Corporate Shareholder Research Articles

Corporate culture and shareholder litigation rights: evidence from a quasi-natural experiment and textual analysis

PurposeTaking advantage of an innovative measure of corporate culture obtained from advanced machine learning and textual analysis, we investigate how corporate culture is influenced by shareholder litigation rights, which are widely recognized as a crucial external governance mechanism. The innovative measure of corporate culture is based on a textual analysis of over 200,000 earnings call transcripts.Design/methodology/approachTo mitigate endogeneity and thus demonstrate causality, we exploit a quasi-natural experiment based on the staggered passage of universal demand laws, which reduce shareholder litigation rights. The enactment of state-level legislation is likely exogenous to individual firms’ characteristics as it is beyond the control of any given firm. Following the literature, we employ a difference-in-difference analysis, supplemented by several robustness checks, i.e. propensity score matching and entropy balancing.FindingsOur difference-in-difference estimates show that an exogenous reduction in shareholder litigation rights weakens corporate culture considerably. Specifically, corporate culture is 12.74–14.41% weaker after the implementation of universal demand laws. Our results corroborate the hypothesis that a decline in litigation risk exacerbates agency problems, discouraging self-interested managers from taking actions that enhance shareholder value in the long run, such as cultivating a strong corporate culture.Originality/valueOur study is the first to explore how corporate culture is affected by shareholder litigation risk, which constitutes a vital external governance mechanism. Moreover, we utilize an innovative measure of corporate culture based on sophisticated textual analysis. Finally, we employ a quasi-natural experiment based on an exogenous shock, making it more likely that our conclusion reflects a causal influence rather than merely a correlation.

Unleashing the Mechanism in Green Finance, Corporate Social Responsibility and Shareholders Wealth: Insight from Quantile GMM

Unleashing the Mechanism in Green Finance, Corporate Social Responsibility and Shareholders Wealth: Insight from Quantile GMM

Proxy Advisory Firms and Corporate Shareholder Engagement

Abstract We study how Institutional Shareholder Services (ISS) affect firms’ engagement with shareholders. Our analyses exploit a quasi-natural experiment using say-on-pay voting outcomes near a threshold that triggers ISS to review engagement activities. Firms receiving ISS treatment exhibit swift and substantive increases in extensive and intensive margins of engagement, especially when their boards have higher agency conflicts and directors are more likely to lose voting support from ISS. Increases in engagement persist over time, and shareholders appear to value the increased engagement. Collectively, we shed light on an unexplored channel through which ISS positively influences firms’ governance and information environments.

Corporate Social Responsibility (CSR) Practices of Shariaconsumer Cooperatives for Sustainable Development Goals (SDGS) Ethical Perspective

Objectives: This study aims to explain (1) Islamic business ethics and corporate responsibility for sustainable development goals, as well as (2) Corporate Social Responsibility (CSR) practices in the BTM Mulia Babat KKS in the context of Islamic business ethics. Theoretical Framework: Islamic business ethics, which includes the values of honesty, fairness, and belonging, are considered essential to achieving business success. CSR is a corporate social responsibility that aims to increase corporate value and shareholder welfare. With a commitment to sustainable economic development, CSR integrates social responsibility in business operations. The framework of this research relates the implementation of Islamic business ethics to CSR practices, as well as how this impacts the company's value and stakeholder well-being. Method: This study uses a qualitative approach with a type of field research. Data was collected through observations, interviews, and documentation related to CSR practices at KKS BTM Mulia Babat. Results and Discussion: The results of the study show that: Islamic business ethics has five basic axioms: unity, balance, free will, virtue, and responsibility. The implementation of CSR at KKS BTM Mulia Babat has been carried out by the principles of Islamic business ethics. This includes responsibility to consumers, employees, investors, and the environment. Research Implications: The findings of this study indicate that the application of Islamic business ethics in CSR can increase corporate value and shareholder welfare and contribute to sustainable economic development. In addition, it can be a model for other companies to integrate Islamic business ethics into their CSR practices. Novelty/Originality: The uniqueness of this research lies in the combination of the concept of Islamic business ethics with CSR practices in the context of the BTM Mulia Babat KKS company. This research provides new insights into how Islamic values can be effectively integrated in modern business operations to achieve better social and environmental well-being.

