Tag Archives: Corporate Governance

Cost Information and Business Strategy: A Synergistic Approach of Ensuring Valid Business Decision and Growth (Published)

This paper examines cost information and business strategy as a synergistic approach of ensuring valid business decision and growth. This was hinged on the premise that cost accounting information is one of the enduring tools of management for planning, decision making and control. If this information is wrongly applied, it can jeopardize the revenue aspect of the business and by extension the overall performance of the entity. To this end, the ex-post facto and descriptive research designs were adopted to elicit information from respondents. The paper adopted the ordinary least square analytical technique for data analysis. Findings revealed that inadequate cost information, obsolete costing techniques and ineffective corporate governance mechanisms impact on organizational performance. Indeed, it was recommended that corporate entities should place more priority on cost information, modern costing techniques and effective corporate governance to facilitate growth especially in all sectors of human endeavors.

Keywords: Business Strategy, Corporate Governance, Cost Information, Growth

International Standards As Corporate Governance Mechanisms And Credibility Gap In Jordan Financial Managers’ Point Of View (Published)

This study aimed to examine what financial managers think about auditors implementation in relation with corporate governance mechanisms and credibility gap, by using an inferential descriptive statistical analysis. Corporate governance has shown flaws; where part of it was done to the weakness of financial managers activism, and since auditing is a very important avenue of faithful representation (credibility gap) of financial statements, and since shareholders depend on auditors’ reports, this article utilized primary data by distributing a questionnaire to the financial managers in Jordanian industrial companies regestered in Amman Stock Exchange to study the effect of implementation. The paper focused on the affect and relationship of the auditors’ implementation of International Audit Standards and International Standards on Quality Control; on the credibility gap by using regression analysis, and the demographic factors by using one way anova. Results showed a positive relationship between auditors’ implementation of International Audit Standards on the credibility gap as well as to the International Standards on Quality Control, and results also showed that respondants elder than 45 years were more realizable of the credibility gap than the younger ones, as well as to the PhD degree holders and those above 15 years of experience.

Keywords: Corporate Governance, Credibility Gap, International Audit Standards, International Standards, Quality control

Studying the Role of Corporate Governance in the Development of Risk Management in Commercial Banks Listed At Amman Stock Exchange (Field Study) (Published)

The study aimed to identify the role of corporate governance in the development of risk management in commercial banks listed at Amman Stock Exchange (ASE). To achieve this goal, the researcher relied adopted an analytical descriptive approach in her study to be convenient to the study nature. A questionnaire has designed as a tool to collect data. It distributed to a sample survey of the members of the committee’s corporate governance, audit committees and risk management commissions in these banks. The questionnaires have statistically analyzed using Statistical Package for Social Sciences (SPSS). The most important findings of the study that the presence of the role of corporate governance committees resulting from the Board of Directors in development of risk management in banks listed at ASE. This role was in uneven degree, between medium and high. In addition, the role of audit committees is the most development in the risk management, followed by risk management committees, and finally to corporate governance committees. The study concluded a set of recommendations including: It is necessary to activate the role of committees in the exercise of its work in development of risk management in commercial banks listed at ASE. The sub-committees should constituted of the board of directors in accordance with corporate governance, which includes financially and accounting experienced members. Finally, the financial experience should not limited to a specific number of members

Keywords: Commercial Banks, Corporate Governance, Risk Management

The Impact of Corporate Governance on Firm Performance: Evidence from Bahrain Stock Exchange (Published)

Corporate governance is recognized as one of the most important implications to build a marketplace confidence and to attract positive investors in the organization specifically and the economy generally. Promoting good corporate governance standards considered to be very important in attracting investment capital, reducing risk and developing firms’ performance. The aim of this research was to examine the impact of corporate governance characteristics on firm performance in Bahrain Stock Exchange. Previous literature reviews presented in the study found that corporate governance are successful in improving firm’s performance. The study sample contained 42 Out of 48 Bahrain’s financial companies which are listed in Bahrain Stock Exchange during the period 2007-2011. The descriptive results indicated that our sample firms fulfill corporate governance variables about 61.2% for the entire period in the study. The empirical results indicate that performance measures such as Return on Assets and Return on Equity are significantly related to corporate governance in Bahrain. However, Earning Per share performance measure is not showing any significance impact related to corporate governance. Overall, this study found a positive influence of corporate governance mechanisms on performance for the entire firm in Bahrain Stock Exchange. Thus, it is recommended that further research be undertaken from different aspects: The effect of corporate governance variables and their impact on firm’s performance in the Gulf Cooperation Council (GCC) and the effect of Global Corporate Governance on performance during the current Global Financial Crisis.

