Corporate governance and financing decisions by Saudi companies

This paper aims to contribute to the corporate governance literature in emerging economies by examining the effect of some corporate governance mechanisms on financing decisions in Saudi Arabian listed companies. A multiple regression model is used to examine the association between financing decisions and corporate governance mechanisms for a sample of 37 listed Saudi companies. In particular, we examine the effect of board size, ownership concentration and corporate governance reporting on the debt-to-equity ratio. Corporate governance reporting is measured by the content analysis approach. After controlling for companies＇ profitability and their growth opportunities, we found that both board size and ownership concentration are positively associated with debt-to-equity ratio. We limit our analysis to a small sample of firms that use the internet to communicate corporate governance information between October 2005 and January 2006. The findings suggest that managers are likely to choose higher financial leverage when they have stronger corporate governance （large number of directors on the board and higher ownership concentration）. However, we did not find any statistical association between corporate governance disclosure and debt-to-equity ratio. This suggests that firm＇s asymmetric information is not an important driver of the financing decision of Saudi Arabian companies. This might be due to the nature of the Saudi business environment. We strongly believe that this paper provides a novel contribution to the existing literature as we are the first to examine this issue in Saudi Arabia.     

Corporate governance mechanisms and firm valuation in Malaysian listed firms： A panel data analysis

Corporate governance mechanisms emerge to tackle agency problems in ensuring that shareholders＇ funds are not expropriated or wasted on unprofitable activities. The issue arises as to whether these improvements have been effective in reducing agency costs, and therefore enhancing firm value. The objectives of this paper is to examine the effects of governance mechanisms of dividend, types of ownership structure, and board governance on firm value. This paper utilises a panel data analysis of 403 firms listed on the Bursa Malaysia over a four-year period from years 2002 to 2005. A hierarchical regression analysis is used to test the hypotheses and the data is analysed using the generalized least square （GLS） estimation technique. Overall, the results highlight the importance of moderating role played by board governance variables with types of ownership structure to influence firm value. However, the benefits of better corporate governance through enhanced board governance are not the same across all firms since their incentives vary with respect to dividend and different types of ownership structure mechanisms.     

The Impact of Financial Distress Status and Corporate Governance Structures on the Level of Voluntary Disclosure Within Annual Reports of Firms （Case Study of Non-financial Firms in Indonesia Over the Period of 2009-2011）

The purpose of this research is to examine the impact of financial distress status and corporate governance structures on the level of voluntary disclosure. We apply six independent variables, including the firm＇s financial distress status and five components of corporate governance structures, such as board independence, audit committee independence, institutional ownership, board meeting frequency, and audit committee meeting frequency. This research is carried out by examining the annual reports of 114 non-financial firms listed at the Indonesian Stock Exchange over the period of 2009-2011. To test hypotheses, we undergo two different analyses, including independent samples t-test and Multiple Linear Regression. We find that： （1） The audit committee independence and the audit committee meeting frequency have significant positive impacts on the level of voluntary disclosure; （2） The financial distress status is negatively related to the level of disclosure at various levels of significance; and （3） All the independent variables are simultaneously related to voluntary disclosure.     

Does a deviation between the rights and obligations of the board and controlling shareholders affect firm value？

This study examines the association between firm value and ownership structure, when board and controlling stockholders＇ voting rights deviate from obligations. The measurement of the corporate governance variables is different from prior research. The author further investigates whether monitoring mechanisms can alleviate the agency problem due to percentage of outside directors. The empirical results show that the higher board voting rights-obligations is deviated, which means the weaker relation with the firm value. The author also finds the monitoring from outside directors can reduce the agency problems from board＇s deviation and thus can improve firm value. But the results of the controlling stockholders＇ deviation are mixed or insignificant. This research has implications for Taiwan＇s regulators who are striving to improve the information, transparency, and corporate governance of board and controlling shareholders＇ voting rights-obligations deviation.     

Evaluating Board Roles Performance in Adopting Corporate Social Responsibility （CSR） Practices

The purpose of this paper is to evaluate the board roles that make a board effective in the performance of adopting corporate social responsibility （CSR） practices. This paper examines directors＇ perceptions of the three main roles： monitoring, service, and strategic, which provide tools for critically understanding how the board adds the value in moving the organization towards more CSR practices. The stakeholder theory is used to distinguish the influence of the three main roles on the adoption of CSR practices. Primary data were collected for this research by conducting structured questionnaires with a sample of 461 directors from Saudi listed companies for study purpose. The results show that an appropriate mix of directors＇ roles and the development of sound board monitoring and service roles are the most crucial determinants of CSR adoption in Saudi listed companies. As the extant corporate governance and CSR literatures do not provide a clear perspective with contradictory outcomes about board roles in influencing CSR practices, the originality of this research is its contribution by evaluating the directors＇ perceptions of developing a direct relationship between the board roles and the adoption of CSR practices. Furthermore, the use of the stakeholder theory provides additional insights into identifying the most influential board role factors enhancing stakeholders＇ expectations of CSR practices.     

