Purpose -This paper seeks to address the effect that principle-based corporate governance practic... more Purpose -This paper seeks to address the effect that principle-based corporate governance practices have on the financial performance of large publicly-listed companies. In 2004, the New Zealand Securities Commission (NZSC) promulgated nine high level principles and guidelines for all business entities with an aim of improving corporate governance practices and boosting investor confidence in the New Zealand capital market. This event provides a point for empirically testing companies' responses. Design/methodology/approach -Panel data for the NZX top 50 companies over the period 1999-2007 are analysed using ordinary least squares (OLS) and two stage least squares (2SLS) regression techniques to evaluate whether: those firms that were continuously compliant with the NZSC requirements perform better; and the firm performance post-NZSC recommendations is better than pre-NZSC recommendations. Tobin's Q, market-to-book (MB) and return on assets (ROA) metrics are used as dependent variables.. Findings -The findings indicate that large listed companies have universally adopted the Securities Commission recommendations, establishing subcommittees for audit and remuneration, and having a majority of non-executive/independent directors on the board which, on average, have seven members. There is support for the view that the NZSC recommendations have had positive influence on firm performance measured by Tobin's Q, MB and ROA. The results show that the presence of a remuneration committee has had a positive influence on firm performance. Research limitations/implications -This study provides empirical support for the corporate governance recommendations made by the NZSC in 2004, giving support to the principle-based corporate governance practices to be adopted in New Zealand. The sequential testing of each NZSC recommendation provides a comprehensive picture of performance outcomes which has not been achieved in prior research. The interdependency issues are of interest and the correlation between recommendations provides useful insights. Originality/value -This study offers insights for policy makers interested in adopting principle-based corporate governance practices within their country. Within New Zealand, public policy developments and stock exchange listing requirements/regulatory issues with associated compliance burdens are better informed as a consequence of the research.
We examine the impact of ownership concentration on firm performance using panel data for firms l... more We examine the impact of ownership concentration on firm performance using panel data for firms listed on the Budapest Stock Exchange, where ownership tends to be highly concentrated and frequently involves multiple blocks. Fixed-effects estimates imply that the size of the largest block increases profitability and efficiency strongly and monotonically, but the effects of total blockholdings are much smaller and statistically insignificant. Controlling for the size of the largest block, point estimates of the marginal effects of additional blocks are negative. The results suggest that the marginal costs of concentration may outweigh the benefits when the increased concentration involves "too many cooks".
International Journal of Cooperative Studies, 2013
Cooperatives have been a feature of New Zealand agricultural scene since late 19 th century. Alth... more Cooperatives have been a feature of New Zealand agricultural scene since late 19 th century. Although cooperatives did arise in a greater degree in the agricultural sector in New Zealand, evidence show that it has been not too different to that found in other jurisdictions. Using a case study methodology, this study analyses the history and development of cooperative business and explores the establishment and demise of Allied Farmers Limited in New Zealand. Using agency-theoretical perspective and hubris it is argued that Allied Finance Limited's expansion was of concern from the start and was most likely to cause financial crisis. The evidence supports the view that the managerial overconfidence was the key factors leading to the demise of Allied Farmers Company Limited.
financial performance in the context of a transitional economy characterised by an underdeveloped... more financial performance in the context of a transitional economy characterised by an underdeveloped corporate governance system. Using a sample of 120 publicly listed companies in Vietnam covering a 4-year period from 2008 to 2011, we examine this relationship in a dynamic modelling framework, which controls for potential sources of endogeneity. We find that board gender diversity appears to have an effect on firm performance. This finding remains robust when alternative proxies for gender diversity are employed and is consistent with the perspectives of agency theory and resource dependence theory. The number of female directors in the boardroom also matters, supporting the view that if female board representation affects firm outcomes, this effect is more pronounced when the number of female directors increases. It is observed, furthermore, that the marginal positive performance effect of board gender diversity ceases when the percentage of female directors reaches a breakpoint of about 20%. This finding suggests that there is perhaps a potential trade-off between the costs and benefits of board gender diversification. Our findings significantly contribute to the growing literature of non-US based studies, by providing robust empirical evidence from a transitional economy in East Asia.
