Changes In Corporate Governance Research Articles

CEO Power: A Review, Critique, and Future Research Directions

CEO power has been extensively studied across various disciplines and country contexts. Despite the exponential growth of research, there has been limited effort to integrate the vast body of literature. Using bibliometric and other analytical techniques we apply to the 580 articles in our review, we identify and discuss the topics and major research streams considered in CEO power research and their evolution over the years. We also highlight several shortcomings in the existing literature, including four pressing challenges concerning unclear conceptualizations, varied measurement and methods, the under-contextualized nature of CEO power across international contexts, and a lack of attention to how the changing corporate governance landscape has affected CEO power. We provide a roadmap for future scholarship by offering suggestions for addressing these pressing challenges. Finally, we provide several new and promising research directions in our discussion.

Reconnoitering the impact of corporate governance on carbon emission disclosure in an emerging setting

Purpose This study aims to determine the influence of corporate governance characteristics on carbon emission disclosure in an emerging economy. Design/methodology/approach The study is based on S&P BSE 500 Indian firms for the period of 6 years from 2016–2017 to 2021–2022. The panel data regression models are used to gauge the association between corporate governance and carbon emission disclosure. Findings The empirical findings of the study support the positive and significant association between board activity intensity, environment committee and carbon emission disclosure. This evinced that the board activity intensity and presence of the environment committee have a critical role in carbon emission disclosure. On the contrary, findings reveal a significant and negative relationship between board size and carbon emission disclosure. Practical implications The present study provides treasured insights to regulators, policymakers, investors and corporate managers, as the study corroborates that various corporate governance characteristics exert significant influence on carbon emission disclosure. Originality/value The current research work provides novel insights into corporate governance and climate change literature that good corporate governance significantly boosts the carbon emission disclosure of firms. Previous studies examining the impact of corporate governance on carbon emission disclosure ignored emerging economies. Thus, the current work explores the role of governance mechanisms on carbon emission disclosure in an emerging context. Further, to the best of the author’s knowledge, the current study is the first of its kind to investigate the role of corporate governance on carbon emission disclosure in the Indian context.

Corporate governance transfers: the case of mergers and acquisitions

AbstractWe study changes in corporate governance around mergers and acquisitions by comparing the ex-post corporate governance of the combined firm with the ex-ante weighted average governance of the bidder and target. We find that when the quality of the bidder governance is better than the target before the acquisition, the ex-post corporate governance quality of the combined firm is better than the ex-ante weighted average of each firm. We document post-acquisition improvement in the combined firm’s board independence, audit committee independence, stock compensation, and minority shareholders protection, proposing that these firm-level attributes serve as potential channels to explain better corporate governance quality of the combined firm. The operating performance of the combined firm also improves when the bidder’s pre-deal governance quality is better than the target. Our results support the portability theory of corporate governance, suggesting that poorly governed targets are better off if acquired by better-governed bidders.

Digitalization of MSMEs in Pelawi Utara District, Langkat Regency: Opportunities and Challenges

This study's goal was to outline the opportunities and challenges of how digitization will affect MSMEs. We combined publication trends from numerous papers using the qualitative methodology to find them. We found that the process of digitizing MSMEs involves switching from analog to digital technologies in order to improve the efficacy and efficiency of MSMEs business operations. The digitization of MSMEs has compelled stakeholders in MSMEs businesses to change corporate governance from outdated techniques to more contemporary ones. For MSMEs, becoming digital involves more than just utilizing technology to sell goods. Additionally, MSMEs will be able to manage their accounts, track their cash flow, and buy raw materials online as a result of digitization. As a result, digitization is crucial to the whole operation of MSMEs business activities.

The disciplinary role of unsuccessful takeovers and changes in corporate governance

AbstractThis study examines if unsuccessful takeovers trigger the replacement of directors and changes in other governance attributes and result in improvements in target firm performance. Using an Australian sample this study finds that following failed bids, target firms are more likely to remove directors and experience an increase in director ownership, board independence, and block ownership. In contrast, target firm director expertise and prestige decrease following failed bids. We also find that post‐bid accounting and stock performance of targets are largely unrelated to changes in governance attributes after the unsuccessful takeover.

