Impact of corporate governance on firm performance publishedMuhammad Usman
In the light of corporate financial scandals, there is an increasing attention on corporate governance issues. The investors look for emerging economies to diversify their investment portfolios to exhaust the possibilities of returns. This paper examines the impact of corporate governance variables on firms’ performance. This Research found that there is a direct positive relationship between profitability measured either by Earnings per share (EPS) or Return on assets (ROA) and corporate governance, also have a positive direct relationship between each of liquidity, dividend per share, and the size of the company with corporate governance, finally the study found a positive direct relationship between corporate governance and corporate performance. Various studies have been conducted in developing countries including Pakistan to investigate the relationship among corporate governance and firm performance. This study indicates that corporate governance can be measured through the following elements.
(1) board size (2) Female Member (3) CEO duality (4) Education of Directors (5) Board working experience(6) independent directors (7) board compensation (8) Board ownership (9) Audit committee (10) Board composition(11)Leadership Structure
THERE ARE SO MANY STANDARDS OF AUDITING, HERE IN THIS PDF, I HAVE EXPLAINED ANY 10 STANDARDS ON AUDITING WITH FLOWCHARTS, PICTURES FOR BETTER REFERENCE OF THE TOPIC
A Study on Budgetary Control of SHIMUL. This project shed more light on how to control the budget in milk projects and its production. This project also has detailed questionnaire to understand the problem statement. Visit http://www.projectskart.com/p/contact-us.html for more infomation.
Impact of corporate governance on firm performance publishedMuhammad Usman
In the light of corporate financial scandals, there is an increasing attention on corporate governance issues. The investors look for emerging economies to diversify their investment portfolios to exhaust the possibilities of returns. This paper examines the impact of corporate governance variables on firms’ performance. This Research found that there is a direct positive relationship between profitability measured either by Earnings per share (EPS) or Return on assets (ROA) and corporate governance, also have a positive direct relationship between each of liquidity, dividend per share, and the size of the company with corporate governance, finally the study found a positive direct relationship between corporate governance and corporate performance. Various studies have been conducted in developing countries including Pakistan to investigate the relationship among corporate governance and firm performance. This study indicates that corporate governance can be measured through the following elements.
(1) board size (2) Female Member (3) CEO duality (4) Education of Directors (5) Board working experience(6) independent directors (7) board compensation (8) Board ownership (9) Audit committee (10) Board composition(11)Leadership Structure
THERE ARE SO MANY STANDARDS OF AUDITING, HERE IN THIS PDF, I HAVE EXPLAINED ANY 10 STANDARDS ON AUDITING WITH FLOWCHARTS, PICTURES FOR BETTER REFERENCE OF THE TOPIC
A Study on Budgetary Control of SHIMUL. This project shed more light on how to control the budget in milk projects and its production. This project also has detailed questionnaire to understand the problem statement. Visit http://www.projectskart.com/p/contact-us.html for more infomation.
The governance system that a company adopts is not independent of its environment. Instead, it is shaped by a variety of factors inherent to the business setting.
This Quick Guide explains the factors that shape governance systems around the world. It also provides an overview of governance systems in selected countries.
It answers the questions:
• Why do governance systems vary?
• How important are capital markets?
• What is the impact of legal tradition?
• Why do accounting standards matter?
• How do societal values shape governance?
For an expanded discussion, see Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences (Second Edition) by David Larcker and Brian Tayan (2015): http://www.gsb.stanford.edu/faculty-research/books/corporate-governance-matters-closer-look-organizational-choices
Buy This Book: http://www.ftpress.com/store/corporate-governance-matters-a-closer-look-at-organizational-9780134031569
For permissions to use this material, please contact: E: corpgovernance@gsb.stanford.edu
Copyright 2015 by David F. Larcker and Brian Tayan. All rights reserved.
CH- 3 CONCEPTUAL FRAMEWORK OF CORPORATE GOVERNANCE Bibek Prajapati
CH- 3 CONCEPTUAL FRAMEWORK OF CORPORATE GOVERNANCE
FOR CS PROFESSONAL, CA, CMA
Definitions of Corporate Governance
• ICSI Principles of Corporate Governance
• Need for Corporate Governance
• Theories of Corporate Governance
• Evolution and Development of Corporate Governance
• Elements of Good Corporate Governance
The root of the word Governance is from ‘gubernate’, which means to steer. Corporate governance would mean to steer an organization in the desired direction. The responsibility to steer lies with the board of directors/governing board.