In this study, a sample of 257 Singaporean domiciled non-financial listed companies is investigat... more In this study, a sample of 257 Singaporean domiciled non-financial listed companies is investigated using a system generalised method of moments (system GMM) estimator. This approach allows for controlling the potential sources of endogeneity inherent in the performance-governance relationship. Our findings strongly support the proposition that the relationship between corporate governance structures and firm performance is dynamic by nature. Moreover, our results show that the internal corporate governance structures do matter in Singapore, where the market for corporate control is relatively poor. This study is novel as it is the first to explore the corporate governance-firm performance nexus using a dynamic approach for the Singapore market. This study significantly contributes to a better understanding of international diversity on corporate governance by providing further empirical evidence from an emerging market characterised by the best corporate governance practices in the Asia region.
ABSTRACT Momentum returns remain a contentious topic and a substantial amount of research purport... more ABSTRACT Momentum returns remain a contentious topic and a substantial amount of research purports to support and negate this phenomenon of accepting and rejecting this anomaly. Fama, (1998, p 304) add that, "The short-term continuation of returns documented by Jegadeesh and Titman (1993) is also an open puzzle, but it is till rather new and further tests are in order." The two important extensions of momentum strategy in explaining and/or generating superior returns are industrial momentum and 52-week high momentum investing.52-week high momentum investing states that 52-week high price coupled with a stock's current price can explain a large portion of profits from momentum investing. So far this strategy is tested out-of-sample only in Australian Stock Market and a further investigation is needed in this area to attest the viability of this anomaly. This paper contributes to the existing literature by undertaking this investment strategy in a global context (54 countries). Additionally, the paper also addresses several important questions with regards to methodology, sample and other issues.
ABSTRACT This study examines the relationship between corporate governance and financial performa... more ABSTRACT This study examines the relationship between corporate governance and financial performance of Sri Lankan Microfinance Institutions (MFIs). The OLS regression, fixed effect and random effect models are used to analysis an unbalanced panel data comprising 300 firm-year observations over the period 2007 to 2012. We fine that financial performance of Sri Lankan MFIs improves when MFIs have female CEO, female chair, CEO/chairman duality, independent directors and client representation on the board rather than donor directors on the board. The financial performance may reduce with the higher number of female director representation. We also find no significant relation between international directors on the board, internal audit and firm performance of MFIs in Sri Lanka. This research provides insight for the policy-makers regarding corporate governance in Sri Lankan MFIs.
ABSTRACT The paper reports on an investigation of various techniques to optimise momentum returns... more ABSTRACT The paper reports on an investigation of various techniques to optimise momentum returns. Eight different processes are applied to share returns from five countries, using US dollars as the common currency. The aim is to determine whether one method is clearly superior to other algorithms in maximising the momentum returns. The Single Index model with adjusted beta is found to have the potential to increase returns for large-size stocks. The results are important from the perspectives of researchers and practitioners, showing how an anomaly can be further exploited by wisely allocating money to each stock of the portfolio.
... The Shanghai Composite Index represents the overall market performance for the Shanghai stock... more ... The Shanghai Composite Index represents the overall market performance for the Shanghai stock exchange and the ... Thus, the long-term returns of stock X listed at the end of sample period cannot be ... three-factor model is used in this study to check if monthly IPO returns can be ...
The paper reports an investigation of the returns obtained on a listed portfolio of entrepreneuri... more The paper reports an investigation of the returns obtained on a listed portfolio of entrepreneurial companies comparing these with a portfolio of listed small businesses and the stock market overall. The initial findings produce counter-intuitive results in that the returns on the portfolio of entrepreneurial companies appear to be less than those for other small companies and for the market
This study investigates supply-side investments in the tourism sector, analysing the return and r... more This study investigates supply-side investments in the tourism sector, analysing the return and risk relationship of investments in tourism across several countries. The performance of tourism sector companies listed on the stock exchange, for the top one dozen countries according to the World Economic Forum (WEF) tourism rankings, is investigated by region, across these countries and within each country by comparison to other sectors. Several metrics are used to compare the risk-adjusted returns, over a 15-year period ending March 2007 and sub-periods to check the persistence of performance over time. The results present a strikingly different ranking than those of the WEF. The implications for the flow of investment funds are of importance in a global capital market. Money will flow to those investments with the highest expected returns for a given risk level and this has consequential impacts for economic growth and employment in the tourism sector.
