Multiple directorships, family ownership and the board nomination committee: International evidence from the GCC

Eulaiwi, Baban; Al‐Hadi, Ahmed; Taylor, Grantley; Al‐Yahyaee, Khamis Hamed; Evans, John

doi:10.1016/j.ememar.2016.06.004

Cited by 48 publications

(67 citation statements)

References 90 publications

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“…This further validates the findings in Exhibit 4 as the level of multiple directorship ( BOD3it ) is negatively associated with the level of earnings management. BOD3it as a measurement is closely related to the measurement used by past studies where those past studies view the board as busy when majority of the outside/independent directors have three or more directorships (Eulaiwi et al, 2016; Fich & Shivdasani, 2006; Jiraporn et al, 2008). Studies supporting the “busyness” hypothesis argue that when directors hold three or more directorships, they will be overloaded with directorship commitments and will not be effective in monitoring, suggesting higher level of earnings management.…”

Section: Resultsmentioning

confidence: 99%

“…Second, the alternative method to measure the level of multiple directorships ( BOD1it , BOD2it , BOD3it , and BOD4it ) will adopt a similar but different approach from past literature too. Past studies measure the level of busyness of the board by giving the associated dichotomous variable a value of 1 if the majority of the outside/independent directors have three directorships or more (Eulaiwi et al, 2016; Fich & Shivdasani, 2006; Jiraporn, Kim, & Davidson Iii, 2008). Therefore, to have a more holistic measurement on the busyness of the board, this study will adopt a slightly different approach to the aforementioned studies and will follow the measurement by Tham et al (2019).…”

Section: Methodsmentioning

confidence: 99%

“…Multiple directorships and its influence have been studied extensively in countries like the United States, Australia, India, Hong Kong and Middle Eastern Countries (Brown, Dai, & Zur, 2019; Eulaiwi, Al‐Hadi, Taylor, Al‐Yahyaee, & Evans, 2016; Kiel & Nicholson, 2006; Sarkar & Sarkar, 2009; Tham, Sultana, Singh, & Taplin, 2019). However, limited research have been conducted in Singapore, especially on its impact with earnings manipulation.…”

Section: Introductionmentioning

confidence: 99%

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The role of directors with multiple board seats and earnings quality: A Singapore context

Chee

Tham

2020

J Corp Accounting Finance

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This article explores whether multiple directorships has an influence on earnings management for Singaporean publicly listed firms. This article attempts to determine whether boards with multiple directorships are effective monitors and able deterrents of earnings management activities. Drawing on resource dependence theory, the results suggest that directors with multiple board seats will be able to tap on external resources for information, skills, and financial resources using their board connectedness. Data analysis is based on publicly listed firms on Singapore Stock Exchange (SSE) with a final pooled sample of 1,404 firm‐year observations from 2015 to 2018. Findings of this study show that with a higher level of multiple directorships, there is a significant negative relationship with the level of earnings management, where earnings management is measured by Dechow et al. (The Accounting Review, 1995, 70, 193–225) Modified Jones model and the Kothari et al. (Journal of Accounting and Economics, 2005, 39, 163–197) performance‐adjusted model. We also find that firms in Singapore that have a higher number of multiple directorships on its board, will have a lower level of tolerance on income‐increasing earnings manipulation. Notable secondary findings of this study include a significant negative relationship between the proportion of female directors on the board with the level of earnings management (income‐increasing manipulations). Additionally, it is found that the engagement of Big Four auditors has no significant relationship with the level of earnings management in the context of Singaporean firms. This study has significant implications and contributions to the theoretical applications and policy reforms, specifically pertaining to the Singapore Code of Corporate Governance on the issue of multiple directorships.