Sustainability： Corporate Responsibility for the Future Classroom

The machinery, equipment, inventory, and other assets of the 21 st century company without people to work them. Corporations, by leave of the accounting profession, have no real economic value continue to omit the value of human. And yet, there is a growing realization that people represent the largest proportion of corporate productive capacity relative to the current assets and fixed assets shown in corporate financial statements. This paper provides research on the top 50 of the Fortune 500 companies which confirm this material deficiency. There is a need to provide stakeholders with a ＂fair＂ knowledge of the value of corporate human capital to provide a higher standard of transparency and accountability in international financial reporting and to provide the basis for research into the sustainability and potential expansion of growth in the world economy. An appropriate standard for the valuation of human capital will provide the knowledge base for effective and efficient investment in human capital. Effective and efficient investment will be particularly valuable for governments and service industries and for those who wish to promote growth in Europe. Indeed, the Organization for Economic Cooperation and Development （OECD） is questioning the veracity of financial statements which fail to include ＂the most valuable＂ of corporate assets in their financial statements. Recently, the OECD has noted that human capital may be measurable ＂by the output potential of specific competencies＂; ＂the fruits of （corporate） investment＂; the objective measurement of the market ＂rental＂ price of human capital; and lastly, perhaps self-evident when it comes to physical capital, the output potential of corporate investment in their human capital inventory. This paper considers the conditions in the context of literature which reassesses theory and assumptions which have been made on the valuation of human capital. Human capital is a pre-requisite for tangible assets to be productive. The valuation of human capital will trigger the same sort of activity-based analysis of people power as computers brought to cost accounting. The knowledge century analysis of people power will take off when human capital is at last included in the list of assets on the corporate balance sheet.     

Do Company Directors Underestimate the Adoption of Corporate Governance Provisions？ A Survey Approach

This paper examines whether company directors underestimate the adoption of corporate governance provisions within Ghanaian listed firms. Using a survey approach, the respondents, who were company executives and non-executive directors with knowledge of the Ghanaian Code and its provisions, regard the code as a benchmark for good corporate governance practices within Ghanaian listed firms. They also report some improvement in the standard of corporate governance in their companies since the introduction of the Code. Many of the company directors indicated their preparedness to comply with further corporate governance requirements, such as the adoption of a formal nomination committee something not been currently included in the Ghanaian Code. However, the directors noted that they receive inadequate support from the regulatory and institutional bodies for the implementation of the Ghanaian Code provisions. Many of the directors also supported the review of the Ghanaian Code by an independent committee. With regard to the adoption of the Ghanaian Code and its influence on firm performance, the respondents indicated that the adoption of the specific governance provisions in the area of chief executive officer （CEO）/chairman roles separation, having a balance of executive and non-executive directors on the board, the establishment of audit and remuneration committees, and the full adoption of the Ghanaian Code provisions were all influential in determining firm performance. They, however, did not support the adoption of the board size provision as influential to firm performance. This raises questions about the usefulness of the range of board size as recommended by the Ghanaian Code.     

A New-style Internal Auditing： The Governance-oriented Internal Auditing

The transformation of internal auditing （IA） from the function of supervision, management and control-oriented to governance-oriented are fulfilled while governance-oriented internal auditing emerging from the demand of corporate governance. The governance-oriented internal auditing （GOIA） is a risk-based assurance and consulting activity designed to add value into the organization focusing on the effectiveness of corporate governance in supervision and assessment by compound professional aims. Governance-oriented internal auditing includes board auditing, strategic auditing, management responsibility auditing and risk management auditing, etc..     

Corporate Governance and the Financial Value of Financially Distressed Listed Companies

The article combines the background of Chinese system, theoretically derivates the relationship between corporate governance and their financial value, selects a sample of loss listed companies from 2003 to 2009, and studies how the level of corporate governance affects the value of listed company losses. Research results show that, among corporate governance factors, the largest shareholder and the market for corporate control have obvious positive effects on the financial value of loss listed companies; the proportion of state-owned shares, the type of audit opinion, and corporate govemance factors have obvious negative effects on the financial value of loss listed companies; and managerial ownership, the proportion of independent directors, and the size of the board have no obvious driving effect on the financial value of loss listed companies.     