Journal of International Financial Markets, Institutions and Money, 2010
The performance of both the industrial and the 52-week high momentum strategies are compared to t... more The performance of both the industrial and the 52-week high momentum strategies are compared to the conventional strategy, using a large sample of stocks drawn from multiple countries covering a quarter of century to 2007. The sample of 51,879 stocks in 51 countries removes many criticisms, such as data mining, providing more generalisable finding and knowledge concerning the robustness and usefulness of return from momentum strategies.
The application of contrarian strategies in the Bombay Stock Exchange (BSE) are examined in this ... more The application of contrarian strategies in the Bombay Stock Exchange (BSE) are examined in this paper, shedding further light on competing explanations underlying this anomaly. Three specific issues are investigated using several models. First, can a trader book a profit by employing a contrarian strategy? The test portfolio earned a contrarian profit of 74.40 per cent above the market return.
ABSTRACT Purpose ‐ The analysis aims to explore how momentum return changes with alternative comp... more ABSTRACT Purpose ‐ The analysis aims to explore how momentum return changes with alternative computational methods and the extent to which the portfolio structure is important in the momentum context. Design/methodology/approach ‐ The focus reflected in the prior research emphasises the method used by Jegadeesh and Titman and various extensions to test whether momentum returns exist. This study uses alternative methods of buying previous Winners and short-selling previous Losers to determine if this significantly changes the returns. Findings ‐ The current study clarifies the impact of several contributory factors that impact upon estimated momentum returns. The large sample of cleaned data upon which this study is based provides a higher degree of confidence that the findings are sound and not just a statistical anomaly. Practical implications ‐ The research is important from a practitioner perspective as details of momentum return are presented for each country using different methods, providing information regarding the most profitable country in which to invest and whether the momentum return is sustainable under different formative approaches. Originality/value ‐ One of the important contributions of this study is a detailed empirical analysis, presenting results in a global context rather than on a single country basis.
Purpose -The purpose of this paper is to examine whether the registered charities in New Zealand ... more Purpose -The purpose of this paper is to examine whether the registered charities in New Zealand have adopted the principle-based corporate governance practices similar to those adopted by the publicly-listed companies and the effect corporate governance practices have on their financial performance measured by technical efficiency, allocative efficiency and quick ratio. The paper addresses four important questions: how registered charities in New Zealand are managed and controlled; whether the funds donated to registered charities are utilised effectively; the nature of the corporate governance practiced by registered charities in New Zealand; and the nature of compliance to the Charities Act 2005. Design/methodology/approach -Panel data for the registered charities over the period 2008-2010 are analysed using ordinary least squares (OLS) regression and Tobit model regression. Technical efficiency, allocative efficiency and quick ratio are used as the dependent variables. Findings -The findings indicate that there is no reporting requirement for the registered charities under the Charities Act 2005 to report detailed information regarding the board make-up, board committees, board meetings, etc. and therefore, registered charities have not reported such information. The results show also that board gender diversity is an important corporate governance mechanism to mitigate agency problem in charitable organisations in New Zealand. However, large board size and large donors have potential to increase agency costs in charitable organisations in New Zealand. Research limitations/implications -Caution should be exercised when interpreting and generalising the paper's results, as this study is a case study of registered charities in New Zealand and data comprised only large charities that have revenue over NZ$20 m. It should also be noted that there was a small sample size, which may have had a bearing on the results. Practical implications -This study offers insights for policy makers and practitioners interested in adopting similar corporate governance practices within their country. Social implications -Within New Zealand, issues relating to management and control of charitable organisations are better understood and as a consequence, development of sector-wise standards could be initiated. Originality/value -This research is novel as it investigates the nature of corporate governance practices relating to the registered charities in New Zealand. The availability of data provided by Charities Commission made this research possible.
