The impact of CEO' duality and board's size and independence on firms’ innovation and financial performance

Blibech, Nourhene; Berraies, Sarra

doi:10.18685/ejbme(9)1_ejbme-17-021

Cited by 10 publications

(23 citation statements)

References 24 publications

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“…Therefore, this evidence supports the view of agency theory that CEO duality is no more advantageous to the firm performance since it permits the board exposers to a threat of imbalance and permits a conflict (Dalton and Kesner, 1987;Tricker, 1994). This result is consistent with Doğan et al (2013) and Blibech and Berraies, (2018). Thus, it provides a strong evidence to support a view that CEO duality could be blamed for poor performance in Bangladeshi listed companies.…”

Section: Results Of Regression Analysissupporting

confidence: 92%

“…In addition, a board with duality is typically over controlled by the executives; it threatens the good governance practices in the corporation (Tricker, 1994;Yermack, 1996). Empirical evidence (such as Daily and Dalton, 1994;Carter et al, 2003;Doğan et al, 2013;Blibech and Berraies, 2018) confirms the detrimental impact of duality on corporate performance. Consistent with the agency theory, this study hypothesizes that CEO duality is not advantageous to the firms to enhance their performance.…”

Section: Board Independencementioning

confidence: 99%

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Board Composition, Insider Ownership and Firm Performance: Evidence from Post-Shock Period of Stock Prices in Bangladesh

Hossain

2021

KUBR

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Purpose: This study attempts to analyze the influence of board structure (board size, board independence, CEO duality, insider ownership) on performance of Bangladeshi listed nonfinancial firms during the post-shock period of stock prices. Methodology: Putting stress on the issue of controlling for any possible endogeneity problems prevails in the effects of structure of board on corporate performance this study employed the Durbin-Wu-Hausman test as the presence of endogeneity severely makes the OLS estimates biased. Therefore, satisfying endogeneity and overidentification tests the observed data have been analyzed by 2SLS as well as OLS regression models. In an attempt to choose the consistent coefficients between OLS and 2SLS a Hausman test was applied. Findings: Results of the study suggest that a board featuring more directors improve accounting measures of performance and a board having more independent directors also significantly assist firms to enhance their market measure of performance. CEO duality is found detrimental to the accounting measures of performance. Apart from, findings support that holding more ownership by insiders leads to enhance firm performance. Thus, it provides empirical evidence to support a view of agency theory that large board, board independence, and insider ownership are good incentives to the firm to monitor and supervise managerial activities and minimize agency problems. Practical Implication: Overall, findings of the study are posing some implications for academics, practitioners, and policy makers in advancing the existing knowledge domain and formulating governance policies in the context of emerging countries like Bangladesh. Originality: The driving force of this work was to investigate how effective the corporate governance directives/notifications in regard to board independence and insider ownership was in protecting the shareholders’ interest during the post-shock period of stock prices in Bangladesh. Therefore, this study provides a robust result with regard to the impacts of reformed corporate governance notification (CGN 2012) on firm performance in Bangladesh.

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Section: Results Of Regression Analysissupporting

confidence: 92%

Section: Board Independencementioning

confidence: 99%

Board Composition, Insider Ownership and Firm Performance: Evidence from Post-Shock Period of Stock Prices in Bangladesh

Hossain

2021

KUBR

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“…On the other hand, empirical results indicate that the volume of the board of directors does not have a statistically significant effect on innovation capability. The results obtained from the analysis are in parallel with those obtained by Driver and Guedes (2012), Shapiro et al (2015), Balsmeier et al, (2017) and Blibech and Berraies (2018).…”

Section: Discussionsupporting

confidence: 72%

“…The proportion of foreign members in the board of directors has a statistically significant effect on the sustainable innovation capabilities of enterprises. Tribo et al (2007), Mat Rabi et al (2010, Choi et al (2012), Minetti et al (2015), Shapiro et al (2015), Bobillo et al (2017) and Blibech and Berraies (2018) examined the effects of various administrative elements on innovation performance. Unlike these studies, in this study, the impact of board elements on innovation ability was investigated.…”