경영권방어수단과 타인자본비용

[Purpose]This study examines the effect of Anti－Takeover Provisions(ATP, hereinafter referred to as ATP) on the cost of debt capital using credit ratings and borrowing interest rates. Through this, it is intended to clarify whether creditors interpret ATP, which means weakening shareholder rights, differently from shareholders.
 [Methodology]From 2011 to 2018, domestic companies listed on the KOSPI Market excluding the financial industry were selected as samples, and ATP were identified through the articles of incorporation. We conducted a regression analysis to verify the effect of Anti－Takeover Provision on the cost of debt.
 [Findings]As a result of the analysis, companies with ATP had relatively lower credit ratings and higher borrowing interest rates than those without ATP. And the more ATP they had, the lower their credit rating was. This is consistent with overseas empirical studies that the weakening of shareholder rights is also disadvantageous to creditors, supporting that mergers and acquisitions can benefit from coinsurance effect, which reduces the risk of default by improving the company’s debt capacity after the merger.
 [Implications]This study has contributions in that it analyzed the impact of strengthening (or weakening) shareholder rights on creditors using domestic data. Research and systems related to corporate governance have been dealt with a lot from the perspective of shareholders, but there is a lack of various studies on how they affect creditors. Creditors are major stakeholders of the company and play an important role in corporate governance. In this study, it is meaningful in that the impact of changes in corporate governance on them from the perspective of creditors was analyzed through ATP.

Union Bargaining Power and Institutional Investors: Evidence from 20 OECD Countries, 1980–2017

This article investigates the relationship between the share of assets held by institutional investors relative to GDP and a synthetic index of union bargaining power in 20 OECD countries from 1980 to 2017. Findings from the use of fixed-effects OLS and instrumental variables regressions show that the share of assets held by institutional investors, especially insurance companies and pension funds, is correlated with a decline in union bargaining power. The authors argue that by contributing to significant changes in corporate strategies and governance through potential effects on jobs and wages, institutional investors in most OECD countries may have weakened the influence of trade unions, thereby leading to a higher decentralization of wage bargaining. Mixed evidence is found, however, when investigating the role of complementarity across institutions to explain cross-country heterogeneity.

The Essential Role of Accounting Information in the Capital Markets: Updating Seminal Research Results with Current Evidence

SYNOPSIS An extensive literature of empirical research over the past 50+ years provides important insights into the role of accounting information in the equity capital markets. But how has the role of accounting information changed, given advancements in the dissemination and processing of accounting information, as well as changes in corporate governance, securities regulations, and trading? In this paper, we use recent data to examine whether seminal findings from prior studies in the following three major areas of research still hold: the earnings-returns relation, earnings management, and market efficiency. We also introduce some new findings that were not in the original studies. We use a framework that maps firms’ business activities into share prices and provide straightforward descriptions of the research methodologies, empirical findings, and important implications from the evidence to benefit accounting students, instructors, practitioners, and others who may not yet have been exposed to this research. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: D22; D80; G10; G12; G14; M41.

Corporate Governance Research in Asian Countries: A Bibliometric and Content Analysis (2001–2021)

Corporate failure suggests that weak corporate governance leads to frail institutions and exposes them to severe crises. Asian countries have faced financial crises in three different periods, most recently due to the COVID-19 pandemic. A crisis will trigger structural changes in corporate governance to enable firms to either respond to, or prevent, the reoccurrence of potentially similar events. The characteristic of corporate governance practice in Asian countries are also unique due to some institutional and informal factors. These will alter direction and future trend of research in corporate governance in Asian region. The objective of this study is to utilize a bibliometric analysis which focuses on research trends and themes, and citations (with additional inclusive visualization) and perform in-depth content analysis to trace the evolution and identify knowledge of corporate governance in Asian countries from 2001 to 2021. Following bibliometric analysis, a sample of 656 articles on corporate governance in Asian countries has been extracted and analyzed from the Scopus database. The results indicate that there is a growing of interest in corporate governance in Asian countries from 2001 to 2021. Eight major themes have been recognized: corporate governance, corporate social responsibility and financial performance, corporate strategy and performance, agency theory, corporate sustainability, audit and agency problems, firm size, and business ethics. Major findings, shortcomings, and directions for future research are also discussed in this study. In general, most cited articles related to corporate governance theme explain the importance of corporate governance in companies with the focus on preventing financial fraud, impact on earnings management, and cost of equity capital in the market and reporting methods.

