Does Competition Matter for Corporate Governance? The Role of Country Characteristics

Cosset, Jean‐Claude; Somé, Hyacinthe Y.; Valéry, Pascale

doi:10.2139/ssrn.2336052

Cited by 6 publications

(13 citation statements)

References 29 publications

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“…The indices were constructed using public and non-public data from surveys of firms. The indices have been used and validated previously (Cosset et al , 2016; Doidge et al , 2007) and showed acceptable predictive power in this study even after several robustness checks. The indicators used a numeric, decile-based score that indicates a company’s governance risk relative to the index or region.…”

Section: Methodsmentioning

confidence: 75%

“…These included firm size, leverage, profitability and industry type, and were collected from the DataStream database. Previous studies have shown a positive relationship between firm size (total assets) and corporate governance because large firms may attract more community inspection and have resources to cover the implementation costs of corporate governance systems (Cosset et al , 2016; Durnev and Kim, 2005). Leverage (long-term debt plus current liabilities/total assets) was used to control for the external monitoring activities of creditors (Cosset et al , 2016).…”

Section: Methodsmentioning

confidence: 99%

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Corporate governance risk and the agency problem

ElKelish

2017

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Purpose This study aims to investigate the relationship between corporate governance risk and agency costs across different countries. Design/methodology/approach Corporate governance risk indicators were obtained from the Institutional Shareholder Services Europe (S.A.) for 4,135 firms across 27 countries. Agency costs and other control variables were derived from companies’ annual financial reports using the DataStream database. Ordinary least squares multiple regression analysis model was used to test the study hypothesis. Findings Agency costs have a significant negative impact on corporate governance risk across countries. The extent of corporate governance mechanisms used, however, varies across geographic regions and industry types. The relationship between corporate governance risk and agency costs is more obvious in the non-financial than financial sector. These results were robust after several statistical checks. Practical implications The findings will help stakeholders, including corporate management, regulators and investors to improve corporate governance mechanisms and capital allocation decisions across countries. Originality/value Evidence is provided on the role of agency costs in corporate governance risk across geographic regions for financial and non-financial companies. The paper also overcomes common problems in corporate governance research such as construct validity, limited data and endogeneity.

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Section: Methodsmentioning

confidence: 75%

Section: Methodsmentioning

confidence: 99%

Corporate governance risk and the agency problem

ElKelish

2017

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“…For example, Black et al (2015) declare that better governance not only moderates the negative effect of related-party transactions but also increases the firm profitability due to less tunneling. Cosset et al (2016) reveal that corporate governance is associated with the greater firm value for developing countries. Bae et al (2012) report that Asian firms with weaker corporate governance experienced a larger drop in their share values during the 1997 Asian financial crisis.…”

Section: Corporate Governance Financial Statements and Firm Valuementioning

confidence: 97%

Do intellectual capitals matter to firm value enhancement? Evidences from Taiwan

Cheng

Huang

2020

JIC

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PurposeThe purpose of this study is to find evidence of the impact of intellectual capital on firm value, and, in turn, enhance the existing literature which lacks consensus on it. By employing some distinctive proxies for human capital, innovation capital, customer capital and process capital, this study might provide valuable information for firms to make strategic decisions.Design/methodology/approachThis study uses Tobin's Q to represent firm value and various variables to be the proxies for intellectual capitals. By utilizing firm-year observations, this study applies panel data models first, and then Petersen regression models for further investigation to enhance the robustness of the empirical results.FindingsFirm value is affected positively by the average net profit per employee as well as goodwill and intangible assets. This is because firms having employees with abundant knowledge will possess advantage for innovation, and the excellent reputation, a part of goodwill for oriental firms, would encourage people to consume and invest more.Research limitations/implicationsThe constraint of data resource is the main limitation. With the limited scales and as an emerging market of Taiwan Stock Exchange, it is not confirmed whether the results are appropriate for the developed markets. Nevertheless, firms should make efforts on developing intellectual capital and corporate governance for operating businesses with competitiveness and safety.Originality/valueSince capable employees enhance the innovation, innovation improves customer's satisfaction and good customer relationship increases the sales; this study illustrates that for expanding businesses, firms should make more efforts on developing intellectual capital.

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“…The HHI is defined as the sum of firms j 's squared market share ( S ) in an industry “ i ” in year “ t ”. As is advocated in literature, we compute HHI at the two-digit SIC code level (Guadalupe and Pérez-González, 2010; Ammann et al , 2013; Cosset et al , 2016). More specifically, the HHI is computed as follows.…”

Section: Datamentioning

confidence: 99%

Agency problems and the value of advertising expenditures in an emerging market: role of product market competition

Farooq

Pashayev

2020

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PurposeThis paper documents the impact of product market competition on the value of advertising expenditures.Design/methodology/approachThe authors use the data for non-financial firms from India and the pooled regression procedure to test their arguments during the period between 2009 and 2018.FindingsThe results show that advertising expenditures of firms operating in sectors with relatively high competition are more valuable than advertising expenditures of firms operating in sectors with relatively low competition. The results of the study are robust across various proxies of advertising expenditures and firm performance. Furthermore, the results also show that the positive impact of product market competition on the value of advertising expenditures is confined only to firms that already have lower agency problems.Originality/valueThe results of the study highlight the importance of product market competition on the value of advertising expenditure in the emerging market setting, where agency problems are supposed to be high.

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Does Competition Matter for Corporate Governance? The Role of Country Characteristics

Cited by 6 publications

References 29 publications

Corporate governance risk and the agency problem

Corporate governance risk and the agency problem

Do intellectual capitals matter to firm value enhancement? Evidences from Taiwan

Agency problems and the value of advertising expenditures in an emerging market: role of product market competition

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