Certain attributes are often considered as significant determinants of the effectiveness of governancemechanisms. For example, previous studies mentioned the importance of expertise, experience and independence in ensuring the effectiveness of the key governancemechanisms in performing their roles (e.g. Salleh et al., 2006; Yatim et al., 2006; Gul and Goodwin, 2010). Similarly, the studies that focused on the process of the corporategovernance practices found that these attributes may contribute to the effectiveness of key governancemechanisms. These studies provided some interesting insights. For instance, Cohen, Krishnamoorthy, and Wright (2002) found that auditors perceived audit committees as weak and ineffective in the post-SOX era. Based on their interviews with 36 auditors, the findings of their study indicated that auditors found that audit committee members lacked the necessary expertise, power and scepticism that would make them effective. Even though the members were appointed based on their qualifications, in practice, audit committees were considered to be ineffective in performing their duties, and their existence was symbolic for the purpose of satisfying the regulatory requirements. Similarly, Soobaroyen and Mahadeo (2012) found that the accountability of the board members in Mauritius was questionable, in that the independent non-executive directors were relatively powerless. Although the board members were found to have the required knowledge, the accountability was not practiced by the members in performing their roles. These studies illustrate that the attributes (e.g. knowledge, experience and expertise) alone cannot ensure the effectiveness of the key governancemechanisms.
O‟Higgins (2002), Roberts et al. (2005), Parker (2007), Brundin & Nordqvist (2008), Soobaroyen & Mahadeo (2012) focus mainly on the board of directors. These studies provide deeper, more current insights how the board actually do in performing their roles in the organization as well as improving the governance. Using interviews as a method of the study, O‟Higgins (2002) found that the incisive thinking, the ability to make a beneficial contribution to the company inside and outside the boardroom, and practical business experience are the most important characteristics of effective non-executive directors in Ireland. Roberts et al. (2005) who also focus on the non-executive director explore the effectiveness of boards through an examination of the work and relationships of non-executive directors. Whilst other study use the board composition to measure effectiveness, Roberts et al. (2005) argue that the actual conduct of the nonexecutive vis-a` -vis the executive that determines board effectiveness. Through the interviews with 40 company directors, Roberts et al. (2005) find that non- executive‟s willingness to exercise independence is the key to effective board behavior. The results also suggest that traditional divisions between agency and stewardship theory do not adequately reflect the actual practice of the directors on board. The study concluded that corporategovernance reform will be challenged as it not supports the actual effectiveness of boards.
In addition, rapid advances in information technology and the Internet have changed the business environment (O’Brien & Robertson, 2009) and the roles of boards. For example, the Internet has become a major business tool, which makes the timeframe for decision- making shorter and faster (Wilson & Lombardi, 2001). As a result, Conger et al. (2001) urged that speed in action is critical to the effectiveness of the board. At the same time, as more corporations use the Internet to disseminate their financial information, the public is now able to gather more information about corporate performance (Xiao, Jones & Lymer, 2002). The ease of access to Internet stock trading has thus enabled more individuals to become shareholders of corporations (Taschler, 2004). This has led to many corporations having large and diverse types of shareholders. In effect, company governance has become more complex than ever before. In these ways, information technology has changed the functions of boards, creating situations that have never been faced before. Banks (2004) argued that if boards are unaware of the impact of technology development, especially concerning the technical aspects of business, they are unable to query or challenge company management effectively.
In addition, Bravo and Alvarado (2019) studied the analyses whether the role played by independent directors in monitoring the financial reporting process is affected by certain personal characteristics. Specifically, we focus on the tenure and the number of directorships that independent director’s hold. Their sample is composed of US listed firms for the period 2008–2012. After performing several robustness checks and sensitivity analyses, they have documented a positive association between board independence and financial reporting quality. However, this association is presented only for certain values of directors’ tenure and external directorships. This evidence suggests that the effectiveness of independent directors in their monitoring tasks is affected by these personal characteristics. In particular, our results indicate that long tenures and a high number of directorships compromise the ability to monitor. They further suggest the need for a more specific approach, based on the personal characteristics of independent directors, in order to study their influence on corporate decisions.