RECENT CHANGES IN CORPORATE GOVERNANCE AND ITS IMPACT ON CORPORATE AMERICA

ABSTRACT Recent changes to corporate governance have affected the areas of environmental awareness, corporate strategy, managerial accountability, compensation, board structure and shareholder rights. Reasons for these changes to corporate governance include new rules from the U.S. Securities & Exchange Commission, changes in society, and increased shareholder activism. This paper explains how recent changes in corporate governance have led to Corporate America putting more focus on corporate social responsibility activities, firms seeking to diversify their boards of directors, and shareholders using their interests to shape how firms operate. Subsequently, this paper will examine what future changes to corporate governance may come and then conclude with a summary of the impact on Corporate America. Keywords Corporate Governance, Corporate Social Responsibility, Diversity of Board of Directors

Brazilian Corporate Sustainability Regulation in the Green Transition: Missing the Forest for the Trees

The article describes and analyses new regulatory and governance rules regarding corporate sustainability regulation in Brazil, including the new provisions by the capital markets, the financial authorities, and private frameworks. This is done through the theoretical lens of a critical approach to socio-ecological transformation, shedding light on the broader context in which the institutional innovations take place: the political project of relying on finance to guide the transformation and the current transformations (i.e., the dismantling) of the traditional apparatus for environmental protection. In so doing, the contributions are twofold: on an empirical level, the article presents an overview of new rules regarding corporate governance and climate change in Brazil, serving as a useful source for comparison with other jurisdictions and a critical analysis of trends and differences in Northern and Southern Countries. On the theoretical level, we argue in favour of the need for a holistic approach that considers the broader regulatory context including the political agenda boosting the reforms in internal corporate governance and the circumstances of external environmental regulation. As such, we stress the interplay between extra-corporate and intra corporate governance tools in fostering corporate sustainability.

Boards' Governance of Hostile Takeovers in the US and the UK

It is argued heatedly whether the governance of the board in a company against hostile takeovers is of necessity in the United States and in the United Kingdoms. This study aims to determine whether this intervention of boards should be legitimatized according to laws in these two countries in order to gain a better legal environment for the market. Literature research method had been used in this paper and conclusions were analyzed to reach the aim. The result in this study suggests that the effects of hostile takeovers on corporate governance are quite different owning to the different jurisdiction in the United States and in the United Kingdoms. Obvious as it is, corporate governance changes according to local legislations. The United States tends to have a more tolerate jurisdiction on whether the management of corporate should be entitled to intervene or block hostile takeovers. The United Kingdoms, on the contrary, tends to be more disciplined in administration for the board in a company issued on this type of governance.

The impact of justified corporate governance changes against exchange rate exposure in North Cyprus

AbstractThis study seeks to use the legally required governance reforms of the Sarbanes‐Oxley Act of 2002, the Financial Reporting Council 2012–2018 and the EU COM 2012–2014 to investigate the relationship between corporate governance performance, exchange rate exposure and hedging by using two governance indexes based on a more comprehensive model previously constructed. The paper is one of the first to adopt the measures that state the importance of internal (corporate culture) and external (corporate legality) governance qualities that help prevent exchange rate exposure and improve trade and hedging. The examination is conducted by using the ARCH and ARMA models as well as a two‐factor and a multiple‐factor model to capture the variations that significantly account for variations in the exchange rate exposure, net trade, and stock market returns. Empirical results revealed that an improvement in corporate governance indexes is associated with a greater reduction in exchange rate exposure, an increase in net trade, and more hedging at the firm level. In addition, adoption of the corporate legality measures has a greater impact on exchange rate exposure and hedging than corporate culture measures.

