Canadian Corporate Research Articles

Mapping a corporate governance exchange: a survey of Canadian shareholder resolutions 2000–2009

The landscape of shareholder resolutions within an economy provides insight into the various perspectives as to what constitutes appropriate corporate forms and functions. This landscape arises from a community of practice and amounts to a public corporate governance exchange. Analysis of all shareholder resolutions filed with Canadian corporations from 2000 to 2009 reveals that Canada's distinctly multi-jurisdictional model of corporate governance and preponderance of block holdings serve to significantly limit the corporate governance exchange. Compounding such limitations is the tendency of large Canadian institutional shareholders to refrain from engaging in the public corporate governance exchange, thereby shrouding the behaviour of some of the most potentially influential flows of finance. Interestingly, Canadian shareholders engage in issues across 25 distinct themes relating to corporate environmental, social and/or governance performance while favouring the latter. Perhaps most consequentially, however, the public Canadian corporate governance exchange is distinctly multi-jurisdictional, thereby indicating potential regional divergence.

Determinants of the Effectiveness of Corporate Codes of Ethics: An Empirical Study

Recent figures reported by KPMG confirm the growing prevalence of corporate codes of ethics globally. Svensson et al. (Bus Ethics 18:389–407, 2009) in surveys of the largest corporations in Australia, Canada, and Sweden found a similar trend. The increased prevalence of corporate codes of ethics has been accompanied by heightened research interest in various aspects of these documents, e.g., the contents and focus of the codes. However, there is a paucity of research examining the effectiveness of these documents and the organizational infrastructure that accompany them. This study, based on a survey of Canada’s largest corporations, sought to empirically assess the determinants of the effectiveness of corporate codes of ethics by regressing managers’ perceptions of code effectiveness against various elements of ethics programs. It was found that, in a statistically significant model, eighteen independent variables explain 58.5% of the variance in the perceived effectiveness of corporate codes of ethics.

A longitudinal and cross-cultural study of the contents of codes of ethics of Australian, Canadian and Swedish corporations

This study uses a specific method to analyze the contents of the codes of ethics of the largest corporations in Australia, Canada and Sweden and compares the findings of similar content analyses in ...

A review of Canadian corporate sustainable development reports

PurposeThe purpose of the paper is to present the results of a content analysis of Canadian corporate sustainable development reports.Design/methodology/approachA comparison of existing content analyses of corporate sustainable development reports was conducted. Based on the comparison, eight key areas were identified for further research in the content analysis of Canadian corporate reports. A total of 89 reports were reviewed in the content analysis.FindingsThe content analysis highlighted several interesting trends in Canadian reporting. For example, the analysis highlighted that relatively few corporations explicitly identify the audience for the report, include an endorsement from the board chair, provide details on specific standards used for managing the supply chain, discuss linkages to public policy, or use third‐party assurance. The analysis also highlighted the wide variety in report structure.Research limitations/implicationsThe content analysis did not address all issues related to corporate sustainable development reporting. Numerous areas for further research were identified, such as focusing on how companies decide on what to include in the reports, how the reports are used, the accommodations made for specific audiences, challenges in auditing the reports, and future directions of company reporting.Originality/valueThe content analysis focused on several areas that have been highlighted in previous studies as well as areas that have not previously been investigated. The analysis is based on a larger sample size than the most recent Canadian studies. The research will be of interest to both research and practitioners in corporate sustainable development reporting.

