Board structure and firm value: a study on listed banking firms in the Asian emerging markets

Zulkafli, Abdul Hadi; Amran, Azlan; Samad, M. Fazilah Abdul

doi:10.1504/ijbge.2010.033344

Cited by 11 publications

(7 citation statements)

References 59 publications

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“…Looking at the other two characteristics of the board (board size and CEOchairman duality) we find that board size has no impact on bank performance which is consistent with several empirical studies (Romano et al, 2012;Zulkafli et al, 2010;Belkhir, 2009). Our results do not provide evidence for the claim that large boards are likely to be inefficient due to the coordination, communication and free-rider problem.…”

Section: Fixed Effectssupporting

confidence: 87%

Yönetim Kurulu Üyelerinin ve Yönetim Kurulu Özelliklerinin Türkiye’de Banka Performansı Üzerine Etkisi

Yılmaz¹

2019

Ankara Üniversitesi SBF Dergisi

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This study analyzes the effect of board member's characteristics (political, national and gender) and board characteristics (board size, CEO-chairman duality) on bank performance, with the main attention being on the political board directors, in Turkey. By making use of a sample of 31 commercial banks in Turkey, during the period of 2002-2013, our empirical evidence shows that political board directors have a significantly negative impact on bank performance. We found new evidence that not only political board directors inhibit bank performance, but politically connected banks also have less accounting performance than their nonconnected counterparts. Similarly, our results indicate that foreign board directors also affect negatively bank performance. Furthermore, our results demonstrate that gender diversity, board size and CEO-Chairman duality has no impact on bank performance. Our results are robust to the alternative time-period and estimation models.

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Section: Fixed Effectssupporting

confidence: 87%

Yönetim Kurulu Üyelerinin ve Yönetim Kurulu Özelliklerinin Türkiye’de Banka Performansı Üzerine Etkisi

Yılmaz¹

2019

Ankara Üniversitesi SBF Dergisi

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“…Further, using the fixed effect estimator, the effect of independent directors is insignificant to the bank's financial stability indicators (measures). However, the effect of independent directors is positive on risk-taking when we use the GMM model supporting the view that an independent board Chairman constructively challenges the CEO and strengthens governance checks and balances (Zulkafli, Amran, and Abdul Samad, 2010). The effect of female directors is negative on banks' stability when we use the fixed effects estimators but positive in the GMM model for only credit risk measures.…”

Section: Discussionsupporting

confidence: 59%

Corporate Governance and Banking Stability: The Case of Universal Banks in Ghana

Li¹,

Kong²,

Sampson³

et al. 2020

IJEBA

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Purpose: Many countries both develop and developing have issues concerning corporate governance mechanisms, policy and implementations and there needs to be addressed by researchers and academics. Our study seeks to investigate whether bank stability and corporate governance variables have a robust linkage. Methodology: A country sampling of 23 commercial banks' data from 2008-2019 was used for our analysis. We employed a fixed effect estimator and generalized method of moments (GMM) estimation. Findings: Using the fixed-effect approach, we declare that board size, ages of board members, the financial experience of board members, and CEO duality have a strong positive effect on bank stability measures. We find evidence these corporate governance variables help decrease bank's risk/insolvency. Next, we found out that, percentage of female directors, audit committee activities, and directors' educational composition/qualification have reversed rather than encouraged risk in banks. For the generalized method of moments setting, we discovered that board size has a mixed effect on banks' stability. The audit committee has a negative effect on banks' stability for only the tier 1 capital. Educational qualification and directors' compensation is negatively related to the bank's credit risk measure only. The ages' of directors (average age) is strongly related to the bank's stability measures. However, the percentage of independent directors' on the board is linked to Zscore only, while the financial experience of directors and the percentage of female directors are connected to credit risk measure only while CEO duality has a great linkage with both credit risk and tier 1 capital. Practical Implications: The result indicates that banks still need to strengthen their corporate governance structures, which will help them stay strong and solvent. Originality/Value: This is crucial in understanding how governance works at the banks level and how it help in preventing financial instability.

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“…Caprio et al (2007) study the effects of governance (i.e., ownership structure, shareholder protection laws, cash flow rights, and empowering official supervisory and regulatory agencies) on the market valuations of banks. Similarly, Belkhir (2009) and Zulkafli et al (2010) provide evidence on the relationship between bank value and governance (i.e., board characteristics, board size and CEO duality).…”

Section: Background and Theoretical Frameworkmentioning

confidence: 99%

“…Evidence on the market valuations of busy boards of directors is limited (e.g., Ferris et al 2003;Cashman et al 2012), focused on non-financial firms (i.e., the industrial sector) and provided mixed findings. Within the banking setting, examining stock market valuations (see Caprio et al 2007;Belkhir 2009;Zulkafli et al 2010) is restricted to focus only on other corporate governance mechanism and characteristics (e.g., ownership structure, shareholder protection laws, board size, and CEO duality). Therefore, relatively little is known about whether board busyness can either improve or detriment the bank market value.…”

Section: Introductionmentioning

confidence: 99%

Differential market valuations of board busyness across alternative banking models

Elnahass

Omoteso

Salama

et al. 2019

Rev Quant Finan Acc

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This study comparatively assesses the influence of board busyness (i.e., multiple directorships of outside directors) on stock market valuations of both Islamic and conventional banks. For a sample of listed banks from 11 countries for the period 2010-2015, results show that board busyness is differentially priced by investors depending on the bank type. In conventional banks, board busyness is significantly and positively valued by the stock market. This result suggests that investors perceive some reputational benefits arising from a busy board (e.g., extended industry knowledge, established external networks or facilitation of external market sources). In contrast, we find no supporting evidence on the market valuations of board busyness in Islamic banks. This result might be attributed to, both, the complex governance structure and the uniqueness of the business model which require additional effective monitoring, relative to that employed in conventional banking. Our results also show that investors provide significantly low market valuations for busy Shari'ah advisory board which acts as an additional layer of governance in Islamic banks. Findings in this study offer important policy implications to international banking studies and regulations governing countries with dual-banking systems.

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Board structure and firm value: a study on listed banking firms in the Asian emerging markets

Cited by 11 publications

References 59 publications

Yönetim Kurulu Üyelerinin ve Yönetim Kurulu Özelliklerinin Türkiye’de Banka Performansı Üzerine Etkisi

Yönetim Kurulu Üyelerinin ve Yönetim Kurulu Özelliklerinin Türkiye’de Banka Performansı Üzerine Etkisi

Corporate Governance and Banking Stability: The Case of Universal Banks in Ghana

Differential market valuations of board busyness across alternative banking models

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