Board independence, investment opportunity set and performance of South African firms

Pacific Basin Finance Journal

Volumn 35, Issue , 2015, Pages 108-124

  Muniandy, Balachandran ^a   Hillier, John ^a  

^a LA TROBE UNIVERSITY   (Australia)

Author keywords

Board independence; Endogeneity; Firm performance; Investment opportunity set; South Africa

Indexed keywords

EID: 84947866408     PISSN: 0927538X     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.pacfin.2014.11.003     Document Type: Article

References (87)

1. Agrawal A., Knoeber C.R. Firm performance and mechanisms to control agency problems between managers and shareholders. J. Financ. Quant. Anal. 1996, 3(3):377-397.
2. Anderson D., Francis J.R., Stokes D.J. Auditing directorship and the demand for monitoring. J. Account. Public Policy 1993, 12:353-375.
3. Antle R., Smith A. An empirical investigation of the relative performance evaluation of corporate executives. J. Account. Res. 1986, 24:1-24.
4. Armstrong P., Segal N., Davis B. Corporate governance - South Africa, a pioneer in Africa. Global Best Practice Report No. 1 2005.
5. Baker G.P. Growth, corporate policies and the investment opportunity set. J. Account. Econ. 1993, 16:161-165.
6. Barrier M. Mervyn king: principles, not rules. Intern. Audit. 2003, 60:68-72.
7. Beasley M.S. An empirical analysis of the relation between the board of director composition and financial statement fraud. Account. Rev. 1996, 71(4):443-465.
8. Berle A.A., Means G. The Modern Corporation and Private Property 1932, Macmillan, New York.
9. Bhagat S., Black B. The non-correlation between board independence and long-term firm performance. J. Corp. Law 2002, 27(2):231-275.
10. Bhagat S., Bolton B. Corporate governance and firm performance. J. Corp. Financ. 2008, 14(3):257-273.
11. Black B.S., Jang H., Kim W. Predicting firms' corporate governance choices: evidence from Korea. J. Law Econ. Org. 2006, 22(2):366-413.
12. Bozec R. Board of directors, market discipline and firm performance. J. Bus. Financ. Account. 2005, 32(9&10):1921-1960.
13. Brickley J.A., Smith C.W., Zimmerman J.L. Managerial Economics and Organizational Architecture 1997, Irwin, Chicago.
14. Brooks C. Introductory Econometrics for Finance 2002, Cambridge University Press, Cambridge, UK.
15. Brown L.D., Caylor M.L. Corporate governance and firm performance. Working Paper 2004.
16. Brown L.D., Caylor M.L. Corporate governance and firm valuation. J. Account. Public Policy 2006, 25:409-434.
17. Brown P., Beekes W., Verhoeven P. Corporate governance, accounting and finance: a review. Account. Financ. 2011, 51:96-172.
18. Card D., Krueger A.B. Minimum wages and employment: a case study of the fast food industry in New Jersey and Pennsylvania. Am. Econ. Rev. 1994, 84(4):772-793.
19. Chahine S., Goergen M. VC board representation and performance of US IPOs. J. Bus. Financ. Account. 2011, 38(3&4):413-445.
20. Conyon M.J., Peck S.I. Board control, remuneration committees and top management compensation. Acad. Manag. J. 1998, 41(2):146-157.
21. Cremers M., Nair V. Governance mechanisms and equity prices. J. Financ. 2005, 60:2859-2894.
22. Denis D.K., McConnell J.J. International corporate governance. J. Financ. Quant. Anal. 2003, 38:1-38.
23. Elitzur R.R., Yaari V. Executive incentive compensation and earnings manipulation in a multi-period setting. J. Econ. Behav. Organ. 1995, 26:201-219.
24. Fama E. Agency problems and the theory of the firm. J. Polit. Econ. 1980, 88:288-307.
25. Fama E.F., Jensen M.C. Agency problems and residual claims. J. Law Econ. 1983, 26:327-349.
26. Fama E.F., Jensen M.C. Separation of ownership and control. J. Law Econ. 1983, 26:301-325.
27. Gaver J., Gaver K. Additional evidence on the association between investment opportunity set and corporate financing, dividend and compensation policies. J. Account. Econ. 1993, 16:125-160.
