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Trustee board diversity, governance mechanisms, capital structure and performance in UK charities

Mohamed Elmagrhi Orcid Logo, Collins G. Ntim, John Malagila, Samuel Fosu, Abongeh A. Tunyi

Corporate Governance: The International Journal of Business in Society, Volume: 18, Issue: 3, Pages: 478 - 508

Swansea University Author: Mohamed Elmagrhi Orcid Logo

Abstract

Purpose: We investigate the association among trustee board diversity (TBD), corporate governance (CG),capital structure (CS) and financial performance (FP) using a sample of UK charities. Specifically, weinvestigate the effect of TBD on CS, and ascertain whether CG quality moderates the TBD-CS nexu...

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Published in: Corporate Governance: The International Journal of Business in Society
ISSN: 1472-0701
Published: Emerald 2018
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URI: https://cronfa.swan.ac.uk/Record/cronfa53271
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spelling 2020-10-19T12:23:51.3795009 v2 53271 2020-01-15 Trustee board diversity, governance mechanisms, capital structure and performance in UK charities 4def956b7e2d996ad0bfbfcb710b7ef6 0000-0003-3803-8496 Mohamed Elmagrhi Mohamed Elmagrhi true false 2020-01-15 BAF Purpose: We investigate the association among trustee board diversity (TBD), corporate governance (CG),capital structure (CS) and financial performance (FP) using a sample of UK charities. Specifically, weinvestigate the effect of TBD on CS, and ascertain whether CG quality moderates the TBD-CS nexus.Additionally, we examine the impact of CS on FP, and ascertain whether the CS-FP nexus is also moderatedby TBD and CG quality.Design/methodology/approach: We employ a number of multivariate regression techniques, includingordinary least squares, fixed-effects, lagged-effects and two-stage least squares to rigorously analyse the dataand test the hypotheses.Findings: First, we find that trustee board gender diversity has a negative effect on CS, but this relationshipholds only up to the point of having three women trustees. We find similar, but relatively weak results for thepresence of Black, Asian and Minority Ethnic trustees. Second, we find that the TBD-CS nexus depends onthe quality of CG with the relationship being stronger in charities with higher frequency of meetings,independent CG committee, and larger trustee and audit firm size. Third, we find that CS structure has apositive effect on FP, but this is moderated by TBD and CG quality. Our evidence is robust to differenteconometric models that adjust for alternative measures and endogeneities. We interpret our findings withinthe explanations of a theoretical perspective that captures insights from different CG and CS theories.Originality/value: Existing studies on TBD, CG, CS and FP in charities are rare. Our study distinctivelyattempts to address this empirical lacuna within the extant literature by providing four new insights withspecific focus on UK charities. First, we provide new evidence on the relationship between TBD and CS.Second, we offer new evidence on the moderating effect of CG on the TBD-CS nexus. Third, we provide newevidence on the effect of CS on FP. Finally, we offer new evidence on the moderating effect of TBD and CGon the CS-FP nexus. Journal Article Corporate Governance: The International Journal of Business in Society 18 3 478 508 Emerald 1472-0701 trustee board diversity, women and ethnic minority trustees, governance mechanisms, capital structure and performance, charities, UK 4 6 2018 2018-06-04 10.1108/cg-08-2017-0185 http://dx.doi.org/10.1108/cg-08-2017-0185 COLLEGE NANME Accounting and Finance COLLEGE CODE BAF Swansea University 2020-10-19T12:23:51.3795009 2020-01-15T12:15:05.0712412 Mohamed Elmagrhi 0000-0003-3803-8496 1 Collins G. Ntim 2 John Malagila 3 Samuel Fosu 4 Abongeh A. Tunyi 5 53271__16306__19bee016dde24010a11931e89ece0be6.pdf CGAcceptedManuscript_Jan_2018.pdf1.pdf 2020-01-15T12:17:50.2228564 Output 698870 application/pdf Accepted Manuscript true true eng
title Trustee board diversity, governance mechanisms, capital structure and performance in UK charities
spellingShingle Trustee board diversity, governance mechanisms, capital structure and performance in UK charities
Mohamed Elmagrhi
title_short Trustee board diversity, governance mechanisms, capital structure and performance in UK charities
title_full Trustee board diversity, governance mechanisms, capital structure and performance in UK charities
title_fullStr Trustee board diversity, governance mechanisms, capital structure and performance in UK charities
title_full_unstemmed Trustee board diversity, governance mechanisms, capital structure and performance in UK charities
title_sort Trustee board diversity, governance mechanisms, capital structure and performance in UK charities
author_id_str_mv 4def956b7e2d996ad0bfbfcb710b7ef6
author_id_fullname_str_mv 4def956b7e2d996ad0bfbfcb710b7ef6_***_Mohamed Elmagrhi
author Mohamed Elmagrhi
author2 Mohamed Elmagrhi
Collins G. Ntim
John Malagila
Samuel Fosu
Abongeh A. Tunyi
format Journal article
container_title Corporate Governance: The International Journal of Business in Society
container_volume 18
container_issue 3
container_start_page 478
publishDate 2018
institution Swansea University
issn 1472-0701
doi_str_mv 10.1108/cg-08-2017-0185
publisher Emerald
url http://dx.doi.org/10.1108/cg-08-2017-0185
document_store_str 1
active_str 0
description Purpose: We investigate the association among trustee board diversity (TBD), corporate governance (CG),capital structure (CS) and financial performance (FP) using a sample of UK charities. Specifically, weinvestigate the effect of TBD on CS, and ascertain whether CG quality moderates the TBD-CS nexus.Additionally, we examine the impact of CS on FP, and ascertain whether the CS-FP nexus is also moderatedby TBD and CG quality.Design/methodology/approach: We employ a number of multivariate regression techniques, includingordinary least squares, fixed-effects, lagged-effects and two-stage least squares to rigorously analyse the dataand test the hypotheses.Findings: First, we find that trustee board gender diversity has a negative effect on CS, but this relationshipholds only up to the point of having three women trustees. We find similar, but relatively weak results for thepresence of Black, Asian and Minority Ethnic trustees. Second, we find that the TBD-CS nexus depends onthe quality of CG with the relationship being stronger in charities with higher frequency of meetings,independent CG committee, and larger trustee and audit firm size. Third, we find that CS structure has apositive effect on FP, but this is moderated by TBD and CG quality. Our evidence is robust to differenteconometric models that adjust for alternative measures and endogeneities. We interpret our findings withinthe explanations of a theoretical perspective that captures insights from different CG and CS theories.Originality/value: Existing studies on TBD, CG, CS and FP in charities are rare. Our study distinctivelyattempts to address this empirical lacuna within the extant literature by providing four new insights withspecific focus on UK charities. First, we provide new evidence on the relationship between TBD and CS.Second, we offer new evidence on the moderating effect of CG on the TBD-CS nexus. Third, we provide newevidence on the effect of CS on FP. Finally, we offer new evidence on the moderating effect of TBD and CGon the CS-FP nexus.
published_date 2018-06-04T04:07:28Z
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