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Section: Resultsmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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The role of directors with multiple board seats and earnings quality: A Singapore context

Chee

Tham

2020

J Corp Accounting Finance

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“…A potential endogeneity problem may exist between family ownership configurations (i.e., FOWN and FDIV ), firm performance, and auditor choice (Anderson & Reeb, ; Villalonga & Amit, ). This potential issue is addressed by employing a two‐stage model in which the instrumental variables in the first stage are the presence of corporate social responsibility (CSR) disclosure ( CSR_DIS ) (Dyre & Whetten, ; Eulaiwi, Al‐Hadi, Taylor, Al‐Yahyaee, & Evans, ) and lagged diversification ( LAG_DIV ) (Gómez‐Mejía, Makri, & Kintana, ; Villalonga & Amit, ). CSR_DIS is a dummy variable that has a value of one if the firm discloses CSR activities, and zero otherwise.…”

Section: Resultsmentioning

confidence: 99%

Founding family and auditor choice: Evidence from Taiwan

Hsu

Lin

Tsao

2018

Corporate Governance

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Manuscript Type Empirical Research Question/Issue From an agency perspective, we investigate whether family ownership and control configurations are systematically associated with a firm's choice of auditor. Our analysis focuses on three different characteristics of family ownership and control: family ownership (cash flow rights), disparity between cash flow and voting rights held by family owners (cash–vote divergence), and the family identities of CEOs. Research Findings/Insights Our findings suggest that different family ownership and control configurations lead to different agency effects. The alignment effect prevails in family firms with greater family ownership, founder CEOs, and professional CEOs, whereas the entrenchment effect prevails when there is greater cash–vote divergence. Despite the presence of two distinct types of agency effects, regardless of differences in family ownership and control configurations, none of these firms is inclined to appoint higher‐quality auditors. Theoretical/Academic Implications This study advances our understanding of the varied agency effects arising from family ownership, cash–vote divergence, and the family identities of CEOs, as well as the impact of family ownership and control features on auditor choice. Our empirical evidence provides a unique insight, showing that higher‐quality auditors do not tend to be appointed in firms where family alignment with outside investors is relatively strong, as this lowers demand for such auditors. In addition, although family entrenchment may create greater outside investor demand for higher‐quality auditors, such demand is difficult to realize. Practitioner/Policy Implications Auditors are an important external governance mechanism. This study offers insights for policymakers, family owners, auditors, and other capital market participants, with regard to the varied effects of different family ownership and control features on auditor choice.

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“…Financial performance was thus increased by an increase in institutional ownership that will impact the company's value by expanding it. The empirical results from previous studies of the effects of the board of director's index and ownership structure index on company performance have been mixed and inconclusive (Almudehki & Zeitun, 2011;Eulaiwi et al, 2016;Fauzi & Musallam, 2015;Srivastava & Bhatia, 2020). This study contributes by increasing research on the effect of ownership structure index on Indian listed companies' firm performance.…”

Section: Introductionmentioning

confidence: 85%

Effect of Ownership Structure on Company Performance: Evidence from Emerging Market

Al‐ahdal¹,

Alsamhi²,

Barakat³

2020

SEBR

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This paper uses panel data to examine the impact of ownership structure index on the financial performance of 73 listed companies of the Indian national stock exchange from 2009 to 2016. To measure the Panel Regression in this study, the FEM model was used. The different dimensions of the ownership structure index involve ten items used as the Independent variable of this study. Two measures have been adopted to estimate the firm performance that is; ROA and ROE. In contrast, the control variables are firm size and leverage. This study's empirical evidence shows that the ownership structure index has significant impact on a firm's performance measured by ROA and ROE of Indian Nifty 100 listed companies. Findings of this study support previous empirical studies performed and add some value in the research area of finance that explores different aspects of the board of directors' index and ownership structure index in Indian market by using Nifty 100 as an example.

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Multiple directorships, family ownership and the board nomination committee: International evidence from the GCC

Cited by 48 publications

References 90 publications

The role of directors with multiple board seats and earnings quality: A Singapore context

The role of directors with multiple board seats and earnings quality: A Singapore context

Founding family and auditor choice: Evidence from Taiwan

Effect of Ownership Structure on Company Performance: Evidence from Emerging Market

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