Corporate Governance Research Research Articles

Audit committee members’ professional identities: Evidence from the field

We advance social identity theory in the context of corporate governance research by evaluating how experiences outside the audit committee (AC) relate to AC members’ (ACMs’) professional identities and how these identities then map into ACMs’ responsibilities, how ACMs perceive that they add value, and how ACMs aid in the resolution of difficult judgments and decisions. We identify and evaluate four non-exclusive ACM social identities: executive management, financial management, investment management, and audit partner. We find that prior experiences relate to the social identities with which ACMs identify, yet identities also develop without role-relevant experiences. Interpreting the interviews leads us to propose a novel theory – mediational activism – a hybrid perspective whereby the ACM acts in multiple seemingly incongruent modes as a monitor, collaborator, and/or advocate with the intent to organize collective understanding, action, and mutually equitable outcomes. We find that ACMs’ perceptions of their primary role-relevant responsibilities are consistent with agency theory and extensive mediational activism, while perceptions of value-add are more consistent with the theory of resource dependence and reflect the desire to leverage prior experiences. Finally, we provide evidence on a host of difficult judgments and decisions that ACMs oversee, and find that they sometimes use typical negotiation strategies such as contending and compromising, but rarely resort to offering concessions. Employing these strategies differs based on social identities, but regardless of their identities ACMs most commonly approach their oversight role in resolving difficult judgments and decisions by adopting a mediational activism perspective.

Corporate Governance Research in the Wake of a Systemic Crisis: Lessons and Opportunities from the COVID‐19 Pandemic

The Covid‐19 pandemic offers an unprecedented opportunity to advance research on how various corporate governance mechanisms shape firms’ decision‐making, survival and success. In the short term, corporate governance research could pinpoint which mechanisms in place before the pandemic (e.g., ownership structure, board attributes, executive compensation) will shape corporate responses, thus affecting firms’ survival in the post‐pandemic period. In the long term, the crisis will trigger structural changes in governance mechanisms to enable firms to either prevent or respond to the occurrences of potentially similar events. In the reminder of this essay, we will first discuss the peculiar nature of the recent crisis in relation to other recent crises. Then, we will analyse the impact of Covid‐19 on five key areas in the field of corporate governance (i.e., corporate purpose, ownership structure, board of directors, executive compensation and accountability) and, for each of them, we will suggest a series of research questions that contribute to redirecting and advancing the domain.

Disciplinary power in corporate governance: A Foucauldian analysis of the emergence and development of proxy advisors

Prior research in corporate governance has extensively investigated the mechanisms through which a variety of actors (financial analysts, investment managers, shareholder activists) monitor and discipline corporate executives. However, one recently emerged actor has received little attention so far: the proxy advisory firm. Mobilising Foucault’s concept of disciplinary power, this study uses historical analysis to examine the role of proxy advisors in corporate governance. This article shows that proxy advisors actively contributed to developing and implementing disciplinary mechanisms. This involves (1) hierarchical observations of corporations and their executives on a global scale. These observations are made available to institutional investors on proxy advisors’ voting platforms which have Panopticon-like features; (2) normalisation of judgements through the provision of generic voting policies, generic voting recommendations and corporate governance ratings prepared by proxy advisors and delivered to many institutional investors; (3) ritualised examination of the performance of corporations and of their executives during the annual general meeting, including record-keeping of all past voting results.

Stakeholder Governance for Responsible Innovation: A Theory of Value Creation, Appropriation, and Distribution

In the face of intractable societal grand challenges, organizations increasingly resort to responsible innovation—that is, they pledge to create value for multiple stakeholders through developing new products or services that avoid doing harm and improve conditions for people and the planet. While the link between responsible innovation and societal improvements has been established, organizations pursuing responsible innovation lack governance mechanisms to guide the allocation of the value created—both economic and social—among heterogeneous stakeholders, in line with their responsible intent. We combine the value-based strategy and stakeholder perspectives and infuse a deliberative process to design a three-stage model of value allocation that rests on three key organizational decisions: i) what value to create and for whom, ii) how to appropriate the value created vis-a-vis unintended value appropriators, and iii) how to distribute the value appropriated among intended stakeholders. We propose a framework of stakeholder governance comprised of four novel mechanisms by which organizations can allocate value among their multiple principal stakeholders as part of participative processes. Our study contributes to responsible innovation and corporate governance research by unpacking how new value is managed to solve societal grand challenges.

