Purpose: The study aims to investigate whether female representation on corporate boards impacts company financial and non-financial performance. Existing studies show conflicting results regarding the impact that female representation on the boards of directors may have on financial and non-financial performance, namely social and environmental performance. Studies suggest that critical mass may influence the impact that a woman on the board may have on company performance. Existing studies have observed behavioural changes in female directors when there are three or more women on the board compared to when there are less than three women on the board. The study will explore the effects of critical mass on the impact of board female representation on firm performance. Furthermore, studies posit that singlecountry studies contribute to conflicting results due to the influence of country-level factors. Country-level factors (including cultural norms, gender parity in terms of educational attainment, economic employment and opportunity) may influence the level of impact that female representation on the boards of directors have on company performance. Thus, this study explores whether country-level factors influence the impact of board female representation on company performance. Design: Using a linear mixed regression, an analysis of female representation (as measured by the percentage of women on the board and critical mass) of the top 100 listed companies from Australia, Japan and South Africa between financial and nonfinancial performance during 2016 to 2018 is performed. Both accounting and market measures are used to determine a holistic measure of financial performance. Nonfinancial performance is measured using a social and environmental performance score. To determine the influence of country level factors, interaction terms are used to compare the level of impact that female representation on the boards of directors have on company performance between Australia, Japan and South Africa. In addition, an analysis of the mean female representation by country is conducted to understand the existing level of female representation per country. Findings: The descriptive statistics show that female representation was highest in Australia with an average of 29% over the three-year period; South Africa was at 22% and Japan at only 7%, demonstrating that each country in the study has varying levels of female representation on the boards of directors. The regression results show that female representation on boards of directors, as measured by the percentage of women on the board, is shown to have a positive and significant relationship with accounting performance, market performance and social performance. Critical mass of female representation on corporate boards is shown to positively and significantly influence financial performance but has little impact on non-financial performance. Conversely, country-level factors do not significantly influence the level of impact of female representation on performance measures. However, the descriptive statistics suggest that country-level factors are shown to influence the number of women on the boards of directors. Originality and Value: This study is relevant to shareholders and stakeholders when considering board composition and the value of gender diversity on corporate boards for both financial and non-financial performance. In addition, this study aids the understanding of the current status of female representation on boards of directors. The study adds to the existing body of research by exploring the influence of critical mass and country-level factors on the impact of board gender diversity on company performance. Lastly, the study is relevant to regulators and policy-makers as it highlights factors which contribute to increased female representation on corporate boards.

This study examines the links between corporate governance, income smoothing, and informativeness in financial reporting. Firms’ strong corporate governance is measured by variables employed in other studies – the presence of a financial expert serving on the audit committee; whether the audit committee consists entirely of independent directors; whether the members of the audit committee meet at least four times annually; and the percentage of outsiders serving on the board of directors. Income smoothing is measured by the Albrecht-Richardson (AR) and Tucker-Zarowin (TZ) income smoothing measures. The AR measure encompasses four definitions of earnings that include accrual and cash-based transactions. The TZ measure includes only accrual-based transactions. The degree of informativeness is measured by association with two opposing ends of the spectrum. On the one hand, firms that are the most informative are predicted to have a greater association between earnings and one period ahead operating cash flows. Prior researchers have defined in a similar manner the information content of earnings to predict cash flows. On the other hand, the existence of a regulatory violation clearly indicates firms’ lack of informativeness (i.e., deceptiveness) in financial reporting. The results do not show a strong relationship between strong corporate governance and degree of income smoothing. First, results for the link between income smoothing and informativeness show only a strong, positive association between accrual-based income smoothing (i.e., TZ measure) and informativeness. Second, results for the links between deceptiveness, corporate governance, and income smoothing are weak. The corporate governance variables show no significant association with deceptiveness. A negative relationship between corporate governance and deceptiveness was predicted. For the link between income smoothing and deceptiveness, only the AR measures show the predicted negative relationship. The TZ measure shows no significant association with deceptiveness. Taken together, the results of this study provide unique insights into the links between corporate governance, income smoothing, and informativeness in financial reporting. The results confirm the informativeness of accrual accounting, but do not resolve the debate of whether corporate governance measures impact the quality of financial reporting.