Keywords: Bahrain Stock Exchange (BSE), Corporate Governance, Firm Performance

Assessing Office Managers’ Role in Creating a Culture of Corporate Social Responsibility through Corporate Governance in Selected Business Organizations in Delta State, Nigeria (Published)

This study assessed the role of Office Managers in Corporate Governance and Corporate Social Responsibilities in selected Business Organizations in Delta State of Nigeria. In going about the study, a research instrument which consisted of 51 items was designed to cover the three research questions raised for the study. This study was survey research. The data collected from 130 respondents were analyzed using the descriptive statistics, mean and standard deviation. The results of the study revealed that organizations are measured on how well their objectives are achieved; that social responsibilities of business is an ethical ideology or theory that an entity has obligation to act in order to benefit its society, and that corporate social responsibilities cut across all aspects of human life. It was concluded that meeting the basic social, economic and political needs of the immediate communities will guarantee safe and healthy environment for organizations to operate their businesses. It was therefore recommended that there should be a working synergy between organizations and their host communities in order for their business objectives to be realized.

Keywords: Business Organizations, Corporate Governance, Environmental Issue, Interrelated Functions; Corporate Social Responsibilities, Office Manager

Effect of Corporate Governance on the Financial Performance of Banking Industry in Rwanda: (A Case Study-Commercial Banks in Rwanda) (Published)

This study investigated the effect of corporate governance on Financial Performance of commercial banks in Rwanda. The study has four objectives which determined how board size, CEO duality, institutional ownership, board composition affect financial performance of commercial banks in Rwanda. The study adopted a descriptive research design which assisted to examine the effect of corporate governance on financial performance of commercial banks. The population of the study was 120 composed by the senior managers of the commercials banks operating in Rwanda; and the sample size was 92 but only 76 responded to the questions asked which represent 84%.The key findings for this research were showing that board independence, board composition, institution ownership do not have an effect on financial performance since the majority of respondent have disagreed the effect of corporate governance variables on the financial performance of commercial banks. The analysis of variance has shown that corporate governance variables are not significant predictors to explain the increase of profitability represented by return on asset and return on equity since the p value was 0.447 and 0.186 respectively. This research has concluded that there is no effect between corporate governance using board size, board composition CEO duality as well as institutional ownership are not predictors of financial performance and recommended the regulatory body of commercial banks in Rwanda to provide a guidance on the use of corporate governance practices which may impact positively the financial performance of commercial banks

Keywords: Commercial Banks, Corporate Governance, Financial Performance

Effects of the Implementation of Good Corporate Governance on Profitability (Published)

The Indonesian Institute for Corporate Governance (IICG) always conducts research about the proper application of corporate governance every year, especially in public companies in Indonesia’s Stock Exchange. Basically, Good Corporate Governance is the procedure of company management in running their goals that result in optimal profitability or profit for the investors. In theory, the application of good corporate governance will increase the profitability of a company. But in reality, it is necessary to conduct research on the issue. Some problem identifications that arise are the questions about the implementation of good corporate governance, the level of profitability (return on assets) and how much the implementation of Good Corporate Governance affects the profitability (return on assets). This study involved 9 companies which participated in The Indonesian Institute for Corporate Governance (IICG) research. For this study, the authors used quantitative research method to test the hypothesis that has been set. The variables correlation is causal or causal associative. The statistical test measurement used to determine the effects is simple regression. The statistical tool to measure the effect of the used measurement scale is ratio and interval. Based on the research conducted by the author, the result that is obtained is the implementation of CGPI that is measured through CGPI increased and decreased, although in general it increased. Meanwhile profitability that is measured through average ROA increased. Based on the result of hypothesis testing, the implementation level of Good Corporate Governance has a positive effect on the sampled company’s profitability (return on assets). The effect is 19.8%.