Corporate governance dynamics of political tie formation in emerging economies: Business group affiliation, family ownership, and institutional transition

AbstractResearch Question/IssueDespite the importance of political ties to firm strategy and performance, little is known about why and how firms form political ties. This study examines how firm‐specific governance structures function as important determinants of the formation of political ties and how the impact of governance structures evolves during institutional transition of emerging economies.Research Findings/InsightsOur empirical analysis is based on a longitudinal data set involving manually coded political ties of listed firms in Taiwan between 1996 and 2005. We find that business group affiliation and family ownership facilitate the formation of political ties but that such effects diminish as market infrastructures and regulatory institutions develop.Theoretical/Academic ImplicationsThis study systematically examines how corporate governance structures affect the formation of political ties. It identifies an overlooked explanation for the dynamics of political ties that resides in the internal governance structures of firms. It contributes to the corporate governance research by demonstrating how governance structures other than the board of directors can provide resources to facilitate strategic actions such as political tie establishment. It also enriches research on corporate governance bundles by showing the interdependence among multilevel governance mechanisms in the context of political tie formation.Practitioner/Policy ImplicationsThis study offers insights for business executives interested in managing interdependence with government. While business group affiliates and family firms are better able to link to politicians, such advantages diminish during institutional transition. Hence, group leaders and family owners should consider other political activities to effectively manage political risks as institutions develop.

Corporate governance and corporate agility

This paper suggests the topic of corporate agility as a fruitful area for corporate governance research. Corporate agility, which refers to a firms ability to adapt to changes in its environment, is likely to be a critical, yet understudied, determinant of firm performance and survival. This paper proposes an inverse relation between the centralization of decision-making in firms and agility. It also proposes that certain governance structures often viewed as increasing agency costs, such as insider-controlled boards and dual class stock, may actually increase agility and thereby improve firm performance and the chances of survival. The paper concludes with a discussion of specific ways in which agility might be incorporated into the corporate governance literature.

Bridging Accounting and Corporate Governance: New Avenues of Research

This paper draws on the articles in the Forum on Corporate Governance to discuss how corporate governance and accounting research complement each other well in explaining how companies are governed as well as properly managed from an accounting point of view. We put special attention to the cross-national differences in both corporate governance systems and accounting practice and how that affect multiple organizational outcomes ranging from financial performance to corporate social performance and reporting quality.

Editorial: Corporate governance and regulation: The literature review as a research methodology and research method

Volume 10, issue 4 (special issue) of the Journal of Governance and Regulation is a special issue and as usual it is replete with cutting-edge research studies covering a wide array of important topics dealing with corporate governance and regulation. The special issue therefore reflects this statement from the editorial note policy of the Journal of Governance and Regulation, “providing a continuous development that enables our readers to outline the new and most challenging issues of research in corporate governance and related topics”.

Managerial discretion and corporate governance: The bonded relationship

Our study aims to demonstrate the importance of managerial discretion to corporate governance research and deepen our understanding of managerial discretion. Adopting theoretical frameworks and definitions from 93 conceptual and empirical studies on managerial discretion and corporate governance, we argue that extant studies have presented explicit empirical and theoretical definitions of managerial discretion; and have proved the validity, reliability, and replicability of the concept. We argue that corporate governance scholarship cannot move forward without managerial discretion as it provides shareholders and board of directors’ essential guidance on how much freedom in decision-making is to be granted to top managers by deeming the different dimensions of the internal and external environment into consideration. We reinstate our original argument that corporate governance research is not better off without managerial discretion. We also provide a new vantage for corporate governance and managerial discretion scholars to distinguishing between the latitude of actions and latitude of objectives

Corporate Governance Research in Nigeria: A Review

This paper is a literature review of the recent corporate governance research in Nigeria. It identifies the recent advances and challenges in the literature and suggest some directions for future research. A comprehensive review of the recent corporate governance literature is important because it provides a basis to compare the corporate governance experience in Nigeria with the corporate governance experience in other African countries and developing countries. The findings from the literature review reveal that the board of directors is the most explored corporate governance determinant in the Nigerian corporate governance literature. Most studies focus on some corporate governance determinants, and ignore other corporate governance determinants in firms. There is some consensus that corporate governance failure in Nigeria is caused by multiplicity of factors such as lack of political will by the government to enforce corporate governance laws, deliberate refusal to comply with existing corporate governance laws by politically connected firms, weak compliance by firms, weak enforcement by regulators, and conflicting codes in the country’s corporate governance codes. Also, recent corporate governance studies do not systematically build on previous corporate governance studies. Regarding methodology, most Nigerian corporate governance studies are merely experimenting different methods of analyses without advancing the literature in a significant way. The study also finds that the 2018 Nigerian code of corporate governance (NCCG) solves some problems and create new problems for Nigerian firms.

Research on the Development Status and Countermeasures of Enterprise Earnings Management from the Perspective of Big Data

Earnings management plays a leading role in the development of enterprises. With the popularity of big data, when enterprises implement earnings management, analyzing the big data model from the computer can improve the development speed of enterprises. It is not only the key of accounting theory and corporate governance research, but also the top priority in practice. With the continuous development of economy and society in recent years, the problems of interrelated financial have frequently appeared, which leads investors to query the earning ability of related companies. Therefore, this paper studies the current situation of enterprise earnings management from the perspective of big data, and further analyzes the existing problems, and puts forward the countermeasures and suggestions for the relevant enterprise earnings management from the perspective of big data, hoping to standardize the enterprise earnings management behavior and maintain the order of the investment market.