An analysis on corporate governance

Corporate governance has become one of the major international issues that have succeeded in attracting a good deal of public interest in recent years, especially since the recent spate of ＂world famous＂ scandalous corporate failures. Today, it is considered that corporate governance plays an important role in the economic health of corporations and society in general. Improving corporate governance is a systematic project, it is necessary to the internal governance and external governance of the ways multi-pronged.     

An Enquiry Into the Responsiveness of Corporate Profitability to Corporate Governance Mechanism＂ Evidences From Malaysian Government-Linked Companies （GLCs）

Realizing the importance of corporate governance, many governments have embarked upon various initiatives. In Malaysia, the recently introduced Green Book program aims to strengthen the corporate governance among the government-linked companies （GLCs）, in view of their significant contributions to the national socio-economic development. The Green Book initiative, launched in 2005, contains, among other things, a provision to create a high-performing board. Performance of GLCs, therefore, is likely to scale better heights with the modification of the constitution of the boards. The present paper aims to examine the association between the selected corporate governance attributes and performance of GLCs in 2010, approximately five years since the implementation of the transformation program. The regression analysis reveals that none of the selected corporate governance indicators has significantly impacted the performance of GLCs. The findings serve as a wake-up call to the authorities to appraise the effectiveness of the transformation program in enhancing the performance of GLCs.     

Corporate Governance Viability： Theoretical Exploration

The purpose of this exploratory paper is to try to envision how corporate governance systems and practices are evolving and what eventually determines the forms they take and the functions they perform. Practical implications especially concern different consequences that recent global economic crisis has imposed on regulatory, business, and social aspects of corporate governance. In order to encompass different approaches to this ongoing issue, the author takes into account mainly theoretical contributions that address the issue from the following perspectives： interrelations between product market competition and corporate governance, assessment of capital market pressures on corporate governance; relation between labour market and corporate governance; and actors influencing corporate governance changes in national systems of corporate governance. Since the viability of any corporate governance system and practice, at national and international levels, depends on their ability to respond to both market pressure towards competitiveness and diversified requirements by influential social, political, and economic actors of change, the author suggests that all groups of factors should continue to be in the focus of future researches. On the other hand, as global economic crisis differently affects different countries and businesses, it is of particular importance for those that shape corporate governance policies and practices to be aware of the deep relatedness between corporate governance, on the one hand, and economic, social, and environmental aspects of growth and development, on the other hand.     

Association Between Independent Auditor Fees and Firm Value： A Study of Brazilian Public Companies

This article investigates the relationship between fees for audit and non-audit services with Tobin＇s Q. Using a sample of Brazilian public companies in the period from 2009 to 2011, we estimate the association between Tobin＇s Q and the auditors＇ remuneration scaled by total assets. Additionally, to strengthen the conclusions, we present a second model with the remuneration of the auditors in absolute terms. The results suggest a significant relationship between Tobin＇s Q and audit and non-audit fees, positive and negative, respectively. Specifically, increases in audit fees and non-audit fees respectively increase and decrease the Tobin＇s Q of the audited company. The results of this study have important implications for those interested in good corporate governance practices. Managers and board members concerned with value carefully evaluate the remuneration and nature of services creation, when engaging independent auditors, should provided.     

A Comparative Analysis of Disclosures in Annual Reports

Public companies issue periodic annual reports to give information about the past financial and operational results while presenting the future strategies. Companies release non-financial information concerned with corporate sustainability issues like market share, customer loyalty, supply chain management, corporate governance, and human resources in annual reports as well as the audited financial reports. Annual reports, one of the important instruments of transparency and disclosure, are widely used by shareholders and stakeholders. Recent laws and regulations in the US, European Union, and Turkey require enhanced disclosures in annual reports. In the first part of this study, a comparative regulatory framework for annual reports will be established under the Sarbanes Oxley Act （SOX）, the Securities and Exchange Commission （SEC） filing requirements, the New Turkish Commercial Code, and regulations of Capital Markets Board （CMB） of Turkey. In the second part of this study, annual reports of four sample companies listed in the New York Stock Exchange （NYSE） and Corporate Governance Index of Borsa Istanbul will be discussed in the light of disclosure requirements of Form 20-F. Findings of this study support the hypothesis which states that regulatory environment has a positive impact on the quantity and quality of disclosures. Attention is drawn to the need for global standardization to reduce the reporting variances and the need for independent audit of annual reports to increase the reliability.     