• Kautilya’s Arthashastra maintains that for good governance, all administrators, including the king were considered servants of the people. Good governance and stability were completely linked. There is stability if leaders are responsive, accountable and removable. These tenets hold good even today.
• Corporate Governance Basic theories: Agency Theory; Stock Holder Theory; Stake Holder Theory; Stewardship Theory
OECD has defined corporate governance to mean “A system by which business corporations are directed and controlled”. Corporate governance structure specifies the distribution of rights and responsibilities among different participants in the company such as board, management, shareholders and other stakeholders; and spells out the rules and procedures for corporate decision making. By doing this, it provides the structure through which the company’s objectives are set along with the means of attaining these objectives as well as for monitoring performance.
The board composition must meet the standards set by law and best practice to ensure good corporate governance practice which ensures that the organization is properly run for the benefit of the shareholders.
The OECD Corporate Governance Committee is reviewing the G20/OECD Principles of Corporate Governance. The review was launched in November 2021 and will be completed in 2023. OECD, G20 and FSB members participate in the review, as well as other countries through the Committee’s regional Roundtables (Asia, Latin America and the Middle East and North Africa).
The Terms of Reference and Roadmap agreed by the Corporate Governance Committee sets out the main priorities and timeline for the review. The review’s overall goal is to strengthen the Principles, in particular by adapting relevant elements to the post COVID-19 environment, taking into account any structural effects of the crisis on capital markets and corporate governance practices. The revised Principles will aim to strengthen corporate sector resilience through better risk management and to improve companies’ access to finance from capital markets.
In October 2021, OECD Ministers and G20 Leaders supported the Committee’s decision to review the Principles. Ministers and Leaders “recognised the importance of good corporate governance frameworks and well-functioning capital markets to support the recovery, and looked forward to the review of the G20/OECD Principles of Corporate Governance”.
A public consultation on proposed revisions to the Principles will be held in fall 2022.
Corporate Governance and Corporate Profitability Empirical Study of Listed La...ijtsrd
Corporate governance is concerned with ways in which all parties interested in the well- being of the organization attempt to ensure that mangers and other insiders take measures or adopt mechanisms that safeguard the interests of the stakeholders.. The purpose of the study is to find out the impact of corporate governance on profitability of listed Land and Property companies in Sri Lanka. Return of Assets is used as dependent variable. To measure the corporate governance, Board size, Board composition and independent directors of Remuneration committee. number of auditors are considered in this study. Firm size was considered as control variable in this study. The data were collected from firms annual financial reports and Data Stream over the period of 2011to 2016, from the CSE website. Descriptive statistics, correlation analysis, multiple linear regression analysis were used to analyse the data and examine the hypotheses by using the E-views 10 version, in this study. The findings revealed that there is a positive and significant relationship between ROA with auditors, board composition. Independent directors of Remuneration committee and board size are insignificantly correlated with ROA. Furthermore, it was found that the control variable firm size was insignificant in influencing firm performance ROA ..This study provides useful information for policy makers, regulators in improving the corporate governance policies in the future and also helps in increasing and understanding the relationship between corporate governance and firms performance. S. Anandasayanan | H. Thavarasasingam "Corporate Governance and Corporate Profitability: Empirical Study of Listed Land and Property Companies in Sri Lanka" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-2 , February 2019, URL: https://www.ijtsrd.com/papers/ijtsrd20309.pdf
Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/20309/corporate-governance-and-corporate-profitability-empirical-study-of-listed-land-and-property-companies-in-sri-lanka/s-anandasayanan
The governance system that a company adopts is not independent of its environment. Instead, it is shaped by a variety of factors inherent to the business setting.
This Quick Guide explains the factors that shape governance systems around the world. It also provides an overview of governance systems in selected countries.
It answers the questions:
• Why do governance systems vary?
• How important are capital markets?
• What is the impact of legal tradition?
• Why do accounting standards matter?
• How do societal values shape governance?
For an expanded discussion, see Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences (Second Edition) by David Larcker and Brian Tayan (2015): http://www.gsb.stanford.edu/faculty-research/books/corporate-governance-matters-closer-look-organizational-choices
Buy This Book: http://www.ftpress.com/store/corporate-governance-matters-a-closer-look-at-organizational-9780134031569
For permissions to use this material, please contact: E: corpgovernance@gsb.stanford.edu
Copyright 2015 by David F. Larcker and Brian Tayan. All rights reserved.