Editorial: From agency problem to the recent challenging issues in the corporate governance research

We are pleased to present the second issue of 2021. This volume of the journal Corporate Ownership & Control is focused on corporate governance, corporate social responsibility, earning and performance management, risk management, debt financing and others.

Corporate governance and firm performance in the emerging market: A review of the empirical literature

After decades of many corporate scandals and financial meltdowns, the quest for effective corporate governance and firm performance has raised the concern of a lot of academicians, practitioners, and researchers regarding articles written on this issue. This study seeks to review corporate governance and firm performance articles written in Ghana under the author’s keywords in order to fulfill the objective. The goal is to identify the research trend and then to suggest the idea of future research directions. The study has conducted a review of corporate governance research by searching at Scopus and Web of Science research databases from 2006 to 2020 to prepare the list of articles. A comprehensive review of recent corporate governance and firm performance literature is essential because it provides a basis for comparing Ghana’s corporate governance research experience with other emerging economies in other continents. The findings reveal that two keywords on corporate governance analysed in this study – board composition and ownership – have many written articles, while compensation has the least number of articles. However, in the future, gender diversity and audit committee may be investigated since it has received global attention.

Editorial: The recent trends in corporate governance research

The eight papers included in this issue offer the opportunity to capture the latest trends in on-topic researches. The thread of this issue concerns the centrality of the emerging marketing and economies in developing new knowledge and understanding in corporate governance studies.

Editorial: Insights into the future blended learning and corporate governance research in a COVID-19 world

We are pleased to share with you the first issue (volume 5, issue 1) of the journal Corporate Governance and Organisational Behaviour Review introduced in 2021. We hope that the readers of the journal will find this issue worth reading.

Lessons from Quality Shareholders on Corporate Governance Practice, Research and Scholarship

Special Note: This Publication is part of The Quality Shareholder Initiative at the Center for Law, Economics and Finance (C-LEAF), at The George Washington University Law School, Prof. Lawrence A. Cunningham, Faculty Director. This Article presents original data and analysis addressing an understudied force in corporate America: the most patient and focused shareholders. Great attention has been devoted to short-term trading on the one hand and diversified index funds on the other, but scant attention has been focused on long-term concentrated investors. The George Washington University has been redressing this problem through a research initiative focused on such buy-and-hold stock pickers, whom Warren Buffett long ago dubbed 'quality shareholders'. GW’s Quality Shareholders Initiative ('QSI') is pleased to present highlights of the initial installment of this work in this Article in the Business and Finance Law Review at the George Washington University’s Center for Law, Economics, and Finance.

Editorial: Recent trends in corporate governance and sustainability research

Editorial: Recent trends in corporate governance and sustainability research

Editorial: New horizons in corporate law and governance research

Corporate governance and corporate law cover a wide range of eminent topics for the effective governance system. The articles published in this issue have focused particularly on the board configuration, commercial code regulations about the managers’ decision and compensation, the comparative perspective of the common law rule on pre incorporation contracts, and the responsibility of the company with the authorized fictitious capital from the evidence of emerging markets. Moreover, this issue includes a book review of the theoretical, essential, and international practices of corporate governance, which consists of various timely and interesting concepts, such as the role of institutional investors in corporate governance, the board of directors’ impact on performance and the role of non-executive directors, the audit function and the role of regulation international corporate governance, and socially responsible investment, etc.

Corporate governance in Egypt: The landscape, the research, and future directions

Egypt is an emerging economy that has in recent years been exposed to several severe economic, political, and social shocks, all within a relatively short period of time. This has amplified the importance of the rule of law, regulatory enforcement, and corporate governance best practices, in order to restore the investing public’s confidence in the Egyptian market. Historically, the focus on corporate governance had preceded these recent events. Building on this history, today’s corporate governance landscape in Egypt is much more robust with more effective regulators, clearer streamlined governing rules, and better corporate governance literacy. This paper identifies four main areas of corporate governance research in Egypt: firm performance, reporting quality, corporate responsibility, and auditing. While extensive research has already been conducted in these areas, the paper provides some recommendations for further enhancing its quality. These pertain mainly to the development of comprehensive corporate governance databases, the increased focus on emerging and current market-relevant aspects of corporate governance, and the release of more proprietary data by regulators.

Editorial: Geographical insights of the corporate governance research

The recent issue of Corporate Ownership and Control journal contains both empirical and review papers describing the wide variety of corporate governance issues from the board of directors and executive compensation to mergers and acquisitions, stock market and institutional investors. The geographical representation of the papers provides an excellent opportunity for international comparison.