Blockchain technology for corporate governance and IT governance: A financial perspectiv

The development of information technology (IT) and the adoption of blockchain have affected the world of finance today. Research on these two matters is still lacking, especially from a financial perspective. This study aims to review the latest research regarding changes in corporate governance with the adoption of IT governance and blockchain. A computerized multi-database literature search was conducted in January–March 2022, using the ScienceDirect and Emerald search engines. The terms “corporate governance”, “IT governance”, and “blockchain” were entered in the descriptor fields, with “language” limited to English and “source” limited to peer-reviewed journal articles. The implementation of good corporate governance will reduce the company's risk and protect investors. Technological advances can be used to develop better IT governance by making information transparent and adopting technological advances to support the implementation of good corporate governance. Under a blockchain framework, corporate governance might evolve in a variety of ways. There are several advantages to issuing and trading corporate securities on blockchains, but there are also certain drawbacks connected to increased ownership transparency. Businesses would seek out board members and outside advisors with various skill sets, and crucial issues like managerial incentives would probably change to account for the shifting character of corporate securities.

Political Connections Impact on Corporate Governance Quality

The paper explores political connections impact on corporate governance quality in Indonesia. Using data from publicly listed firms in Indonesia stock exchange for the 2010-2019 period, this study find that politically connected firms are actually having better corporate governance quality than their counterparts. The significant development on corporate governance system implementation and changes in political system may influence the political connections impact on corporate governance quality. Additionally, the findings also indicates that the political connections improve board efficiency, risk management and stakeholders relationship. The findings from this study is markedly dissimilar from previous studies that emphasize on the rent-seeking nature of political connectedness. Institutional setting changes such as the changes in political system and coporate governance system may changes the nature of politically connected firms to become more responsible. The results maybe of interests for regulators of emerging countries around the world and shed a new paradigm on political connectedness. The findings of the papers indicates that the design of regulatory frameworks and policies should consider the potential positive effects of political connections, rather than simply focusing on potential drawbacks. The results indicate that promoting political connections that are accountable and transparent can be beneficial for the investment environment.

The Government as Institutional Entrepreneur in Corporate Governance Reform

Governments around the world have become prolific issuers of soft law regulation in the form of corporate governance codes. However, the strategies that governments pursue to ensure the diffusion of the codes have remained unexplored in the literature. Drawing from institutional and sociopolitical perspectives, I hypothesize that governments pursue a combination of different intervention strategies to bring the corporate governance arrangements of firms in line with the issued code. These strategies focus on the mobilization of material resources, the dissemination of rationales and legitimating accounts for corporate governance change, interventions in social structure and the establishment of new social relations. I test my hypotheses in the context of the issuance of the national corporate governance code in Germany and find general support for my hypotheses.

China's Party-State Capitalism and International Backlash: From Interdependence to Insecurity

Abstract Contrary to expectations, economic interdependence has not tempered security conflict between China and the United States. In response to perceived domestic and external threats, the Chinese Communist Party's actions to ensure regime security have generated insecurity in other states, causing them to adopt measures to constrain Chinese firms. Security dilemma dynamics best explain the subsequent reactions from many advanced industrialized countries to the evolution of China's political economy into party-state capitalism. Party-state capitalism manifests in two signature ways: (1) expansion of party-state authority in firms through changes in corporate governance and state-led financial instruments; and (2) enforcement of political fealty among various economic actors. Together, these trends have blurred the distinction between state and private capital in China and resulted in backlash, including intensified investment reviews, campaigns to exclude Chinese firms from strategic sectors, and the creation of novel domestic and international institutions to address perceived threats from Chinese actors. The uniqueness of China's model has prompted significant reorganization of the rules governing capitalism, both nationally and globally.

Revisiting Japan’s stakeholder-based system and foreign ownership: IR managers’ view of foreign shareholders in corporate governance reform in Japanese companies

