An Integrated Framework of Corporate Governance and Firm Valuation

Beiner, Stefan; Schmid, Markus; Drobetz, Wolfgang; Zimmermann, Heinz

doi:10.2139/ssrn.762864

Cited by 172 publications

(379 citation statements)

References 71 publications

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“…Corporate boards perform important functions, including monitoring, disciplining and compensating management to align their interests with those of shareholders (Beiner et al, 2006;Finkelstein et al, 2009), but their effectiveness is usually influenced by the way they are structured (e.g., size, composition, committees and meetings) (Cornett et al, 2009;Sanchez et al, 2010;Ntim, 2013a). Hence and in this study, we assess the moderating effect of these five board structures (board size, board meetings, proportion of NEDs, independent nomination committee, and independent remuneration committee) on the PPS.…”

Section: The Effect Of Board Structure (Effectiveness) On the Ppsmentioning

confidence: 99%

“…However, to make sure that the 2SLS technique is appropriate, and following past studies (Beiner et al, 2006;Larcker & Rusticus, 2010), we first conduct the Durbin-Wu-Hausman exogeneity test to test for the existence of an endogenous association between TSR and TPAY or CPAY. The null hypothesis of no endogeneity is rejected at the 1% level when the test is applied to equation (2), and we therefore, conclude that the 2SLS technique is appropriate and that our fixed-effects results may be misleading and as such, requiring further investigation that follows.…”

Section: Additional Analysesmentioning

confidence: 99%

“…The findings of several past studies (Beiner et al, 2006;Brown and Caylor, 2009) suggest that tge CEO power and CG structure variables do affect performance, and as such, in the first-stage, we assume that TSR will be determined by 7 CEO power and 8 CG structure mechanisms, as well as the 10 control variables. Therefore, the first-stage model to be estimated is specified as: Consistent with our predictions, the results, (which for brevity are not fully reported here, but available upon request), suggest statistically significant effect of the CEO power, CG structure and control variables on the TSR.…”

Section: Additional Analysesmentioning

confidence: 99%

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Executive pay and performance: the moderating effect of CEO power and governance structure

Ntim

Lindop

Thomas

et al. 2017

The International Journal of Human Resource Management

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Executive pay and performance: the moderating effect of CEO power and governance structure. International Journal of Human Resource Management,(doi:10.1080/09585192.2017 This is the author's final accepted version.There may be differences between this version and the published version. You are advised to consult the publisher's version if you wish to cite from it.http://eprints.gla.ac.uk/121453/ Executive pay and performance: The moderating effect of CEO power and governance structure AbstractThis paper examines the crucial question of whether chief executive officer (CEO) power and corporate governance (CG) structure can moderate the pay-for-performance sensitivity (PPS) using a large up-to-date South African dataset. Our findings are three-fold. First, when direct links between executive pay and performance are examined, we find a positive, but relatively small PPS. Second, our results show that in a context of concentrated ownership and weak board structures; the second-tier agency conflict (director monitoring power and opportunism) is stronger than the first-tier agency problem (CEO power and self-interest). Third, additional analysis suggests that CEO power and CG structure have a moderating effect on the PPS. Specifically, we find that the PPS is higher in firms with more reputable, founding and shareholding CEOs, higher ownership by directors and institutions, and independent nomination and remuneration committees, but lower in firms with larger boards, more powerful, and long-tenured CEOs. Overall, our evidence sheds new important theoretical and empirical insights on explaining the PPS with specific focus on the predictions of the optimal contracting and managerial power hypotheses. The findings are generally robust across a raft of econometric models that control for different types of endogeneities, pay, and performance proxies.

