Moderating Effect of Leverage on the Relationship between Board Size, Board Meetings and Performance: A Study on Textile Sector of Pakistan
Keywords:
Board Size, Board Meetings, Leverage, Corporate Governance, Performance .Abstract
Extensive research relating to corporate governance and performance of firms have been carried out, however less research has been carried relating to developing countries like Pakistan. The purpose of the study is to examine the relationship of corporate governance (CG) tools (board size, board meetings) with performance (ROA) of listed textile firms on the Pakistan stock exchange. Leverage (FLEV) has been accommodated as a moderator in the study, data has been collected concerning to 30 textile firms from the period 2015 to 2017 and multiple regression technique has been employed in the research to assess the relation among corporate governance and firm performance. The study found that both board size (BS) and board meetings (BM) have a significant impact on the textile firm’s performance, moreover the moderating effect of leverage was found to be significant on the relationship between BM and performance of textile, but insignificant on the relationship of board size and performance. This study provides helpful information for regulators as well as management of textile firms to enhance policies relating to corporate governance ahead.
References
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[35] E. F. Fama, "Agency problems and the theory of the business," Journal of Political Economy, no. 88, pp. 134-145, 1980.
[36] N. Rajagopalan and Y. Zhang, "Corporate governance reforms in China and India: Challenges and opportunities," Business Horizons , vol. 51, no. 1, p. 55–64, 2008.
[37] A. Shleifer and R. W. Vishny, "A Survey of Corporate Governance," The Journal of Finance, vol. 52, no. 2, pp. 737-783, 1997.
[2] V. Bairathi, "Corporate governance: A suggestive code," International Research Journal, vol. II, no. 6, pp. 753-754, 2009.
[3] K. Humera, H. Rohail and M. Maran, "Diversity on Corporate Boards and Firm Performance: An Empirical Evidence from Malaysia," American Journal of Social Sciences and Humanities, vol. 2, no. 1, pp. 1-8, 2017.
[4] B. Nanette, H. David, T. Emily and D. Paula, "Reform:Who's making the grade A performance review for ceo,s, boards, analysts and others," Business Week, no. 3850, pp. 80-80, 2003.
[5] M. A. Naseem, S. Xiaoming, S. Riaz and R. U. Rehman, "Board Attributes and Financial Performance: The Evidence from an Emerging Economy," The Journal of Developing Areas, vol. 51, no. 3, pp. 281-297, 2017.
[6] M. Jensen and W. H. Meckling, "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, vol. III, no. 4, pp. 305-360, 1976.
[7] M. Asad, "Working Capital Management And Corporate Performance Of Textile Sector In Pakistan," Paradigms, vol. 6, no. 1, pp. 100-114, 2012.
[8] Q. R. Yasser, H. Entebang and S. A. Mansor, "Corporate governance and firm performance in Pakistan: The case of Karachi Stock Exchange (KSE)-30," Journal of Economics and International Finance, vol. 3, no. 8, pp. 482-491, 2011.
[9] B. Mashayekhi and M. S. Bazazb, "Corporate governance and firm performance in Iran," Contemporary Accounting & Economics, vol. 4, no. 2, pp. 156-172, 2008.
[10] C. G. Ntim and K. A. Oseit, "The impact of corporate board meetings on corporate performance in South Africa," African Review of Economics and Finance, vol. 2, no. 2, pp. 83-103, 2011.
[11] N. Vafeas, "Board meeting frequency and firm performance," Journal of Financial Economics, vol. 53, no. 1, pp. 113-142, 1999.
[12] L. Bonazzi and S. M. Islam, "Agency theory and corporate governance: A study of the effectiveness of board in their monitoring of the CEO," Journal of Modelling in Management, vol. I, no. 2, pp. 7-23, 2007.
[13] B. S. Black, H. Jang and W. Kim, "Does corporate governance predict firms' market values? Evidence from Korea," Journal of Law, Economics, and Organization, vol. 22, no. 2, pp. 366-416, 2006.
[14] N. A. Sheikh, Z. Wang and S. Khan, "The impact of internal attributes of corporate governance on firm performance: evidence from Pakistan," International Journal of Commerce and Management, vol. 23, no. 1, pp. 38-55, 2013.
[15] D. Berardino, "Corporate Governance and Firm Performance in New Technology Ventures," Procedia Economics and Finance, vol. 39, pp. 412-421, 2016.
[16] M. A. M. Makki and S. A. Lodhi, "Impact of Corporate Governance on Intellectual Capital Efficiency and Financial Performance.," Pakistan Journal of Commerce and Social Sciences, vol. 8, no. 2, pp. 305-330, 2014.
