Board Effect and the Moderating Role of CEOs/CFOs on Corporate Governance Disclosure: Evidence from East Africa

Samuel Fulgence, Agyenim Boateng, Yan Wang and Frank O. Kwabi
Additional contact information
Samuel Fulgence: Leicester Castle Business School, De Montfort University Leicester, UK
Agyenim Boateng: Leicester Castle Business School, De Montfort University Leicester, UK
Yan Wang: Nottingham Business School, Nottingham Trent University, Nottingham, UK
Frank O. Kwabi: Leicester Castle Business School, De Montfort University Leicester, UK

The International Journal of Accounting (TIJA), 2023, vol. 58, issue 03, 1-50

Abstract: SynopsisThe research problemThis study examines the effects of board size and board independence, as well as the interaction effect between board independence and CEOs/CFOs on corporate governance disclosure practices.MotivationDespite corporate governance (CG) reforms around the world, research evidence indicates that the levels of corporate governance disclosures (CGDs) in developing countries remain poor due to weak institutions and corporate governance systems. In particular, the corporate boards as a key mechanism of CG and the board nomination processes in East Africa remain largely opaque and dominated by majority shareholders, chief executive officers, and chief finance officers (CEOs/CFOs), giving rise to opportunistic behaviors that may be detrimental to firm value. The distinctive feature of the board nomination process/CG system in East Africa has implications for monitoring and corporate governance disclosure practices and compliance and calls for systematic research in this under-explored subject.HypothesesH1: The association between board size and corporate governance disclosure will be positive.H2: The association between board independence and corporate governance disclosure will be positive.H3a: The presence of the CEO on the nomination/remuneration committee will negatively moderate the relationship between board independence and corporate governance disclosure.H3b: The presence of the CFO on the nomination/remuneration committee will negatively moderate the relationship between board independence and corporate governance disclosure.H3c: The presence of the CEO and CFO on the nomination/remuneration committee will negatively moderate the relationship between board independence and corporate governance disclosure.Target populationStakeholders including firm managers, practitioners, regulatory authorities, policymakers, and investors.Adopted methodologyOrdinary least squares (OLS), fixed-effects model, and system generalized method of moments (GMM).AnalysesUsing a large and hand-collected dataset comprising 1000 firm-year observations from 2007 to 2017 in East Africa, this study develops a corporate governance disclosure index (CGDI) of East Africa consisting of 164 provisions. To test our hypotheses, this study adopts three analytical approaches, namely OLS and fixed-effects (FE) regressions and the two-stage system GMM to address the endogeneity concerns.FindingsWe find that large boards and independent directors are associated with greater disclosure of CG information. Our analysis suggests that CEO/CFO power negatively moderates the link between board independence and corporate governance disclosure, unlike those environments with stronger institutions and corporate governance systems. Thus, firms whose CEO and CFO are involved in remuneration or nomination committees disclose less CG information. The combined effect of the CEO and CFO on selection and remuneration committees and an independent board in reducing corporate disclosure appears more pronounced for the post-financial crisis period compared with the crisis period.

Keywords: Corporate governance disclosure; board independence; board size; CEO/CFO effect; East Africa (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S1094406023500087
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:tijaxx:v:58:y:2023:i:03:n:s1094406023500087

Ordering information: This journal article can be ordered from

DOI: 10.1142/S1094406023500087

Access Statistics for this article

The International Journal of Accounting (TIJA) is currently edited by A. Rashad Abdel-khalik

More articles in The International Journal of Accounting (TIJA) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().