2017, Yarram, Subba Reddy, Rice, John

How firms determine the pay of their executive employees is a vital research area. In the Australian context, mining firms form a large portion of listed companies. These miners tend to have more volatile earnings, operate with less certainty and higher risk in relation to capital investment. We look at a sample of ASX listed miners and non-miners from 2005 to 2013. We note that miners pay their CEOs less (AUD 1 m vs AUD 1.5 m for non-miners) overall. However, we also note that miners tend to use enhanced contingent long-term remuneration arrangements to significantly boost the pay-performance relationship compared to non-miners particularly during the pre-GFC period. Curiously, non-miners tend to have more generous short-term contingent arrangements linking executive pay and performance. The GFC, as an event, has adversely impacted these arrangements, lessening the generosity of pay-performance among miners, while enhancing these arrangements among non-miners. Overall, the results of the study provide support for optimal contracting theory and do not generally support the managerial power approach for both mining and non-mining firms.

2010, Yarram, Subba Reddy

The present study analyses the capital structure choice of Malaysian firms for the period 1993 - 2003. Debt levels have increased substantially after the 1997 East Asian Financial Crisis. Analysis shows that tangibility has no significant influence on leverage in both pre-crisis and post-crisis periods. This finding contradicts the findings of earlier studies. Similarly profitability does not appear to have any influence on leverage during both pre-crisis and post-crisis periods. Size has significant negative influence on leverage in both pre and post crisis periods. One plausible reason could be that investors have more information about large companies and are willing to supply equity to these firms as suggested by information based theories of capital structure. Growth as expected has significant negative influence on leverage in both periods. This is consistent with information based theories of capital structure that suggest that growth firms face more uncertainty compared to stable mature firms and may therefore choose to have less leverage. Tax-based explanations of capital structure suggest that presence of non-debt tax shields obviates the need for leverage. However, analysis shows that NDTS has positive impact on leverage in both periods thus rendering tax-based explanations untenable in the Malaysian context. Liquidity has significant negative influence during the pre-crisis period while it has no significant influence during the post-crisis period. Volatility has significant influence on leverage though the degree of influence appears to be small in both periods. Stock price performance has negative influence on leverage in both periods indicating possible equity offerings rather than debt offerings as firms may be timing their equity issues. Thus there is support for information based explanations of capital structure.

2011, Yarram, Subba Reddy

The present study makes an important contribution to the growing literature on international corporate governance by finding a significant relationship between board independence and average dividend payout of a sample of 413 Australian firms for the period 2004 to 2009. This finding implies that firms with highly independent boards contribute to corporate governance by allowing dividends to play significant disciplinary and monitoring roles. These findings are consistent with free cash flow hypothesis (Jensen, 1986) and agency cost view of Easterbrook (1984). The study also finds that board size (median of seven directors) and board independence (median of 75 per cent) in the study period of 2004 to 2009 compare remarkably similar to the findings for the year 1996 by Kiel and Nicholson (2003). However chairman-CEO duality has considerably reduced to 5.2 per cent in 2004-2009 period compared to 23 per cent in 1996. Board size and duality have no significant influence on the dividend payout of Australian firms when controlled for other variables identified in prior literature, however, board independence continue to exert significant positive influence on average dividend payout.

2005, Yarram, SR, Rath, S

This study examines the dividend behavior of Indian corporate firms in an emerging market (India), identifying characteristics of dividend payers and nonpayers from 1991 to 2001. Dividend trends for a large sample of stocks traded on Indian markets indicate that the percentage of companies paying dividends declined, from over 57 percent in 1991 to 32 percent in 2001, and that only a few firms paid regular dividends. Even though regular payers consistently paid higher dividends than did other firms, on average, Indian firmsbecame less likely to pay dividends by the close of the century. Dividend-paying companies were likely to be larger and more profitable than nonpaying companies, though growth opportunities do not seem to have significantly influenced the dividend policies of Indian firms.

2012, Yarram, Subba Reddy

The present study analyses the relationship between ownership structure and capital structure of a sample of 465 Australian firms for the period 2004 to 2010. An examination of leverage levels show that long-term debt accounts for nearly three-fourths all debt or approximately 13 per cent of total capital for large Australian firms. Global financial crisis appears to have no significant impact on leverage levels of Australian firms. Managerial ownership in Australian firms is very small on an average with less than 1 per cent shareholding held by both independent and non-independent directors. Pooled OLS analysis shows evidence of a significant non-linear relationship between ownership structure and capital structure. Blockholders have a significant positive influence on capital structure but as their shareholding increases, the impact turns to be negative. Managerial ownership on the other hand has no influence on capital structure but has impact on short-term debt levels. This relationship between blockholder ownership and capital structure is spurious and does not persist when endogeneity and unobserved heterogeneity are taken into account. Panel data analysis shows no significant relationship between ownership structure and capital structure of Australian firms.