CH- 3 CONCEPTUAL FRAMEWORK OF CORPORATE GOVERNANCE Bibek Prajapati
CH- 3 CONCEPTUAL FRAMEWORK OF CORPORATE GOVERNANCE
FOR CS PROFESSONAL, CA, CMA
Definitions of Corporate Governance
• ICSI Principles of Corporate Governance
• Need for Corporate Governance
• Theories of Corporate Governance
• Evolution and Development of Corporate Governance
• Elements of Good Corporate Governance
The root of the word Governance is from ‘gubernate’, which means to steer. Corporate governance would mean to steer an organization in the desired direction. The responsibility to steer lies with the board of directors/governing board.
• Kautilya’s Arthashastra maintains that for good governance, all administrators, including the king were considered servants of the people. Good governance and stability were completely linked. There is stability if leaders are responsive, accountable and removable. These tenets hold good even today.
• Corporate Governance Basic theories: Agency Theory; Stock Holder Theory; Stake Holder Theory; Stewardship Theory
OECD has defined corporate governance to mean “A system by which business corporations are directed and controlled”. Corporate governance structure specifies the distribution of rights and responsibilities among different participants in the company such as board, management, shareholders and other stakeholders; and spells out the rules and procedures for corporate decision making. By doing this, it provides the structure through which the company’s objectives are set along with the means of attaining these objectives as well as for monitoring performance.
The board composition must meet the standards set by law and best practice to ensure good corporate governance practice which ensures that the organization is properly run for the benefit of the shareholders.
The OECD Corporate Governance Committee is reviewing the G20/OECD Principles of Corporate Governance. The review was launched in November 2021 and will be completed in 2023. OECD, G20 and FSB members participate in the review, as well as other countries through the Committee’s regional Roundtables (Asia, Latin America and the Middle East and North Africa).
The Terms of Reference and Roadmap agreed by the Corporate Governance Committee sets out the main priorities and timeline for the review. The review’s overall goal is to strengthen the Principles, in particular by adapting relevant elements to the post COVID-19 environment, taking into account any structural effects of the crisis on capital markets and corporate governance practices. The revised Principles will aim to strengthen corporate sector resilience through better risk management and to improve companies’ access to finance from capital markets.
In October 2021, OECD Ministers and G20 Leaders supported the Committee’s decision to review the Principles. Ministers and Leaders “recognised the importance of good corporate governance frameworks and well-functioning capital markets to support the recovery, and looked forward to the review of the G20/OECD Principles of Corporate Governance”.
A public consultation on proposed revisions to the Principles will be held in fall 2022.
Corporate Governance and Corporate Profitability Empirical Study of Listed La...ijtsrd
Corporate governance is concerned with ways in which all parties interested in the well- being of the organization attempt to ensure that mangers and other insiders take measures or adopt mechanisms that safeguard the interests of the stakeholders.. The purpose of the study is to find out the impact of corporate governance on profitability of listed Land and Property companies in Sri Lanka. Return of Assets is used as dependent variable. To measure the corporate governance, Board size, Board composition and independent directors of Remuneration committee. number of auditors are considered in this study. Firm size was considered as control variable in this study. The data were collected from firms annual financial reports and Data Stream over the period of 2011to 2016, from the CSE website. Descriptive statistics, correlation analysis, multiple linear regression analysis were used to analyse the data and examine the hypotheses by using the E-views 10 version, in this study. The findings revealed that there is a positive and significant relationship between ROA with auditors, board composition. Independent directors of Remuneration committee and board size are insignificantly correlated with ROA. Furthermore, it was found that the control variable firm size was insignificant in influencing firm performance ROA ..This study provides useful information for policy makers, regulators in improving the corporate governance policies in the future and also helps in increasing and understanding the relationship between corporate governance and firms performance. S. Anandasayanan | H. Thavarasasingam "Corporate Governance and Corporate Profitability: Empirical Study of Listed Land and Property Companies in Sri Lanka" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-2 , February 2019, URL: https://www.ijtsrd.com/papers/ijtsrd20309.pdf
Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/20309/corporate-governance-and-corporate-profitability-empirical-study-of-listed-land-and-property-companies-in-sri-lanka/s-anandasayanan
Corporate Governance and Firm Performance: The Role of Transparency & Disclos...Muhammad Arslan
Purpose: This purpose of this paper is to empirically examine the relationship between transparency and disclosure and firm performance. Highlighting the importance of corporate governance in banking sector, the paper has focused in depth over its role, level and its impact on performance in banking industry of Pakistan. Design/methodology/approach: The paper access this purpose by constructing transparency and disclosure index for the past five year 2007-2011, using proxies for three sub-categories which are board and management structure disclosure, ownership structure disclosure and financial transparency disclosure. The paper also investigated structural changes of T&D Index and its effect on bank financial performance over the sample of 30 banks operating in Pakistan. Findings: Empirical analysis results by using ordinary least square regression model, reveals that financial performance is positively related to the transparency and disclosure and their sub levels except ownership structure disclosure which has negative relation with both ROA and ROE. Furthermore the average T&D level in Pakistani banking sector is above average. Practical implications: The current research paper aims for important policy implementation to reduce information asymmetry and improve corporate governance and firm performance in banking sector of Pakistan.