Purpose -This paper seeks to address the effect that principle-based corporate governance practic... more Purpose -This paper seeks to address the effect that principle-based corporate governance practices have on the financial performance of large publicly-listed companies. In 2004, the New Zealand Securities Commission (NZSC) promulgated nine high level principles and guidelines for all business entities with an aim of improving corporate governance practices and boosting investor confidence in the New Zealand capital market. This event provides a point for empirically testing companies' responses. Design/methodology/approach -Panel data for the NZX top 50 companies over the period 1999-2007 are analysed using ordinary least squares (OLS) and two stage least squares (2SLS) regression techniques to evaluate whether: those firms that were continuously compliant with the NZSC requirements perform better; and the firm performance post-NZSC recommendations is better than pre-NZSC recommendations. Tobin's Q, market-to-book (MB) and return on assets (ROA) metrics are used as dependent variables.. Findings -The findings indicate that large listed companies have universally adopted the Securities Commission recommendations, establishing subcommittees for audit and remuneration, and having a majority of non-executive/independent directors on the board which, on average, have seven members. There is support for the view that the NZSC recommendations have had positive influence on firm performance measured by Tobin's Q, MB and ROA. The results show that the presence of a remuneration committee has had a positive influence on firm performance. Research limitations/implications -This study provides empirical support for the corporate governance recommendations made by the NZSC in 2004, giving support to the principle-based corporate governance practices to be adopted in New Zealand. The sequential testing of each NZSC recommendation provides a comprehensive picture of performance outcomes which has not been achieved in prior research. The interdependency issues are of interest and the correlation between recommendations provides useful insights. Originality/value -This study offers insights for policy makers interested in adopting principle-based corporate governance practices within their country. Within New Zealand, public policy developments and stock exchange listing requirements/regulatory issues with associated compliance burdens are better informed as a consequence of the research.
International Journal of Business Governance and Ethics, 2008
The purpose of this paper is to examine the effect of corporate governance practices of small cap... more The purpose of this paper is to examine the effect of corporate governance practices of small cap companies have had on their financial performances. Previous studies have mainly examined governance practices of larger corporations. This analysis focuses on the governance variables that have been highlighted by the New Zealand Securities Commission governance principles and guidelines and also on the governance variables that are supported in the literature as providing an appropriate structure for the firm in the environment in which it operates. The data for 71 small cap companies listed in New Zealand over a five-year period from 2001 to 2005 was analysed. Pooled data, OLS and 2SLS regression techniques were used and Tobin's Q, ROA and OPINC were used as the dependent variables. The evidence does support the hypothesis that the existence of board independence and audit committee has enhanced firm financial performance, as measured by Tobin's Q.
Purpose -This paper seeks to address the effect that principle-based corporate governance practic... more Purpose -This paper seeks to address the effect that principle-based corporate governance practices have on the financial performance of large publicly-listed companies. In 2004, the New Zealand Securities Commission (NZSC) promulgated nine high level principles and guidelines for all business entities with an aim of improving corporate governance practices and boosting investor confidence in the New Zealand capital market. This event provides a point for empirically testing companies' responses. Design/methodology/approach -Panel data for the NZX top 50 companies over the period 1999-2007 are analysed using ordinary least squares (OLS) and two stage least squares (2SLS) regression techniques to evaluate whether: those firms that were continuously compliant with the NZSC requirements perform better; and the firm performance post-NZSC recommendations is better than pre-NZSC recommendations. Tobin's Q, market-to-book (MB) and return on assets (ROA) metrics are used as dependent variables.. Findings -The findings indicate that large listed companies have universally adopted the Securities Commission recommendations, establishing subcommittees for audit and remuneration, and having a majority of non-executive/independent directors on the board which, on average, have seven members. There is support for the view that the NZSC recommendations have had positive influence on firm performance measured by Tobin's Q, MB and ROA. The results show that the presence of a remuneration committee has had a positive influence on firm performance. Research limitations/implications -This study provides empirical support for the corporate governance recommendations made by the NZSC in 2004, giving support to the principle-based corporate governance practices to be adopted in New Zealand. The sequential testing of each NZSC recommendation provides a comprehensive picture of performance outcomes which has not been achieved in prior research. The interdependency issues are of interest and the correlation between recommendations provides useful insights. Originality/value -This study offers insights for policy makers interested in adopting principle-based corporate governance practices within their country. Within New Zealand, public policy developments and stock exchange listing requirements/regulatory issues with associated compliance burdens are better informed as a consequence of the research.
We examine the impact of ownership concentration on firm performance using panel data for firms l... more We examine the impact of ownership concentration on firm performance using panel data for firms listed on the Budapest Stock Exchange, where ownership tends to be highly concentrated and frequently involves multiple blocks. Fixed-effects estimates imply that the size of the largest block increases profitability and efficiency strongly and monotonically, but the effects of total blockholdings are much smaller and statistically insignificant. Controlling for the size of the largest block, point estimates of the marginal effects of additional blocks are negative. The results suggest that the marginal costs of concentration may outweigh the benefits when the increased concentration involves "too many cooks".