2013, Yarram, Subba Reddy

This study examines the factors influencing decision to buyback shares in Australia. Analysis of a sample of non-financial firms included in the All Ordinaries Index for the period 2004 to 2010 show that size has significant positive influence on the decision to buyback shares. There is limited support for the view that firms buyback shares in order to reach their target optimal capital structure. The present study finds no evidence of undervaluation influencing buyback decisions of Australian firms.

2010, Yarram, Subba Reddy, Balachandran, Balasingham

The present study analyzes the causal relationship between managerial ownership and corporate performance in an emerging market setting. We analyze 606 non-financial firms listed on the Bursa Malaysia (formerly Kuala Lumpur Stock Exchange) for the year financial year 2004. We find that total directors' percentage shareholding on boards of Malaysia (of 32%) is substantially higher than that is reported in case of US and UK. Further analysis shows that managerial ownership as measured by total percentage shareholding of directors has no influence on corporate performance. We analyze the endogeneity of directors' total ownership, corporate value and investment using simultaneous equations analysis. Market capitalization as expected has a negative impact on managerial ownership. The finding implies that as firm size increases risk-averse managers may not want to concentrate their personal wealth in a single firm thus leading to diffusion of ownership. The present study also finds that Tobin's Q has no significant influence on managerial ownership. In summary, managerial ownership has no significant impact on corporate value and investment and in turn corporate performance has no influence on managerial ownership. Perhaps political connections may have a pervasive influence on corporate decisions in Malaysia as suggested by Johnson and Mitton (2005).

2010, Farooque, Omar, Yarram, Subba Reddy

This study examines the interrelationships between foreign direct investment (FDI) inflows and country-level corporate governance in a large sample of countries for 2004. Building on the new paradigm shift of FDI attractiveness towards a host country's existing corporate governance environment, accounting/disclosure standards, property rights, openness of markets and legal/institutional infrastructure, this study provides new evidence of a significant positive bi-directional relationship between corporate governance and FDI. However, there is no significant effect of adoption of international accounting standards and legal origin on improving corporate governance and FDI inflows in the recipient country. But disclosure has significant positive impact on FDI inflows. While ownership diffusion has a significant positive effect on corporate governance, it shows a negative influence on FDI inflows. These evidences provide policy makers an insight to frame county-level strategy and implement appropriate measures in attracting FDI and improving quality of country-level corporate governance in an internationally competitive environment.

2014, Vaidun Vidyadhar, Sujatha, Hovey, Martin, Yarram, Subba, Teale, John

The quality of risk oversight by a company's board of directors is of critical importance in preserving shareholder value and protecting stakeholder interests. The research for this thesis was aimed at constructing a Risk Governance Index (RGI) which sought to measure the quality of risk oversight by the board of directors in the parent companies of life insurance companies registered with the Australian Prudential Regulatory Authority (APRA). The thesis contributed to research in the financial services sector. The RGI enables regulators and shareholders to monitor whether the board of directors is discharging its duties and responsibilities effectively to protect and enhance shareholder investment, as well as the interests of the depositors and policyholders of a regulated financial institution.

2012, Yarram, Subba Reddy

The present study analyses influence of board structure and cash holdings on the value of Australian firms for the period 2004 to 2010. Australian Stock Exchange (ASX) adopted the Principles of Good Corporate Governance Guidelines in 2003 and Australian firms have started adopting these principles starting 2004. Similarly the reporting framework of Australian firms is harmonized with the rest of the world with adoption of Australian International Financial Reporting Standards (AIFRS) starting in 2004. Corporate cash holdings despite their significance have not been considered extensively in prior literature outside the US. Cash holdings may have significant influence on the value of the firm as too much excess cash may lead to misuse of these funds by entrenched managers. Corporate governance has a role to play in maintaining appropriate cash holdings and their use. The present has two objectives: it considers the influence of corporate cash holdings on the value of Australian firms; and it examines the role of board structure on the relationship between cash holdings and value of the firm. The present study considers all non-financial firms that are part of the All Ordinaries Index (AOI). The present study constructs Fama French 25 portfolio and estimate the excess return as the difference between actual return and the average return of the relevant FF portfolio. OLS analyses show that board independence has no significant impact on the value of the firm though cash holdings have significant influence. Analysing using panel data methods however unearth the significant influence of board independence on the value of Australian firms.