Corporate Governance, Firm Size, and Earning Management: Evidence in Indonesi...IOSR Journals
Purpose –Thepurpose of this paper is to evaluate the impact of the corporate governance regulationsimplementation and firm size onthe earning management for food and beverages companies in Indonesian Stock Exchange. Design/methodology/approach –The multiple regression is utilized to test this relationship at 95% confidence.Corporate governance was proxied by board of director, audit quality, and board independence. Firm size was represented by natural logarithm of total assets. Earning management was measured by Jones model withdiscretionary accruals. Findings – Using data from the year 2005 annual reports of 51 food and beverages listed companies,including the composite index, the results showed that twoof the corporate governance variables, namely board of director and audit quality, as well as firm size are statistically significant in explaining earning management measured bydiscretionary accruals. Research limitations/implications – The regulations on corporate governance were implementedin 2005, but not all of food and beverages listed companies implemented the regulations in 2005. Practical implications – An implication of this finding is that regulatory efforts initiated after the1997 financial crisis to enhance corporate transparency and accountability did not appear to result on better corporate performance. Originality/value – This is one of the few studies which investigates the impact of regulatory actionson corporate governance on earning management immediately after its implementation.
Impact of Corporate Governance on Firms’ Financial Performance: Textile Secto...inventionjournals
Purpose: The basic standard of this article is to find out the outcome of corporate governance on firm’s profitability in textile sector of listed companies in Pakistan. Methodology: The data are collected from respective textile sector annual reports from 2005 to 2014.The results of different variables arise by using different techniques like descriptive, correlation and regression in using software of E-views in this study. Findings: These results of study explain that corporate governance and firm’s financial performance shows positive relationship between each other. This indicates that in textile sectors adopting corporate governance and plays a significant role in textile sectors. Research limitations: This study restricts by fewer digit of determinantslinked corporategovernance and data gathered from 2005 to 2014 were addressed, which restrictions the overview of the result. Further research can be conduct by using more variables and more years for finding more in future. Originality: This study shows that the firm’s performance has increased by using corporate governance in textile sector firms.
Impact of Corporate Governance on Firms’ Financial Performance: Textile Secto...inventionjournals
Purpose: The basic standard of this article is to find out the outcome of corporate governance on firm’s profitability in textile sector of listed companies in Pakistan. Methodology: The data are collected from respective textile sector annual reports from 2005 to 2014.The results of different variables arise by using different techniques like descriptive, correlation and regression in using software of E-views in this study. Findings: These results of study explain that corporate governance and firm’s financial performance shows positive relationship between each other. This indicates that in textile sectors adopting corporate governance and plays a significant role in textile sectors. Research limitations: This study restricts by fewer digit of determinantslinked corporategovernance and data gathered from 2005 to 2014 were addressed, which restrictions the overview of the result. Further research can be conduct by using more variables and more years for finding more in future. Originality: This study shows that the firm’s performance has increased by using corporate governance in textile sector firms.