Keywords: Corporate Governance, Profitability

Effects of Recapitalisation on Commercial Banks Survival in Nigeria: Pre and Post Camel Anaylsis (Published)

This paper examined the analysis effects of recapitalization on commercial banks survivals in Nigerian: pre and post camel analysis. This is because the banking industry in Nigeria has witnessed a lot of transformation as a result of the restructuring programmes channeled towards resolving the existing problems of the industry by the central bank of Nigeria. The banking consolidation and recapitalization of commercial banks exercise which has shaped the structure of the Nigerian banking industry significantly. This was driven by the need to strengthen the banking sector and reposition the banks to be strong in order to meet up with the internationalization of financial and business globalization best practices. The exercise was deemed necessary because having a strong capital base increasing their ability to assume risk and absorb losses. The study used an Ex-post-facto research design comprising of pooled data which employs the use of secondary data covering a thirteen years period pre and post recapitalization (2006- 2012) using 10 out of the 25 banks that emerged after the transformation to test the effect of the reform . Chow test was used to check for structurally difference between the pre and post period using CAMEL framework as indicators for measurement. The result of the regression model of Minimum capital base on capital adequacy, asset quality, management quality and earnings quality and liquidity indicated an increase after recapitalization and consolidation but only Capital adequacy and management quality had a structurally difference with the increment. Based on the findings, it is discovered that recapitalization and consolidation is a welcome development that is needed by the banks but it cannot stand alone in achieving all round soundness and stability desired by Central Bank of Nigeria, little thereafter we are still faced with the post 2006 distress of banks even after the huge recapitalization reform and the Central Bank of Nigeria bailing out 8 banks with over 400 billion in 2012. Therefore, we recommend among other things the strict compliance to corporate governance practices, zero tolerance on misreporting and fraudulent practices, enforcing laws like the liabilities of board members of failing banks and finally, every business needs an enabling environment to enhance profitability.

Keywords: Business Global Best Practices, Corporate Governance, Recapitalization Reform

Effectiveness of Audit Committee Practices and the Value of Listed Deposit Money Banks in Nigeria (Published)

This research study examines the effectiveness of audit committee and as well explores the relationship between audit committee effectiveness and the value of deposit money banks in Nigeria. The followings were identified as audit committee characteristics (Internal control, the integrity of financial reporting, commitment of audit committee members and meeting) and were used in identifying the effectiveness of audit committee. Eight questions-survey questionnaires related to the four identified characteristics were administered to 55 respondents spread amongst the five sampled banks. The questionnaire enables the study to seek the perceptions of the respondents on the effectiveness of audit committee in deposit money banks in Nigeria. The Chi Square statistical tool was used to test the two study’s hypotheses. The study finds that the Characteristics of Audit Committee practices relates to the effectiveness of Audit committees’ of the deposits money banks in Nigeria, hence portraying the committee’s effectiveness in performing its functions, the effectiveness of audit committee does not necessarily improve or otherwise on the value of the deposits money banks and results also indicate that activities as relate meeting of the audit committees’ of deposit money banks are not clearly stated in the annual accounts of the banks. It therefore recommends that detail issues of meetings of audit committees be clearly stated and or included in the annual reports of the banks.