From the literature reviewed in this study, it has been established that corporategovernance is important in any modern business and asides the structures, processes and mechanisms, the corporategovernancemechanisms that will be discussed monitors and manages risks associated with the entity. According to Owolabi et al. (2013), he asserted that “the structure of governance comes from the political arena and the climate of the economy which are significant determinants of corporate leadership”. The reviews have however pointed to the fact that oversight responsibilities of the committee as internal audit, internal controls, reporting, external activities, code of ethics, risk management practices which explains the functions of corporategovernance in the history and taxonomy of international corporate finance.
Table 3 shows that the most preferred research design (33.33%) were Research and Development, followed by Experimental (16.67%), and Content Analysis (16.67%). The rest were diverse including Exploratory Design (5.55%), Action Research (5.55%), Descriptive Study (5.55%), Survey (5.55%), Mixed Method (5.55%), and Design-Based Research (5.55%). Based on those reported research designs, all the research studies focused on gaining primary data. This is due to the recent popularity of AR in educational setting (Akcayir & Akcayir, 2017), magnetizing researchers to put a great focus on developing AR applications (Martín-Gutiérrez et al. 2015), investigating the effectiveness of AR in educational setting (Yen et al., 2013), gaining teachers’ and students’ perception on AR (Kamarainen et al., 2013), and reporting details about AR (Jeřábek et al., 2014). The researchers also found an interesting research design known as Research-Based Design (DBR). The focus of DBR is to design and explore an array of designed innovations (The Design- Based Research Collective, 2002). DBR is a new design in educational-based research (Jeřábek et al., 2014), making this design remained scarce in the published literatures. Content Analysis was also quite scarce in the published literatures since most of the studies put a major interest in reporting newly development of AR (Zhu et al., 2014).
The relation of institutional changes and corporategovernancemechanisms in national governance systems to overall economic movements, and especially foreign direct investments has good evidence in the literature and the empirical analyses. Thus, it is apparent that the new way of functioning of the systems creates an endogenous competitive characteristics for the home companies due time, through the process of learning and cooperation with foreign companies or their capital.
However, there is little agreement on the appropriate combination of the mechanism of the positivist approach. For instance,  considers Board of Directors and audit committee in resolving agency conflict. However,  look at Venture Capitalist and financing arrangement. From these conflicting combinations of positivist stream it is evident that there is no appropriate mix of mechanism to resolve agency conflict. It is therefore not surprising the conclusion made by  that mechanisms proposed to mitigate agency problem remains contentious even after 75 years of conceptualization and development of empirical research in agency conflict. Future studies are expected to consider circumstances under which these mechanisms become effective.
The existing studies of diffusion of CG regulations around the world, particularly in emerging economies, usually focused on similarities between adopted codes and internationally accepted CG practices. These studies considered that isomorphism does not affect the substance of the codes. These studies emphasized similarities of CG regulations in developing countries with the Anglo-American model of CG (e.g. Siddiqui, 2010) while the differences were down-played. According to Aguilera and Cuervo-Cazurra(2009), prior studies assume that codes are equivalent across countries and can be analyzedusingone common variable or as a comparable independent variable. Although most of the codes diffused around the world shared common principles, codes vary significantly because they were introduced to resolve corporategovernance issues specific to a given country. Studies arguing that the adoption of CG regulations is the outcome of mimetic, normative, or coercive response to institutional pressures fail to capture the political bargaining process that takes place in determining the contents of the adopted regulations.