Corporate Governance and Earnings Quality of Listed Banks in Rivers Stateinventionjournals
This study investigated the relationship between corporate governance and earnings quality of listed banks in Rivers State. It examined the relationship between Board size and accrual quality; Audit committee independence and value relevance; and directors’ independence and accrual quality of listed banks in Rivers State. It adopted the quantitative approach in investigating the assumed relationships. Using regression analysis and Pearson product moment correlation coefficient, the result indicated a positive relationship between corporate governance and earnings quality. It revealed positive association between board size, independent directors and accrual quality. No relationship was established between independent audit committee and accrual quality. It is recommended that the existing board size should be maintained to sustain bank performance. In addition, quality and independent directors should be hired for earnings and accrual management. Finally, further study is recommended for other sectors using different research to correct the limitation of the research method and tools
Investigating Corporate Governance And Its Effect on Firm Performance with As...QUESTJOURNAL
ABSTRACT: Corporate governance and its effect on firm performance are investigated in this research. Research independent variables include non-bound members of board of directors, board of directors’ independence, institutional shareholders, and dependent variable includes assets return which is the index of firm’s performance. Accordingly, data of 125 accepted firms in Tehran securities exchange during 2009 to 2013 was extracted and panel data regression model was applied to test the hypotheses. Results indicate an inverse significant relationship between non-bound members of board of directors and assets return and a positive significant relationship between board of directors’ independence and firm’s performance. Also, there is a positive relationship between institutional shareholders and firm’s performance. In general, results showed that appropriate corporate governance improves firms’ performance.
A workshop hosted by the South African Journal of Science aimed at postgraduate students and early career researchers with little or no experience in writing and publishing journal articles.
This slide is special for master students (MIBS & MIFB) in UUM. Also useful for readers who are interested in the topic of contemporary Islamic banking.
Acetabularia Information For Class 9 .docxvaibhavrinwa19
Acetabularia acetabulum is a single-celled green alga that in its vegetative state is morphologically differentiated into a basal rhizoid and an axially elongated stalk, which bears whorls of branching hairs. The single diploid nucleus resides in the rhizoid.
Model Attribute Check Company Auto PropertyCeline George
In Odoo, the multi-company feature allows you to manage multiple companies within a single Odoo database instance. Each company can have its own configurations while still sharing common resources such as products, customers, and suppliers.
Synthetic Fiber Construction in lab .pptxPavel ( NSTU)
Synthetic fiber production is a fascinating and complex field that blends chemistry, engineering, and environmental science. By understanding these aspects, students can gain a comprehensive view of synthetic fiber production, its impact on society and the environment, and the potential for future innovations. Synthetic fibers play a crucial role in modern society, impacting various aspects of daily life, industry, and the environment. ynthetic fibers are integral to modern life, offering a range of benefits from cost-effectiveness and versatility to innovative applications and performance characteristics. While they pose environmental challenges, ongoing research and development aim to create more sustainable and eco-friendly alternatives. Understanding the importance of synthetic fibers helps in appreciating their role in the economy, industry, and daily life, while also emphasizing the need for sustainable practices and innovation.
Francesca Gottschalk - How can education support child empowerment.pptxEduSkills OECD
Francesca Gottschalk from the OECD’s Centre for Educational Research and Innovation presents at the Ask an Expert Webinar: How can education support child empowerment?
Normal Labour/ Stages of Labour/ Mechanism of LabourWasim Ak
Normal labor is also termed spontaneous labor, defined as the natural physiological process through which the fetus, placenta, and membranes are expelled from the uterus through the birth canal at term (37 to 42 weeks
June 3, 2024 Anti-Semitism Letter Sent to MIT President Kornbluth and MIT Cor...Levi Shapiro
Letter from the Congress of the United States regarding Anti-Semitism sent June 3rd to MIT President Sally Kornbluth, MIT Corp Chair, Mark Gorenberg
Dear Dr. Kornbluth and Mr. Gorenberg,
The US House of Representatives is deeply concerned by ongoing and pervasive acts of antisemitic
harassment and intimidation at the Massachusetts Institute of Technology (MIT). Failing to act decisively to ensure a safe learning environment for all students would be a grave dereliction of your responsibilities as President of MIT and Chair of the MIT Corporation.
This Congress will not stand idly by and allow an environment hostile to Jewish students to persist. The House believes that your institution is in violation of Title VI of the Civil Rights Act, and the inability or
unwillingness to rectify this violation through action requires accountability.
Postsecondary education is a unique opportunity for students to learn and have their ideas and beliefs challenged. However, universities receiving hundreds of millions of federal funds annually have denied
students that opportunity and have been hijacked to become venues for the promotion of terrorism, antisemitic harassment and intimidation, unlawful encampments, and in some cases, assaults and riots.