Keywords: Audit Committee, Corporate Governance, Deposit Money Banks

DO BOARD COMMITTEES AFFECT CORPORATE FINANCIAL PERFORMANCE? EVIDENCE FROM LISTED COMPANIES IN GHANA (Published)

This research has examined the effect of board committees on corporate financial performance among companies listed on the Ghana Stock Exchange (GSE). The quantitative research approach was adopted to study the prognostic effect of board committee on corporate financial performance for companies consistently listed on the GSE from 2006-2010. Data was sourced from annual reports of listed companies and a static panel regression model was employed to analyze the presence of various committees on corporate financial performance. The results indicated that board committees had no statistical significant effect on the corporate financial performance of listed firms. Specifically, nomination committee regressed negatively on corporate financial performance but was statistically insignificant at the 5% level, with audit committee having no effect whiles remuneration committee predicted positively but also not statistically significant on corporate financial performance. The outcome suggests that the internal workings of corporate boards were weak implying that the effective supervision expected of these committees in terms of executive recruitment, succession planning, internal control, effective financial reporting, and the fixation of executive remuneration are lacking. The author recommends that board committees be strengthen with capable outside directors, skillful in the various technical areas to assist committees deliver on their responsibilities by instituting transparent selection processes. Listed firms must also desist from the selection of outside directors because they will sustain the dominance of the board to a more strategic selection approach where outside directors exercise unflinching oversight responsibility to enable firms reach their long-term goals.

Keywords: Corporate Governance, board committees, corporate financial performance

INTEGRATION OF CORPORATE SOCIAL RESPONSIBILITY (CSR) INTO CORPORATE GOVERNANCE: NEW MODEL, STRUCTURE AND PRACTICE: A CASE STUDY OF SAUDI COMPANY (Published)

This paper seeks to explore the integration of corporate social responsibility (CSR) into corporate governance (CG) structure and system. To obtain this objective, this paper firstly reviews the extensive literature of CG and CSR. Second, it investigates the conception and understanding of interrelationship between CG and CSR within case study context of petrochemical company operates in Saudi Arabia. A qualitative case study was adopted by conducting in-depth interviews with participants at various levels of board and management in petrochemical company operates in Saudi Arabia. The findings suggested that the majority of participants consider CG as an essential foundation for sustainable CSR activities. The significance of the findings can be found in the fact that the previous trend of focusing solely on CG in developing countries has been reverted and more attention is dedicated to CSR. The current study contributes to existing body of CSR and CG literature by presenting the new CSR governance model. Two important implications can be found in this study. At organizational level, board members and managers can improve the corporate policy and practice in context of engaging with stakeholders. At the national level, the policy makers within developing countries can build on the conclusion drawn in this paper and enhance capacities of their regulatory and judicial systems to protect stakeholder’s interest.

Keywords: CSR governance., Corporate Governance, Corporate Social Responsibility

Vol 3, Issue 5, May 2015 ()

Keywords: CSR governance., Corporate Governance, Corporate Social Responsibility

Board Characteristics and Firm Performance- Evidence from Palestine (Published)

The objective of this research paper is to assess the relationship between the Return on Assets and Board Characteristics (Board independence, Board meeting, Board size, Board expertise, Company size and Company year of incorporation). The research consisted of examining companies listed on the Palestine Exchange with analysis undertaken through regression analysis. After studying the six variables, the researcher found the existence of only one relationship which was between the age of the organization/ year of incorporation and the company’s Return on Assets (ROA). This paper provides a greater insight to understanding corporate governance in Palestine. The approach, taken in this paper, will enable companies to assess the true relationship between the Return on Assets to Board independence, Board meeting, Board size, Board expertise, Company size and Company year of incorporation. It will enable them, also, to find ways of ensuring these factors become more relevant to the organization’s performance. Palestine is still a young country in relation to corporate governance and the outcome of this paper will enable companies to grow positively

Keywords: Board Characteristics, Corporate Governance, Firm Performance, Palestine

IMPACT OF INSTITUTIONAL CHARACTERISTICS OF CORPORATE GOVERNANCE ON CORPORATE GOVERNANCE SYSTEM IN SUB-SAHARAN AFRICA ANGLOPHONE COUNTRIES (SSAA). (Published)

