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Research regards related party transactions (RPTs) and control-ownership divergence (wedge) as expropriation mechanisms manifesting severe agency conflict in emerging markets. Since corporate governance greatly influences firms' investments and strategic behavior, this study examines how different RPTs and the wedge affect cross-border acquisition (CBA) size and returns. In line with agency theory, opportunistic RPTs like loans/guarantees reduce CBA returns. However, operating RPTs are positively related to returns as the market seems to link these RPTs with benefits to firms. The CBA performance of wedge firms varies with RPT types. While loans/guarantees by wedge firms reduce returns due to combined tunneling incentives, operating RPTs impact returns positively, reflecting more economic benefits in wedge firms. The wedge or RPTs are also positively related to CBA size. But increased tunneling incentives restrain wedge firms that give loans/guarantees from large CBAs. Finally, family firms or large group affiliates that provide loans/guarantees or sustain the wedge reduce returns yet make larger CBAs. Overall, agency costs of expropriation mechanisms depend on RPT types and receive further impetus in family firms or group affiliates with extensive intra-group linkages. [ABSTRACT FROM AUTHOR]

This study explores the association between board composition and the financial performance of the companies listed on the BSE-500 Index. The authors also analyse whether financial performance mediates the relation between board composition and executive compensation or not. The authors utilised a sample of 319 non-financial firms from the BSE-500 Index from 2010–11 to 2019–20. This time period was purposely chosen to eliminate the consequences of the 2007–2008 global financial crisis to reduce any uncertainty that may influence the company's financial performance. OLS regression techniques with firm fixed and time effects have been incorporated to test the hypotheses. To address the issues of reverse causation and endogeneity, regression models were employed with one-year lagged values for all predicted variables. In addition to OLS, the GMM technique is also used to validate the findings of the study. The findings show that financial performance fully mediates the link between board composition variables, except gender diversity, and executive compensation. These results suggest that a successful corporate governance system relies on the board's composition and how well it supervises its executives. Thus, the board may devise a fair compensation structure which is linked to financial performance to reduce managerial opportunism. This could help in aligning the interest of managers and shareholders, therefore lowering agency costs and boosting financial performance. Although executives are held accountable for the organisation's growth, sometimes they may act in their interest instead of the shareholders. Therefore, this study contributes to the literature on executive compensation and provides insights into reducing the opportunistic behaviour of managers through compensation design. In the pre-existing literature, limited studies are available that examine the direct or indirect effect of financial performance on the association between board composition and executive compensation among Indian companies. This study adds evidence to the literature on board composition of companies, financial performance, and executive compensation. This study is helpful for executives of the company and regulatory authorities while making decisions regarding board composition and executive compensation. This study encourages future researchers to conduct longitudinal studies with a larger sample and a longer time horizon. [ABSTRACT FROM AUTHOR]

The paper has two main objectives: one, to investigate if inter-bank horizontal dispersion in the remuneration of executives has any significant influence on bank performance. And two, to explore various situations with respect to board quality, agency cost, and government ownership under which the dispersion-performance nexus is moderated. The paper employs a two-step system GMM of (Blundell and Bond, Journal of Econometrics 8:115–143, 1998) to account for the possible endogeneity issues, and Driscoll–Kraay's non-parametric matrix estimator to account for cross-sectional dependence. The findings show that horizontal pay dispersion has a negative influence on bank performance. It produces evidence in favor of the "equity fairness theory" that higher pay dispersion would incentivize them to engage in excessive risk-taking for maximizing their personal interests, which emerges to be detrimental to the bank's performance. Further evidence of moderating effect shows that in the presence of effective board oversight, pay dispersion exerts a favorable influence on the performance of Indian banking firms. The research has significant policy ramifications for regulators to apprehend the undesirable implications of pay dispersion on bank performance and initiate quick action to scrutinize the governance practices of higher-paying banks. [ABSTRACT FROM AUTHOR]