The House of Representatives will not countenance the use of federal funds to indoctrinate students into hateful, antisemitic, anti-American supporters of terrorism. Investigations into campus antisemitism by the Committee on Education and the Workforce and the Committee on Ways and Means have been expanded into a Congress-wide probe across all relevant jurisdictions to address this national crisis. The undersigned Committees will conduct oversight into the use of federal funds at MIT and its learning environment under authorities granted to each Committee.
• The Committee on Education and the Workforce has been investigating your institution since December 7, 2023. The Committee has broad jurisdiction over postsecondary education, including its compliance with Title VI of the Civil Rights Act, campus safety concerns over disruptions to the learning environment, and the awarding of federal student aid under the Higher Education Act.
• The Committee on Oversight and Accountability is investigating the sources of funding and other support flowing to groups espousing pro-Hamas propaganda and engaged in antisemitic harassment and intimidation of students. The Committee on Oversight and Accountability is the principal oversight committee of the US House of Representatives and has broad authority to investigate “any matter” at “any time” under House Rule X.
• The Committee on Ways and Means has been investigating several universities since November 15, 2023, when the Committee held a hearing entitled From Ivory Towers to Dark Corners: Investigating the Nexus Between Antisemitism, Tax-Exempt Universities, and Terror Financing. The Committee followed the hearing with letters to those institutions on January 10, 202
1.4 modern child centered education - mahatma gandhi-2.pptx
Board structure and firm performance
1. Board Structure and Firm
Performance of Hotel and Travel
Sector Companies in Sri Lanka
Sajith Jayawardhana
Department of Finance
Faculty of Commerce and Management Studies
University of Kelaniya
2. Background of the study
•This study investigates the effect of corporate governance practices to the
financial performance of Hotels and Travels sector companies in Sri Lanka.
What is Corporate Governance ?What is Corporate Governance ?
•Corporate Governance is the framework of rules and practices by which a
board of directors ensures accountability, fairness, and transparency in a
company's relationship with its all stakeholders.
Corporate Governance in Sri Lankan contestCorporate Governance in Sri Lankan contest
•A voluntary code on corporate governance was published jointly by the
Securities and Exchange Commission of Sri Lanka and the Institute of
Chartered Accountants of Sri Lanka in 2002.
3. Tourism sector overview - 2011Tourism sector overview - 2011
•There are 36 Hotels and Travels sector companies listed in Colombo stock
exchange in Sri Lanka which represent 13% out of 287 listed companies in
Colombo Stock Exchange.
•Sri Lanka’s tourist industry recorded an impressive performance in the year
2011 and is poised to continue its growth momentum in the coming years too.
Board StructureBoard Structure
•Components which affect to structure of the board are board size, percentage
of insider ownership, non-executive directors’ percentage and female director
percentage which were gathered from the companies’ audited annual reports.
Firm PerformanceFirm Performance
•As a financial performance indicator, the return on equity (ROE) is used in
this study.
4. Review of LiteratureReview of Literature
•Literature review focuses on the relationship between firm performance and
component of board structure such as board size, Non-executive directors in
the board, inside ownership, Female directors on the board.
1. Board size1. Board size
Inverse relation between board size and Firm performanceInverse relation between board size and Firm performance
- Dr. Roselina Shakir- Board size, board composition and property firm
performance 2006
- Lipton and Borsch 1992, Jensen 1993 - Limiting board size is believed to
improve firm performance
- Yermack (1996) documents an inverse relation between board size and
profitability
5. 2. Non-executive directors2. Non-executive directors
Inverse relation between Non-executive directors and Firm performanceInverse relation between Non-executive directors and Firm performance
- Klein (1998), Bhagat and Black (1997, 1998) and Hermalin and Weisbach (1991)
have found that a high proportion of independent directors does not predict better
future accounting performance.
- The proportion of non-executive directors in Sri Lankan firms has no significant
impact on the firm performance (Fernando, 2007).
- Fosberg (1989) finds no relation between the proportion of outsider directors and
return on equity.
Positive relation between Non-executive directors and Firm performancePositive relation between Non-executive directors and Firm performance
- Baysinger and Butler (1985) indicated that the proportion of independent non-
executive directors in 1970 was positively correlated with return on equity.
6. 3. Insider ownership3. Insider ownership
Inverse relation between insider ownership and Firm performanceInverse relation between insider ownership and Firm performance
- Demsetz and Lehn (1985) and Hubbard and Palia (1999) that
managerial ownership does not affect firm.