This paper assesses the impact of institutional characteristics of corporate governance on corporate system of firms using survey questionnaire based on international corporate governance norms. Data were collected from listed firms in Ghana, Nigeria and South Africa. The conclusions are follows: (1) In Ghanaian and South African firms show that regulatory framework and enforcement of corporate governance have a positive significant impact on corporate governance system. However, in Nigerian firms’ regulatory framework has a negative significant relationship with corporate governance system. This result suggests that in Ghanaian and South African firms’ regulatory frameworks and enforcement may be stronger than that in Nigerian firms. (2) In Nigerian firms, there are violations of minority shareholders right. (3) Ownership concentration is significant with corporate governance system in the region. This indicates that ownership concentration is prevalent in firms of Sub-Saharan African Anglophone countries. We recommend that there should be prudent monitoring of corporate governance rules and enforcement

Keywords: Corporate Governance, institutional characteristics and OLS regression

EXAMINING CORPORATE GOVERNANCE PRACTICES IN NIGERIAN AND SOUTH AFRICAN FIRMS (Published)

This paper reviews the historical background of corporate governance and emerging issues in the development and practice of corporate governance in Nigerian and South African firms. The paper examines the role of institutional bodies on corporate governance of listed firms, regulatory and enforcement, and institutional bodies of corporate governance in Nigeria and South Africa. Other issues also examined include role and responsibilities of corporate board and external factors that affect corporate governance such as politics, corruption, economic, and ownership structure of listed firms. We find that institutional shareholders are more active in South Africa than in Nigeria, also shareholders association in South Africa are not active compared with that of Nigeria. In addition, South Africa have a stronger institutional framework than Nigeria, this really provide an evidence to show that enforcement of corporate governance practices in South Africa seem to be better than Nigeria. Generally, we find that corruption and bribery, politics, economic and ownership structure influence effective corporate governance practice in each country

Keywords: Corporate Governance, Corruption, Economics and Ownership structure, Institutional frameworks, Politics

EFFECT OF CO-OPERATIVES REFORMS ON CORPORATE GOVERNANCE IN SAVINGS AND CREDIT CO-OPERATIVES IN KAKA MEGA COUNTY, KENYA. (Published)

This paper made an attempt to establish the effect of co-operatives reforms on corporate governance in savings and credit co-operatives in Kakamega County; Kenya. The Kenyan Government has undertaken various legislative and policy reforms in the co-operative sector aimed at improving corporate governance. So far, there is limited information as to the outcome of this initiative. The objective of the study was to determine the effect of co-operatives reforms on corporate governance in the SACCOs in the county. The study adopted a correlational research design. The study population comprised of the 35 SACCOs in the county as at December, 2012. Cronbach’s Alpha score was computed to establish the reliability of the results. The Alpha score was found to be 0.883 and was above the acceptable 0.7 for social sciences research. Descriptive and inferential statistics were used. The hypothesis was tested using simple regression coefficient at 95 percent confidence level. The study revealed that co-operatives reforms have a significant effect on corporate governance in SACCOs in Kakamega County. The study recommended that co-operatives should establish ways of how to fully adopt reforms. The findings of the study may help scholars and policy makers to understand and craft policies on reforms

Keywords: Co-Operative Reforms, Co-Operative Society, Corporate Governance

THE ROLE OF CORPORATE GOVERNANCE AND ITS IMPACT ON THE SHARE PRICE OF INDUSTRIAL CORPORATIONS LISTED ON THE AMMAN STOCK EXCHANGE (Published)

This study examined the principles of corporate governance, and make them known and its importance, and to achieve the goal of this study was to develop a questionnaire composed of (70) items, was distributed to a sample study, the study population consisted of industrial corporations listed on the Amman Stock Exchange, and number (70) Company, and was the study sample directors general and their deputies, managers, administrators and financial exclusively, working in industrial companies totaling (280) as director, due to the large size of the sample was selected a random sample of each company to be the research sample, and by (50%) of them, totaling (140) director in companies included in the study, and after the completion of the identification of the study sample were distributed to them (140) questionnaires were retrieved (125) to identify them, and the percentage of questionnaires suitable for statistical analysis of (112) to identify, has been used by researchers in the study, a set of statistical methods, available in the program Statistical Package for Social Sciences (SPSS), including style regression, and correlation analysis to test the hypotheses.The most important results of the study, that there is an application of the principles of corporate governance in industrial corporations listed on the Amman Stock Exchange. There is increase understanding and awareness of the departments of industrial companies to contribute to the principles of corporate governance. Therefore, this will contribute significantly to the upgrading and advancement of the price of the stock in the companies mentioned. One of the main recommendations recommended by this study , constantly industrial corporations listed on the Amman Stock Exchange to apply the principles of corporate governance, and the continuation of industrial corporations in adherence to the principles of corporate governance, in particular, the principle of the role of stakeholders in corporate governance, and the principle responsibilities of the Board of Directors, and the principle of disclosure and transparency, as they have a significant impact on the share price of the company