Corporate Governance Evaluation and Shareholder Activism: An Institutional Gatekeeping Perspective

Corporate Governance Evaluation and Shareholder Activism: An Institutional Gatekeeping Perspective

Impact of environmental, social and governance (ESG) on foreign institutional investments in India: a machine learning perspective

PurposeThis study thoroughly examines the relationship between environmental, social and governance (ESG) scores and their subcategories with the investment decisions made by foreign institutional investors (FII). These subcategories include resource use, emission reduction and innovation under the environmental pillar, workforce, human rights, community and product responsibility under the social pillar and management, shareholders and CSR strategy under the governance pillar.Design/methodology/approachA machine learning technique known as “topic modeling” is used to analyse the current literature on ESG. To investigate the correlation between ESG scores and their subcategories with the investment decisions made by FII and to address concerns regarding multicollinearity and overfitting, a penalty-based regression model is employed.FindingsThe findings indicate that FIIs invest in firms with higher emission reduction and innovation scores under the environmental indicator. Additionally, firms with high human rights, community and product responsibility scores under the social indicator category have a positive relationship with FII investors. All subcategories of governance indicators, such as corporate social responsibility (CSR), strategy, shareholders and management scores, also positively impact FII investment. Of the three indicators, i.e. ESG, non-promoter FIIs give maximum weightage to governance indicators.Research limitations/implicationsSince ESG is a contemporary topic, the findings on the relationship between different categories of ESG on FII investment will support managers in their FII investment. Also, the study will help the government frame policy decisions on ESG.Originality/valuePrevious studies have explored the impact of the overall ESG indicators on FII investments, but they have not specifically studied the influence of sub-indicators within these categories on investment decisions. By addressing this gap, the study enhances stakeholder theory by identifying and prioritizing the various subcategories of ESG indicators that impact FII investment decisions.

The influence of shareholder ESG performance on corporate sustainability: Exploring the role of ownership structure

The increasing emphasis on Environmental, Social, and Governance (ESG) criteria has raised important questions about the role of shareholders in influencing corporate sustainability. Using an international sample of 5,182 companies, we find a positive association between corporate ESG performance and shareholder ESG performance, and this is robust to endogeneity issues. This effect is stronger when the first shareholder is excluded, ownership is more dispersed and firms ensure more rights to their shareholders, suggesting that these characteristics play a key role in strengthening this link.

Predicting the supplier relationship management system’s magnificence and investigating its effect on corporate shareholder value via the mediating role of marketing brand strength: A SEM-ANN hypered approach

Purpose—In the business sector, reliable and timely data are crucial for business management to formulate a company’s strategy and enhance supply chain efficiency. The main goal of this study is to examine how strong brand strength affects shareholder value with a new Supplier Relationship Management System (SRMS) and to find the specific system qualities that are linked to SRMS adoption. This leads to higher brand strength and stronger shareholder value. Design/Methodology/Approach—This study employed a cross-sectional design with an explanatory survey as a deductive technique to form hypotheses. The primary method of data collection used a drop-off questionnaire that was self-administered to the UAE-based healthcare suppliers. Of the 787 questionnaires sent to the healthcare suppliers, 602 were usable, yielding a response rate of 76.5%. To analyze the data gathered, the study used Partial Least Squares Structural Equation modelling (PLS-SEM) and artificial neural network (ANN) techniques. Findings—The study’s data proved that SRMS adoption and brand strength positively affected and improved healthcare suppliers’ shareholder value. Additionally, it demonstrates that user satisfaction is the most significant predictor of SRMS adoption, while the results show that the mediating role of brand strength is the most significant predictor of shareholder value. The results demonstrated that internally derived constructs were better explained by the ANN technique than by the PLS-SEM approach. Originality/Value—This study demonstrates its practical value by offering decision-makers in the healthcare supplier industry a reference on what to avoid and what elements to take into account when creating plans and implementing strategies and policies.