- Loderer and Martin (1997) points in the same direction that insider
ownership does not have a predictive effect on firm performance.
Positive relation between insider ownership and Firm performancePositive relation between insider ownership and Firm performance
- Kaserer & Moldenhauer (2008) find a positive relationship between insider
ownership and stock performance.
- D. Txomin Iturralde argued that if insider ownership is between 0 and 35%,
increases in ownership will result in higher firm performance.
7. 3. Female directors on the board3. Female directors on the board
Inverse relation between Female directors and Firm performanceInverse relation between Female directors and Firm performance
- Shrader, Blackburn, and Iles (1997) investigate the relationship between the
percentage of female board members and two accounting measures of
financial value (ROA and ROE) find a significant negative relationship
between those two.
Positive relation between Female directors and Firm performancePositive relation between Female directors and Firm performance
- Erhardt (2003) find that the percentage of female directors is
positively related to larger US firms’ two accounting measures; return on assets
and return on investments.
8. Research objectivesResearch objectives
• Identify the board structure of Hotels and Travels sector companies in Sri
Lanka.
• To determine the relationship between Board size and the Firm
performance measured by using Return on Equity.
• To determine the relationship between the Proportion of Non Executive
directors and the Firm performance measured by using Return on Equity.
• To determine the relationship between Insider ownership Percentage and
the Firm performance measured by using Return on Equity.
• To determine the relationship between the Proportion of female directors
and the Firm performance measured by using Return on Equity.
9. MethodologyMethodology
• Data CollectionData Collection
- Data were gathered from the companies’ audited annual reports.
- Firms with missing information and the firms which were not started
their commercial operation were excluded from the study and the final
sample was reduced to 33 listed companies out of 36 hotel and travel
sector companies.
• Dependent VariablesDependent Variables
Return On Equity (ROE)
To measure corporate performance return on equity (ROE) is used in this study
ROE = Net Income / Shareholder’s equityROE = Net Income / Shareholder’s equity
• Explanatory variablesExplanatory variables
Board Size (BS)
Non-Executive Director percentage (NED)
Insider ownership percentage (IO)
Female Director percentage (FD)
10. MethodologyMethodology
•The data were analyzed with SPSS and interpret findings using descriptive
statistics and Pearson correlation.
Descriptive statisticsDescriptive statistics
•Descriptive statistics measure the central tendency and dispersion.
•The descriptive statistics used in this study consist of mean which helps to
identify the Board Structure of Hospitality Companies in Sri Lanka.
Pearson correlationPearson correlation
•Pearson correlation coefficient is a measure of the correlation between two
variables. It is widely used in the sciences as a measure of the strength of
linear dependence between two variables which helps to determine the
relationship between corporate governance and financial performance of hotel
and travel sector companies in Sri Lanka.
11. Data analysis and findings
Descriptive statisticsDescriptive statistics
•Table 3 represents the data collected from annual reports of hotels and travel sector
companies.
•The first objective of the study is to identify the nature of the BOD within the Hotel
and Travel Sector organizations, in order to deliver this, descriptive statistics were
employed
Descriptive Statistics
Mean Std. Deviation N
ROE (%) 06.92 14.75 33
BS 8.67 2.203 33
NED (%) 73.82 27.78 33
IO (%) 06.56 14.26 33
FD (%) 07.61 10.20 33
12. Data analysis and findings
• Second objective of this study is to measure the association between the board characteristics
and financial performance, for this we measured correlation between the above said
variables.
• There is a significant correlation between Return on Equity and insider ownership.
13. ConclusionConclusion
• The results of this study proves that good corporate governance is an important factor in
determining firm performance.
• This study reported significant positive relationships between insider ownership percentage
and firm performance.
• And also this study proves that there is a inverse relationship between Board size and firm
performance as well as Non Executive directors and firm performance and there is a
positive association between The Proportion of female directors on the board and firm
performance.
• Descriptive statistics from the study showed that
- The BOD consists of around nine directors with a variation of around two within the
hotel sector organizations in Sri Lanka. This is fairly a large number for a board in
hotel sector organization, when compared to average of 7.56 per board for all the
listed companies in Sri Lanka.
- Female directors are about 7.6% out of the total board members.
- Non-executive director proportion in the board is 73.8% which is very high which is
given by the governance requirement.
- Insider Ownership is around 7% which is relatively small compared with findings from
other countries.