Leadership structure and firm performance

Fosberg, Richard H.; Nelson, Michael R.

doi:10.1016/s1057-5219(99)00007-1

Cited by 71 publications

(40 citation statements)

References 7 publications

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“…It is clear from the above discussion that the role of institutional investment is different in China from in other developed countries, as they allow firms to list with dual-class structures, whereas insiders of Chinese dual-class firms may use it to satisfy concerns and to increase investor confidence. We do not witness any significant relationship between CEO-Chairman Duality and market performance variables, whereas other researchers find that CEO-Chairman Duality affects performance negatively (Yermack 1996;Fosberg and Nelson 1999;Kajola 2008;Tian 2013).…”

Section: Discussion Of Resultscontrasting

confidence: 93%

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Effect of Disproportional Voting Rights on Firm’s Market Performance: Evidence from Chinese Firms Cross-Listed on U.S. Exchanges

Abdullah

Zhou

Shah

2017

IJFS

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Dual-class firms face great criticism as it is believed that firms choose this structure to expropriate minority shareholders' wealth. We compare market performance of Chinese dual-class firms with their single-class counterparts by constructing a list of Chinese firms cross-listed on U.S. exchanges. We find, contrary to the literature, that Chinese dual-class firms are outperforming in terms of market performance measured by Tobin's Q, P/E ratio, and abnormal return in both subsequent years after the initial public offering (IPO). The reason for contrary results is that Chinese dual-class firms bond themselves to high U.S. standards from low local Chinese standards, and it is evident from the literature that when a firm bonds itself to high standards it shows a credible commitment towards minority shareholders' rights, as well as focus on upright performance rather than investing in value-destroying projects and competes to survive in the market that imposes the high standards.

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Section: Discussion Of Resultscontrasting

confidence: 93%

“…This finding is quite interesting, as it is evident from the literature that institutions push firms to adapt adequate governance practices, which affects performance positively (Yermack 1996;Fosberg and Nelson 1999;Kajola 2008). Our findings are contrary to the literature, and may be because of the role of institutions in China.…”

Section: Discussion Of Resultsmentioning

confidence: 83%

Effect of Disproportional Voting Rights on Firm’s Market Performance: Evidence from Chinese Firms Cross-Listed on U.S. Exchanges

Abdullah

Zhou

Shah

2017

IJFS

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“…We use a CEO/chair duality dummy as a proxy for CEO power and leadership structure. Fosberg and Nelson (1999) find a positive relationship between the change in leadership style from the unitary leadership structure to a dual leadership structure (CEO/chair duality) and financial performance.…”

Section: Data and Variables Descriptionmentioning

confidence: 79%

Corporate governance in Islamic banks: New insights for dual board structure and agency relationships

Farag

Mallin

Ow-Yong

2018

Journal of International Financial Markets, Institutions and Mo

171

142

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We investigate the influence of the dual board structure on the financial performance of Islamic banks. The paper also investigates the unique agency relationships using a sample of 90 Islamic banks across 13 countries over the period [2006][2007][2008][2009][2010][2011][2012][2013][2014]. We find that the larger the Shari'ah Supervisory Board (SSB) the better the financial performance and this result reinforces the fundamental role of the SSB to certify permissible financial instruments and products. We also find evidence of the scope of operation hypothesis with respect to both the board of directors and the SSB as Islamic banks are characterised by a higher degree of complex operations. Interestingly, we find that a larger SSB size may result in lower agency costs and that the greater the size of the unrestricted contracts, the higher the agency costs. This implies that unrestricted profit-sharing contracts are one of the main sources of the unique agency relationships in Islamic banks. The paper has a number of policy implications for regulators including the design of governance mechanisms in Islamic banks and the dynamics of unrestricted contracts. Corporate Governance in Islamic Banks: New Insights for Dual Board Structure and Agency Relationships AbstractWe investigate the influence of the dual board structure on the financial performance of Islamic banks. The paper also investigates the unique agency relationships using a sample of 90 Islamic banks across 13 countries over the period 2006-2014. We find that the larger the Shari'ah Supervisory Board (SSB) the better the financial performance and this result reinforces the fundamental role of the SSB to certify permissible financial instruments and products. We also find evidence of the scope of operation hypothesis with respect to both the board of directors and the SSB as Islamic banks are characterised by a higher degree of complex operations. Interestingly, we find that a larger SSB size may result in lower agency costs and that the greater the size of the unrestricted contracts, the higher the agency costs. This implies that unrestricted profit-sharing contracts are one of the main sources of the unique agency relationships in Islamic banks. The paper has a number of policy implications for regulators including the design of governance mechanisms in Islamic banks and the dynamics of unrestricted contracts.

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“…Annual Reports Coombes and Wong, 2004;Donaldson and Davis, 1991;Fosberg and Nelson, 1999;Hashim and Devi, 2009;Ritchie, 2007 Board committees Total number of board committees in the company Annual Reports Adams, Hermalin and Weisbach, 2010;McColgan, 2001;Puni, 2015 Ownership concentration Total per cent of equity shares held by the first 5 largest shareholders Annual Reports Desender, 2009;Fama and Jensen, 1983;La Porta et al, 2000;Shleifer and Vishny, 1986;Wahla, Shah and Hussain, 2012 Age Number of years firm is listed on stock exchange KSE website Fama and French, 2004;Shumway, 2000 Size Measured in total sales of the firm (natural logarithm)…”

Section: Estimation Methodsmentioning

confidence: 99%

Corporate Governance and Tobin's Q as a Measure of Organizational Performance

Singh

Tabassum

Darwish

et al. 2017

British J of Management

225

153

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This empirical study examines the relationship between corporate governance and organizational performance (OP), measured using Tobin's Q (TQ) in the context of an emerging economy for which, as yet, only a handful of studies have been conducted. We employ a system generalized method of moments approach controlling for endogeneity and test it on a newly created dataset comprising 324 listed firms in Pakistan. We find that board size, number of board committees and ownership concentration are positively linked with high TQ ratio, whilst board independence and CEO duality display a negative relationship. In terms of moderating effects, we find that ownership concentration negatively moderates the relationship between board independence and OP, as well as that of CEO duality and OP. The relationship between the number of board committees and OP is positively moderated by ownership concentration. Our findings contribute towards a better articulation and application of a more concrete measure of OP − that of the TQ ratio − whilst, at the same time, testing the board composition-performance relationship in the context of an upcoming and increasingly important emerging market. Wider applicability of results and policy implications are discussed.

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Leadership structure and firm performance

Cited by 71 publications

References 7 publications

Effect of Disproportional Voting Rights on Firm’s Market Performance: Evidence from Chinese Firms Cross-Listed on U.S. Exchanges

Effect of Disproportional Voting Rights on Firm’s Market Performance: Evidence from Chinese Firms Cross-Listed on U.S. Exchanges

Corporate governance in Islamic banks: New insights for dual board structure and agency relationships

Corporate Governance and Tobin's Q as a Measure of Organizational Performance

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