Meta-analysis of corporate governance in Asia ”

Research on corporate governance has been conducted extensively over the past few decades. However, the result of various studies failed to produce conclusive insight. This study is aimed at identifying, classifying, analyzing and interpreting previous research on corporate governance in Asia by using meta-analytical approach. By using the HOMA (Hedges-Olkin Meta-Analytical) procedures, the current study collected eighty articles from journals ranging from 1999 until 2017. Data were gathered from empirical scientific papers. Through rigorous research process, the current study found that most previous research on corporate governance in Asia observed the patterns of influence of various types of ownership structure and board characteristics on corporate performance. Ownership by family, government, and management tend to have a negative impact on performance, whilst institutional ownership and foreign ownership show positive effect on performance. The study reveals inconsistent result for frequency of board meetings, existence of family members on board, outside director, and board independence towards performance. Similar finding appeared for the relationship of performance to women on board and CEO duality. CGPI as the Corporate Governance Perception index and board size were found to have a positive consistency on performance. Apart from limitations of the study, the result suggests that there exists institutional and environmental specificity in the study of corporate governance in Asia that may be different from other context of study so that future researcher need to take a precaution of this matter. Niki Lukviarman (Indonesia), Arief Prima Johan (Indonesia) BUSINESS PERSPECTIVES LLC “СPС “Business Perspectives” Hryhorii Skovoroda lane, 10, Sumy, 40022, Ukraine www.businessperspectives.org Meta-analysis of corporate governance


INTRODUCTION
Extensive research on corporate governance has resulted in significant implication on practices. Practical contribution of this field has generated amount of regulations and best practices to accelerate the companies to running well and properly based on the governance principles. However, research on corporate governance related issues is still evolving due to changes in organizational environment that need to be considered in an effort to maintain corporate sustainability. Among the context of research are corporations in emerging markets, particularly in Asia, that have received considerable attention in the course of the research on governance. Consequently, series of studies conducted by Credit Lyonnais Securities Asia (CLSA) showed that most companies in some Asian countries have poor corporate governance practices. This statement advances several questions: do corporate governance practices really matter in the context of Asia? Which dimensions should be accounted for as imperative factors in an effort to promote better corporate governance practices in this region?

LITERATURE REVIEW
After decades of investigation, particularly following the financial crisis in 1997, the result of various corporate governance research in Asia is still inconclusive. Scholars in this field, for example, found various results on the effect of corporate governance dimensions on company performance. However, the underlying problem of corporate governance is the separation of ownership and control and has been recognized by long traditions of scholars (Finkeilstein, Hambrick, & Cannella, 2009;Jensen & Meckling, 1976). Dispersed ownership structure as proposed by earlier scholars (Berle & Means, 1977) are less common around the world. Further study supported such a phenomenon through their findings that more than sixty percent of large corporations in twenty-seven richest countries have controlling shareholders (La-Porta, Lopez-de-Silanes, & Shleifer, 1999).
Concentrated ownership has been claimed for providing excessive power to the controlling owners to use corporate resources in favor of their interests at the expense of other stakeholders. On the other hand, the existence of concentrated ownership could increase shareholders' power to supervise management in an effort to control their activities that may deviate from the interests of corporate owner. In this regard, previous studies on the relationship between corporate ownership structure and firm performance reported various results and implications. Many scholars found a positive impact of a company that has ownership concentration ( Institutional ownership has been argued among favorable determinants of the companies' performance (Tam & Tan, 2007). The existence of large institution within ownership structure should increase supervisory process, particularly from large and more reliable institution. Several studies support positive roles of institutional ownership within a corporation (Darmadi, 2013; Husnin, Nawawi, & Salin, 2016; Shan & Mclver, 2011). However, some studies also found a negative impact of institutional ownership on corporate performance (Hu et al., 2010;Lu et al., 2009;Prabowo & Simpson, 2011). Mixed findings were also found on the effect of other types of ownership structure (i.e. CEO ownership, director ownership, and managerial ownership) on organizational performance.
