全部 标题 作者
关键词 摘要

OALib Journal期刊
ISSN: 2333-9721
费用:99美元

查看量下载量

Boards of Directors’ Characteristics and Firm Value: A Comparative Study between Egypt and USA

DOI: 10.4236/oalib.1105323, PP. 1-33

Subject Areas: Entrepreneurship, Corporate Governance, Accounting

Keywords: Corporate Governance, Board of Directors’ Characteristics, CEO Duality, Board Independence, Board Size, Board Meetings, Gender Diversity, Firm Value

Full-Text   Cite this paper   Add to My Lib

Abstract

Purpose This research aims to compare the effect of board of directors’ characteristics on the firm’s value in Egypt as an emerging country and USA as a developed country. Five characteristics have been exposed from the literature review that may influence the enhancement of a firm’s value. In corporate governance, these characteristics are CEO duality, board independence, board size, board meetings and gender diversity. Design The model is developed and 84 Egyptian firms listed on the Egyptian stock exchange and 27 American firms listed on The Dow Jones Industrial Average (DJIA) are utilized in this research for testing this model. The research covers a six-year period (2012-2017). Five main hypotheses and ten sub-hypotheses were derived from the model. GLS regression is used to test these hypotheses. Findings The results of this research revealed that board of directors’ characteristics affects firm value almost in the same way in both Egypt and the USA. The results revealed that board independence, board meetings and gender diversity are positively and significantly related to firm value in both countries. Furthermore, it displayed that board size affected firm value in both the Egyptian and American contexts negatively and significantly. Finally, the results showed that the CEO duality has a positive effect on firm value in the Egyptian setting while it has a negative effect on the firm value in the American setting. This research contributes to the literature on the subject of how corporate governance enhances a firm’s value. Participants in the stock market would benefit from the results when assessing the board of directors’ roles in enhancing the firm’s value. Regulators will be able to use the results of this research to recognize the critical characteristics of corporate governance and to assess the governance practices of the board of directors.

Cite this paper

Salem, W. F. , Metawe, S. A. , Youssef, A. A. and Mohamed, M. B. (2019). Boards of Directors’ Characteristics and Firm Value: A Comparative Study between Egypt and USA. Open Access Library Journal, 6, e5323. doi: http://dx.doi.org/10.4236/oalib.1105323.