Tilting at Windmills or Contested Norms? Dissident Proxy Initiatives in Canada

ABSTRACTManuscript Type: EmpiricalResearch Question/Issue: Do shareholder activists influence standards of legitimacy with Dissident proxy initiatives? What are the antecedents and consequences of Dissident proxy initiatives?Research Findings/Insights: We use a longitudinal Canadian sample to evaluate the dynamics of Dissident proxy initiatives. Firms with lower legitimacy are more likely to receive governance‐ and performance‐oriented Dissident proxy initiatives. Firms with higher legitimacy were more likely to settle proxy initiatives of all types, and avoid publishing activist shareholders' concerns to all shareholders, but this relationship did not hold for governance‐oriented proposals. Firms that received more governance‐ and performance‐oriented proposals subsequently had lower legitimacy.Theoretical/Academic Implications: Dissident proxy initiatives are legitimation contests, where shareholders contest the legitimacy of corporate management's conduct. The dynamics that produce proposals and management responses are consistent with the predictions of institutional theories of legitimacy, institutional entrepreneurship, and legitimation contests. Because the ownership structure of Canadian corporations makes passage unlikely, they resemble a ritual for influencing legitimacy of a wide variety of practices.Practitioner/Policy Implications: Management's response to Dissident proxy initiatives makes a statement about the legitimacy of their conduct. Settling proxies may enable management to contribute to the acceptance or rejections of emerging practices. Management should consider whether attempts to decouple adoption of some practices from core operations are wise in the long term. Shareholder activists should consider whether management is seeking to ceremonially adopt policies demanded in dissident proxies.

The portrayal of women in Canadian corporate annual reports

AbstractWe assess the inclusion of women in Canadian corporate annual report (CAR) photographs and on boards of directors at TSX100 firms and evaluate whether either is related to financial performance. We find that women are underrepresented in CAR photographs and on boards. In CAR photographs women are frequently portrayed as outsiders or less powerful organizational members than men. Higher return on equity (ROE) was found at companies that more frequently depicted women in their CAR photographs. However, no association was observed between the inclusion of women on the board and the ROE of the firm. The applied and theoretical implications of these results are discussed. Copyright © 2010 ASAC. Published by John Wiley & Sons, Ltd.

Gendered interactions in corporate annual report photographs

PurposeThe purpose of this paper is to explore the gendered nature of interactions in mixed sex Canadian corporate annual report (CAR) photographs.Design/methodology/approachQuantitative content analysis of 106 CAR photographs is performed to evaluate, at the level of the photograph, how women and men interact in mixed sex photographs to reveal their relative prominence, power and status.FindingsWomen in CAR photographs overall are under‐represented. In mixed sex photographs, however, the relative proportions of women and men approximate those of women in the Canadian workforce, but men are more prominent in most photographs. Mixed sex photographs are relatively similar in composition (depicting largely passive, smiling subjects, few of whom are talking or in positions of authority). Where there are differences in mixed sex photographs, however, women are portrayed as less powerful than the men in the photographs. Supplemental testing suggests that the findings are persisting over time.Originality/valueThis paper looks at gendered interactions in CAR photos in a Canadian context. It takes the photograph, rather than individual subjects in the photo, as the level of analysis. This research clearly situates the inclusion of photographs in CARs in the voluntary disclosure literature and explores the implications for management and readers of CARs.

Pyramid groups and firm performance: empirical evidence from Canadian corporations

Using data of Canadian corporations in 1994 and 2003, this study analyzes whether controlling shareholders of corporate pyramid groups, with substantial divergences in ownership and control, negatively or positively impact firm performance. We find some evidence that the combination of ownership concentration and pyramidal structure would lead to inferior firm performance and valuation, but little evidence concerning tunneling within groups. We argue the robust legal environment in Canada that encourages shareholder value maximization could mitigate the negative impact of control enhancing mechanisms on minority public investors.

Venture Capital in Canada: Lessons for Building (or Restoring) National Wealth

Canadian policymakers and regulators have been praised for avoiding many of the policy blunders that, when combined with excessive risk‐taking by the banks, nearly brought down the U.S. financial sector. But, as the global economy begins to recover, policymakers everywhere need to find ways to stimulate the creation of new ventures.On that score, Canada's record is not encouraging. The returns on Canadian venture capital investment have been dismally low, particularly in its government‐run funds. In a recent survey, 40% of U.S. venture capital partners identified Canada as having the least favorable treatment of investors of any country they had dealings with. And perhaps most troubling, half of the Canadian corporate executives responding to another survey cited “inability to retain talent” as the biggest threat to their firms.The authors begin by suggesting that these findings are all related. Without investors and the know‐how and networks they bring with them, a country's ability to attract, develop, and retain top talent—business and managerial talent in particular—is significantly reduced. And as the authors go on to argue, the key to building a successful venture capital industry is to match talent with capital in such a way that all three parties—talent, capital providers, and the “matchmakers” who bring together talent and capital—are rewarded for superior performance and held accountable for failure.