The board of directors as an element of governance structure is positioned as the apex of the internal control system (Finkeilstein et al., 2009). The active role of board of directors in performing their supervisory and advisory tasks is an important element in the functioning of the corporation. Previous studies on the relationship between board of directors and firm performance also showed inconsistent results. For example, several studies found a positive relationship between board size and performance ( Corporate governance implementation is an essential factor that supports a company to maintain its competitiveness and sustainability in a dynamic business environment. Such practices may not only benefit the internal process of business, but may also generate external trust from investor, creditor, public, and other stakeholders. As such, corporate governance practices could be considered as the social capital and, hence, the strategic asset of a company to sustained in its environment. The significant importance of corporate governance could be reflected from continuous assessment of corporate governance practices by respective institutions such as the OECD. Furthermore, most countries in Asia have a local and independent institution, which is responsible for evaluating corporate governance practices for companies in their country (e.g. KNKG in Indonesia). Cheung and Chan (2004) argued that the imperative measures to enhance corporate governance practices in Asia region are more towards increased investor protection and information transparency. Both are believed able to improve the development of local capital market and promote foreign direct investment in an effort to alleviate the economy of each country. However, prior to adopting and complying with corporate governance best practices, each country has to focus on adjusting their regulation standards and best practices (OECD, 2014). As has been further argued by the OECD (2004) that corporate governance should be an evolutionary process, overemphasis on standardization will contradict the uniqueness of each country, such as its legal system, corporate structure, and local culture.
From the historical perspective, there are considerable challenges on regional governance best practices and standardization. All countries share an idiosyncratic style of nationalism, which, in turn, determined the distinct approach (Filatotchev, Jackson, & Nakajima, 2013), which may lead to divergent perspective on corporate governance implementation. As such, a unique governance culture is expected to be discovered in any country, followed by various level of enforcement, and the specificity of corporate governance rule and practices. Consequently, without considering regional best practices as an individual tool in assessing the corporate governance implementation of any country, it potentially misleads the conclusion of the study. This is in a corollary with the argument that change or improvement of corporate governance practices should be consistent with surrounding value and the corporate environment as the context of implementation (Nakamura, 2011).
Previous literatures have discussed various dimensions of corporate governance, such as corpo-rate governance structure and mechanism (Jaffar & Abdul-Shukor, 2016), the structure and composition of the board (Goyal & Park, 2002), discretion and supervision intensity, among others (Hu et al., 2010 Although various variables related to corporate governance have been investigated, most scholars tend to use similar theoretical strands. The most widely used perspective is the agency theory in various versions, although there are also significant numbers of researches that used stewardship theory. According to Eisenhardt (1989), both agency and stewardship theories rest upon distinct and opposite assumptions, but some research contradicted and compared such theories (Christie & Zimmerman, 1994;Martynov, 2009).
Agency theory assumed the manager (the agent) as hired hands, and, hence, they will be more interested in their own welfare than the return to the shareholders (the principal) (Eisenhardt, 1989;Jensen & Meckling, 1976). On the other hand, shareholders will be more concerned about the return on their investment, which often neglected the rights of that manager. Such assumption will give rise to conflict of interests or be widely known as the agency problems, which must be mitigated. Agency problems occur when there is a lack of agreement between owners and management. In the practice of modern management, it is difficult for the owners to control manager's action (Finkeilstein et al., 2009). Another potential hazard could originate from distribution of risk and return for each party (Martin-Ortega, 2008). Managers have the incentive to ignore high risk profile, which will likely decrease their reputation and position, but the cost will be borne by shareholders by losing potential return on their invested capital.
On the contrary, stewardship theory views manager as the guardian of shareholders' investment, and the guardian is taking the companies' assets in order to fulfill their higher needs of achievement and self-actualization (Donaldson & Davis, 1991). The executives of the companies hold a view that they are attached to the existence of companies, and the reputation of companies is also their reputation. Consequently, this perspective viewed that the interests of shareholders and managers are aligned, since there exists insignificant conflict of interest among parties due to the assumption of the theory.
As has been argued previously, ownership structure is one of the most investigated dimensions of corporate governance research. The amount and pattern of stock ownership may have an effect on managerial behavior and, finally, affect corporate performance (Jensen & Warner, 1988). Amongst ownership variables, the most frequently used in previous studies are ownership concentration, director ownership, CEO ownership, managerial ownership, institutional ownership, and government ownership. However, differences in institutional context, economic, and other environmental factors might have different impacts on the relationship between corporate ownership and performance.
Another dimension of corporate governance identified in previous research is the existence of board of directors in a company. The active role of board of directors in performing their supervisory and advisory tasks is believed to be an efficient and less expensive governance mechanism than other external governance mechanisms (Hu et al., 2010). In this regard, board of directors can undertake potential conflict of interest between managers and shareholders. However, the position and composition of the boards differs considerably from country to country (Denis & McConnel, 2003;Moerland, 1995). Several variables that have been found in previous studies are board size, outside director, board independence, women on board, family members on board, among others. Filatotchev et al. (2013) argued that there are differences in corporate governance contexts across countries and they can be seen to change over time. As a consequence, there is no specific corporate governance system, which is appropriate for every company and all countries. It might be argued that the cultural aspects in the society, where the governance system exists, could be seen as a context specificity that determines governance system in one country (Kuada & Gullestrup, 1998). Differences in context and specificity of governance system will further determine the effectiveness of the system and its enforcement. In the context of Asian countries, as in many emerging and developing economies, there exist salient features corporate governance system that do not necessarily follow the system that could be found in the developed countries.