In Essay 1, we examine the departure of independent directors among 525 Taiwanese publicly listed firms with independent directors on the board between 2002 and 2006. We find that the accounting restatements is positively associated with the number (and the rate) of departures in the firm. This result implies that deteriorating financial reporting quality is related to the departures, which is consistent with Srinivasan's (2005) finding among the U.S. firms. We also find the number (and the rate) of departures is positively associated with shares owned by controlling families. Our findings support the independent directors’ role for intense monitoring based on agency theory. The results also support Anderson and Reeb’s (2004) result based opinion that that independent directors can protect minority shareholders’ interest by hindering dominant or family shareholders’ opportunistic or expropriation behaviors. In essay 2, we examine if there are significant associations between firm performance and (1) directors’ shareholdings, (2) directors’ family shareholdings, and (3) independent directors’ career affiliations in 2,164 Taiwanese publicly listed firms between 2002 and 2006. After addressing for possible endogeneity and controlling for firm specific variables, we find a positive association between CEO’s shareholding and firm performance. Consistent with agency theory and incentive effect, this result indicates that CEOs have control over firms’ operation and have incentive to maximize firms’ value. Also, we find a negative association between firm performance and non-executive directors’ shareholdings. This result, which is consistent with the entrenchment effect, implies that the possibility of expropriating minority shareholders’ interest may increase with shares owned by non-executive directors. However, we find that the non-executive directors’ family shareholding is positively related to firm performance, which implies that non-executive directors may be motivated by their family members to improve firm value. The results also imply that the majority-minority agency problem (Villalonga and Amit, 2006) can be reduced when director’s family welfare is at stake. In addition, consistent with skill matching theory (Jovanovic, 1979), we find a positive association between independent director’s career affiliation of executive officer and firm performance, which implies that independent directors who are executives are likely to improve firm performance.

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Svenska aktiebolag som verksamhetsform har historiskt sett presumerats syfta till att maximera värdet på aktierna och generera utdelning till aktieägarna. Detta synsätt återspeglas i aktiebolagsrätten av det indirekta vinstmaximeringssyfte som stadgas i 3 kap. 3 § ABL. I skrivande stund har EU-kommissionen antagit ett direktivförslag avseende hållbar bolagsstyrning och väntar nu på att Europaparlamentet och Europeiska unionens råd ska godkänna förslaget. Direktivförslaget grundar sig på en studie som genomfördes av EY som visade att aktiebolag inom EU uppvisar en tydlig tendens att fokusera på kortsiktig vinning till förmån för aktieägare på bekostnad av långsiktiga aspekter som hållbarhet.I och med att svensk aktiebolagsrätt i dagsläget är utformad utifrån presumerad vinstmaximering syftar uppsatsen till att utreda hur svensk rätt, svenska noterade aktiebolag och den svenska bolagsstyrningsmodellen kan komma att påverkas om direktivförslaget antages och vilka faktiska åtgärder bolagsledningar i de bolag som träffas av direktivet kan bli tvungna att vidta. Direktivförslaget tar sikte på att reglera ett flertal, av EY, utpekade grundorsaker till short-termism. Det anges bland annat att aktiebolagen måste upprätta övervakningsförfaranden som tillser regelefterlevnad i såväl den egna verksamheten som värdekedjan. Bolagen ska även ansvara för att identifiera och reducera negativa effekter som verksamheten medför samt bereda berörda intressenter möjlighet att lämna synpunkter som måste beaktas innan företagsledningen fattar beslut för bolagets räkning. I förekommande fall ska även ett samrådsförfarande genomföras med nämnda intressenter. Om direktivförslaget antages kan det komma att väsentligen förändra aktiebolagslagens utformning i grunden. Lagstiftaren måste ta ställning till om det nu gällande vinstmaximeringssyftet går att tillämpa parallellt med de nya hållbarhetskraven eller inte. Det indirekta vinstsyftet i ABL är formulerat såtillvida att det finns utrymme för syftespluralism i teorin, men i praktiken uppstår en rad olika problem om vinstmaximeringssyfte ska kombineras med långsiktiga hållbarhetskrav. Om syftespluralism införs kan ledningen hamna i till synes omöjliga situationer där inget beslut harmonierar med båda syftena. Det kan även argumenteras för att bolagsledningar inte längre