• The Journal of Asian Finance, Economics and Business
• /
• v.3 no.4
• /
• pp.67-79
• /
• 2016

Prior literature expects a lower marginal cash value for weaker governance firms. We test this empirical hypothesis by using the sample of publicly traded Korean firms from 2005 to 2013. To measure the quality of governance structures, we employ the corporate governance scores provided by Korean Corporate Governance Services. The empirical model of Faulkender and Wang (2006) is adopted to estimate the marginal value of cash. Our empirical analysis shows a higher marginal value of cash for the good governance firms in the examination of the total governance score. This finding is consistent to the agency view of cash policy predicting a larger marginal value of cash for the firms with higher governance scores. However, this positive relationship is not robust for a subset of detailed governance scores; a lower marginal cash value is observed for the firms with better qualities of board structure, auditing, dividend policies. Moreover, our empirical analysis verifies a quite low level of marginal cash value for Korean firms, which supports the existence of severe agency conflicts in Korean corporations. Our results verify the significant role of agency conflicts between a manager and shareholders in the determination of marginal cash values in the Korean firms.

• The Journal of Asian Finance, Economics and Business
• /
• v.6 no.3
• /
• pp.67-79
• /
• 2019

This study examines the impact of corporate governance on capital structure decisions based on a large panel of Chinese listed firms. Using the system Generalized Method of Moments (GMM) estimator to control for unobserved heterogeneity, endogeneity, and persistency in capital structure decisions, we document that the ownership structure plays a significant role in determining leverage ratios. More specially, we find that managerial ownership has a positive and significant impact on firms' leverage, consistent with the incentive alignment hypothesis. We also find that managerial ownership only affects the leverage decisions of private firms in the post-2005 split share reform period. State ownership negatively influence leverage decisions implying that SOEs may face fewer restrictions in equity issuance and may receive favourable treatments when applying for seasoned equity ¿nancing, thus use less debt. Furthermore, our results show that while foreign ownership negatively influences leverage decisions, legal person shareholding positively influences firms' leverage decisions only for state controlled firms. We also find that the board structure variables (board size and the proportion of independent directors) do not influence firms' capital structure decisions. Our findings suggest that recent ownership reforms have been successful in terms of providing incentive to managers through managerial shareholdings to take risky financial choices.

• The Journal of Asian Finance, Economics and Business
• /
• v.7 no.11
• /
• pp.817-825
• /
• 2020

Over the last few decades, corporate frauds have highlighted the significance of corporate governance in deriving firm performance. By using different sample data, extensive research has examined how corporate governance structure influences firm's profitability, but limited research was undertaken on the banking sector of Pakistan. This research adds to the literature by testing how board structure derives bank's performance by using sample data of 19 banks for the period from 2010 to 2017. In addition, the study analyzes the controlling part of size on the link between board governance and bank performance. Findings reveal that banks having small board size, fewer non-executive directors and minimum activity level perform better. Analysis related to bank size illustrates that board size has value in increasing benefits in large size banks in contrast to small size one, while higher participation by board members enhances performance of small size banks more. The correlation results and findings showed that there existed no multicollinearity issue between independent variables. Board size showed positive correlation with the market variable, while board activity tended to correlated negatively with the market performance. Inverse correlation between board size and independent directors indicated that Pakistani banks with greater board size had fewer independent directors.

• The Journal of Asian Finance, Economics and Business
• /
• v.8 no.2
• /
• pp.861-872
• /
• 2021

This study examines the relationship between board characteristics and capital structure. Data was collected from the annual reports of listed companies in the Stock Exchange of Thailand, from 2015 to 2017, which totaled 1,264 firm-year observations. The study uses multiple regression analysis to analyses the data by using independent variables, including board size, outside directors, managerial ownership, CEO duality, frequency of board meetings, board experience, and gender to measure board characteristics and the total debt ratio for capital structure. Research findings show that the more independent the directors are, the lower the cost of debt financing is, as they control the management team more strictly about debt financing than directors with less independence do. Additionally, the results reveal that the higher the percentage of managerial ownership, the higher the level of leverage and debt financing, whereas board size and board meetings have a negative relationship to capital structure. Further research showed that firm size, growth opportunities and corporate governance rating all had a positive significant impact on capital structure. The findings of this study suggest that the presence of proper corporate governance leads to better funding mechanisms as it ensures that the company is in a better position to obtain external funding.

• The Journal of Asian Finance, Economics and Business
• /
• v.8 no.2
• /
• pp.943-952
• /
• 2021

The purpose of this study is to evaluate the effect of COVID-19 on corporate governance attributes and firm performance association. This research used a sample of 188 non-financial firms from the Malaysian market for the years 2019-2020. We found that the COVID-19 has affected all firm characteristics including firm performance, governance structure, dividend, liquidity, and leverage level, yet, the difference between prior and post COVID-19 pandemic is not significant. Also, the investigation revealed that board size exerts a significant positive impact on firm performance. After splitting the sample based on year, however, we found that board size does not matter in the uncertain time of the current crisis, while board diversity appeared to be significantly enhancing firm performance in the crisis time compared to the prior year where it has an inverse association with firm performance in both indicators. Board meetings and audit committee meetings seemed to have a significant negative influence on firm performance pre and post-COVID-19. This study contributes to the limited literature by providing the first empirical evidence on the impact of Coronavirus on the firm performance and corporate governance association.