[17] U. Detthamrong, N. Chancharat and C. Vithessonthi, "Corporate governance, capital structure and firm performance: Evidence from Thailand," Research in International Business and Finance, vol. 39, pp. 689-709, 2017.
[18] R. B. Adams and H. Mehran, "3. Adams, R. B., & Mehran, H. (2005). Corporate performance, board structure and its determinants in the banking industry.," 2005.
[19] Z. Guo and U. K. Kga, "Corporate Governance and Firm Performance of Listed Firms in Sri Lanka," Procedia - Social and Behavioral Sciences, vol. 40, pp. 664-667, 2012.
[20] E. García-Meca, Isabel-MaríaGarcía-Sánchez and J. Martínez-Ferrero, "Board diversity and its effects on bank performance: An international analysis," Journal of Banking and Finance, vol. 53, pp. 202-214, 2015.
[21] R. C. Anderson, S. A. Mansi and D. M. Reeb, "Board characteristics, accounting report integrity, and the cost of debt," Journal of accounting and economics, vol. 37, no. 3, pp. 315-342, 2004.
[22] J. L. Coles, N. D. Daniel and L. Naveen, "Boards: Does one size fit all?," Journal of Financial Economics, vol. 87, no. 2, pp. 329-356, 2008.
[23] R. G. Ramos and M. G. Olalla, "Board characteristics and firm performance in public founder-and nonfounder-led family businesses," Journal of Family Business Strategy, vol. 2, no. 4, pp. 220-231, 2011.
[24] I. K. E. Mehdi, "Empirical Evidence on Corporate Governance and Corporate Performance in Tunisia," Corporate Governance: An International Review, vol. 15, no. 6, pp. 1429-1441, 2007.
[25] M. Azeem, M. Hassan and R. Kouser, "Impact of quality corporate governance on firm performance: A ten year perspective," Pakistan Journal of Commerce and Social Sciences, vol. 25, no. 3, 2013.
[26] C. Loderer and U. Peyer, "Board overlap, seat accumulation and share prices," European Financial Management, vol. 8, no. 2, pp. 165-192, 2002.
[27] I. E. Brick and N. Chidambaran, "Board meetings, committee structure, and firm value," Journal of Corporate Finance, vol. 16, no. 4, pp. 533-553, 2010.
[28] E. F. Fama and M. C. Jensen, "Separation of ownership and control," The Journal of Law & Economics, vol. II, no. 26, pp. 301-325, 1983.
[29] C. W. L. Hill and T. M. Jones, "STAKEHOLDER-AGENCY THEORY Stakeholder-agency theory," Journal of Management Studies, vol. II, no. 29, pp. 131-154, 1992.
[30] S. Berthelot, T. Morris and C. Morrill, "Corporate governance rating and financial performance: a Canadian study," Corporate Governance: The international journal of business in society, vol. X, no. 5, pp. 635-646, 2010.
[31] A. Ikram, Q. Su, M. Fiaz and M. W. Shabbir, "Cultural Diversity and Challenges for Female Entrepreneurs: Empirical Study of an Emerging Economy," World Academy of Science, Engineering and Technology, International Journal of Social, Behavioral, Educational, Economic, Business and Industrial Engineering, vol. 10, no. 10, pp. 3375-3378, 2016.
[32] G. Y. Tian and G. Twite, "Corporate governance, external market discipline and firm productivity," Journal of Corporate Finance, vol. 17, no. 3, pp. 403-417, 2011.
[33] S. M. Zabri, K. Ahmad and K. K. Wah, "Corporate Governance Practices and Firm Performance: Evidence from top 100 Public Listed Companies in Malaysia," Procedia Economics and Finance, vol. 35, pp. 287-296, 2016.
[34] A. Singh, A. Singh and B. Weisse, "Corporate governance, competition, the new international financial architecture and large corporations in emerging markets," Management of Capital Flows, p. 1, 2003.
[35] E. F. Fama, "Agency problems and the theory of the business," Journal of Political Economy, no. 88, pp. 134-145, 1980.
[36] N. Rajagopalan and Y. Zhang, "Corporate governance reforms in China and India: Challenges and opportunities," Business Horizons , vol. 51, no. 1, p. 55–64, 2008.
[37] A. Shleifer and R. W. Vishny, "A Survey of Corporate Governance," The Journal of Finance, vol. 52, no. 2, pp. 737-783, 1997.
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Published
2018-01-07
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Bashir, A., & Asad, M. (2018). Moderating Effect of Leverage on the Relationship between Board Size, Board Meetings and Performance: A Study on Textile Sector of Pakistan. American Scientific Research Journal for Engineering, Technology, and Sciences, 39(1), 19–29. Retrieved from https://asrjetsjournal.org/index.php/American_Scientific_Journal/article/view/3790
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