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Supervisory Board Composition and Firm Financial Performance: A Case of Companies Listed on the Warsaw Stock Exchange

Abstract

Purpose: This paper investigates the relationship between the internal governance structure and financial performance of Polish companies. Ensuring diversity of corporate boards has been on the agenda of various regulators on a national and international level as it is generally expected corporate boards that are more diverse will be more competent and more effective monitoring managerial actions, and therefore positively impact company performance. Methodology: This paper uses a sample of companies listed on the Warsaw Stock Exchange and examines the two main compositional features of company supervisory boards (independence and experience) and their practices by companies. We also investigate the effect of diversity on company performance. As our empirical methodology, we use linear regression analysis. Findings: Our findings support the proposal that diversity matters, especially in terms of the presence of experienced members on supervisory boards, and that such diversity positively affects financial results. In addition to the main finding, the results of the study indicate also the importance of the ownership structure. Family firms and companies with a higher level of gearing are more likely to perform less effectively. Originality: To date, research on the association between supervisory board diversity and financial performance in either the Polish or Central and Eastern European capital markets has been limited. The paper also points to the importance of having experienced members on a company’s supervisory board. Independent members on supervisory boards do not seem to have a similar association.

Open access
An Analysis of Codified Corporate Governance Practices in the Banking Industry: The Case Study of Bangladesh

Abstract

Introducing a well-designed system of corporate governance is considered an effective tool to ensure the stability and resilience of a banking system. It was in 2006 when Bangladesh initiated its first corporate governance code (CG code). Despite trying to meet the code of enhancing the internal monitoring mechanisms and transparency in governance, it is apparent that the quality in bank credit portfolios continuously deteriorated. This paper aims to empirically analyze the impact of adopting the CG code on performance for eight years (2010–2017) of 21 major commercial banks of Bangladesh. In this case study, we suggest that the CG code may have given the Bangladeshi commercial banks an ill-incentive for the reduction of executive directors under the pressure of meeting a guideline to increase the ratio of independent directors. This incentive structure had a negative impact on bank performance during the period. Another finding is that the fundamental structure of ownership and control by sponsor directors remained unchanged during the period. This structure of maintaining the control of power by a group with its vested interest may have hindered the effectiveness of the CG code in Bangladesh. We suggest that the agenda of CG practices should go together with a policy for mitigating a potential bias under the ownership concentration because any attempt of adopting codified CG practices would be futile under the fundamental structure in Bangladesh.

Open access
An Assessment of Good Corporate Governance in State Owned Enterprises of Mauritius

Abstract

The study seeks to assess the impact good corporate governance in State Owned Enterprises (SOEs) of Mauritius by obtaining the general perspectives of employees in this particular sector. This study comprised of two stages. Firstly, a focus group discussion was conducted among few employees in SOEs of Mauritius. This exploratory phase was useful in identifying additional views on the impact, barriers, issues and challenges on the level of good corporate governance in SOEs of Mauritius. A survey was then being conducted as a second phase of the study among a sample of employees from SOEs in Mauritius. The analysis focused on the objectives of the study, which were to assess the practice of good governance in SOEs in Mauritius, its benefits and the barriers towards practicing good governance in these firms. The major findings of the study showed that most respondents acknowledge the positive impact of good corporate governance in the day to day of their organisations. However, they also reported that constant governmental intervention acts as a barrier for the proper functioning of SOEs in Mauritius.

Open access
Corporate Governance for A.S.E. Listed Firms

Abstract

The present paper focuses on the level of compliance and application of corporate governance from the corporations listed in the Athens Stock Exchange (A.S.E.) and attempts to highlight improvements from the adoption of best practices suggested by corporate governance recent trends worldwide. In order for the research to be conducted, a series of qualitative and quantitative variables were used, as derived from the financial statements of 162 public companies. A more extensive analysis regarding the level of compliance with corporate governance was conducted in 25 companies with the highest and 25 corporations with the lowest score, whose classification in these positions was the result of a rating system that was created for this purpose.

Open access
Internet Transparentnost u Finansijskom Sektoru Bosne i Hercegovine/ Internet Transparency in Financial Sector in Bosnia and Herzegovina

Rezime

Podizanjem kvaliteta korporativnog upravljanja povećava se vrijednost preduzeća na tržištu, omogućuje korištenje svih oblika finansiranja: domaćeg i međunarodnog, javnog i privatnog, a samim tim jača i njihov dugoročni prosperitet. Svrha ovog rada je istraživanje internet transparentnosti u bankama i osiguravajućim društvima Bosne i Hercegovine i uočavanje razlika između sektora banaka i sektora osiguravajućih društava u pogledu stepena transparentnosti pojedinih oblasti iz domena korporativnog upravljanja. Podaci potrebni za istraživanje su dobijeni pregledanjem internet stranica posmatranih subjekata. Rezultati diskriminacione analize su pokazali da postoji razlika u internet transparentnosti između banaka i osiguravajućih društava.