Hollowing Out Corporate Canada? Changes in the Corporate Network Since the 1990s

The recent spate of foreign takeovers once again raises the question of whether Canada’s corporate elite is being ‘hollowed out’ in a silent surrender to foreign-based transnational firms. Using data from a study of interlocking directorates among the largest corporations in Canada and the world for the years 1996 and 2006, this paper assesses whether recent changes in the Canadian corporate network indicate a process of hollowing out or the reproduction of a domestic elite within global circuits of capital.

Civil Enforcement in Canadian Securities Law

Private enforcement of securities laws enhances incentives for issuers and other market participants to comply with their statutory and regulatory obligations, especially their disclosure obligations. Assessing the effectiveness of a jurisdiction's private securities law enforcement regime requires not only quantitative evaluations of enforcement intensity, but also a nuanced consideration of the qualitative institutional context within which the jurisdiction's enforcement regime has developed and operates. This article contextualises the regime for civil enforcement of securities law in Canada, focusing principally on statutory civil liability for continuous disclosure violations. The development of this statutory remedy, its apparent strengths and acknowledged weaknesses are considered not only within the context of Canadian public enforcement mechanisms, but also within a broader institutional context, including an examination of complementary developments relating to class actions and lawyers' contingency fees and key shareholder-friendly provisions of Canadian corporate law.

Critique of the Report of the Advisory Panel on Canada's international tax system

This article presents a critical analysis of the report of the Advisory Panel on Canada's System of International Taxation. The criticism is derived from the author's analysis in his 2009 book on reforming Canada's international tax system. The article focuses on three aspects of the report: taxation of the foreign-source income of Canadian corporations, deductibility of interest expenses, and tax administration and legislation. The article concludes that the report does not provide a thorough, analytically rigorous examination of the most difficult issues facing Canada's international tax system.

Ethics, Entrepreneurs and Corporate Managers: A Canadian Study

This study found that Canadian entrepreneurs and corporate managers differed little in terms of their ethical attitudes. This similarity could be explained by similar cultural, legal, and socio-demographic factors that affect the ethical attitudes of both groups. However, there were a few significant differences in ethical attitudes between the groups. Specifically, entrepreneurs were more likely to perceive certain practices as more unethical, including the use of company services for personal use; taking company time for personal use; exaggerating the performance of a company's product/service; and unfairly criticizing competitors’ products. The theory of property might explain these findings given the entrepreneur would want to preserve and sustain his/her property over time by not engaging in such practices. Overall, given the high ethical attitudes of the entrepreneurs in this study, it seems possible that the new entrepreneurial society will also have an elevated ethical tone.

The Sensitivity of Canadian Corporate Investment to Liquidity

Abstract This study examines the investment behaviour of 201 Canadian firms over the 1987-94 period and confirms that liquidity is a significant determinant of Canadian corporate investment. Contrary to recent US evidence, the investment-liquidity sensitivity of financially constrained firms is not found to be significantly different from that of unconstrained firms. Surprisingly, partially constrained firms exhibit higher investment-liquidity sensitivity than both constrained and unconstrained firms. The difference from the US results is attributed to the industry structure and closely held nature of Canadian firms. Finally, this study highlights the importance of sample size by demonstrating how sensitive the results can be to the behaviour of a small number of firms. This represents an important observation, since the conclusions of several previous studies are based on small sample results. Résumé Cette étude passe en revue la gestion des investissements de 201 sociétés canadiennes durant les années 1987-94 et confirme que, en ce qui concerne le milieu d'affaires canadien, la liquidité est un facteur important dans la mise de fonds. Contrairement aux données récentes provenant des EU, l'importance de la liquidité des placements chez les maisons de commerce sous con-traintes fiscales ne s'avère pas ětre très différente de celle chez les maisons sans pareilles contraintes. De façon surprenante, les maisons sous contraintes fiscales partielles démontrent une sensibilité plus accrue à la liquidité des placements que les maisons davantage contraintes, ou encore sans aucune contrainte. L'écart entre ces données et celles provenant des EU s'explique en fonction de l'organisation industrielle et de la plus haute concentration des actionnaires dans les maisons de commerce canadiennes. Enfin, cette étude souligne l'importance de l'ampleur de l'échantillonage en démontrant à quel point les données peuvent varier en fonction d'un nombre restraint de maisons de commerce. Etant donné que les conclusions de plusieurs études précédentes étaient tirées d'échantillonages plus restreints, cette observation gagne en portée.

