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Conceptualising the Corporate Governance Issues of Fintech Firms

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The Fourth Industrial Revolution: Implementation of Artificial Intelligence for Growing Business Success

Part of the book series: Studies in Computational Intelligence ((SCI,volume 935))

Abstract

The board of directors plays a vital role in reducing the divergence of interest, which effectively alleviates agency problems. This study aims to highlight the current corporate governance issues which Fintech firms are facing. This line of enquiry is necessary as a majority of Fintech firms are collaborating with the listed firms, and quality corporate governance is vital to protect the shareholders’ rights. Fintech governance structure faces four key challenges: lack of anti-misconduct policy, CEO duality, over-boarded directors, and the inability of audit firms to detect fraud. Organization for Economic Co-operation and Development (OECD) provides a guideline for corporate governance, suggesting that anti-misconduct policy is a sign of better governance. The agency theory postulates that concentration of power weakens corporate governance mechanism; thereby, CEO duality and over-boarded directors are the indicators of weak governance. Also, the supervisory structure of Fintech firms is different than counterparts, which hinder the audit firms to deduct any financial misstatement. Based on the literature, we find that the Fintech firms lack anti-bribery policy and prone to have CEO duality, over-boarded directors and audit firms’ failure to detect fraud. It implies that the Fintech firms have embedded weak governance mechanisms, which will expropriate the shareholders’ right after the listed firms’ collaboration. The governance issues are not merely a technical issue of the Fintech firms, as it may cause financial instability across the world.

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Notes

  1. 1.

    OECD was founded in 1961, it operates for the world trade and economic growth. Currently, OECD has 36 countries as member world-wide.

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Authors and Affiliations

  1. Taylor’s University, Subang Jaya, Malaysia

    Khakan Najaf & Rabia Najaf

  2. IPE Management School Paris, Paris, France

    Alice Chin

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  1. Khakan Najaf
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  2. Alice Chin
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  3. Rabia Najaf
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Correspondence to Khakan Najaf or Alice Chin .

Editor information

Editors and Affiliations

  1. College of Business and Finance, Ahlia University, Manama, Bahrain

    Allam Hamdan

  2. Information Technology Department, Faculty of Computers and Information, Cairo University, Giza, Egypt

    Aboul Ella Hassanien

  3. College of Business and Finance, Ahlia University, Manama, Bahrain

    Anjum Razzaque

  4. Middle East Technical University - Northern Cyprus Campus, Kalkanlı, Güzelyurt, KKTC, Turkey

    Bahaaeddin Alareeni

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Najaf, K., Chin, A., Najaf, R. (2021). Conceptualising the Corporate Governance Issues of Fintech Firms. In: Hamdan, A., Hassanien, A.E., Razzaque, A., Alareeni, B. (eds) The Fourth Industrial Revolution: Implementation of Artificial Intelligence for Growing Business Success. Studies in Computational Intelligence, vol 935. Springer, Cham. https://doi.org/10.1007/978-3-030-62796-6_10

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