The Analysis of the Governance Effect of Chinese Public Corporation Based on Capital Structure

Under the existed system, the capital structure is the basis of the corporate governance, the structure of the corporate governance is the reflection of the capital structure. The choice of the capital structure decides the level of the corporate governance to a great degree. This paper discusses the governance effect of Chinese public corporation in the view of capital structure. At last, the author suggests that the government should change the state of state-owned stock which takes a great proportion, make the state-owned stocks and corporation stocks enter and circulate in the market, develop investment banks, promote the stockholder＇s rights to circulate and recombine, enhance the supervision and the management of the stock markets, perfect the mechanism of the market＇s operation, set up the mechanism of the way to protect to pay back the debt, perfect the system of bankruptcy and develop the way of bond-financing, offset the drawbacks of the indirect-financing among banks and so on. All of the advice was given to perfect the public company＇s capital structure and improve the efficiency of the corporate governance.     

Corporate governance mechanisms and performance： Analysis of Malaysian family and non-family controlled companies

Most study concentrating on family and non-family companies is conducted overseas with little research carried out in Malaysia. This study examined the impact of corporate governance mechanisms on family and non-family controlled companies＇ performance. The sample size of this study is 730 companies listed on Bursa Malaysia from 2003 to 2007. The findings reveal that corporate governance mechanisms influence the family and non-family controlled companies＇ performance. But not all corporate governance mechanisms are significant. The significant variables differ between family and non-family controlled companies. Thus, regulators need to be vigilant that family and non-family controlled companies practise differently and to set different code needed for each type of families.     

Usefulness and Effectiveness of Related Party Transactions （RPTs） Disclosure： Empirical Evidence From Italy

Related party transactions （RPTs） can be used by corporate insiders （e.g., managers, controlling shareholders） to expropriate corporate outsiders （e.g., minority shareholders）. We argue that effective disclosure of RPTs can eliminate or at least reduce expropriation phenomena by letting corporate outsiders assess the fairness of the transactions and identify the underlying conflicts of interest. We consider a sample of large RPTs carried out by listed corporations in Italy, a country that has been affected by significant corporate scandals in recent years. In particular, we analyse the content of several compulsory informative documents, required by CONSOB （the Italian Securities and Exchange Commission）, concerning large RPTs. The focus of our content analysis is on the ＂warnings＂ sections of these documents that should convey clear and comprehensive information on potential risks and conflicts of interest. Our empirical results show that, while the ＂warnings＂ sections of the studied documents generally contain all the information required by existing rules, the depth of the information provided is often unlikely to be sufficient to communicate the implications of the RPTs. Thus, readers may not find the disclosed information adequate to evaluate the fairness of the transactions. Moreover, visual representations are rarely used in the informative documents. The use of such representations could allow companies to convey the structures and features of complex RPTs in a simpler and more direct way.     

Corporate Reporting： An Integrated Approach to Legitimacy Claims

With the increasing pressure on companies to engage in corporate social responsibility （CSR）, it is paramount for businesses and organizations to gain social legitimacy through building trust and credibility towards their stakeholders. Corporate reporting is a major tool whereby they can demonstrate their transparency and their will to contribute to society. However, reporting is often addressed as a narrow and restricted discipline based on specific areas of communication like financial and CSR communication, which potentially can lead to ＂disconnected reporting＂. The aim of this paper is to address reporting within a framework of corporate communication, introducing the concept of corporate reporting as ＂an issue of integration＂ and to discuss the opportunities and challenges of corporate reporting as a driver for gaining social legitimacy. Recent research in corporate reporting and the development of standards by distinguished reporting agencies （e.g., Klynveld Peat Marwick Goerdeler （KPMG）, A4S, PricewaterhouseCoopers （PwC）） seem to support this position, arguing that integrated reporting is ＂the way forward＂. Accordingly, the authors conclude that there is a need to include a broader range of aspects in the corporate reporting literature applying a strategic integrated approach by which corporate reporting may more explicitly help businesses and organizations gain social legitimacy towards their internal and external stakeholders.     

Good Corporate Governance （GCG） Mechanism and Audit Delay： An Empirical Study on Companies Listed on the Indonesia Stock Exchange （IDX） in the Period of 2009-2011

Audit delay is a delay in reporting audit to the Indonesia Stock Exchange （IDX） after the allotted time of 90 days after closing the book. Delay to publish audit report will affect the value of infromation, causing a bad sign for the company. As good corporate governance （GCG） is one way to solve the different interests, practices, and culture, companies implement GCG in an attempt to get more value. This study aims to measure the impact of corporate governance mechanisms on audit delay in companies listed on the IDX in the period of 2009-2011. Variables of GCG mechanism consist of institutional ownership, number of audit committee members, and the percentage of independent commissioners. Purposive sampling method is used in sample selection procedure. Samples comprise 42 companies listed on the IDX. The simultaneous test results show that all the variables have a significant influence on audit delay. By the partial test, number of audit committee members has significantly affected audit delay, while institutional ownership and independent commissioners have no significant effect on audit delay. This study is limited to use only three variables to study their influence on audit delay in the reseach period of only three years.