Ownership, Board Compensation and Company Performance in Sub-Saharan African Countries

Munisi, Gibson; Mersland, Roy

doi:10.1177/0972652716645893

Cited by 12 publications

(4 citation statements)

References 76 publications

(121 reference statements)

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“…() stem from differences in legal institutions between Canada and less developed countries where MFIs typically operate. It is well‐documented in the governance literature that organizations need to focus on board governance when legal institutions are weak (Jensen , Munisi and Mersland ). Thus, we believe that our empirical setting, where legal frameworks play a minor role, is a good ground for testing theoretical differences between NPOs and FPOs.…”

Section: Resultsmentioning

confidence: 99%

Board Governance: Does Ownership Matter?

Dato

Hudon²,

Mersland

2019

Ann Public Coop Econ

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Good governance is crucial to achieving an organization's mission. Nevertheless, little is known about how the structure of governance is influenced by the nonprofit (NPO) or for‐profit ownership (FPO) structure of an organization, partly because they tend to be active in different sectors. In this paper we overcome this challenge by using data from a global sample of 392 microfinance institutions. The results show that the average NPO has a larger board, more female directors, and a higher number of board meetings than the average FPO. Moreover, where there are larger boards and more frequent board meetings, this has a positive effect on the financial performance of NPOs. It is thus confirmed that ownership structures influence boards’ characteristics and that some board mechanisms are more efficient in some ownership structures than in others. An effective board design should thus be based on a firm's ownership structure.

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Section: Resultsmentioning

confidence: 99%

Board Governance: Does Ownership Matter?

Dato

Hudon²,

Mersland

2019

Ann Public Coop Econ

Self Cite

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“…A second instrument that helps to align agents' behavior with their principals' interests is governance structure. Board directors serve as a governing function, which translates into the interests of the shareholders [140]. Boards communicate shareholders' objectives and interests to managers and monitor them to keep agency costs in check [125].…”

Section: Agency Theorymentioning

confidence: 99%

Does corporate governance spur bank intellectual capital in an emerging economy? A system GMM analysis from Ethiopia

Assfaw,

Sharma

2024

Futur Bus J

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Purpose The current study aims to explore the impact of corporate governance (CG) mechanisms, as measured by board size, board meeting frequency, board gender diversity, number of board subcommittees, board remuneration, size of audit committee, and audit committee meeting frequency, on bank intellectual capital (as calculated by the modified value-added intellectual coefficient (M-VAIC) and its components (human capital efficiency (HCE), structural capital efficiency (SCE), and relational capital efficiency (SCE)). Design/methodology/approach Panel data is extracted from the financial and other internal reports of 14 commercial banks and the National Bank of Ethiopia for the period 2011–2022. A two-step system generalized method of moments (2SYS-GMM) was used to account for the unobserved endogeneity and heteroscedasticity problems. Findings The empirical findings suggest that board size and board meeting frequency have a negative and significant impact on all IC performance measures. Besides, audit committee size has a negative and significant effect on HCE, SCE, and M-VAIC of the banking industry in Ethiopia. Moreover, board remuneration has a significant positive relationship with IC efficiency (HCE, SCE, and M-VAIC). Also, audit committee meeting frequency has a positive and significant effect on the HCE of banks. However, board gender diversity and the number of board subcommittees have not made statistically significant contributions to IC performance. Research limitation/implication The study is limited in its use of seven dimensions of CG and future studies can use other alternative accounts for CG variables. Next, this study applies only to commercial banks; hence, future studies can include other financial as well as non-financial organizations such as insurance companies, microfinance institutions, manufacturing, and other sectors. Practical implications This study contributes to helping the regulators and practitioners of the banking industry improve the existing standards and guidelines for CG practices to strengthen their IC performance. The findings may also give input for policymakers to integrate the intellectual capital in the decision-making process for policy formulation and implementation for the establishment of a robust banking sector. Originality/value Considering the modified value-added IC coefficient (M-VAIC) and 2SYS-GMM models, this research is the first study to analyze the relationships between CG and banks’ IC in Ethiopia.

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“…De Cesari and Ozkan (2015) and Michaely and Roberts (2011) suggest that share repurchases do not substitute for dividends and are used for a different purpose, such as when firms have cash flow problems. Munisi and Mersland (2016) studied PLCs in Sub-Saharan African countries and document that State ownership and other concentrated ownership are negatively associated with board compensation. Share repurchases are not common in Malaysia that enables us to focus solely on the dividend payout as the primary means to reduce agency conflicts in Malaysian PLCs.…”

Section: Ijmf 182mentioning

confidence: 99%

Board performance and its relation to dividend payout: evidence from Malaysia

Subramaniam

Mahenthiran

2021

IJMF

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PurposeTo examine the board of directors’ performance and if higher performance helps protect minority shareholders in an emerging capital market. Additionally, we determine if the different types of company ownership moderate the level of protection to minority shareholders.Design/methodology/approachThe study develops a measure of board performance with their compensation. And it tests its association with the dividend payout decision of 300 of the largest Malaysian public listed companies (referred to as PLCs) over the period 2008 to 2014.FindingsThe results find that higher board productivity in terms of return on capital employed is associated with higher dividend payout. Additionally, the study finds that the board performance measure interacts with race, ethnicity and gender of the board of directors and CEO duality to affect the dividend payout decision of Malaysian PLCs.Research limitations/implicationsIt is a single-country study of large Malaysian PLCs. And it uses only the governance mechanisms that have been shown in emerging capital markets to have the most significant effect on affecting the relationship between board performance and dividend payout.Practical implicationsThe findings show the importance of inclusivity and diversity in governing State-controlled firms in an emerging capital market.Originality/valueThe findings suggest improving corporate boards’ performance, protecting minority shareholders and contributing to the corporate governance literature. Notably, the study highlights boardroom diversity’s importance to enhance the boards of State-controlled firms’ performance.

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Ownership, Board Compensation and Company Performance in Sub-Saharan African Countries

Cited by 12 publications

References 76 publications

Board Governance: Does Ownership Matter?

Board Governance: Does Ownership Matter?

Does corporate governance spur bank intellectual capital in an emerging economy? A system GMM analysis from Ethiopia

Board performance and its relation to dividend payout: evidence from Malaysia

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