Exploring governance issues among boards of directors within state-owned enterprises in Barbados

Abstract

Purpose The purpose of this paper is to examine corporate governance (CG) issues among boards of directors (BODs) in Barbados’ state-owned enterprises (SOEs) by utilizing agency and institutional theories as the theoretical framework. Design/methodology/approach This research adopts a mixed methods approach using quantitative and qualitative methods. Data are collected in five stages including data initially from a governance workshop attended by BODs. The findings are presented and feedback obtained in subsequent stages including several seminars attended by BODs, government officials, regulators and other stakeholders. Findings BODs perceive that they perform their roles and responsibilities in an effective and efficient manner, influence decision making, exercise control in SOEs and conduct well-organized meetings. However, respondents from the various stages report that there is lack of accountability and transparency, inadequate disclosure, lengthy board meetings resulting in excessive delays in decision making, unclear accounting and auditing guidelines, and a lack of training in financial and CG matters. Political interference, board appointment and composition are also cited as major concerns. Research limitations/implications Suggestions include reduced political interference, increased training, following OECD (2005) best practices and greater accountability. Originality/value The paper extends the literature on CG in BODs in SOEs in emerging economies. This study utilizes the agency and institutional frameworks to understand the phenomenon.

Board of directors, performance and firm value in Brazilian listed state-owned enterprises

“…Monitoring is less effective when board members declared as independents have hidden underlying political connections, leading to destruction of firm value (Shi et al;. Thompson et al (2019) find that the recruitment and selection of board members in SOEs in Barbados were motivated by political affiliation, compromising the independence of the boards. In this situation, there lack objective criteria for appointing board members and their mandate is determined based on political government changes.…”

“…Governments can dominate the boards' behavior by directly appointing directors that suit their interests. In this way, boards can be used as political tools, since they are unlikely to defy poor decisions made by political entities (Thompson et al;. Another conflict from the principal-principal perspective is that board members can be manipulated to support political interests that do not reflect the firms' business interests, therefore, impacting their performance (Apriliyanti and Randøy;.…”

“…In this situation, there lack objective criteria for appointing board members and their mandate is determined based on political government changes. The consequence is the presence of inexperienced members on the board, who negatively impact firm performance by generating inefficiencies for the SOEs (Thompson et al;.…”

“…Bhat et al (2018) argue that agency conflicts are minimized when board members are independent, which leads to better corporate performance. It is not unusual for board members in SOEs to be nominated by members of government, which results in inexperienced, influenced directors who negatively impact firm performance by generating inefficiencies for such firms (Thompson et al;.…”

“…Corporate governance literature presents few empirical studies regarding board of director's composition in SOEs (Menozzi et al;2012) and how the relationship between business and political decisions within the board occurs in such firms (Apriliyanti and Randøy;. The limited number of empirical studies on corporate governance of SOEs in emerging markets is also noteworthy (Thompson et al;. Moreover, due to the importance and central role played by SOEs in developing countries, it is imperative to understand the factors that drive the performance of these firms (Mbo and Adjasi;.…”