28. Gillan S.L. Recent developments in corporate governance: an overview. J. Corp. Financ. 2006, 12:381-402.
29. Govindarajan V. A contingency approach to strategy implementation at the business-unit level: integrating administrative mechanisms with strategy. Acad. Manag. J. 1988, 32(4):828-853.
30. Gules N. Way ahead. Accountancy Futures 2014, 8. Association of Chartered and Certified Accountants, London.
31. Hammoudeh S., Ramazan S., Uzunkaya M., Liu T. The dynamics of BRIC's country risk ratings and domestic stock markets, U.S. stock market and oil price. Math. Comput. Simul. 2013, 94:277-294.
32. Haniffa R., Hudaib M. Corporate governance structure and performance of Malaysian listed companies. J. Bus. Financ. Account. 2006, 33(7-8):1034-1062.
33. Hermalin B.E., Weisbach M.S. The effects of board composition and direct incentives on firm performance. Financ. Manag. 1991, 20(4):101-112.
34. Hermanson D.R. Does corporate governance really matter? What the research tell us. Intern. Audit. 2003, 18(2):44-45.
35. Ho C.K. Corporate governance and corporate competitiveness: an international analysis. Corp. Gov. Int. Rev. 2005, 13(2):211-253.
36. Hossain M., Cahan S.F., Adams M.B. The investment opportunity set and the voluntary use of outside directors: New Zealand evidence. Account. Bus. Res. 2000, 30(4):263-273.
37. Hunt H.G. Potential determinants of corporate inventory accounting decisions. J. Account. Res. 1985, 448-467. (Autumn).
38. Hutchinson M., Gul F. Investment opportunity set, corporate governance practices and firm performance. J. Corp. Financ. 2004, 10:595-614.
39. Hutchinson M., Percy M., Erkurtoglu L. An investigation of the association between corporate governance, earnings management and the effect of governance reforms. Account. Res. J. 2008, 21(3):239-262.
40. Jarque C.M., Bera A.K. A test for normality of observations and regression residuals. Int. Stat. Rev. 1987, 55:163-172.
41. Jensen M.C., Meckling W.H. Theory of the firm: managerial behavior, agency costs and ownership structure. J. Financ. Econ. 1976, 3(4):305-360.
42. Jermias J., Gani L. The impact of board capital and board characteristics on firm performance. Br. Account. Rev. 2014, 46:135-153.
43. Kaiser H.F., Rice J. Little Jiffy, Mark IV. Educ. Psychol. Meas. 1974, 34:111-117.
44. Kakabadse A., Korac-Kakabadse N. Corporate governance in South Africa: evaluation of the King II report. J. Chang. Manag. 2002, 2:305-317.
45. Kallapur S., Trombley M.A. The association between investment opportunity set proxies and realised growth. J. Bus. Financ. Account. 1999, 26:505-519.
46. Kallapur S., Trombley M.A. The investment opportunity set: determinants, consequences and measurement. Manag. Financ. 2001, 27(3):3-15.
47. King Report III http://www.iodsa.co.za/page=kingIII.
48. Klein A. Firm performance and board committee structure. J. Law Econ. 1998, 41(1):275-304.
49. Larcker D.F., Richardson A.S., Tuna I. Corporate governance, accounting outcomes and organizational performance. Account. Rev. 2007, 82(4):963-1008.
50. Lehn K., Patro S., Zhao M. Determinants of the size and composition of US corporate boards: 1935-2000. Financ. Manag. 2009, 38(4):747-780.
51. Linck J.S., Netter J.M., Yang T. The determinants of board structure. J. Financ. Econ. 2008, 87(2):308-328.
52. Malherbe S., Segal N. Corporate Governance in South Africa 2001, OECD Development Center Online, (Available at: http://www.oecd.org).
53. McConnell J.J., Servaes H. Additional evidence on equity ownership and corporate value. J. Financ. Econ. 1990, 27:595-612.
54. Morck R., Shleifer A., Vishny R.W. Management ownership and market valuation: an empirical analysis. J. Financ. Econ. 1988, 20:293-315.
55. Myers S. Determinants of corporate borrowing. J. Financ. Econ. 1977, 5:141-175.
56. Myers S.C., Majluf N.S. Corporate financing and investment decisions when firms have information that investors do not have. J. Financ. Econ. 1984, 13:187-221.