This study focused on the attempt to identify consistency of previous studies on corporate governance in Asia by using meta-analytical approach. The pattern of previous studies under observations will be identified by using HOMA (Hedges-Olkin Meta-Analytical) procedures. This paper only observed previous research on corporate governance with the focus on the direct relationship between ownership and performance in the Asian context.

Sample and coding
In order to identify population of corporate governance studies in Asia, several electronic databases were explored. Searching strategy is to collect as many relevant articles as possible in Emerald Insight, EBSCOhost, ProQuest, JSTOR, ScienceDirect, and Google Scholar. The process was conducted using the keywords "corporate governance", "board of directors", "board char-acteristics", "ownership structure", and "Asia". In order to accumulate relevant articles based on a specified country in the Asian continent, several search also used the name of countries in Asia. Further, to obtain more articles, searching strategy also employed the snowball approach. We also tracked references of relevant articles that have been selected to find previous studies. As such, this strategy yields 77 articles, which were all published in the refereed academic journals, as provided in the following table.
The abovementioned articles contain diverse variables related to corporate governance that are commonly used by researchers in the field for research associated with company's performance. In relation to performance indicators, we also found various indicators that could be categorized under accounting and/or market performance. However, this study was limited to articles that included Pearsoncorrelation in their analysis, and the scores of correlations between dependent and independent variables were coded and tabulated. Pearson product-moment correlation (r) is used as the effect size in further process of analysis. The basic argument to use this procedure is that the measurement was more easily interpretable and scalefree of linear relationship so that it is commonly used in meta-analytical research (Essen et al., 2012). As described by Hedges and Olkin (1985), the optimal measure of effect size is the inverse variance of weight (w) so that the use of such weights, meta-analysis mean effect size, standard error, and confidence interval could be calculated more precisely.

RESULTS AND DISCUSSION
After reviewing the selected articles based on the abovementioned procedures, this study generated 14,505 observations, which contain 16 identified independent variables. Numbers of the study included in the analysis range from 6 to 40 results. In the process of pre-coding, we identified and confirmed that each independent variable has similar conceptual meaning across the corresponding study. The following table describes the selected variables, which will be used for further analysis.
Further classifications of variables used in the previous study on corporate governance issues and performance show several important aspects. The issue related to ownership structure of a company was the most prominent phenomenon involved in corporate governance studies, and ownership concentration is the most common variable in corporate governance studies in Asia. It might be argued that ownership structure is the imperative determinant of corporate governance in Asia. This is in line with the argument that ownership concentration and composition are key aspects of corporate ownership (ADB, 2000) and the structure of and concentration of shareholding are two elements that may limit the role of corporate control (Lannoo, 1999 , 1997). Consequently, the type of agency problems will also deviate from traditional managers-shareholders conflicts, as can be found in firms with widely-dispersed ownership. When ownership is concentrated to a level at which the owners obtain effective control of the firm, the nature of the agency problem shifts to conflicts between controlling or majority shareholders and minority shareholders. The fact that significant amount of companies characterized by concentrated family ownership in Asia, particularly those of South East Asian countries, the existence of family members on board has less number of observations. CEO duality is not common in some countries in Asia, especially for countries that adopted the Civil Law tradition following the Continental European model of governance. Our finding suggests that significant number of research utilizes this variable, which may imply that CEO's power could be considered as an important dimension shaping corporate governance practices.
The results were generated using HOMA analysis on Pearson product-moment correlation of each variable on performance for every sample included in the studies. The result of HOMA procedures indicated there are several relationships of corporate governance variables that show consistent and significant relationship with performance. This study identifies 7 among 16 investigated variables that have significant size effect on companies' performance on our observations. Such variables are family ownership, institutional ownership, government ownership, CG index, board size, foreign ownership, and managerial ownership. All of these variables are found to have consistent and significant relationship with performance ( Table 3 detailed the results of HOMA procedure).