The purpose of this study is to investigate the impact of capital structure on the performance of firms listed on the Saudi Stock Exchange (Tadawul). The study employs a panel of 350 firm-year observations for 70 Saudi non-financial listed firms over the period 2016 to 2020. A generalised method of moments (GMM) estimation is employed to estimate models to enable hypothesis testing, thereby addressing any autocorrelation, heteroscedasticity and endogeneity issues. The results indicate that short-term debt, long-term debt, total debt and debt-to-equity ratios all have a significant negative impact on firm operational performance (return on assets), while long-term debt, total debt and debt to equity have such an impact on firm financial performance (return on equity) and market performance (in terms of Tobin's Q). This suggests that firm agency issues that lead to a high-debt policy may result in diminished firm performance. The results also show that increases in sales growth, the degree of insider ownership, and firm size and age in general positively impact firm performance, while asset tangibility and liquidity have a more ambiguous impact. The findings of the study are limited to listed non-financial Saudi firms over the period 2016–2020; the key results may be relatable to other developing country settings. Future research may be extended to investigate the effect of capital structure on firm performance on the wider Tadawul and to other capital structure and performance measures. The findings have practical implications for firm managers, which will help them to identify the firm-specific factors affecting the capital structure and choose the values that enhance optimal capital structure. This study result suggests that as debt financing can have a significant adverse effect on firm profitability, managers should moderate leverage in order to maximise shareholder wealth. Indeed, as debt is more costly than equity, managers should keep debt levels lower and instead focus financing at the margin on internal sources such as retained earnings and new equity, using external funding only as a last resort. The study results should provide policymakers with a better understanding of the relationship between corporate capital structures and performance, thereby underpinning future policy formulation. [ABSTRACT FROM AUTHOR]

This research foremost intention is to investigate the corporate governance structure effect on the firm's performance of the Indian-listed companies. The study was based on a six-year financial figure from FY 2014–2015 to FY 2019–2020 of Indian-listed companies on the Bombay Stock Exchange (BSE). The study applied the panel data statics model such as pooled OLS, fixed effect and random effect model, Hausman test and the Sys-GMM models for testing the study hypotheses. The study findings indicate that higher board size has a positive significant impact with the ROA, Tobin's Q on the firm's performance, and this helps in strengthen the decision-making process. Besides, the study results show statistically insignificant correlation among the ROA, EPS and NPM with the board independence. The results also reflected the positively correlation among the board meetings and the performance indicators of Tobin's Q, and these scenarios lead to that enhancement of corporate governance practices. Besides, the results negatively revealed correlation amongst the ROE, NPM and corporate governance indicators of CEO duality. The results of the study suggested that companies likely implement proper corporate governance practices leading to sophisticated effectiveness in firm's performance and minimize agency cost. The study attempted corporate governance issues with the several different measures and firm's variables other than using a single-measure context. Additionally, various model descriptions and statistical techniques are applied for analyzing the corporate governance structure and firm-related performance. [ABSTRACT FROM AUTHOR]

This article investigates the impact on share prices when news released on the specialized media indicates that the interests of controlling and minority shareholders groups diverge. Methodologically, we analyze 24 announcements of conflicts between shareholder groups in Brazil using two event study methodologies. We find strong support for our hypothesis that such news constitutes a proxy for relevant agency costs taking place, leading to a higher perception of risk and reduced share price. To our knowledge, this is the first article to estimate the impact of specific agency costs between controlling and minority shareholders in an environment characterized by concentrated ownership structures. The article is relevant for all capital markets' investors, as well as for analysts and other capital markets' agents. For policy makers and practitioners, our results provide evidence on the potential corporate value loss owing to conflicts between shareholders groups. As a result, they reinforce the argument for the adoption of good corporate governance practices, in order to avoid corporate value destruction resulting from problems between different shareholding groups. The main author is a professor at the School of Economics, Management and Accounting of University of São Paulo (FEA/USP) in Corporate Governance courses at both graduate and undergraduate level. In addition, he is Executive Coordinator of the Center for Corporate Governance Research of Fipecafi (CEG – www.ceg.org.br), Vice-President of the Brazilian Society of Finance (www.sbfin.org.br) and Senior Researcher of the Brazilian Institute of Corporate Governance (IBGC – www.ibgc.org.br). He is author of several books and articles on corporate governance, and writes a monthly column on corporate governance issues for Capital Aberto magazine, one of the most prominent capital markets' magazines in Brazil, making him well known among the corporate governance community in Brazil and Latin America. All persons involved with capital markets, media and policy makers should take note of these results, as most have corporate environments characterized by controlling shareholders, and their relationship with minority shareholders can be a potential source of relevant value destruction. [ABSTRACT FROM AUTHOR]