Recently the terms "governance" and "good governance" are being increasingly used in development literature. Bad governance is being recognized now as one of the root causes of corrupt practices in our societies. Major donors, institutional investors and international financial institutions provide their aid and loans on the condition that reforms that ensure "good governance" are put in place by the recipient nations. As with nations, corporations too are expected to provide good governance to benefit all their stakeholders. At the same time, good Corporates are not born, but are made by the combined efforts of all stakeholders, which include shareholders, board of directors, employees, customers, dealers, government and the society at large. Law and regulation alone cannot bring about changes in corporate to behave better to benefit all concerned. Directors and management, as goaded by stakeholders and inspired by societal values, have a very important role to play. The company and its officers, who, inter alia, include the board of directors and the officials, especially the senior management, should strictly follow a code of conduct, which should have the following desiderata:
At this level, important concrete measures are taken for corporategovernance. Organizations provide evidences demonstrating that it has adhered with the governance procedures articulated at previous stages. Furthermore board officially notifies executive management to implement policies and procedures and also engages internal audit or forensic accounting as independent assessing authorities (Fernando, 2009; Wilkinson & Plant, 2012; Enofe, Ekpulu & Ajala, 2015). Major emphasis is provided towards demonstration for controlling conflict of interest and highlighting and managing related party transactions. Gap analysis is also performed at this stage where board identifies potential gaps within its strategies and accordingly develop risk framework and risk management. At this level board also identifies skills and knowledge required at board level (Fernando, 2009; Switzer et al., 2015; Singleton & Singleton, 2010). Level 5- Mature:
55 committee's ability to effectively execute its duties (e.g., Abbott and Parker 2000; Beasley et al. 2000; Carcello and Neal 2000; Raghunandan, Read, and Rama 2001). An audit committee with independent directors with financial expertise should be able to conduct investigations when appropriate, assess risks and exposures, and comment on internal audit practices. The presence of an effective audit committee could substitute for some of the work of external auditors. Krishnan and Visvanathan (2006) observe that auditors price the effectiveness of the audit committee as it relates to the control risk and thus, the overall audit risk. They find that after controlling for several board and audit committee and firm characteristics, audit pricing is negatively related to accounting and financial expertise. In the post-SOX environment, and because of the attention corporategovernance has received in recent years, indicators such as an independent audit committee with at least one financial expert is an important signal of audit risk and audit fees reduction in the US. Therefore, consistent with prior literature, I conjecture that an effective (ineffective) audit committee would lower (increase) audit fees. However, this is in contrast to the demand-side argument that effective audit committees would require higher quality audits and, therefore, higher audit fees. As argued earlier in Chapter 3, the supply-side argument is more plausible in the stricter regulatory environment of the post-SOX era, where auditors are more concerned about their risks and have to provide more governance oriented assurances to the capital markets. Therefore, for the post-SOX setting, I hypothesise that:
Corporategovernance is a complex and multidimensional concept. A review of the literature shows that there is ‘no one size fit all' definition of corporate and it differs from professional, research interests, socio-economic, political, legal, and cultural systems, influence definitions of corporategovernance (Okike, 2007). The Organization for Economic Co-operation and Development (OECD) defined corporategovernance as ‘a set of relationships governing the various members of a corporation. It explains further that corporategovernance specifies the distribution of rights and responsibilities among different participants in the corporation while spelling out the rules and procedures for making decisions on corporate affairs. By doing this, it provides the structure for setting objectives, the means of attaining those objectives, and monitoring of performance (OECD, 1999, 2004). Shleifer and Vishny(1997) define corporategovernance as "dealing with the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment” (p.737). The authors further explained that corporategovernance deals specifically with difficulties of conflict of interest, design ways to prevent corporate misconduct which in turn protects the interests of stakeholders using incentive controls.According to Llewellyn and Sinha (2000), corporategovernance refers to ‘the mechanism, principles, and practices which establish the connection between management, the board of directors, and stakeholders in managing risks.’ In their opinion, it is concerned with mechanisms for accountability, monitoring, and control of bank’s management with respect to the use of resources and managing risks (Llewellyn & Sinha, 2000). Talbot (2012) has also defined corporategovernance broadly as the political, economic, social, and legal mechanisms, which govern the activities of a company. The author further indicates that corporategovernance is a mechanism for addressing public sector management, including transparency, accountability, regulatory reform, and public sector skills as well as providing good leadership.
1 INTRODUCTION Reports from the Association of Certified Fraud Examiners (ACFE) in 2017 estimated that 5% of the Gross World Product (GWP) of USD 79.6 trillion had experienced fraud (ACFE, 2014). While the results of the Indonesian fraud survey (SFI) show that corruption (31%), misuse of state or company assets (67%) and fraudulent financial statements (2%) (ACFE, 2016). The results of the SFI survey show that management behavior to commit corporate fraud is still high. The potential for corporate fraud in Indonesia is due to many factors such as low salary or bonus managers, political interests, and moral hazard. Bad behavior like this is detrimental to the company and its stakeholders (Harris & Bromiley, 2007). The impact of corporate fraud is not only detrimental to investors, customers, creditors, employees but damages the integrity of the capital market, social economy and economic growth. Corporate fraud will result in high operational costs of the company, and reduce profitability. Ethical point of view, corporate fraud as a result of individual failure to accept responsibility for managing the company and top management has neglected to run it (Staubus, 2005). The motivation of management to commit corporate fraud includes (Johnson, Ryan, & Tian, 2009), (Conyon & He, 2016) (Chen, Firth, Gao, & Rui, 2006a) incentive management and weak corporategovernance. Management bonus is the right tool to reduce agency problems. Information asymmetry (Jensen & Meckling, 1976) causes agency problems. Management that behaves opportunistically conducts activities that can benefit themselves without considering the interests of the owner.