Section: H4mentioning

confidence: 99%

The Effect of Board Structure on Sustainable Innovation Capability: A Research on Turkey

Gerekan¹

2021

Hacettepe Üniversitesi İktisadi Ve İdari Bilimler Fakültesi Dergisi

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The continuous development of information technology under intense competition environment and shortening in the product life cycles based on short-term changes in customer demands lead to complexity and uncertainty in business environments. This situation features the sustainable innovation capabilities of enterprises, highlighting their significance. In this context, the objective of this study is to determine the impact of board structure on the innovation capabilities of businesses. In line with this purpose, the data of the companies included in the Istanbul Stock Exchange 100 Index for the years 2009 -2017 were examined by panel data analysis method. As a result of regression analysis using the robust estimator developed by Beck-Katz (1995), it was found that gender diversity and role duality in the board of directors had a statistically significant negative impact on sustainable innovation capability. However, it was also observed that the ratio of foreign members in the board of directors and the size of the enterprise had a statistically significant positive impact on sustainable innovation capability.

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“…Various researchers proposed enterprises should separate the functions of the chief executive officer and chairperson. In line with this perspective, Blibech and Berraies (2018) argued that the separation of the managerial roles enable enterprises to be able to control business decisions made by executives and reduces the inconsistency related to agency problems. The combination of the roles likely allows executives to be easy to support for their proposed projects although they do not make any profits for the enterprises (Fama & Jensen, 1983).…”

Section: Literature Reviewmentioning

confidence: 99%

Interaction Among Corporate Governance, Innovation, and Performance in Vietnam’s Banking Sector

Huynh¹,

Tran²,

Nguyen³

2020

RWE

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Background/Objectives: The current research tries to investigate effects of the three elements of corporate governance (chief executive officer duality, board independence and size) on banking performance and then analyze the mediating role of innovation on these effects, which are overlooked at Vietnamese banks.Methods/Statistical analysis: The research sample for this research encompassed 78 usable firm-year observations of 25 publicly listed organizations in the banking sector on Vietnam’s three main Stock Exchanges during a 4-year period from 2015 to 2018. To test out the causal hypotheses, the multiple linear regressions were carried out; while to statistically explore the mediating hypotheses, the approaches for testing the statistical significance of mediating effects, proposed by Aroian (1947) were applied.Findings: The empirical findings disclose that good mechanisms of corporate governance in banking can lead to superior banking performance. The empirical results also discover that innovative activities in banking statistically interferes in the causal linkage between corporate governance and banking performance; where innovation fully interferes between the duality of management and banking performance, but it partially interferes in the relations of board independence and board size with banking performance.Improvements/Applications: This research indicates that the banks, in which the positions of the director and chairperson are held by one separate person, may suffer agency costs, so achieve poorer banking performance. Therefore, the banks in Vietnam should assign the positions of the chief executive officer and chairperson to two separate individuals. The banks should hire more independent executives in the managerial board in order to lessen agency costs, so can get better banking performance. Moreover, the banks with larger managerial boards can improve banking performance since they possess better business experience, expertise, skill and other relations that can create substantial resources, so enhance banking success. It also shows that when included into the research model of corporate governance and banking performance, innovativeness in banking should be carefully considered, because it could interfere into this research model.

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The impact of CEO' duality and board's size and independence on firms’ innovation and financial performance

Cited by 10 publications

References 24 publications

Board Composition, Insider Ownership and Firm Performance: Evidence from Post-Shock Period of Stock Prices in Bangladesh

Board Composition, Insider Ownership and Firm Performance: Evidence from Post-Shock Period of Stock Prices in Bangladesh

The Effect of Board Structure on Sustainable Innovation Capability: A Research on Turkey

Interaction Among Corporate Governance, Innovation, and Performance in Vietnam’s Banking Sector

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