to investigate the determinants of voluntary appointment of independent directors. Second, prior studies tend to neglect the possible issue of using a censored and fractional dependent variable, the proportion of independent directors, which might yield biased and inconsistent parameter estimates when using ordinary least squares regression estimation. Finally, this study addresses the relevant econometric issues by using the Tobit, GLM and the two-stage least squares for a possible endogeneity concern.

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Section: Methodsmentioning

confidence: 99%

Voluntary appointment of independent directors: evidence from Taiwan

Kao

Hodgkinson

Jaafar

2021

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“…First, the banking sector of Bangladesh is the most dominating industry of the economy; so, the result of this sector will reflect the picture of the whole economy. Secondly, it is predicted that fraudulent financial reporting might be practiced in the banking sector of Bangladesh evidenced by the financial scam, heists, and bribery in the industry (Karim and Hossain, 2021) and independence of independent directors (Karim and Mitra, 2019) and board (Karim, Mitra, and Khan, 2020) are highly impaired in this sector. Additionally, compliance in disclosure in financial reporting is also low in this country (Karim and Riya, 2022).…”

Section: Data Collection Techniquesmentioning

confidence: 99%

COVID-19, Supply Chain, and Profitability: A Survey Based on an Emerging Economy

Shetu

Karim

2023

OSCM: An Int. Journal

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COVID-19 has stunned the whole economy and has been unveiled as a colossal threat to global supply chain management. This paper has tried to assess the implications of COVID-19 on different areas of the supply chain and the profitability of different industries in Bangladesh. The study is based on a questionnaire survey of three major industries of Bangladesh: textile, pharmaceuticals, and banking sectors conducted from December 2021 to February 2022. Descriptive statistics and t-tests for mean differences were used to analyze the data and they are displayed across tables and graphs. It is found that supply chain aspects like raw material, labor, manufacturing facility, import/export, product/service, revenue, and profit are significantly impinged by the pandemic. Furthermore, the supply chain of the manufacturing sector is more affected than that of the service sector, and statistically, significant differences are evidenced between manufacturing industries. The findings and recommendations of this study will have policy implications for regulators, companies, suppliers, investors, and customers. This is a pioneer study to investigate the implications of the pandemic on the supply chain fields.

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“…Bangladesh Bank data show a substantial impact on commercial bankers with COVID-19, and despite central bank support, non-performing loans increased by 7%, reaching Tk950.85bn (equivalent to US$8.64bn) in Q1 2021. The sector faces various challenges, including scams, high NPLs, governance deficits and slow loan recovery, raising concerns about fraudulent financial reporting (Karim and Hossain, 2021; Karim et al , 2020). In this complex situation, the banking industry grapples with new challenges from the prolonged impact of COVID-19, emphasizing the need for high-quality information to address stakeholders’ concerns and pressures.…”

Section: Introductionmentioning

confidence: 99%

COVID-19-related accounting disclosures in the financial statements: evidence from an emerging economy

Karim,

Reza,

Shetu

2024

ARJ

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Purpose This study aims to explore COVID-19-related accounting disclosures using sociological disclosure analysis (SDA) within the context of the developing economy of Bangladesh. Design/methodology/approach COVID-19-related accounting disclosures from listed banks’ annual reports have been examined using three levels of SDA: textual, contextual and sociological interpretations. Data were gathered from the banks’ 2019 and 2020 annual reports. The study uses the legitimacy theory as its theoretical framework. Findings The research reveals a substantial shift in corporate disclosures due to COVID-19, marked by a significant increase from 2019 to 2020. Despite regulatory and professional directives for COVID-19-specific disclosures, notable non-compliance is evident in subsequent events, going concern, fair value, financial instruments and more. Instead of assessing the implications of COVID-19 and making disclosures, companies used positive, vague and subjective wording to legitimize non-disclosure. Practical implications The study’s insights can inform regulators and policymakers in crafting effective guidelines for future crisis-related reporting like COVID-19. The research adds to the literature by methodologically using SDA to explore pandemic-specific disclosures, uncovering the interplay between disclosures, legitimacy and stakeholder engagement. Originality/value This study represents a pioneering effort in investigating COVID-19-specific disclosures. Moreover, it uses the SDA methodology along with the legitimacy theory to analyze accounting disclosures associated with COVID-19.

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Determinants of Board Independence in the Banking Sector of Bangladesh

Abstract: The Journal of Economics and Business is an Open Access publication. It may be read, copied, and distributed free of charge according to the conditions of the Creative Commons Attribution 4.0 International license.

Cited by 7 publications

References 6 publications

Voluntary appointment of independent directors: evidence from Taiwan

Voluntary appointment of independent directors: evidence from Taiwan

COVID-19, Supply Chain, and Profitability: A Survey Based on an Emerging Economy

COVID-19-related accounting disclosures in the financial statements: evidence from an emerging economy

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