“Creating shared value”: Time for a normative extension?

AbstractPorter and Kramer's “creating shared value” (CSV) proposal has achieved significant penetration into both the academic and corporate communities. Building on other critiques of CSV, this paper assesses whether the CSV framework, notwithstanding its popularity, currently possesses an appropriate and adequate theoretical foundation to represent an overarching normative framework for the entire business and society field. The analysis does so by comparing CSV with a series of other dominant business and society approaches including corporate social responsibility, business ethics, stakeholder management, sustainability, and corporate citizenship. The analysis finds that while CSV does address the fundamental business and society normative requirement that business activities should contribute to sustainable net societal value, it currently fails to adequately incorporate the equally important notions of (i) appropriately balancing stakeholder interests with those of the corporation's shareholders, as well as (ii) demonstrating sufficient accountability (i.e., taking responsibility) by properly reporting on and addressing any negative impacts resulting from the firm's activities. The paper concludes with a revised and expanded restatement of the CSV concept, which attempts to take into account and address its current theoretical limitations in order to enhance its appeal as an overarching business and society normative paradigm.

Challenging issues in resolving corporate conflict within the framework of a corporate agreement

The scientific article will discuss possible mechanisms for parties to regulate their mutual relations through a corporate agreement. In the modern world, the regulation of relations between business partners is a very important aspect that affects the business climate in a country as a whole. If partners can regulate their mutual relations in the company in a way that is understandable to them, it affects where exactly such a company will be created, who will work in it, and where it will pay taxes. There are different approaches to this issue in the world, but it is possible to distinguish two main ones, namely the approaches used in the Anglo-American legal system and the continental legal system. The scientific article will pay special attention to resolving corporate conflict between business partners who have equal shares (50/50). It should be noted that it is very important for each country to develop an appropriate mechanism for resolving corporate disputes that arise between the parties of a corporate (shareholder) agreement, which will meet the requirements of the business environment and will be clearly regulated by current legislation and approved in court. In the scientific article, the nature of the corporate agreement will be disclosed, practical recommendations on preparing a corporate agreement will be provided, and problematic issues that parties to a corporate agreement encounter when resolving disputed issues and corporate conflicts, especially when a deadlock situation arises, will be highlighted. An analysis of the mechanisms used in corporate agreements to resolve disputes between business partners will be provided. Also, the strengths and weaknesses of each of them will be disclosed, including the experience of countries with Anglo-American law and how such experience can be applied in Ukraine. Special attention was given to mechanisms when the right or obligation to buy or sell a share in the company’s capital arises. Additionally, based on the analysis, effective mechanisms for resolving corporate disputes between the parties of a corporate agreement will be proposed in the scientific article, as well as relevant suggestions for improving the legislation of Ukraine and judicial practice on this issue.

The Influence of Artificial Intelligence and Digital Technology on ESG Reporting Quality

Environmental, social, and governance (ESG) reporting is crucial for conveying a company's sustainability performance. However, challenges related to standardization, consistency, and data quality persist. This study explores the potential of artificial intelligence (AI) and digital technology to enhance ESG reporting by addressing these challenges. AI and digital technology utilize advanced tools like natural language processing, machine learning, data analytics, and blockchain to streamline data collection, improve quality, and facilitate communication. Regression analysis using A-share listed companies' data from 2012 to 2021 examines the relationship between digital transformation and corporate ESG performance. The research emphasizes the implications of ESG reporting, AI, and digital technology for corporate management, risk assessment, shareholder value, and social responsibility. AI and digital technology are vital for growth, innovation, efficiency, and competitiveness. ESG reporting significantly impacts a company's risk profile, reputation, performance, and overall value, contributing to sustainable development. Through a comprehensive review, methodology exploration, and in-depth analysis, this study provides valuable insights and recommendations for leveraging AI and digital technology in advancing ESG reporting. It concludes that implementing AI and digital technology enhances the comprehensiveness and assurance level of ESG reporting.