• The Korean Journal of Applied Statistics
• /
• v.27 no.5
• /
• pp.797-808
• /
• 2014

It is increasingly interested in investigating the relationships and the dynamic characteristics of variations among high class corporate values. This study formulates a statistical model of simultaneous equation system to examine the relationships among variations of stock returns for each class of corporate governance structure and to analyze the dynamic patterns of their long-run adjustment processes. Changes in stock returns for each class of corporate governance by an exogenous shock are found to have common structural features of slow adjustments to the long-run equilibriums.

• The Journal of Asian Finance, Economics and Business
• /
• v.7 no.4
• /
• pp.71-80
• /
• 2020

The paper examines the influence of corporate governance (CG) and earning quality (EQ) on corporate value (FV) of Vietnamese enterprises. The study uses GLS regression and linear structure model using data collected from companies listing on the stock market in Vietnam during 2008-2018, with a total of 2,937 observations. The research results indicate that EQ and CG represented by the Integrated Board of Directors and the Integrated Supervisory Board have a positive effect on FV directly and indirectly. The results show that the Integrated Board of Directors has a positive effect on EQ, whereas the Integrated Supervisory Board has a negative effect on EQ. Based on the research results, we suggest that companies need to strictly comply and implement GC, so to bring down the agency cost and consequently to increase performance. The companies also should establish the Board of Director of a proper size, with financial and accounting specialty, and including women board members. The government also needs to improve the management mechanism asking for firms to prepare and publish financial statements with reliable company information, which could be provided to users. These recommendations are a useful basis to help businesses improve FV via changes in the corporate governance factors in each enterprise.

• The Journal of Asian Finance, Economics and Business
• /
• v.7 no.11
• /
• pp.231-239
• /
• 2020

The aim of this paper is to review the role of board size as part of the corporate governance system. This paper discusses one aspect of corporate governance, namely, boards, in the Indonesian context. Using the literature review method, this paper explores factors that need to be considered to determine the optimal number of boards, especially in Indonesia. We explore some determinants of board size, such as complexity and leverage, ownership structure, and financial ratio support. The results reveal that an understanding of the differences found in the two-tier board model helps us understand that the different functions of the board of commissioners and the board of directors require different test treatments from countries that adhere to one-tier systems. A review of the relationship between board size and company performance is expected to provide the corporate governance literature with insights into optimizing the sizes of boards that can improve company performance, both in terms of boards of commissioners and boards of directors. This paper proposes the simultaneous testing of board size's relationship with company performance. The results of this study are expected to make a more real contribution about the effect of board size on company performance.

• The Journal of Asian Finance, Economics and Business
• /
• v.9 no.10
• /
• pp.105-113
• /
• 2022

The purpose of this paper is to analyze the relationship between the ratio of non-controlling shareholder interests (minority equity ratio, MER) and the measurement error in real activities manipulation (RM) proxy for Japanese firms. Many Japanese firms have practiced stakeholder-oriented corporate governance systems. Previous studies suggest that the higher the MER, the more Japanese businesses tend to employ management techniques for the group's sales growth while also reallocating resources inside the group to reduce principal-principal conflicts. Such differences in management strategies by firms could lead to measurement error in the RM proxy. The analysis uses 16,450 firm-years listed on the Tokyo Stock Exchange. The results of our analysis show that there is a positive relationship between MER and the RM proxy, and high persistence of RM proxies, suggesting that the RM proxies may contain measurement error. We also find that MER is correlated with variables associated with management strategy and that controlling for these variables can reduce the measurement error of RM proxy in firms with large MER. This study extends previous research on measurement error in RM proxy by relating them to ownership structure and corporate governance. This paper would contribute to researchers examining issues related to RM.

• The Journal of Asian Finance, Economics and Business
• /
• v.10 no.1
• /
• pp.67-77
• /
• 2023

This study investigates the impact of corporate governance (defined as companies' ownership structure and board of directors' characteristics) on cash holdings in the context of Oman. This study leverages a quantitative panel pooled regression on a dataset of Omani non-financial firms from 2009-2015. The findings of this study are generally in line with the predictions of Agency Theory and Mentoring and Busyness Hypotheses. The analysis demonstrates that a large stockholder size has a significant positive relationship with cash holding. Meanwhile, a positive (but insignificant) relationship was also found between institutional ownership and cash holding. Furthermore, state ownership was found to exhibit a significant negative relationship with cash holding. In terms of the board of directors' traits, this study's findings suggest that board sizes have a positive (but insignificant) relationship with cash holding. Furthermore, busy and independent boards were found to have a significant positive relationship with cash holding. The above findings suggest that boards with such traits are less effective in providing oversight on managers' actions, which would then increase Omani non-financial firms' cash holdings.