International Journal of Cooperative Studies, 2013
Cooperatives have been a feature of New Zealand agricultural scene since late 19 th century. Alth... more Cooperatives have been a feature of New Zealand agricultural scene since late 19 th century. Although cooperatives did arise in a greater degree in the agricultural sector in New Zealand, evidence show that it has been not too different to that found in other jurisdictions. Using a case study methodology, this study analyses the history and development of cooperative business and explores the establishment and demise of Allied Farmers Limited in New Zealand. Using agency-theoretical perspective and hubris it is argued that Allied Finance Limited's expansion was of concern from the start and was most likely to cause financial crisis. The evidence supports the view that the managerial overconfidence was the key factors leading to the demise of Allied Farmers Company Limited.
financial performance in the context of a transitional economy characterised by an underdeveloped... more financial performance in the context of a transitional economy characterised by an underdeveloped corporate governance system. Using a sample of 120 publicly listed companies in Vietnam covering a 4-year period from 2008 to 2011, we examine this relationship in a dynamic modelling framework, which controls for potential sources of endogeneity. We find that board gender diversity appears to have an effect on firm performance. This finding remains robust when alternative proxies for gender diversity are employed and is consistent with the perspectives of agency theory and resource dependence theory. The number of female directors in the boardroom also matters, supporting the view that if female board representation affects firm outcomes, this effect is more pronounced when the number of female directors increases. It is observed, furthermore, that the marginal positive performance effect of board gender diversity ceases when the percentage of female directors reaches a breakpoint of about 20%. This finding suggests that there is perhaps a potential trade-off between the costs and benefits of board gender diversification. Our findings significantly contribute to the growing literature of non-US based studies, by providing robust empirical evidence from a transitional economy in East Asia.
In this study, a sample of 257 Singaporean domiciled non-financial listed companies is investigat... more In this study, a sample of 257 Singaporean domiciled non-financial listed companies is investigated using a system generalised method of moments (system GMM) estimator. This approach allows for controlling the potential sources of endogeneity inherent in the performance-governance relationship. Our findings strongly support the proposition that the relationship between corporate governance structures and firm performance is dynamic by nature. Moreover, our results show that the internal corporate governance structures do matter in Singapore, where the market for corporate control is relatively poor. This study is novel as it is the first to explore the corporate governance-firm performance nexus using a dynamic approach for the Singapore market. This study significantly contributes to a better understanding of international diversity on corporate governance by providing further empirical evidence from an emerging market characterised by the best corporate governance practices in the Asia region.
ABSTRACT Momentum returns remain a contentious topic and a substantial amount of research purport... more ABSTRACT Momentum returns remain a contentious topic and a substantial amount of research purports to support and negate this phenomenon of accepting and rejecting this anomaly. Fama, (1998, p 304) add that, "The short-term continuation of returns documented by Jegadeesh and Titman (1993) is also an open puzzle, but it is till rather new and further tests are in order." The two important extensions of momentum strategy in explaining and/or generating superior returns are industrial momentum and 52-week high momentum investing.52-week high momentum investing states that 52-week high price coupled with a stock's current price can explain a large portion of profits from momentum investing. So far this strategy is tested out-of-sample only in Australian Stock Market and a further investigation is needed in this area to attest the viability of this anomaly. This paper contributes to the existing literature by undertaking this investment strategy in a global context (54 countries). Additionally, the paper also addresses several important questions with regards to methodology, sample and other issues.
ABSTRACT This study examines the relationship between corporate governance and financial performa... more ABSTRACT This study examines the relationship between corporate governance and financial performance of Sri Lankan Microfinance Institutions (MFIs). The OLS regression, fixed effect and random effect models are used to analysis an unbalanced panel data comprising 300 firm-year observations over the period 2007 to 2012. We fine that financial performance of Sri Lankan MFIs improves when MFIs have female CEO, female chair, CEO/chairman duality, independent directors and client representation on the board rather than donor directors on the board. The financial performance may reduce with the higher number of female director representation. We also find no significant relation between international directors on the board, internal audit and firm performance of MFIs in Sri Lanka. This research provides insight for the policy-makers regarding corporate governance in Sri Lankan MFIs.