skulle gå att ställa till svars för sitt beslutsfattande så länge besluten går att härleda till antingen vinstmaximering eller hållbarhet.Ett annat problem som direktivförslaget medför är att interna och externa intressenter, i förekommande fall utan ekonomiskt incitament, får mer inflytande i bolagets löpande verksamhet än aktieägarna. Detta torde ytterligare accentuera fragmenteringen mellan aktieägare och bolagsledningen. De berörda intressenterna kan även ha skilda åsikter, varpå samrådsförfarandena kommer bestå av ett flertal intressekonflikter intressenterna emellan, utöver de konflikter som redan uppstår till följd av målkonflikten mellan vinstmaximering och hållbarhet.Sammanfattningsvis medför direktivförslaget enbart fler skyldigheter för bolagen och ett utökat ansvar för företagsledningarna, i de fall ansvar kan utkrävas, utan att någon form av ekonomiskt eller på annat vis positivt incitament för regelefterlevnad erbjuds. Direktivförslaget kan av, bland annat, ovanstående anledningar leda till att färre aktörer inom näringslivet är beredda att åta sig styrelseuppdrag samtidigt som aktiebolagen får svårare att attrahera kapital. / The purpose of limited liability companies as a form of business in Sweden has historically been presumed to be profit maximization and dividends to shareholders. This approach is reflected in Swedish company law. At the time of writing this essay the European Commission has adopted a proposal for a directive concerning sustainable corporate governance and are now awaiting adoption by the EU Parliament and Council. The proposal stems from a study that was conducted by EY. The study showed that limited liability companies within the EU clearly tends to focus on short-term profits to provide return to the owners of the business at the expense of long-term aspects such as sustainability.Since current Swedish company law is based on the presumption that limited liability companies strive for profit maximization, the purpose of this essay is to examine how Swedish law, Swedish public limited liability companies, and the Swedish corporate governance model may be affected if the proposal gets adopted and which actions the directors may have to take. The proposal aims to regulate multiple, by EY, identified root causes and specified problem drivers that causes companies to focus on short-term shareholder value maximization rather than long-term interests of the companies. The proposal states that limited liability companies must establish procedures for monitoring their compliance in accordance with the directive, both for their own business as well as their value chain. The companies also have to identify, prevent and/or mitigate their adverse impacts on human rights and the environment and establish procedures which enables affected stakeholders to submit complaints. The complaints must thereafter be duly considered by the directors before they make decisions on behalf of the company and, where applicable, enable for complainants to meet with the company’s representatives at an appropriate level.If the proposal gets adopted, it may fundamentally change Swedish company law. The legislature must decide if the current profit maximization can be applied parallelly with the new sustainability criteria or not. In current Swedish company law there’s theoretically room for coexistence of different interests and purposes, but in practice this becomes problematic if sustainability criteria are to be combined with profit maximization. The directors may face practically impossible situations where no decision harmonizes with either purpose or interest of the company. It can also be argued that it would no longer be possible to hold directors accountable for their decisions if the decisions can be derived from either profit maximization or sustainability. Another problem the proposed directive entails is that internal and external stakeholders, where applicable without financial incentive, gain more influence in the company’s day-to-day operations than the shareholders. This is likely to further accentuate the fragmentation between shareholders and directors. The affected stakeholders may also have different opinions, whereupon the consultation procedures will consist of several conflicts of interests between stakeholders, in addition to the conflicts that already arise as a result of the conflict between profit maximization and sustainability. In summary, the directive proposal only entails more obligations for the companies and increased accountability and responsibility for the directors without offering any economic or otherwise positive incentive for compliance. The proposed directive may therefore, among other reasons, lead to fewer actors being prepared to undertake board assignments, while it will simultaneously become more difficult for companies to attract capital.