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Section: The Effect Of Board Structure (Effectiveness) On the Ppsmentioning

confidence: 99%

Section: Additional Analysesmentioning

confidence: 99%

Section: Additional Analysesmentioning

confidence: 99%

See 1 more Smart Citation

Executive pay and performance: the moderating effect of CEO power and governance structure

Ntim

Lindop

Thomas

et al. 2017

The International Journal of Human Resource Management

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“…First, prior studies have been heavily criticised for apparent methodological deficiencies. Specifically, past studies have been criticised for not sufficiently controlling for endogeneity problems (Guest, 2009;Larcker and Rusticus, 2010), as well as for not accounting for any potential interdependencies between board size and other possible alternative corporate governance (CG) mechanisms (Agrawal and Knoeber, 1996;Beiner et al, 2004Beiner et al, , 2006Ntim et al, 2012aNtim et al, , b, 2013Ntim et al, , 2014. Second, Guest (2009) suggests that the impact of board size on firm value may not just differ by firm-level features, but also by country-specific CG, institutional and legal differences.…”

Section: Introductionmentioning

confidence: 99%

Board size, corporate regulations and firm valuation in an emerging market: a simultaneous equation approach

Ntim

Opong

Danbolt

2014

International Review of Applied Economics

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“…Overall, studies based on US firms show conflicting results (see, among others, Bhagat and Bolton, 2008;Chidambaran et al, 2008;Spellman and Watson, 2009). In contrast, studies conducted in emerging countries and transitional economies (see, among others, Price et al, 2007;Bauer et al, 2008;Garay and Gonzalez, 2008;Black et al, 2009), as well as those from Europe (Beiner et al, 2006;Blom and Schauten, 2008;Clacher et al, 2008;Renders et al, 2010), generally found a positive relation between corporate governance practices and firm performance and value.…”

Section: Governance-performance Relationshipmentioning

confidence: 99%

Governance practices and firm performance: Does shareholders’ proximity to management matter?

Bozec

Dia

2014

Int J Discl Gov

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Richard Bozecis a Full Professor of Accounting at the Telfer School of Management, University of Ottawa where he currently teaches advanced financial accounting courses. He is joining the growing number of researchers in the field of corporate governance who are shifting to more holistic analytical approaches, taking into account the variety of controls that interact to affect a firm's performance. ABSTRACT This article investigates the link between corporate governance practices and firm performance, a topic that received a lot of attention by regulators, interest groups and academics. Research in this field has recently shifted from the analysis of one or more specific governance provisions to the analysis of multiple aspects of corporate governance. In fact, most studies now use corporate governance indexes that capture a wide range of corporate governance provisions (index-based studies). The objective and main contribution of this article is to revisit the governance-performance relationship while taking into account shareholders' proximity to the locus of management. Shareholders' proximity is defined based on ownership concentration and whether or not the dominant/controlling shareholder holds top executive positions in the firm. The lowest level of proximity is evidenced in firms with dispersed ownership, the highest level in controlled entities where the controlling shareholder holds the CEO and/or Chair positions. Governance is measured on a global scale using the Report on Business (ROB) index. The study is conducted over a 4-year period (2002)(2003)(2004)(2005) using panel regressions in a two-stage least squares framework on a sample of Canadian publicly traded companies (470 firm-year observations). The results of the study show a positive relationship between the ROB global index (and sub-indexes) and Tobin's Q whether ownership is dispersed or is concentrated in the hands of a dominant or controlling shareholder. Shareholders' proximity to management has no impact on the governance-performance relationship. Overall, the results support a one-size-fits-all approach to governance, a policy adhesion that underlined the widespread adoption of Codes of Good Governance and legal/ regulatory changes in the years following Enron's collapse in the United States. Initiatives were in large part supported by a general consensus toward a stock market-centered model of governance. However, with the recent debt crisis in the United States, public perception has changed. The credibility of such a model for governing our institutions is called into question. Our study tempers these concerns by showing that governance controls should not account for ownership differences in the context of publicly traded companies. Instead, good governance practices based on an independent board of directors that promotes transparency and protects shareholders' rights should be prioritized whether or not ownership is dispersed or concentrated. From a corporate governance standpoint, this study sheds new light on controlled compani...

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An Integrated Framework of Corporate Governance and Firm Valuation

Cited by 172 publications

References 71 publications

Executive pay and performance: the moderating effect of CEO power and governance structure

Executive pay and performance: the moderating effect of CEO power and governance structure

Board size, corporate regulations and firm valuation in an emerging market: a simultaneous equation approach

Governance practices and firm performance: Does shareholders’ proximity to management matter?

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