Open access
Survey On Competence and Administration of Supervisory Board Activities in German Stock-Listed Companies

Abstract

According to the agency theory (Jensen & Meckling 1976), it is expected that there exists a positive relationship between corporate governance and company performance which is also generally assumed in recent research (Dignam & Galanis 2016). This relationship is investigated in the study performed by the author of this paper. Two different approaches were chosen in parallel: (1) quantitative data analysis, based on financial figures and corporate governance variables, and (2) a survey of supervisory board members of listed German companies. This paper is about the results of structured interviews with 30 supervisory board members. The survey confirms that corporate governance regulations have an important influence on the administration of supervisory board activities and on board competence. Many supervisory board members stated that the German Corporate Governance Codex leads to extended meeting time to fulfil regulatory requirements, more data requirements to identify and estimate risk issues and to rising risk awareness. The interview results converge with the results from the multivariate analysis.

Open access
The Lawful Execution of Employer Rights is an Important Subsystem of Corporate Governance (A Labour Case Study)

Abstract

In the world of work, the political transition created a difficult situation in Hungary which has become even less favourable in the 2010s. Employees are exposed to numerous infringements. The case study presented at previous MEB conferences and continued herein illustrates the vulnerability of employees. The case study provides an excellent opportunity for the presentation of the special Hungarian labour law (the conclusion of an employment relationship, payment of wages, performance of work, trial period, termination, corporate dismissal, etc.) and for summarising the lessons learned. In addition to the court judgement involving heavy expenditure, it can also be concluded that successful corporate work can only be achieved by respected and skilled employees, and the loyalty of employees is the key source of results. This, in turn, can only be achieved if the representatives of the owners and the management of the company pay great attention, as a subsystem, to the lawful employment and motivation of employees.

Open access
Corporate Governance and Human Resource Management in Nigeria’s Downstream Petroleum Sector

Abstract

The emergence of a ‘new world economy’ makes it imperative for corporate entities to adjust their corporate values, practices and internal processes. This paper explored the interrelatedness of selected corporate governance practices and human resource management outcomes. The paper relied on established corporate management theories as a platform for empirical consideration of selected issues relative to four established players in Nigeria’s downstream petroleum sector. A descriptive method was adopted and data was collected via a survey of 112 respondents. Contextual arguments were captured to achieve a robust appreciation of issues affecting individual participation and operations of corporate entities. The study found that there is a significant relationship between corporate governance practices and human resource management outcomes. Requisite conclusions and recommendations were provided in the light of empirical and theoretical findings.

Open access
A Complex Perspective Of Social Audit In Corporate Governance

Abstract

The social audit is interconnected with the corporate governance and contributes to the increase of the trust and transparency between stakeholders. Social audit aims to analyze social factors and how an organization can contribute to the improvement of its activity. Also it involves analyzing the environment in which the organization operates and how it can help to maintain or even improve it. The contribution of this paper is focused on a qualitative research on social practices within NGOs and banking institutions. There is a limited number of studies in this sense in the literature, because is quite difficult to exist a homogeneous image of a domain rather heterogeneous. The present study follows to build an image, accompanied by examples of socially responsible practices We realized a list with the issues related to social responsibility, with specific examples to argument this aspect.

Open access
Internal and External Supervisory Mechanisms in Corporate Governance

Internal and External Supervisory Mechanisms in Corporate Governance

Good corporate governance depends on well balanced relations between supervisory mechanisms in the corporate governance process. Relations between the supervisory board, as the internal supervisory mechanism, and external auditing, as the external supervisory mechanism, are crucial for the development of good corporate governance practice. This paper focuses on analyzing the relationship between the supervisory board and external auditing in order to determine the current state of that relationship in the Republic of Croatia and to determine possible guidelines for improving the relationship between the supervisory board and external auditing in practice. In addition, this study analyzes the relationship between the supervisory board and external auditing, which could lead to the maximum efficiency of both the supervisory board and external auditing and tests that relationship in practice using publicly traded companies in Croatia. This study also analyzes the impact of the audit committee on the efficiency of the supervisory board and external auditing.

Open access