References

[1]  Loukas, J.S. (2004) Corporate Governance in Greece: Developments and Policy Impli-cations. Center of Financial Studies, Department of Economics, University of Athens, Athens.
[2]  Li, T. and Zaiats, N. (2018) Corporate Governance and Firm Value at Dual Class Firm. Review of Financial Economics, 36, 47-71.
https://doi.org/10.1016/j.rfe.2017.07.001
[3]  Nguyen, H., Rahman, N., Tong, A. and Zhao, R. (2015) Board Size and Firm Value: Evidence from Australia. Journal of Management and Governance, 20.
https://doi.org/10.1007/s10997-015-9324-2
[4]  Rakesh, K.M. and Sheeba, K. (2018) Effect of Board Characteristics on Firm Value: Evidence from India. South Asian Journal of Business Studies, 7, 41-72.
[5]  Abdullah, S.N., Ismail, K.N. and Na-chum, L. (2016) Does Having Women on Boards Create Value? The Impact of Societal Perceptions and Corporate Governance in Emerging Markets. Strategic Management Journal, 37, 466-476.
https://doi.org/10.1002/smj.2352
[6]  Dike?, A., Kane, V. and ?apar, N. (2019) Cross-Country and Cross-Sector CSR Variations: A Comparative Analysis of CSR Reporting in the U.S., South Korea, and Turkey. Corporate Social Responsibility: Concepts, Methodologies, Tools, and Applications, 3, 28.
https://doi.org/10.4018/978-1-5225-6192-7.ch078
https://www.igi-global.com/chapter/cross-country-
and-cross-sector-csr-variations/207028
[7]  Rubino, F.E., Tenuta, P. and Cambrea, D.R. (2016) Board Characteristics Effects on Performance in Family and Non-Family Business: A Multi-Theoretical Approach. Journal of Management and Governance, 21, 623-658.
[8]  Dal Vesco, D.G. and Beuren, I.M. (2016) Do the Board of Directors Composition and the Board Interlocking Influence on Performance? Brazilian Administration Review, 13, e160007.
[9]  Amer, M. (2016) Measuring the Effect of the Board of Directors and Audit Committee Characteristics on Firm Financial Performance in Egypt. Thesis, Cardiff Metropolitan University, Cardiff.
[10]  Nashlaji, S.M. and Ghanadi, A.A. (2016) The Effect of Characteristics of Board of Directors on Financial Performance of Firms in Tehran Stock. International Journal of Humanities and Cultural Studies, Special May Issue, 1642-1657.
[11]  Mutunga, M.J. (2015) The Effects of Board Profile on Financial Performance of Firms Listed at the Nairobi Securities Exchange. PhD Thesis, University of Nairobi, Nairobi.
[12]  Anderson, R.C. and Reeb, D.M. (2004) Board Composition: Balancing Family Influence in Sand P 500 Firms. Administrative Science Quarterly, 49, 209-237.
[13]  San Martin-Reyna, J.M. and Duran-Encalada, J.A. (2012) The Relationship among Family Business, Corporate Governance and Firm Performance: Evidence from the Mexican Stock Exchange. Journal of Family Business Strategy, 3, 106-117.
https://doi.org/10.1016/j.jfbs.2012.03.001
[14]  Adams, R.B. and Ferreira, D. (2009) Women in the Boardroom and Their Impact on Governance and Performance. Journal of Financial Economics, 94, 291-309.
https://doi.org/10.1016/j.jfineco.2008.10.007
[15]  De Andres, P., Azofra, V. and Lopez, F. (2005) Corporate Boards in OECD Countries: Size, Composition, Func-tioning and Effectiveness. Corporate Governance: An International Review, 13, 197-210.
[16]  Samaha, K. (2010) Do Board Independence and Audit Committees Motivate Disclosure on Different Corporate Governance Information Categories in the Annual Reports in Developing Countries? International Research Journal of Finance and Economics, 57, 206-225.
[17]  Shehata, N. and Dahawy, K. (2013) Review of the Implementation Status of Corporate Governance Disclosures: Egypt. United Nations Conference on Trade and Development.
[18]  Iren, P. (2016) Gender Diversity of Boardrooms and Firm Financial Performance. Risk Governance and Control: Financial Markets and Institutions, 6, 30-35.
[19]  Solomon, J. and Solomon, A. (2004) Corporate Governance and Accountability. John Wiley, New York.
[20]  Rezaee, Z. (2009) Corporate Governance and Ethics. John Wiley and Sons, Hobo-ken.