This paper examines the relative valuation of alternative methods of tax avoidance. Prior studies find that firm value is positively associated with overall measures of tax avoidance; I extend this research by providing evidence that investors distinguish between methods of tax reduction in their valuation of tax avoidance. The impact of tax avoidance on firm value is a function of tax risk, permanence of tax savings, tax planning costs, implicit taxes and contrasts in disclosures of tax reduction in the financial statements. My empirical results suggest that tax avoidance resulting from stock option tax benefits is positively associated with firm value, accelerated depreciation is not associated with firm value and deferral of residual tax on foreign earnings is negatively associated with firm value. Prior studies that find the positive association between firm value and tax avoidance is attenuated in poorly governed firms suggest the discount results from investor concern of managerial opportunism. Self-serving managers conceal diversion of tax savings from investors under the pretext that aggressive tax positions must be hidden from tax authorities in the financial statements. Under this theory transparent tax reduction methods that are clearly supported by the law should not be discounted by investors of poorly governed firms. However, I find that tax avoidance resulting from transparent stock option tax deductions is discounted in poorly governed firms, while tax avoidance derived from opaque deferral of the residual tax on foreign earnings is not, inconsistent with investors believing that managers are exploiting the compromised information environment associated with complex tax transactions. / Ph. D.

This dissertation seeks to investigate empirically the determinants and implications of large block shareholdings. Specifically, it attempts to answer the following questions : (1) Why do some firms have blocks and others not ? (2) What are the valuation consequences of large block creations ? (3) What are the cross-sectional relationships between the market response and characteristics of the firm and of the blockholder ? and, finally, (4) What are the time series (and control-firm-adjusted) changes in firm performance measures and operating variables attributable to large shareholder monitoring ? The above questions are addressed by recognizing, firstly, that the incidence of large block shareholdings is rational only when the gains from a blockholding exceed the costs of foregone diversification-of-portfolio opportunities. The potential sources of gains to the blockholder are identified as resulting from firm-value-increasing reductions in the agency costs of free cash flow and other non-free-cash-flow-related equity agency costs, equity-value-increasing potential for wealth transfers from bondholders, firm-value-increasing expectation of synergy gains in the case of corporate blockholdings, as well as equity-value-reducing gains such as the potential for insider trading, and the expectation of a greenmail premium. It is hypothesized that the net valuation impact of these gains to the blockholder is positive. Event study results support this hypothesis. Cross-sectional regression results suggest that announcement period abnormal returns are reliably explained by the potential for wealth transfers from bondholders, as proxied by the level of discretionary assets in the firm. Further, consistent with theory, announcement excess returns are positively related to the size of the blockholding and the identity of the blockholder. There is no evidence that blockholders play a valuable role in limiting managerial discretion over free cash flow. Firm-specific risk also appears to have no valuation impact; this suggests that the potential benefits from blockholder monitoring may be offset by the potential costs resulting from insider trading. Finally, a pre- and post-block matched-pair comparison of key performance measures and operating variables between the sets of sample firms and control firms provides weak support for the monitoring role of the large block shareholder. A time-series tracing of blockholder affiliation with the target firms reveals that in only a small fraction of firms does the blockholder obtain a seat on the target firm’s board of directors - a virtual requirement for effective monitoring to occur. Overall, these findings do not support theoretical arguments that envisage blockholder monitoring as a long-term incentive-alignment mechanism between managers and shareholders. / Ph. D.

Yes / Intellectual capital disclosure (ICD) in corporate annual reports has received growing European attention. To date, few studies have undertaken systematic analysis of the factors influencing the decision to disclose Intellectual Capital (IC) related information in annual reports. The purpose of this paper is to examine whether the level of hidden value (market-to-book ratio), share price volatility, listing age, board composition, ownership structure, audit committee size and directors’ shareholding, in addition to other firm specific factors influence ICD in 100 UK listed knowledge-rich firms. The dependent variable is measured by a 183 item index score, supported by word count and percentage of IC word count metrics to assess the extent, volume and focus of ICD respectively. Results of the analysis based on the three measures indicate significant association with hidden value, using market-to-book ratio as a proxy, and listing age. We further find firm size, share price volatility, director shareholding, audit committee size, and ownership concentration to be associated with ICD in a manner consistent with theoretical expectations. The implications of these findings, hitherto largely untested, are explored from a number of theoretical perspectives.