U.S. Intervention in British Guiana: A Cold War Story

U.S. Intervention in British Guiana: A Cold War Story

Shareholder Engagement in the Embedded Business Corporation: Investment Activism, Human Rights and TWAIL Discourse

The expansion of Canadian extractive corporations' overseas business operations has led to serious concerns regarding human rights-related impacts. As these apprehensions grow, we see a countervailing rise in calls for government intervention and in levels of socially conscious shareholder advocacy. I focus on the latter as manifested in recent use of the shareholder proposal mechanism found in Canadian corporate law. Shareholder proposals, while under-theorized, provide a valuable lens through which to consider the argument that economic behaviour is embedded within social relations. In doing so, I situate my analysis within Third World Approaches to International Law (TWAIL) scholarship. Elsewhere, I have supported the use of corporate law tools in advancing the international human rights enterprise and argued that investment activism can be an essential component of this advancement. This paper represents a reflexive pause. I seek to problematize the shareholder proposal as a human rights advocacy tool and to examine it as a site of contestation.

C.K. Prahalad heralds a new era of innovation

PurposeThis interview of C.K. Prahalad, one of the world's leading strategic thinkers, aims to offer corporate leaders a practical look at the radical concepts presented in his The New Age of Innovation (HBP, 2008), written with M.S. Krishnan. A lengthy review of the book is also in this issue.Design/methodology/approachThe questions for this interview were researched by a team of Strategy & Leadership contributing editors. The interview was conducted by Robert J. Allio, a consultant who has previously been a senior executive at major US and Canadian corporations and a business school dean.Practical implicationsPrahalad believes that many businesses will undergo a transformation in the near future as value shifts from offering products to providing co‐created personalized experiences.Originality/valueBecause his new ideas explore the cutting‐edge of management innovation, managers will likely appreciate having Prahalad explain how his new model works. It posits that value will be determined by one customer co‐created experience at a time, defined as n=1; and to compete successfully in this environment, firms must access resources from multiple outside sources, either local or global, defined as R=G. In this interview he discusses the practical steps needed to ready a company to compete in this new business landscape.

2007: A Canadian Corporate Ownership Survey

This study documents a decline in the levels of corporate ownership concentration between 1996 and 2007. When compared to previous studies, the incidence of ownership stakes of 20% or larger has decreased form 60% to 41% of the total population of publicly listed Canadian firms. Regional disparities among provinces remain important. Ontario, Alberta, and British Columbia have the most widely-held firms, while Quebec and Atlantic Canada show the most concentrated corporate ownership patterns. The interpretation of these results requires a complex understanding of historical, demographic, cultural, political and institutional factors.

Post-NAFTA Changes in the Financing of Canadian Corporate Activity

This paper updates the work of Brox and Maclean (1986) and tests for the stability of the model structure with the inclusion of the post-NAFTA data and hence tests whether the increased integration of international trade has led to similar convergence in financial behaviour.

Concentration de l'actionnariat, séparation des droits de vote et des droits de propriété et gestion des bénéfices: Une étude empirique canadienne

AbstractDrawing from models of Jones (1991) and Kothari, Leone, and Wasley (2005), this study examines the relationship between Canadian corporate ownership structure and earnings management from 1995 to1999. There is evidence of a nonmonotonic relationship. The concentration of voting and cash flow rights with the ultimate owner first increases earnings management, but as the level of ownership concentration increases, earnings management decreases. There is also a positive correlation between earnings management and voting and cash flow rights divergence. This is particularly evident when the gap between voting and cash flow rights is high. Copyright © 2008 ASAC. Published by John Wiley & Sons, Ltd.