[21]  Rahman, N. (2008) An Investigation of the Association between Corporate Governance and Environmental Reporting in Malaysia. Asian Journal of Business and Accounting, 1, 639-647.
[22]  OECD (2004) Principles of Corporate Governance. Organization for Economic Cooperation and Development, Paris.
[23]  Egyptian Institute of Directors (EIOD) (2016) Egyptian Code of Corporate Governance. http://www.eiod.org
[24]  Soliman, M. (2013) Corporate Governance and Earning Management: Evidences from Emerging Markets. LAP Lambert Academic Publishing.
[25]  Egyptian Stock Exchange (2014) Stock Market Annual Report.
http://www.egx.com.eg
[26]  Smith, A. (1776) The Wealth of Nations. Book 4, Chapter 2, 401-402.
[27]  Jensen, M.C. and Meckling, W.H. (1976) Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3, 305-360. https://doi.org/10.1016/0304-405X(76)90026-X
[28]  Fama, E.F. and Jensen, M.C. (1983) Separation of Ownership and Control. The Journal of Low and Economics, 26, 301-325.
[29]  Daily, C.M., Dalton, D.R. and Canella, A.A. (2003) Corporate Governance: Decades of Dialogue and Data. Academy of Management Review, 28, 371-382.
https://doi.org/10.5465/amr.2003.10196703
[30]  Coleman, A., Adjasi, C. and Abor, J. (2007) Corporate Governance and Firm Performance: Evidence from Ghanaian Listed Companies. Corporate Ownership and Control, 4, 123-132.
[31]  Pfeffer, J. and Salancik, G.R. (1978) The External Control of Organiza-tions: A Resource Dependence Approach. Harper and Row Publishers, New York.
[32]  Hillman, A.J., Canella, A.A. and Paetzold, R.L. (2000) The Resource De-pendency Role of Corporate Directors: Strategic Adaptation of Board Composition in Response to Environmental Change. Journal of Management Studies, 37, 235-255.
https://doi.org/10.1111/1467-6486.00179
[33]  Muth, M. and Donaldson, L. (1998) Stewardship Theory and Board Structure: A Contingency Approach. Corporate Governance: An International Review, 6, 5-28.
[34]  Freeman, R., Wicks, A. and Parmar, B. (2004) Stakeholder Theory and The—Corporate Objective Revisited. Organization Science, 15, 364-369.
https://doi.org/10.1287/orsc.1040.0066
[35]  Mitchell, R.K., Agle, B.R. and Wood, D.J. (1997) Toward a Theory of Stakeholder Identification and Salience: Defin-ing the Principle of Who and What Really Counts. Academy of Management Review, 22, 853-886.
https://doi.org/10.5465/amr.1997.9711022105
[36]  Jenwittayroje, N. and Jiraporn, P. (2017) Do Independent Directors Improve Firm Value? Evidence from the Great Recession. International Review of Finance, 19, 207-222.
https://onlinelibrary.wiley.com/doi/epdf/10.1111/irfi.12163
https://doi.org/10.1111/irfi.12163
[37]  Asante-Darko, D., Bonsu, B.A., Famiyeh, S., Kwarteng, A. and YayraGoka, Y. (2018) Governance Structures, Cash Holdings and Firm Value on the Ghana Stock Exchange, Corporate Governance. The International Journal of Business in Society, 18, 671-685. https://doi.org/10.1108/CG-07-2017-0148
[38]  Yermack, D. (1996) Higher Market Valuation of Companies with a Small Board of Directors. Journal of Financial Economics, 40, 185-211.
https://doi.org/10.1016/0304-405X(95)00844-5
[39]  Coles, J.L., Daniel, N.D. and Naveen, L. (2008) Boards: Does One Size Fit All? Journal of Financial Economics, 87, 329-356.
https://doi.org/10.1016/j.jfineco.2006.08.008
[40]  Vafeas, N. (1999) Board Meeting Frequency and Firm Performance. Journal of Financial Economics, 53, 113-142. https://doi.org/10.1016/S0304-405X(99)00018-5
[41]  Carcello, J., Her-manson, D., Neal, T. and Riley, J. (2002) Board Characteristics and Audit Fees. Con-temporary Accounting Research, 19, 365-384.
https://doi.org/10.1506/CHWK-GMQ0-MLKE-K03V
[42]  Vafeas, N. (2005) Audit Committees, Boards and the Quality of Reported Earnings. Contemporary Ac-counting Research, 22, 1093-1122.
https://doi.org/10.1506/1QYN-2RFQ-FKYX-XP84
[43]  Levi, M., Li, K. and Zhang, F. (2014) Director Gender and Mergers and Acquisitions. Journal of Corporate Finance, 28, 185-200.
https://doi.org/10.1016/j.jcorpfin.2013.11.005
