Ownership structure, independent directors and firm performance

Kallamu, Basiru Salisu

doi:10.18685/ejbme(7)1_ejbme-15-012

Cited by 15 publications

(18 citation statements)

References 25 publications

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“…Moreover, the findings indicating that more independent directors can lead to better firm performance support Hypotheses 2. The results agree with previous studies (i.e., Baysinger and Butler 1985;Peng 2004;Luan and Tang 2007;Liu et al 2014;Masulis and Mobbs 2014;Kallamu 2016;Singh et al 2018). Thus, the increase of independent directors on boards of firms indeed improves governance and performance of those firms.…”

Section: Discussionsupporting

confidence: 92%

On the Moderating Effects of Country Governance on the Relationships between Corporate Governance and Firm Performance

2021

JRFM

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This study further empirically examines the influence of board independence on financial performance by using the world’s top 1000 firms. CEO duality and the percentage of independent directors are used as the indicators of board independence. Moreover, this study re-addresses the findings in the literature by giving supplement in theory and conducting tests for the influence of board independence on firm performance as well as the moderating effects of country governance, focusing on regulatory quality and rule of law, with multi-level modeling, a more sophisticated statistical approach. Four hypotheses, based on agency theory and compensation theory, were developed. The results indicated that CEO duality and the percentage of independent directors exerted, respectively, negative and positive influence on Return on Assets (ROA), a firm performance indicator. Furthermore, regulatory quality and the rule of law positively moderated the negative effects of the former and negatively moderated the positive effects of the latter. Some practical implications were discussed based on the results obtained.

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Section: Discussionsupporting

confidence: 92%

On the Moderating Effects of Country Governance on the Relationships between Corporate Governance and Firm Performance

2021

JRFM

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“…This structure of maintaining the control power by the group with its vested interest may have hindered the effectiveness of the CG code. This finding may partly support Kallamu (2016) and Chen et al (2015) insisting that the strength of independent directors depends on the ownership structure of the firm.…”

Section: Discussionsupporting

confidence: 61%

An Analysis of Codified Corporate Governance Practices in the Banking Industry: The Case Study of Bangladesh

Suzuki

Hasan

2018

E-Finanse

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Introducing a well-designed system of corporate governance is considered an effective tool to ensure the stability and resilience of a banking system. It was in 2006 when Bangladesh initiated its first corporate governance code (CG code). Despite trying to meet the code of enhancing the internal monitoring mechanisms and transparency in governance, it is apparent that the quality in bank credit portfolios continuously deteriorated. This paper aims to empirically analyze the impact of adopting the CG code on performance for eight years (2010-2017) of 21 major commercial banks of Bangladesh. In this case study, we suggest that the CG code may have given the Bangladeshi commercial banks an ill-incentive for the reduction of executive directors under the pressure of meeting a guideline to increase the ratio of independent directors. This incentive structure had a negative impact on bank performance during the period. Another finding is that the fundamental structure of ownership and control by sponsor directors remained unchanged during the period. This structure of maintaining the control of power by a group with its vested interest may have hindered the effectiveness of the CG code in Bangladesh. We suggest that the agenda of CG practices should go together with a policy for mitigating a potential bias under the ownership concentration because any attempt of adopting codified CG practices would be futile under the fundamental structure in Bangladesh. An analysis of codified corporate governance practices in the banking industry: the case study of Bangladesh C. The effect of independent/explanatory variables on dependent variable non performing loan (NPL) D. The effect of independent/explanatory variables on dependent variable cost of funds (COF)

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“…For this reason, Gebba and Aboelmaged (2016) indicated that a typical board should contain a heterogeneous mix of executive and nonexecutive directors. The revised Malaysian Corporate Governance Code (CGCM, 2007) also provided that all publicly traded companies should have a BOD, which should have a balance between executive and non-executive directors to avoid decisions dominated by one group or by some board members (Kallamu, 2016).…”

Section: Board Independencementioning

confidence: 99%

Effect of board quality on the financial performance of conventional and Islamic banks in a stable financial context: Comparative study on the international evidence

Haddad¹,

Ammari²,

Bouri³

2020

Preprint

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Returning to the literature of finance and banking governance, our article provides the first logical analysis that detailed the process of comparative analysis between the correlation of board determinants’ quality and the financial performance of conventional and Islamic banks. Previous research has always discussed the main role of the board as an internal mechanism of governance on the financial performance separately in each bank type. However, we have never encountered rewarding studies that compared these impacts. In our study, we distinguished between the impact of the board of directors on the financial performance in conventional and Islamic banks. Settings of the financial performance and board of directors of the conventional and Islamic banks are collected from 30 countries located in four continents: America, Europe, Asia, and Africa. Two equal samples were collected that each of them is composed of 112 banks. By using the GLS method, data were used to explore the impact of the board of directors on the financial performance between both types of banks over the period 2010-2018, giving us 1008 bank-year observations in each sub-sample. On the whole, empirical results have shown that in conventional banks the board of directors has negatively affected the financial performance, while the impact of the board on the financial performance of Islamic banks is ambiguous. Nevertheless, the degree of the positive impact on financial performance is more significant in Islamic banks.

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Ownership structure, independent directors and firm performance

Cited by 15 publications

References 25 publications

On the Moderating Effects of Country Governance on the Relationships between Corporate Governance and Firm Performance

On the Moderating Effects of Country Governance on the Relationships between Corporate Governance and Firm Performance

An Analysis of Codified Corporate Governance Practices in the Banking Industry: The Case Study of Bangladesh

Effect of board quality on the financial performance of conventional and Islamic banks in a stable financial context: Comparative study on the international evidence

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