Independent Directors in Singapore: Puzzling Compliance Requiring Explanation†

Puchniak, Dan W.; Lan, Luh Luh

doi:10.1093/ajcl/avx023

Cited by 47 publications

(8 citation statements)

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“…Several studies on Asian and western firms show that family firms are associated with higher earnings quality, disclosure and performance (Ali et al , 2007; Anderson and Reeb, 2004; Corbetta and Salvato, 2004; Hashim, 2009; Wan-Hussin, 2009; Wang, 2006; Yeh et al , 2001). Evidence found by Puchniak and Lan (2015) on firms in Singapore and Siregar and Utama (2008) on firms in Indonesia supports the notion that family firms are focused on gaining market recognition of the business operations of a firm and avoiding being categorized as firms that practice earnings management.…”

Section: Introductionmentioning

confidence: 76%

“…Independent directors in family firms form a close relationship with family owners to serve as effective mediators who resolve disputes between family members and minority shareholders. In addition, they act as trusted advisors to the firm while engaging in activities to attract foreign capital and to signal their compliance with international corporate governance standards (Puchniak and Lan, 2015). Accordingly, Jaggi et al (2009) found that, after controlling for family ownership, independent directors are more effective in controlling earnings management.…”

Section: Managerial Hegemony Alignment and Entrenchment Effect Theorymentioning

confidence: 99%

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Effect of audit committee independence, board ethnicity and family ownership on earnings management in Malaysia

Mohammad

Wasiuzzaman

2019

JAEE

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Purpose The purpose of this paper is to investigate the effect of audit committee independence, board ethnicity and family ownership on earnings management in Malaysia. Design/methodology/approach The effect of audit committee independence, board ethnicity and family ownership on corporate governance is investigated via 1,206 firm-year observations between the fiscal years of 2004 and 2009 of Bursa Malaysia listed firms. Panel data regression analysis is used to analyze the relationship. Findings The findings of this study fail to associate the role of audit committee independence as proposed under RMCCG (2007) in curtailing earnings management activities, thus supporting the findings on power distance scores that power granted to the top management may result in less effective independent directors. Nonetheless, in support of the alignment effect theory, family ownership is found to reduce earnings management activities. The findings show that corporate governance is more effective in developing country family firms due to their long history of family reputation and the importance of institutional culture factors. Research limitations/implications This study focuses on board ethnicity, family ownership and its influence on earnings management. Originality/value This study offers insights into the importance of family institutional structures on corporate governance reforms in Malaysia as Malaysian family firms are mostly traditional firms that have built their reputation and strength in the industry for many generations.

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Section: Introductionmentioning

confidence: 76%

Section: Managerial Hegemony Alignment and Entrenchment Effect Theorymentioning

confidence: 99%

Effect of audit committee independence, board ethnicity and family ownership on earnings management in Malaysia

Mohammad

Wasiuzzaman

2019

JAEE

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“…Hence, several countries (including the UK) modified the American definition of independent directors to require independence from controlling shareholders (in addition to management) so as to reflect the underlying realities in controlled companies that takes account of the agency problems between the controlling shareholders and the minority. Puchniak and Lan (2017) find in their study that a majority of the companies that have adopted codes (55.2%) define independent directors with reference to controlling shareholders as well. They then go on to discuss the curious case of Singapore where the American definition held sway until 2015 even though Singapore in a jurisdiction that is populated by companies with concentrated shareholding, which they argue 'was the product of strategic regulatory design (not ignorance) and was surprisingly effective'.…”

Section: Board Independence: a Key Thrust Of Corporate Governance Codesmentioning

confidence: 97%

“…What is interesting is that all codes of corporate governance deal with principles of board composition and independence (Zattoni and Cuomo, 2008). In their survey through hand-collected data of 245 codes, Puchniak and Lan (2017) find that all of the codes had some provisions relating to independent directors, thereby demonstrating the ubiquity of the concept and its popularization through corporate governance codes. Even an economy like Japan that has hitherto demonstrated resistance to the concept of board independence incorporated the roles and responsibilities of independent directors in its round of significant corporate governance reforms in 2015 (Curtiss, 2017; Tokyo Stock Exchange, 2015).…”

Section: Shareholder Empowerment and The Monitoring Boardmentioning

confidence: 99%

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Proliferation of corporate governance codes in the backdrop of divergent ownership structures

Varottil

2018

Competition & Change

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In the backdrop of the convergence–divergence debate, the goal of this article is to examine the proliferation of corporate governance codes in the light of a single factor, namely varying corporate ownership structures across countries. While such codes emanated and became popular in the United Kingdom where companies largely display dispersed shareholding, the concept has been disseminated to countries that carry considerably different ownership structures, i.e. mainly concentrated shareholding. This is bound to give rise to incongruities in the implementation of these codes. In order to enunciate the claim made above, the article will consider two aspects that convergence advocates have focused on, namely (i) shareholder empowerment and (ii) self-regulation. For example, corporate governance codes place considerable emphasis on the structure and independence of the boards of directors of companies as a means to ensure shareholder protection. While this approach is meant to produce results in companies with dispersed shareholding, the same cannot be said of companies with concentrated shareholding where the empowerment of shareholders through director independence or other means would only embolden the already dominant controlling shareholders. Moving to self-regulation, a voluntary code operating on a ‘comply-or-explain’ basis can ensure sufficient adherence only if certain factors are present in the jurisdiction where it is applied. Relying upon available empirical evidence, this article finds that use of self-regulation in voluntary codes of corporate governance may generate different results depending upon the ownership structures of companies, thereby exhibiting signs of divergence on this count.

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Malay Ethnic Directors, Board Attributes and Ownership Structure on Firm Performance: Corporate Governance Evidence from an Emerging Market

Haron,

Nomran,

Othman

2022

Future of Organizations and Work After the 4th Industrial Revolution

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Independent Directors in Singapore: Puzzling Compliance Requiring Explanation†

Cited by 47 publications

References 0 publications

Effect of audit committee independence, board ethnicity and family ownership on earnings management in Malaysia

Effect of audit committee independence, board ethnicity and family ownership on earnings management in Malaysia

Proliferation of corporate governance codes in the backdrop of divergent ownership structures

Malay Ethnic Directors, Board Attributes and Ownership Structure on Firm Performance: Corporate Governance Evidence from an Emerging Market

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