The result shows that family ownership has a negative impact on the companies' performance (Z = -5.017, p < 0.01). This result may imply that higher proportion of family ownership in the firms in Asia suggests that there exists expropriation, which, in turn, could negatively affect the company's financial performance. This argument is confirmed by previous study of Claessens et al. (1999) that concentration of ownership by family provides them with the ability and incentive as controlling shareholders to deprive the rights of minority shareholders. Subsequent study by Claessens et al. (2000) on 2,980 East Asia's corporations indicated similar evidence that controlling shareholders dominated companies' resources. Moreover, significant share owned by family will increase the incentive of controlling shareholders for tunneling company's resources, and also decrease managerial discretion trough excessive supervision.
This study also found that the relationship between government ownership and performance is negative and consistent (Z = -3.03, p < 0.01). This result suggests that the significant amount of stock owned by government tends to influence organizational performance negatively. Such high block of government ownership might trigger property rights and political agency problems. This is because government administrator has an incentive to force their interest by using company's resources at the expense of the interest of other shareholders. Moreover, a large amount of ownership by government may also trigger managerial selection problems through assigning peoples who are connected, and could voice the interests on board of directors and/or key managerial positions.
Similar result was also found on the relationship between managerial ownership and performance (Z = -2.59, p < 0.05). The relationship between these variables indicated a significant negative effect of shares hold by management. The result implied that considerable amount of managerial ownership intensifies the agency conflicts among shareholders in a company. By considering the context of research, it might be argued that corporate culture of corporations in some countries in Asia (such as Thailand, Indonesia, and Malaysia), which is characterized with concentrated family ownership, still retained large portions of family in the board and/or key management positions.
On the contrary, positive relationship was observed between institutional ownership and companies' performance (Z = 6.52, p < 0.01). This relationship indicated that higher proportion of institutional ownership in a company may increase organizational performance. The result confirms (Djankov, 1999;Chung et al., 2002) that large institution may have better monitoring skill that could increase management efficiency while reducing earnings management hazard from top management. Additionally, management, which is supervised by a large institution, will feel under pressure and, hence, perform carefully, as have been argued in previous studies (Chaganti & Damanpour, 1991;Shleifer & Vishny, 1986).
Positive result was also found in the relationship between foreign ownership and performance (Z = 2.97, p < 0.01). Such result indicated that favorable results will probably increase with higher proportion of shares by foreign ownership. As such, significant portion of for-

CONCLUSION
After extensive review of previous study on corporate governance issue, various variables are found that could be considered as the determinant of company's performance. Our analysis revealed sixteen dimensions of corporate governance, which have sufficient number of investigation in previous studies. In order to seek the consistency of the research, HOMA procedure was used. Based on the analysis, ownership structure appeared as the most frequently investigated variable in corporate governance research in the Asian context. However, although the study has considered the essential dimension in the Asian environmental setting, the relationship between various types and classifications of ownership structure and performance is not consistent among previous studies included in this observation.
Institutional ownership was found as the favorable dimension for Asia's firm. It may imply that the existence of institutional owner within ownership structure of a company could increase supervision quality and, in turn, produce a positive impact on performance. In a similar vein, high number of board members could also be considered as favorable circumstance of corporate governance structure in Asia. Such condition could be argued as the reflection on the importance of large teamwork and there exists division of tasks among board members that may affect effective corporate governance implementation and board supervision. Our findings also showed that most firms in Asia also need to consider continuous assessment of overall aspects of corporate governance implementation by independent institution by using Corporate Governance Perception Index (CGPI). Regular assessment and evaluation could help companies to establish and develop necessary measures to improve their corporate governance implementation.
Undesirable impact should also be anticipated by a company on the type and patterns of ownership structure. Our results showed that most companies in Asia have been identified to have high level of family ownership, government ownership, and managerial ownership. High level of family and government ownership found in most companies in Asian countries might have different implications on traditional agency problems in countries, where most of the companies are characterized by dispersed ownership. As such, traditional agency problems are not only between owner and manager, but also between controlling (family-owned) and non-controlling (minority) shareholders. However, our findings observed a negative effect of managerial ownership on performance, which is contrary to the most research outcomes for companies in most developed countries.
This study collected, classified, analyzed and interpreted data from previous study on corporate governance and firm performance in various countries within the Asian region. As such, it may suffer from the problem of endogeneity between ownership structure and institutional environments. Although located in the same Asian continent, the countries within may have different legal and institutional contexts. It means that different legal traditions in various countries in the Asian region may have an effect on different effectiveness of governance mechanisms, outcomes, and enforcement. Characteristics of meta-analytical studies may also have an impact on the result of observations, as it considered only the direct effect of independent variables on dependent variables. As such, this study disregarded indirect effect of mediating or moderating variables on the relationship between ownership structure and performance in the study.  (7), 637-