ABSTRACT The paper reports on an investigation of various techniques to optimise momentum returns... more ABSTRACT The paper reports on an investigation of various techniques to optimise momentum returns. Eight different processes are applied to share returns from five countries, using US dollars as the common currency. The aim is to determine whether one method is clearly superior to other algorithms in maximising the momentum returns. The Single Index model with adjusted beta is found to have the potential to increase returns for large-size stocks. The results are important from the perspectives of researchers and practitioners, showing how an anomaly can be further exploited by wisely allocating money to each stock of the portfolio.
... The Shanghai Composite Index represents the overall market performance for the Shanghai stock... more ... The Shanghai Composite Index represents the overall market performance for the Shanghai stock exchange and the ... Thus, the long-term returns of stock X listed at the end of sample period cannot be ... three-factor model is used in this study to check if monthly IPO returns can be ...
The paper reports an investigation of the returns obtained on a listed portfolio of entrepreneuri... more The paper reports an investigation of the returns obtained on a listed portfolio of entrepreneurial companies comparing these with a portfolio of listed small businesses and the stock market overall. The initial findings produce counter-intuitive results in that the returns on the portfolio of entrepreneurial companies appear to be less than those for other small companies and for the market
This study investigates supply-side investments in the tourism sector, analysing the return and r... more This study investigates supply-side investments in the tourism sector, analysing the return and risk relationship of investments in tourism across several countries. The performance of tourism sector companies listed on the stock exchange, for the top one dozen countries according to the World Economic Forum (WEF) tourism rankings, is investigated by region, across these countries and within each country by comparison to other sectors. Several metrics are used to compare the risk-adjusted returns, over a 15-year period ending March 2007 and sub-periods to check the persistence of performance over time. The results present a strikingly different ranking than those of the WEF. The implications for the flow of investment funds are of importance in a global capital market. Money will flow to those investments with the highest expected returns for a given risk level and this has consequential impacts for economic growth and employment in the tourism sector.
Journal of International Financial Markets, Institutions and Money, 2010
The performance of both the industrial and the 52-week high momentum strategies are compared to t... more The performance of both the industrial and the 52-week high momentum strategies are compared to the conventional strategy, using a large sample of stocks drawn from multiple countries covering a quarter of century to 2007. The sample of 51,879 stocks in 51 countries removes many criticisms, such as data mining, providing more generalisable finding and knowledge concerning the robustness and usefulness of return from momentum strategies.
The application of contrarian strategies in the Bombay Stock Exchange (BSE) are examined in this ... more The application of contrarian strategies in the Bombay Stock Exchange (BSE) are examined in this paper, shedding further light on competing explanations underlying this anomaly. Three specific issues are investigated using several models. First, can a trader book a profit by employing a contrarian strategy? The test portfolio earned a contrarian profit of 74.40 per cent above the market return.
ABSTRACT Purpose ‐ The analysis aims to explore how momentum return changes with alternative comp... more ABSTRACT Purpose ‐ The analysis aims to explore how momentum return changes with alternative computational methods and the extent to which the portfolio structure is important in the momentum context. Design/methodology/approach ‐ The focus reflected in the prior research emphasises the method used by Jegadeesh and Titman and various extensions to test whether momentum returns exist. This study uses alternative methods of buying previous Winners and short-selling previous Losers to determine if this significantly changes the returns. Findings ‐ The current study clarifies the impact of several contributory factors that impact upon estimated momentum returns. The large sample of cleaned data upon which this study is based provides a higher degree of confidence that the findings are sound and not just a statistical anomaly. Practical implications ‐ The research is important from a practitioner perspective as details of momentum return are presented for each country using different methods, providing information regarding the most profitable country in which to invest and whether the momentum return is sustainable under different formative approaches. Originality/value ‐ One of the important contributions of this study is a detailed empirical analysis, presenting results in a global context rather than on a single country basis.