Firm performance feedback and organizational impression management: The moderating role of CEO overconfidence

Abstract We propose that while positive performance feedback is positively related to firm sentiment, negative performance feedback is negatively associated with the firm sentiment. Additionally, overconfident Chief Executive Officers (CEOs) will improve the positive relationship between positive performance feedback and firm sentiment and reduce the negative relationship between negative performance feedback and firm sentiment. Using 7,182 firm-year observations for the 2004−2017 period, we show that positive performance feedback positively affects firm sentiment, and negative performance feedback negatively influences firm sentiment. We also found that higher levels of CEO overconfidence will minimize the negative impact of negative performance feedback on firm sentiment. Our research extends the current discourse on organizational impression management (proxied by firm sentiment) and CEO overconfidence research as we provide a nuanced relationship between firm performance feedback and organizational impression management. Our findings have theoretical and practical implications for corporate governance leaders and shareholders.

Do Industries and Corporations of this Generation Align with the Thoughts of Milton Friedman on Corporate Social Responsibility?

This research paper delves into the alignment of modern corporate social responsibility (CSR) practices with Milton Friedman's theory that a corporation's primary responsibility is profit maximization for its shareholders. It examines the pharmaceutical, banking, and food and beverage sectors to assess Friedman's theory's relevance in the current business environment. Contrary to Friedman's 20th-century view that dismissed broader CSR obligations, the 21st century has witnessed a shift towards recognizing corporate duties toward society, the environment, and a broader stakeholder group. The study scrutinizes how these sectors balance profit goals with social responsibility, including sustainable investing, responsible lending, sustainable sourcing, waste management, and nutritional transparency. Employing a mixed-method approach with data from corporate reports and sustainability indices, preliminary findings indicate a spectrum of adherence to Friedman’s profit- centric model versus a comprehensive CSR approach. Results show that while profitability remains central, many corporations have integrated CSR into their business models to varying degrees, influenced by a complex mix of factors. This nuanced exploration provides insights into the evolving nature of CSR, offering a critical perspective on Friedman's relevance today and the degree to which corporations have embraced broader social responsibilities. It lays the groundwork for future research on the interplay between corporate profitability, shareholder value, and social responsibility, contributing valuable information for stakeholders, policymakers, and researchers interested in corporate ethics and sustainability.

Corporate Sustainability and Shareholders’ Wealth in the National Financial Sector

The desire of every shareholder is to see that shareholders’ wealth is given strategic central point attention far and above other priorities of the management. Prior studies have shown that meeting shareholders’ wealth expectations in Nigeria is complex and full of challenges considering the infrastructural deficits, security challenges and lack of corporate legitimacy capable of enhancing shareholders’ wealth in the country. In addition, effective sustainability performance has been advanced as capable of improving corporate performance and increasing shareholders’ wealth. In contributing to knowledge, this study looked at how corporate sustainability affected shareholders' wealth in Nigeria's national banking industry. Using an <i>ex-post facto</i> research design, the study employed secondary data extracted from selected financial institutions from banking institutions. A total of 15 financial institutions were chosen using a purposive sample technique during a 15-year period, from 2008 to 2022, from the population of 65 financial institutions listed in Nigeria. The certification by the external auditors served as the foundation for the data's dependability and authenticity. Inferential (multiple regression) analysis was employed using a pooled panel data analysis. The result showed that corporate sustainability exerted a significant effect on shareholders’ wealth (<i>Adj. R2</i> = 0.7474, <i>F-stat/Wald test</i> (4, 220) = 18.30, <i>p </i>< 0.05). The study concluded that corporate sustainability had a positive and significant effect on shareholders’ wealth in the national financial sector in Nigeria. Consequent to the results, managers should ensure that effective corporate sustainability policies are instituted and practised in their companies.

