The evolution of corporate governance and agency control: the effectiveness of mechanisms in creating value for companies with IPO on the Brazilian stock exchange

Barros, Francisco Elder Escossio de; Santos, Ruan Carlos dos; Orso, Lidinei Éder; Sousa, Antônia Márcia Rodrigues

doi:10.1108/cg-11-2019-0355

Cited by 18 publications

(14 citation statements)

References 234 publications

(220 reference statements)

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“…The most relevant part of this system is the presence of a dynamic and coherent board of directors (Saleem et al , 2021). Boards have a potentially critical role to play in mitigating agency problems (Fama, 1980; Jensen and meckling, 1976; Aslam and Haron, 2021; Barros et al , 2021), designing and implementing strategy and fostering links between the firm and its external environment (Arora and Bodhanwala, 2018). The board of directors bears the ultimate responsibility for the tax affairs of the company (Nadeem et al , 2017) and is held accountable for them by shareholders and other stakeholders (Zemzem and Ftouhi, 2013).…”

Section: Introductionmentioning

confidence: 99%

Do women on corporate boardrooms have an impact on tax avoidance? The mediating role of corporate social responsibility

Dakhli

2021

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Purpose The purpose of this paper is to investigate the direct and indirect relationship between board gender diversity and corporate tax avoidance using corporate social responsibility (CSR) as a mediating variable. Design/methodology/approach This study uses a panel dataset of 200 French firms listed during 2007–2018 period. The direct and indirect effects between board gender diversity (BGD) and tax avoidance were tested by using structural equation model analysis. Findings The results indicate that the presence of women on corporate boardrooms negatively affects tax avoidance. The greater the proportion of women in boards, the lower the likelihood of tax avoidance practice. In the mediation test, CSR appears to partially mediate the link between women on boards and corporate tax avoidance. Additional analysis shows that the social dimension of CSR produces this mediating effect. Practical implications The results have practical implications for companies in regulating the composition of their boards. To benefit from diversity, firms have to increase women‘s percentage in their boards of directors. Also, investors are encouraged to pay attention to the percentage of female directors when investing and purchasing shares. Social implications This study proved empirically that the higher proportion of female directors significantly reduces the possibility of tax avoidance either directly or indirectly through enhancing CSR performance. The findings show that firms with gender diversified boards are more likely to get involved in CSR for hedging against the potential consequences of aggressive tax avoidance practices. In light of the above results, firms are well-advised to strongly apply the policy encouraging or mandating women as board members to take advantage of their expected benefits. Originality/value The originality of this paper consists in proposing the establishment of both direct and indirect relationships between BGD and corporate tax avoidance through CSR. Unlike prior studies that have been examining the direct relationship between corporate governance mechanisms and corporate tax avoidance, this study went further to investigate the indirect relationship between these two constructs. This study also differs from prior studies as it examines the effect of BGD on each of constituting pillars of CSR, namely, environmental, social and governance. To date, an extensive part of CSR research has used the combined score of CSR, but the effects on different CSR pillars remain little investigated.

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Section: Introductionmentioning

confidence: 99%

Do women on corporate boardrooms have an impact on tax avoidance? The mediating role of corporate social responsibility

Dakhli

2021

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“…Notably, current CG thinking and practices favour the employment of structural mechanisms to mitigate agency problems that influence organisational performance (Boivie et al , 2016; de Barros et al , 2021; Goodman et al , 2021; Muchemwa et al , 2016; Tshipa et al , 2018). Indeed, one of the consequences of agency theory-based uncertainty between principals and agents is goal conflict.…”

Section: Literature Reviewmentioning

confidence: 99%

Recasting trust and distrust in the boardroom

Mthombeni

Chizema

2022

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Purpose This study aims to analyse trust and distrust as specific board processes between the board chair and chief executive officer (CEO) aimed at reducing corporate governance (CG) risk partially mitigated by regnant CG mechanisms. This study incorporates the nascent literature that posits trust and distrust as two separate constructs that co-exist simultaneously to recasts them in the CG domain. Design/methodology/approach This paper analysed data from 20 in-depth interviews conducted with board representatives at four financial services firms in The Netherlands, South Africa and Zimbabwe. Findings This paper found that the foundational bases of the chair–CEO relationship determine how trust and distrust are apportioned between them, which impacts board dynamics. This paper also confirmed that the constructs of trust and distrust are separate thus do not sit at opposite ends of a single continuum. Finally, this paper found that high levels of task-based distrust (as opposed to mistrust) are necessary during periods of organisational distress and more effective if there are also high levels of relational trust between the parties. Originality/value This paper empirically examines the relationship between trust and distrust in CEO–chair dyadic relationships in multiple companies across multiple countries. This paper also introduces the concept of tempered trust, which is defined as interpersonal trust tempered by task-based distrust, recasting the traditional characterisation of trust and distrust in the CG domain, thereby making a useful contribution to the literature on board dynamics.

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“…Moreover, this factor is popularly used as an indicator of a firm's internal governance to prevent conflicts of interest between managers and shareholders (Chiang and He, 2010). Hence, firms with high board independence tend to implement appropriate policies, leading to improved WCM efficiency and, eventually, firm performance, based on agency theory (Chong et al, 2018;Duppati et al, 2019;Barros et al, 2021). Additionally, Fiador (2016) found that more non-executive directors in boards reduced CCC and AR periods.…”

Section: Board Independencementioning

confidence: 99%

Does board composition influence working capital management? Evidence from Thailand

Kumpamool

Chancharat

2022

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Purpose This study aims to investigate the influence of board composition on the working capital management (WCM) of Thai listed firms for the period 2010–2019. Design/methodology/approach Probit regression and two-step system generalized method of moments (GMM) are used to address this issue. Findings The results indicate that, while a larger board size causes a lower net working capital holding, it increases its efficiency. Firms with chief executive officer (CEO) duality adopt aggressive policies for their financing but avoid them for their investment to balance the risks and returns of implementing the working capital (WC) policy. Conversely, firms with higher board independence prefer to use conservative WC financing policies. The findings support using both the agency and stewardship theories. Research limitations/implications The authors focus on listed non-financial firms; therefore, the findings may not be generalizable to financial and private firms. Practical implications The findings provide implications for practitioners to focus more on board composition, as it is crucial for WCM. Furthermore, they should avoid applying a single theory in isolation, especially for CEO duality, as one theory is appropriate only for some policies. The authors also provide guidelines for policymakers and regulators to formulate strategies that support more board diversification in terms of size and independence, to enhance board efficiency. Originality/value To the best of the author’s knowledge, this study is the first to directly examine the influence of board composition on aggressive WC policies in Thailand.

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The evolution of corporate governance and agency control: the effectiveness of mechanisms in creating value for companies with IPO on the Brazilian stock exchange

Cited by 18 publications

References 234 publications

Do women on corporate boardrooms have an impact on tax avoidance? The mediating role of corporate social responsibility

Do women on corporate boardrooms have an impact on tax avoidance? The mediating role of corporate social responsibility

Recasting trust and distrust in the boardroom

Does board composition influence working capital management? Evidence from Thailand

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