57. Nenova T. How is corporate governance relevant in low-income countries? At. http://rru.worldbank.org/Discussion/Topics/Topic44.aspx.
58. Noe T.H., Rebello M.J. Asymmetric information, managerial opportunism, financing and payout policies. J. Financ. 1996, 51(2):637-660.
59. Ntim C.G. An integrated corporate governance framework and financial performance in South African-listed corporations. S. Afr. J. Econ. 2013, 81(3):373-392.
60. Prevost A.K., Rao R.P., Hossain M. Board composition in New Zealand: an agency perspective. J. Bus. Financ. Account. 2002, 29(5&6):731-760.
61. Rahman R.A., Ali F.H.M. Board, audit committee, culture and earnings management: Malaysian evidence. Manag. Audit. J. 2006, 21(7):783-804.
62. Ramsey J.B. Tests for specification errors in classical linear least squares regression analysis. J. R. Stat. Soc. Ser. B 1969, 31(2):350-371.
63. Reed J. Investing in South Africa. Financ. Times Limited 2003, 6(10):4.
64. Reinhart C., Rogoff K. This Time is Different. Eight Centuries of Financial Folly 2009, Princeton University Press, Princeton, NJ.
65. Rossouw G.J. Business ethics and corporate governance in Africa. Bus. Soc. 2005, 44:94-106.
66. Shleifer A., Vishny R.W. Management entrenchment: the case of manager-specific investment. J. Financ. Econ. 1989, 25:123-139.
67. Shleifer A., Vishny R.W. A survey of corporate governance. J. Financ. 1997, 52:737-783.
68. Smith C., Watts R. The investment opportunity set and corporate financing, dividend and compensation policies. J. Financ. Econ. 1992, 32:509-522.
69. Statistics South Africa Population statistics Available at:. http://www.statssa.gov.za:www.statssa.gov.za.
70. Subrahmanyan V.N., Rosenstein S. The role of outside directors in bank acquisitions. Financ. Manag. 1997, 26:23-26.
71. Suehiro A., Wailerdsak N. Family business in Thailand: its management, governance and future challenges. ASEAN Econ. Bull. 2004, 21(1):81-93.
72. Sun J., Lan G., Ma Z. Investment opportunity set, board independence and firm performance. Manag. Financ. 2014, 40(5):454-468.
73. Swan P.L., Forsberg D. Does board "Independence" destroy corporate value? 2014, SSRN-id2312325.
74. Tirole J. The Theory of Corporate Finance 2006, Princeton University Press, Princeton, NJ.
75. Tsui J.S.L., Jaggi B., Gul F.A. CEO domination, growth opportunities, and their impact on audit fees. J. Account. Audit. Financ. 2001, 16(3):189-208.
76. Vaughn M., Ryan L.V. Corporate governance in South Africa. Corp. Gov. 2006, 14(5):504-512.
77. Veprauskaite E., Adams M. Do powerful chief executives influence the financial performance of U.K. firms?. Br. Account. Rev. 2013, 45:229-241.
78. Verrecchia R.E. Managerial discretion in the choice among financial reporting alternatives. J. Account. Econ. 1986, 9:175-196.
79. Warfield T.D., Wild J.J., Wild K.L. Managerial ownership, accounting choices, and informativeness of earnings. J. Account. Econ. 1995, 20:61-91.
80. Weir C., Laing D., McKnight P.J. Internal and external governance mechanisms: their impact on the performance of large UK public companies. J. Bus. Financ. Account. 2002, 29(5-6):579-611.
81. Weisbach M. Outside directors and CEO turnover. J. Financ. Econ. 1988, 431-460. (Jan-Mar).
82. West A. Theorising South Africa's corporate governance. J. Bus. Ethics 2006, 68:433-488.
83. Wintoki M.B., Linck J.S., Netter J.M. Endogeneity and the dynamics of internal corporate governance. J. Financ. Econ. 2012, 105:581-606.
84. Wolfensohn J.D. The Other Crisis. Address to the Board of Governors 1998, World Bank, Washington D.C.
85. Wooldridge M.J. Introductory Econometrics: A Modern Approach 2013, South-Western Cengage Learning. 5th edition.
86. World Federation of Exchanges Stock exchange statistics Available at:. http://www.world-exchanges.org/statistics.
87. Yermack D. Higher market valuation of companies with a small board of directors. J. Financ. Econ. 1996, 40:185-212.