BOARD OF DIRECTORâ€™S CHARACTERISTICS, INTELLECTUAL CAPITAL, AND BANK PERFORMANCE An empirical examination of Indonesian Banking Sector

Rositha, Annisa Hilmy; Firdausi, Nila; Dаrmаwаn, Аri

doi:10.21776/ub.ijabs.2019.27.2.1

Cited by 4 publications

(3 citation statements)

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“…This result is also confirmed by Buallay (2019) for a sample of 127 banks in MENA countries during the period 2007-2016. Proponents of the resource dependency theory, in contrast, say that a larger board has a variety of knowledge and experience (Tazilah and Abdul Rahman, 2014;Rositha et al, 2019;Rashid et al, 2020). Moreover, a large board improves control, makes effective decisions and meets the stakeholders' needs (Pfeffer, 1972;Fama and Jensen, 1983).…”

Section: Sizementioning

confidence: 99%

Financial soundness of Islamic banks: does the structure of the board of directors matter?

Khalil

Slimene

2021

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Purpose The purpose of this paper is to examine the Board of Directors’ characteristics and their impact on the financial soundness of Islamic banks. Design/methodology/approach Regression analysis is applied to test the impact of the Board of Directors’ characteristics on the financial soundness of Islamic banks, using a panel data set of 67 Islamic banks covering 20 countries from 2005 to 2018. The Z-score indicator is used to evaluate the Islamic banks’ soundness. To check the robustness of the results, this paper uses other dependent variables (CAMEL) than the Z-score. Findings The main results show that the presence of an independent non-executive director negatively impacts the financial soundness of Islamic banks, while the chief executive officer duality practice has a positive effect on it. Other characteristics of the Board of Directors do not significantly impact the financial soundness of Islamic banks (foreign director, institutional director, chairman with a Shari’ah degree, interlocked chairman and the Board of Directors’ size). Practical implications This study aims to fill the gaps in the literature that discuss the Board of Directors’ role in corporate governance and its impact on the financial soundness of Islamic banks. In other words, it shows the role played by the Board of Directors and improves the knowledge of the corporate governance-financial soundness relationship. Plus, managers, investors and regulators may gain evocative insights, particularly those looking to improve their Islamic banks’ soundness by restructuring their boards’ composition. Originality/value This study sheds new light on the literature on Islamic banking by clarifying the relationship between the Board of Directors and the financial soundness of Islamic banks. Contrary to previous research, this paper uses an additional hypothesis stating that a chairman with a Shari’ah degree (Fiqh Muamalt) has a positive impact on the financial soundness of Islamic banks.

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Section: Sizementioning

confidence: 99%

Financial soundness of Islamic banks: does the structure of the board of directors matter?

Khalil

Slimene

2021

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“…One rationale is that larger boards and greater director independence may offer more resources, a wider range of experience and oversight to encourage investments in IC in businesses with high profitability (Hakimah et al , 2019). In a similar vein, independent directors may be better positioned to question management presumptions and provide oversight to guarantee that expenditures on IC are being done effectively and efficiently (Rositha et al , 2019).…”

Section: Discussionmentioning

confidence: 99%

Intellectual capital efficiency: the missing piece to your corporate governance and profitability puzzle

Ijaz,

Zarrar,

Naz

2024

IJLMA

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Purpose The purpose of this study is to evaluate the synergy of corporate governance (CG) with intellectual capital (IC) and to assess the moderating effect of profitability indicator on the aforementioned synergy using agency theory, resource-based view theory and theory of financial ratios as conceptual frameworks. Design/methodology/approach The sample includes 72 companies with a six-year data set drawn from the KSE 100 Index companies of Pakistan. In addition, the study adopts Pulic’s model to compute the efficiency of IC. The research uses fixed-effect panel regression for analysis and two-stage least squares regression (2SLS) to address endogeneity issues in the estimation process. Findings The results showcased that chief executive officer duality possesses negligible impact on IC efficiency (ICE), while independent directors, audit committees and board size tend to attain a strong association with IC. Moreover, it postulates that the moderation of return on equity strengthens the path between all governance components and ICE significantly. Originality/value The research uses a 2SLS regression analysis to explore how CG practices take hold on the effectiveness of IC in Pakistan while taking into account the moderating impact of profitability. The findings add to the body of knowledge on the value that strong governance practices have on businesses and society.

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“…Thus, for this study, we consider profitability [measured using return on equity (ROE) less COE], referred to as an ER, to influence dividends positively. ROE is considered as net income divided by total equity (Pinto and Rastogi, 2019; Rositha et al , 2019; Santos et al , 2019; Ahsan et al , 2020; Khalil and Ben Slimene, 2021; Khalil and Taktak, 2020; and Rashid, 2020). ER is thus used as a tool to measure shareholder value.…”

Section: Literature Review and Formulation Of Hypothesesmentioning

confidence: 99%

Corporate governance impact on dividend policy of NIFTY-500 indexed Indian pharmaceutical companies (2014–2019)

Pinto¹,

Rastogi

2022

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Purpose This study aims to evaluate the influence of corporate governance index (CGI), ownership concentration (OC) and other features on the dividends of listed Indian pharmaceutical companies. The other features included are leverage, excess return over cost of equity and stock-market return. This study thus helps to provide more insights on the dividend distribution issues for a shareholder in the challenging and demanding pharma industry, especially when stakes are high. Design/methodology/approach The data for all 26 pharmaceutical companies which form part of the NSE NIFTY-500 index for six years (2014–2019) is procured using Centre for Monitoring Indian Economy’s (CMIEs) Prowess database. An eight-pointer scale (unweighted scale) is used to develop the CGI. For OC, this paper considers the proportion of promoters’ shareholding, domestic institutional investors’ shareholding and foreign owners’ shareholding. Both static and dynamic panel data models are used to evaluate the effect of CGI and OC on dividends. Findings The panel data analysis depicts that CGI significantly positively influences the dividends of pharmaceutical companies in India. Thus, the authors find support for La Porta et al.’s outcome agency model. The results also reveal that only promoters’ holdings are significantly inversely related to dividends out of the three OC variables used for this study. This discussion implies that family-run pharmaceutical companies in India tend to retain profits instead of distributing dividends. Research limitations/implications This study provides two direct insights for policymakers and stakeholders. First, because this study shows that CGI significantly positively influences dividends, corporate governance (CG) is an essential factor for determining dividends. Second, because the results also reveal that OC in the hands of promoters hurts dividends, it implies that the higher the promoter holding, lesser is the dividend distributed by the company. Both these results can be used as a quantitative tool by investors to assess Indian pharmaceutical companies better. However, a similar study could be directed to assess the impact of CGI and OC on dividends of other industries. Moreover, additional variables of CG and OC can also be evaluated in further detail. There is also a need to empirically validate the impact of CG and OC on a company’s performance. Originality/value The results are robust and reveal that variation in CGI does impact dividend policy. This aids in confirming that CG is a crucial aspect influencing dividends. The findings also add to the increasing studies across the globe evaluating the influence of CG and OC on dividends.

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BOARD OF DIRECTORâ€™S CHARACTERISTICS, INTELLECTUAL CAPITAL, AND BANK PERFORMANCE An empirical examination of Indonesian Banking Sector

Cited by 4 publications

References 0 publications

Financial soundness of Islamic banks: does the structure of the board of directors matter?

Financial soundness of Islamic banks: does the structure of the board of directors matter?

Intellectual capital efficiency: the missing piece to your corporate governance and profitability puzzle

Corporate governance impact on dividend policy of NIFTY-500 indexed Indian pharmaceutical companies (2014–2019)

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