Keywords: Corporate Governance, Industrial Companies, Share Price, Stakeholders

Corporate Governance Practices and Performance of Coffee farmer‘s Co-operative Societies in Kenya (Review Completed - Accepted)

The central thesis in this paper is that the performance of coffee farmer’s co-operative societies is a function of corporate governance mechanisms; Board Size, Board Composition and status of the Chief Executive Officer (CEO). The research settled on Cash Coverage Ratio and Return On Assets, as performance variables and was guided by the null hypothesis that there exists no linear relationship between the performance variables and the corporate governance mechanisms..The regression analysis result showed that there exist a linear relationship between performance and corporate governance practice in farmer’s co-operative societies, thus rejecting the null hypothesis. In genera the findings were ; societies with smaller size of boards posted better performance as compared with those with bigger sizes more than 9 members. The same results were for those societies whose board comprised of individuals with a mix of skills and the role of the CEO was separate from that of the Chairman. Indeed as suggested by the results the failure by coffee farmer’s co-operative societies in Kenya to embrace corporate governance have made them not to underperform.

Keywords: Corporate Governance, Corporate Governance Mechanisms, Performance

CORPORATE GOVERNANCE AND RISK MANAGEMENT IN THE BANKING SECTOR OF GHANA (Published)

The purpose of this research is to examine the degree to which banks in Ghana use risk management practices and corporate governance in dealing with different types of risk. A modified questionnaire, divided into two parts was developed and administered to the selected banks’ board of directors, senior risk management officers and selected staff. The first part of the questionnaire covered five aspects: understanding risk and risk management, risk identification, risk assessment and analysis, risk monitoring, and corporate governance and risk management practices. This part included 32 closed-ended questions based on an interval scale. The second part consisted of two closed-ended questions based on an ordinal scale dealing with two topics: methods of risk identification, and risks facing the sampled banks. The result of the study indicated that, Board of Directors, senior staffs and not all staff are actively involved in risk management and the most important types of risk facing the sampled banks are credit risk, operating risk, solvency risk, interest rate risk, and liquidity risk. The study also found out that the sampled banks are efficient in managing risk

Keywords: Commercial Banks, Corporate Governance, Ghana, Management, Risk

Corporate Governance Structure and Timeliness of Financial Reports of Quoted Firms in Nigeria (Review Completed - Accepted)

This paper examines the impact of corporate governance on the timeliness of financial statements of quoted firms in Nigeria. To achieve this objective, data was collected from books, financial statements and journals. The data collected were analysed using relevant diagnostics tests, granger causality and multiple regression models. The result revealed a significant relationship between board independence and timeliness of financial reports; board size and timeliness of financial reports; board expertise and knowledge and timeliness of financial reports; board experience and timeliness of financial reports; also no significant relationship between CEO duality and timeliness of financial reports and board meetings and timeliness of financial reports. On the basis of the empirical result, the paper concludes that the application of appropriate corporate governance factors will go a long way to improve the timeliness of financial reports and quality financial statements Therefore, on the basis of the findings and conclusions of the study, we recommends that quoted companies should ensure that corporate governance codes are used in the day-to-day operations of corporation to achieve short, medium and long-term goals; government should ensure that regulatory agencies monitor the activities of corporations to ensure compliance with best practice. Also above all integrity, objectivity and fairness must be applied in the conduct of corporate business for financial statement needs be achieved for users

Keywords: Boards, Corporate Governance, Financial Report, Nigeria, Timeliness