PurposeBuilding on the institutional theory perspective on corporate governance change and based on interviews with investor relations (IR) managers in large Japanese companies, this study aims to examine Japanese IR managers’ perceptions of the influence of foreign shareholders on Japan’s corporate governance reform and stakeholder-based system. The paper examines tensions, conflicts and collaborations among different stakeholders involved in corporate governance changes in Japan, especially in the areas of firm ownership, employment relations and boards of directors. The paper explains why convergence does not happen in some large Japanese companies by investigating Japanese managers’ responses to and perceptions of foreign shareholders in multiple corporate contexts.Design/methodology/approachThe author conducted in-depth interviews with ten IR managers at large, listed Japanese companies in Kyoto and Tokyo and two managers at foreign investment banks in Tokyo, between 2018 and 2021.FindingsThis paper explores five themes that emerged from my interviews: Chief executive officers’ (CEOs’) mixed perceptions of foreign investors, the effectiveness of CEO compensation and outside directors, managers’ reluctance to accept stock price-driven business strategies, foreign investors’ engagement vs investments in index funds and gender patterns, including the effectiveness of token female outside directors. The Japanese companies the author looked at incorporated foreign shareholders as consultants and adopted a few major shareholder-based customs, such as CEOs communicating with investors, having outside directors, increasing CEO compensation and slimming down unprofitable parts of the business via restructuring and downsizing. Simultaneously, they resisted a few major shareholder-based practices. Foreign shareholders’ pressure revealed tensions and contradictions between the Japanese stakeholder system and shareholder primacy-based customs.Originality/valueThis paper is one of the few qualitative studies that explores Japanese IR managers’ responses to and perceptions of foreign shareholders in corporate governance reform, with a particular focus on ownership, employment relations and board members. This paper provides examples of tension, conflict and cooperation between Japanese managers and foreign investors, as seen through the eyes of Japanese IR managers. Examining changes in Japan’s stakeholder-based system of corporate governance reform enables us to better understand the processes by which, with vigorous pressure from government and foreign shareholders, a non-western country like Japan may adopt shareholder-based customs and how such a change may also lead to institutional changes.

Organizational Sustainability Transformation through KPIs: A Model for Sustainability Change

The financial industry is argued to play a vital role in transforming our economies toward sustainability, yet little is known on how to achieve such a transformation. In an inductive, qualitative, single case study analysis of a sustainability leader in the financial services industry, we investigate how the introduction of sustainability key performance indicators transformed the organization. Thereby we contribute to the understudied topic of sustainability transformation in the insurance and investment industry and aim to provide a deeper understanding of how this industry’s indirect real-world impact can be effectively leveraged to benefit sustainability. Introducing consistent indicators for sustainability performance essentially helped to overcome the prevailing diffuse and symbolic image of sustainability in the financial industry through non-financial accounting and reporting. Thereby the organization shifted its sustainability strategy away from individual opinions and sustainability advocates toward legitimate and widely accepted performance indicators. Initially triggered by external regulatory pressure and societal norms, introducing reliable key performance indicators activated organizational awareness, initiated changes in corporate governance, and reinforced a pragmatic sustainability transformation that considered numerous stakeholders’ needs. Our derived model illustrates how firms initiating an organizational sustainability transformation can leverage sustainability key performance indicators to (1) activate and commit internal stakeholders, (2) transform governance structures, and (3) establish accountability of actions and in decision-making.

Toward a synthesis of the board‐strategy relationship: A literature review and future research agenda

AbstractResearch Question/IssueThe strategy role of the board of directors is a contentious topic in both theory and practice and the debate on what boards should or should not do around firm strategy has intensified with changes in global corporate governance. Boards face interventionist regulatory developments, calls for changes in their composition, growing owner engagement, and societal questioning on the corporation's very purpose. With this review, we aim to assess how the research agenda in this area has evolved with these developments.Research Findings/ResultsOur analysis of 152 articles published in 45 high‐quality journals between 2008 and 2020 reveals that the board‐strategy literature remains dominated by traditional input–output approaches using archival data. There are, however, some green shoots opening up the debate by recognizing the importance of the firm's specific context, applying alternative or complementary theoretical lenses, exploring the underlying dynamics and processes, and using more sophisticated modeling techniques.Theoretical implicationsWe identify three research directions with the potential to advance the research agenda, namely, untangling the complex, multilevel interplay between stakeholders involved in the strategy process, embracing the processual and temporal nature of the board‐strategy relationship, and unpacking the impact of social context to understand when boards matter for strategy.Practical implicationsOur results indicate that the strategy role of the board is evolving and broadening. Most notably the integration of CSR‐related themes into the board‐strategy debate, and the leveraging of board diversity in strategic decision‐making appear to be important issues for contemporary boards.