[44]  Rhode, D.L. and Packel, A.K. (2014) Diversity on Corporate Boards: How Much Difference Does Difference Make? Delaware Journal of Corporate Law, 39, 377-426.
[45]  Terjesen, S., Couto, E.B. and Francisco, P.M. (2016) Does the Presence of Independent and Female Directors’ Impact Firm Performance? A Multi-Country Study of Board Diversity. Journal of Management and Governance, 20, 447-483.
https://doi.org/10.1007/s10997-014-9307-8
[46]  Hassan, R. and Marimuthu, M. (2016) Corporate Governance, Board Diversity, and Firm Value: Examining Large Companies Using Panel Data Approach. Economics Bulletin, 36, 1737-1750.
[47]  O’Connor, T. (2012) Investability, Corporate Governance and Firm Value. Research in International Business and Finance, 26, 120-136.
https://doi.org/10.1016/j.ribaf.2011.09.001
[48]  Soliman, M.M. and Ragab, A.A. (2013) Board of Director’s Attributes and Earning Management: Evidence from Egypt. Proceedings of 6th International Business and Social Sciences Research Con-ference, Dubai, 3-4 January 2013, 1-20.
[49]  Cheng, S. (2008) Board Size and the Variability of Corporate Performance. Journal of Financial Economics, 87, 157-176. https://doi.org/10.1016/j.jfineco.2006.10.006
[50]  Andres, C. (2008) Large Shareholders and Firm Performance: An Empirical Examination of Founding Family Ownership. Journal of Corporate Finance, 14, 431-445. https://doi.org/10.1016/j.jcorpfin.2008.05.003
[51]  Lee, J. (2009) Does Size Matter in Firm Performance? Evidence from US Public Firms. International Journal of the Economics of Business, 16, 189-203.
https://doi.org/10.1080/13571510902917400
[52]  Dittmar, A. and Mahrt-Smith, J. (2007) Corporate Governance and the Value of Cash Holdings. Journal of Financial Economics, 83, 599-634.
https://doi.org/10.1016/j.jfineco.2005.12.006
[53]  Ntim, C.G. (2016) Corpo-rate Governance, Corporate Health Accounting, and Firm Value: The Case of HIV/AIDS Disclosure in Sub-Saharan Africa. The International Journal of Accounting, 51, 155-216.
[54]  Chen, L. and Chen, S. (2011) The Influence of Profitability on Firm Value with Capital Structure as the Mediator and Firm Size and Industry as Moderators. Investment Management and Financial Innovations, 8, 121-129.
[55]  Alsaeed, K. (2006) The Association between Firm-Specific Characteristics and Disclosure: The Case of Saudi Arabia. Journal of American Academy of Business, 7, 310-321.
[56]  Hutcheson, G.D. and Sofroniou, N. (1999) The Multivariate Social Scientist: Introductory Statistics Using Generalized Linear Models. Sage, Thousand Oaks.
[57]  Gaur, A.S. and Gaur, S.S. (2006) Statistical Methods for Practice and Research: A Guide to Data Analysis Using SPSS. Response Books, Sage Publication, New Delhi.
[58]  Bhagat, S. and Black, B. (2002) Board Independence and Long-Term Performance. University of Colorado Working Paper.
[59]  Carter, D.A., Simkins, B.J. and Simpson, W.G. (2003) Corporate Governance, Board Diversity, and Firm Value. The Financial Review, 38, 33-53.
[60]  Switzer, L.N. and Tang, M. (2009) The Impact of Corporate Governance on the Performance of U.S. Small-Cap Firms. International Journal of Business, 14, 341-355.
[61]  Gill, A. and Obradovich, J.D. (2012) The Impact of Corporate Governance and Financial Leverage on the Value of American Firms. International Research Journal of Finance and Economics, No. 91, 1-14.
[62]  Singh, S., Tabassum, N., Darwish, T.K. and Batsakis, G. (2018) Corporate Governance and Tobin’s Q as a Measure of Organizational Performance. British Journal of Management, 29, 171-190. https://doi.org/10.1111/1467-8551.12237
[63]  Ciftcia, I., Tatoglub, E., Woodc, G., Demirbagc, M. and Zaimd, S. (2019) Corporate Governance and Firm Per-formance in Emerging Markets: Evidence from Turkey. International Business Review, 28, 90-103.
https://doi.org/10.1016/j.ibusrev.2018.08.004

Full-Text


comments powered by Disqus

Contact Us

service@oalib.com

QQ:3279437679

WhatsApp +8615387084133

WeChat 1538708413