Thesis (MBA (Business Management))--Stellenbosch University, 2008. / ENGLISH ABSTRACT: Corporate governance presents the researcher and the theorist alike, with a rich vein of potential subject matter. This spans a massive scope of issues, ranging from feminist concerns to direct litigious anomalies during the multinational implementation of specific governance measures. Located towards the centre of this spectrum is the formulation of new governance policies, as informed by both theoretical foundations and real world experience. It is at this midway point that the South African governance debate currently finds itself, with the third edition of the King Report on Corporate Governance set for launch in the coming months. The report and the associated code will form the basis for all governance and related oversight mechanisms in South Africa for the foreseeable future. As such, the third report will have to organically grow out of the current structure, the lessons learnt from the current dispensation and the governing theoretical positions. All of these will also have to be done with reference to the new companies act. The research report is specifically targeted at assisting in the process of learning from the current dispensation, before it is replaced by the new. The learning process has as its central tool a formal questionnaire, which was developed and administered by the IOD and KPMG, with all analysis presented herein performed by the author of this research report. The analysis conducted aims to determine how respondents at different types of companies and in different functions, view corporate governance and specifically the current dispensation in South Africa. This is done by dividing respondents into 10 groupings and determining the percentage of respondents from each group, who responded in a certain manner to each question on the questionnaire. Thereafter a statistical analysis technique is employed to determine whether or not any differences found are meaningful and if so, what can be inferred from these differences. Finally, this study is intended to provide a baseline for future studies, which will then be in a position to more accurately measure shifts in attitude and implementation after the publication of the third King Report. / AFRIKAANSE OPSOMMING: Korporatiewe bestuur, hetsy van ‘n suiwer teoreties of ‘n toepassingsoogpunt, bied aan die navorser ‘n magdom van moontlike onderwerpe. Dit sluit bykans enige denkbare invalshoek of fokus area in, van die feminisme tot regskwessies rondom die multinasionale implementering van ‘n enkele kode of beginsel. Midde in hierdie wye veld is daar ook areas wat na beide die teoretiese en praktiese verwys, waarvan die ontwikkeling en opdatering van korporatiewe bestuurskodes ‘n sprekende voorbeeld is. Dit is dan juis ook op hierdie punt waar die debat rondom korporatiewe bestuur in Suid-Afrika sigself tans bevind, met die derde King Verslag op Korporatiewe Bestuur wat binne die volgende paar maande verwag word. Die belang van hierdie verslag lê daarin dat dit, asook die meegaande riglyne, die basis sal vorm van korporatiewe bestuur in Suid-Afrika vir die afsienbare toekoms. Om volwaardig in hierdie kapasiteit te kan funksioneer, sal die nuwe verslag organies moet groei uit die huidige verslag, ervaring in die praktyk en ook die heersende teoretiese posisies. Die ontwikkeling moet dan ook verder tred hou met die nuwe maatskappye wet, wat tans ontwikkel word. Die navorsingsverslag wat hierin voorgelê word, is daarop geteiken om uit die huidige sisteem, spesifiek die tweede King Verslag en meegaande riglyne, te leer alvorens dit vervang word deur die derde King verslag. Die taak is moontlik gemaak deur die gebruik van ‘n vraelys saamgestel en gesirkuleer deur die IOD en KPMG, alhoewel al die analise hier voorgelê deur die outeur van hierdie verslag gedoen is. Die genoemde analise se sentrale fokus is om te bepaal hoe respondente uit verskillende maatskappye en beroepe, korporatiewe bestuur in Suid-Afrika sien, met spesifieke verwysing na die tweede King verslag. Verskille tussen die respondente, wat in 10 groepe ingedeel is, is dan ook statisties geanaliseer om te bepaal of enige verskille tussen die groepe statisties beduidend is en indien wel, wat daaruit afgelei kan word. Laastens is die studie ook opgestel om ‘n basis daar te stel vir toekomstige vergelykende studies, wat sal volg na die uitreiking en implementering van die derde King verslag en riglyne.