mispricing caused by investor sentiment affects managers’ investment decisions. This paper further examines whether corporategovernance can moderate the relation between investor sentiment and investment decisions. Second, previous research of the impact of investor sentiment on investment decisions uses investment level as the main dependent variable. This paper employs the over-investment (under-investment) model introduced by Richardson (2006) to estimate the amount of over-investment and test whether investor sentiment has an adverse impact on investment decisions. Third, based on Baker & Wurgler’s (2006) methodology, this paper develops a composite index of investor sentiment through principal component analysis. Four proxy variables, including stock turnover, number of IPOs, consumer confidence index (CCI), and discretionary accruals are considered in the analysis. This composite index can better represent investor sentiment as it contains not only the market-wide and firm-level investor sentiment index but also the direct and indirect investor sentiment index. Fourth, due to the diversity and interchangeability of corporategovernancemechanisms (Bathala & Rao, 1995), the quality of a firm’s corporategovernance cannot be judged simply by the effectiveness of a single mechanism. This paper follows the method used by Bushman, Chen, Engel, and Smith (2004) and Young and Wu (2009) to integrate various corporategovernance variables into a composite index of corporategovernance. With this index, this paper further examines whether corporategovernancemechanisms can mitigate the adverse impact of investor sentiment on investment decisions.
reports of 111 Nigerian non-financial listed companies in the context of agency theory. In addition, data were collected from the companies in respect of their internal auditing using the questionnaire as these are not available in the annual reports. The findings provide evidence that the block-holders significantly relate to monitoring mechanisms. Thus, this paper provides a new knowledge regarding monitoring mechanisms and its antecedents (directorship, internal and external auditing). These findings are with policy implications for the board of directors to implement their monitoring responsibilities. The findings also suggest policy implications for the internal and external auditors. The findings are useful for further review of corporategovernance guidelines by the regulatory agencies and government. The paper contributes to knowledge in Sub-Saharan Africa, Nigeria in particular by examining block-holders in relation to the aggregate cost of monitoring mechanisms (directorship, internal and external auditing).
Abstract: This study aims to examine the role of corporategovernance in relation to the size of the company and leverage earnings management. Earnings management concept adopted the Modified Jones Model measured using a proxy discretionary accruals. Samples are manufacturing companies listed in Indonesia Stock Exchange period 2014 - 2017. The sampling method with purposive sampling. Data were analy l ed using Moderated Regression Analysis (MRA).
Research conducted by Ratmono, Purwanto, and Nur (2014) argue that companies generate reports corporate social responsibility performance that good only done to make the stakeholders mistaken in decision-making, so that stakeholders are willing to invest their capital in companies which have the performance of corporate social responsibility positive. A similar research conducted by Sari and Sidharta (2014) found evidence that corporate social responsibility activity has a positive influence on earnings management. This is consistent with agency theory that the management give corporate social responsibility report can be used as a tool to demonstrate the company's financial capabilities in an effort to provide a good social activities to stakeholders. Behavior imaging this carried by the company management that do earnings management. Thus, it can be interpreted that the company's management give information reporting results performance corporate social responsibility activities are good only to cover the actions of managers who perform earnings management. Based on the explanation, then the research hypothesis that can be developed are:
Dennis and McConnell  defines corporategovernance as “… the set of mechanisms that maintain an appropri- ate balance between the rights of shareholders … and the needs of the board and management to direct and manage the corporation’s affairs.” The corporategovernancemechanisms may help resolve the two sets of conflicts: between owners and managers, and between controlling shareholders and minority shareholders. It consist own- ership structure, board of directors, executive compensa- tions, financial disclosure, etc. In this paper, we consider and assess ownership structure (e.g. concentration own- ership), board of directors (e.g. board size, proportion of independent directors, the duality of CEO), and the man- agers (e.g. the top3 executive compensations), which effect on earnings management.