Indian Journal of Corporate Governance

The prime objective of this study is to investigate the legitimate role of corporate boards and corporate social responsibility on the performance of Malaysian listed companies during 2006–2017. Elements of corporate boards include board size, board independence and board diversity, whereas corporate social responsibility (CSR) dimensions constitute marketplace, environment, community and workplace. Both accounting-based (return on assets [ROA], return on equity [ROE]) and market-based (earnings per share [EPS]) performance measures have been employed for measuring performance. Pooled ordinary least squares method (OLS) and multiple regressions are used to estimate the dataset. Findings reveal larger board size and higher board independence positively affect firm performance and significantly legitimise the board role in firms. However, the presence of women on Malaysian corporate boards does not legitimate the performance due to their lower percentage on board, hence insignificantly affecting firm value. Additionally, out of four CSR dimensions, only marketplace is positively and significantly related to EPS and negatively and significantly related to ROA. Conversely, environment, community and workplace are insignificantly related to all performance measures, leaving firms in a questionable legitimate state. This study embraces support from agency theory, resource dependence theory, legitimacy theory and stakeholder theory. However, this research raises questionable insights for regulatory bodies and academicians in the form of corporate legitimacy.

This study attempts to explore the effect of corporate governance parameters like board size and independent directors along with firm-specific characteristics such as age, size and profitability on the environmental performance disclosure of 38 National Stock Exchange (NSE) listed Indian non-financial companies for the period of 2013–2017. This study uses panel data analysis and finally documents a positive impact of board size and age of firm on the environmental performance disclosures of Indian companies. The study also finds a significant and negative effect of board independence on the environmental performance disclosure of such companies. The study based on its findings questions the role of independent directors as an internal regulatory body and suggests external regulatory specifications for better environmental performance and its disclosure to the public.

This study investigates the perceptions of firm executives with respect to the extent of the influence of corporate governance (CG) practices on the non-financial performance (NFP) of medium-sized firms in Nigeria. The theoretical support for the research is from the stakeholder and agency theories. The cross-sectional survey and the cluster and stratified probability proportionate sampling methods are adopted, while the data collection is through a structured questionnaire that covers four CG indicators of board size, director’s qualification, ownership structure and board audit committee. The co-variance-based structural equation modelling (CB-SEM) technique ensures the analysis of the data collected. The result indicates that CG has significant positive effect on firms’ NFP. This outcome supports the urgent need for the development and execution of CG code of ethics for the non-listed firms alongside a regulatory agency for ensuring monitoring and compliance. The drawbacks are inclusive of the measure of variables on linear relationship basis and non-adoption of the longitudinal approach for the study. Future studies need to look at the usage of the intervening variables which, can further aid in evaluating the relationships of the research variables and their indirect and total effects.

Purpose: This article analyses the effect of board diversity on the financial performance of non-financial firms listed in the Nifty Index. Specifically, it examines the mediation effect of the promoter’s presence and multiple directorships on the financial performance of the firm, that is, return on net worth (RONW), return on equity (ROE) and its sales growth.

Methodology: The article uses the hierarchical regression model to analyse the effect of board diversity on financial performance. The presence of the promoters on the board and multiple directorships are taken as the control variables.

Findings: Empirical results show the significant effect of the promoter’s presence on the board on the firm’s earnings and a significant positive effect of firm age, board size, age diversity and experience diversity on the financial performance. However, we do not find any statistically significant relationship between firm size and financial performance in any model. The results also show that the age and experience of the female directors are significantly less compared to the male directors. However, the age and experience of the non-executive directors and independent directors are found to be higher among the other positions held by the directors. We also find a negative relationship between multiple directorships in other firms and the financial performance of the firm.

Value: The article proposes that there should be a greater number of independent directors in a firm that has its promoter on the board. One recommendation for the board is to reduce the number of directorships held in other boards to ensure more constructive contribution towards the firm’s financial performance. The article studies the effect of the promoter’s presence on the board and multiple directorships held by board members on the financial performance of the firm.

Manuscript type: An empirical analysis of the relationship between country-level governance and share markets in the Asia-Pacific region was carried out using dynamic value at risk (Dynamic VaR), mixed data sample (MIDAS) and exponential generalised autoregressive conditional heteroskedasticity (EGARCH) models.

Research question/issue: Is there a relationship between a country’s governance and stock market in terms of the level of returns and share price volatility? We hypothesise that stock returns for countries with higher levels of governance will have lower ex ante expected returns and less volatility than countries with lower levels of governance.

Research findings/insights: It is evident from the empirical findings that there is still significant diversity in both corporate-level governance and country-level governance within the Asia-Pacific region. The results from using mixed data sample-autoregressive distributed lag (MIDAS-ADL) model correlation between world governance index (WGI) and the dynamic VaR suggest that the estimators of high frequency slope for India, China and Malaysia are negative. In addition, their t statistics show that the correlation is significant; meanwhile, their goodness of fit is also very high confirming the explanation power of MIDAS-AD model. Consequently, the capital market performances of India, China and Malaysia are negatively related to their corporate-level governance and country-level governance. However, China has a positive correlation between WGI and corporate-level governance and country-level governance. This uncommon phenomenon may be the result of its special political system and the segregation of the capital market and the real economy.

Theoretical/academic implications: The linkage between country-level governance and volatility of stocks in Asia-Pacific markets indicates there is scope to reduce stock price volatility through enhanced national governance. Volatility as an indicator of risk reflects market uncertainty in terms of processing information signals to find the equilibrium return risk nexus. Consequently, researchers have to incorporate the data of different frequency into the same equation using robust methods.

Practitioner/policy implications: Regulatory frameworks encompassing stock markets will benefit from a more focussed consideration of the way in which governance and risk are correlated. Findings from the generalised autoregressive conditional heteroskedasticity (GARCH) and VaR analysis are that stock market volatility is a suitable proxy for the governance of a country. As country governance indices are annual at best, volatility measures give more timely readings. An increase in volatility suggests there is a decline in national governance, and this has implications for those involved in trade, donor organisations and international lending agencies such as the World Bank.