Purpose -The purpose of this paper is to examine whether the registered charities in New Zealand ... more Purpose -The purpose of this paper is to examine whether the registered charities in New Zealand have adopted the principle-based corporate governance practices similar to those adopted by the publicly-listed companies and the effect corporate governance practices have on their financial performance measured by technical efficiency, allocative efficiency and quick ratio. The paper addresses four important questions: how registered charities in New Zealand are managed and controlled; whether the funds donated to registered charities are utilised effectively; the nature of the corporate governance practiced by registered charities in New Zealand; and the nature of compliance to the Charities Act 2005. Design/methodology/approach -Panel data for the registered charities over the period 2008-2010 are analysed using ordinary least squares (OLS) regression and Tobit model regression. Technical efficiency, allocative efficiency and quick ratio are used as the dependent variables. Findings -The findings indicate that there is no reporting requirement for the registered charities under the Charities Act 2005 to report detailed information regarding the board make-up, board committees, board meetings, etc. and therefore, registered charities have not reported such information. The results show also that board gender diversity is an important corporate governance mechanism to mitigate agency problem in charitable organisations in New Zealand. However, large board size and large donors have potential to increase agency costs in charitable organisations in New Zealand. Research limitations/implications -Caution should be exercised when interpreting and generalising the paper's results, as this study is a case study of registered charities in New Zealand and data comprised only large charities that have revenue over NZ$20 m. It should also be noted that there was a small sample size, which may have had a bearing on the results. Practical implications -This study offers insights for policy makers and practitioners interested in adopting similar corporate governance practices within their country. Social implications -Within New Zealand, issues relating to management and control of charitable organisations are better understood and as a consequence, development of sector-wise standards could be initiated. Originality/value -This research is novel as it investigates the nature of corporate governance practices relating to the registered charities in New Zealand. The availability of data provided by Charities Commission made this research possible.
Purpose -This paper seeks to address the effect that principle-based corporate governance practic... more Purpose -This paper seeks to address the effect that principle-based corporate governance practices have on the financial performance of large publicly-listed companies. In 2004, the New Zealand Securities Commission (NZSC) promulgated nine high level principles and guidelines for all business entities with an aim of improving corporate governance practices and boosting investor confidence in the New Zealand capital market. This event provides a point for empirically testing companies' responses. Design/methodology/approach -Panel data for the NZX top 50 companies over the period 1999-2007 are analysed using ordinary least squares (OLS) and two stage least squares (2SLS) regression techniques to evaluate whether: those firms that were continuously compliant with the NZSC requirements perform better; and the firm performance post-NZSC recommendations is better than pre-NZSC recommendations. Tobin's Q, market-to-book (MB) and return on assets (ROA) metrics are used as dependent variables.. Findings -The findings indicate that large listed companies have universally adopted the Securities Commission recommendations, establishing subcommittees for audit and remuneration, and having a majority of non-executive/independent directors on the board which, on average, have seven members. There is support for the view that the NZSC recommendations have had positive influence on firm performance measured by Tobin's Q, MB and ROA. The results show that the presence of a remuneration committee has had a positive influence on firm performance. Research limitations/implications -This study provides empirical support for the corporate governance recommendations made by the NZSC in 2004, giving support to the principle-based corporate governance practices to be adopted in New Zealand. The sequential testing of each NZSC recommendation provides a comprehensive picture of performance outcomes which has not been achieved in prior research. The interdependency issues are of interest and the correlation between recommendations provides useful insights. Originality/value -This study offers insights for policy makers interested in adopting principle-based corporate governance practices within their country. Within New Zealand, public policy developments and stock exchange listing requirements/regulatory issues with associated compliance burdens are better informed as a consequence of the research.
International Journal of Business Governance and Ethics, 2008
The purpose of this paper is to examine the effect of corporate governance practices of small cap... more The purpose of this paper is to examine the effect of corporate governance practices of small cap companies have had on their financial performances. Previous studies have mainly examined governance practices of larger corporations. This analysis focuses on the governance variables that have been highlighted by the New Zealand Securities Commission governance principles and guidelines and also on the governance variables that are supported in the literature as providing an appropriate structure for the firm in the environment in which it operates. The data for 71 small cap companies listed in New Zealand over a five-year period from 2001 to 2005 was analysed. Pooled data, OLS and 2SLS regression techniques were used and Tobin's Q, ROA and OPINC were used as the dependent variables. The evidence does support the hypothesis that the existence of board independence and audit committee has enhanced firm financial performance, as measured by Tobin's Q.
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Papers by Stuart Locke