Political costs and investors’ site visits: evidence from the section 301 investigation

ABSTRACT We explore the relationship between political costs and investors’ site visits. We find that the Section 301 investigation launched by the United States government in 2017 increased Chinese high-tech companies’ resistance to site visits. This effect was more pronounced for companies receiving government subsidies and companies with political connections. We further find that high-tech companies underwent fewer site visits with independent institutions (i.e. securities firms, fund companies) but more site visits with security underwriters (non-independent institutions), depending on different investors’ ability to disseminate corporate information. Moreover, high-tech firms selectively avoided certain topics from discussion during site visits. Additionally, the corporate shareholder structure also changed with the adjustments of visiting investors. High-tech companies reduced their site visits to avoid negative economic consequences. Overall, our study provides evidence that political costs influence the information communication behaviour of companies in the country being investigated.

Corporate governance and shareholders’ confidence in cooperatives: a systematic literature review

Background The confidence of Bottom 40 (B40) shareholders is crucial for cooperative’s sustenance within wider corporate governance. An in-depth study on cooperatives is needed, as they play a crucial role in the Malaysian economic system and contribute greatly to the country’s social development. However, in the current landscape, confidence among shareholders is at stake. This study aims to identify the research gap into corporate governance for cooperativess in relation to B40 shareholder confidence, as well as identify current study challenges and develop a conceptual framework for future research. Methods We conducted a systematic literature review, with the use of agency theory to assess shareholders’ confidence. Emerald, ProQuest, InderScience, Scopus and Science Direct were the online databases used in this study to search five keyword phrases: corporate governance, confidence, cooperative, agency theory and Bottom 40% (B40) household. Tranfield’s five stages were used to conduct the systematic review. Results Only 5 of the 324 studies assess shareholders’ confidence in cooperatives, as well as one paper on B40 and two papers on agency theory. Our review presents three major findings. First, research in the context of B40 shareholder’s confidence in cooperatives is scarce. Second, the challenges related to shareholders’ confidence in B40 are major issues in the context. Third, research on agency theory in the context of shareholders’ confidence within cooperatives and corporate governance is still scant. Conclusions This review urges the research community to conduct more studies based on the highlighted research gaps.

Value relevance of multifaceted corporate social performance: how do country-specific factors matter?

This study examines the relationship between multidimensional corporate social performance (CSP) and shareholder value, considering the moderating impacts of country-specific factors: economic development, the political system, and culture. Based on a sample of public companies in Asian-Pacific emerging countries over the 2010–2020 period, the findings reveal that the aggregate CSP measure obscures the valuation effect, whereas individual CSP dimensions highlight positive valuation effects. The CSP valuation effect varies across dimensions aimed at different stakeholder groups. Notably, narrowly focused CSP dimensions (community, product responsibility, and workforce) demonstrate more pronounced valuation effects than broadly focused dimensions (human rights). Given CSP’s multifaceted nature, directing attention toward the aggregate measure or incorrect dimensions may yield unwarranted conclusions. To enhance shareholder value through CSP, importance-performance analysis suggests prioritized resource allocation to human rights, community, product responsibility, and workforce dimensions. Intriguingly, the positive valuation effect of CSP is amplified in countries with higher income-per-capita and lower corruption, indicative of economic development and a robust political system, respectively. However, humane orientation—a cultural proxy—exerts no moderating impact on the CSP-shareholder value relationship. Comprehending the moderating roles of country-specific factors bears significant implications for bolstering CSP across diverse global regions.

Structural positioning of nomination committees: Evidence from Iceland

Nomination committees (NCs) are the subject of ongoing scholarly and professional debates regarding their purpose, practices, and organizational structure. Existing research suggests that NCs can enhance corporate governance by improving the process through which directors are appointed (Al Absy & AlMahari, 2023; Grove et al., 2020). In Nordic corporate governance, these committees are integrated in various ways, either as shareholders committees or subcommittees of the board. Iceland, a Nordic country, serves as a critical case study for investigating perspectives among stakeholders on the structural positioning of NCs — whether they should operate as subcommittees of corporate boards or shareholders committees. This unique context of Iceland adds a layer of intrigue and curiosity to our research. Interviews were conducted with thirteen individuals comprising shareholders, board members of publicly listed companies, and nomination committee members. Additionally, surveys were distributed among shareholders, board members, and nomination committee members of Iceland’s 300 largest corporations in 2020 and then again in 2023. The findings suggest that NCs should be shareholders’ committees voted by the shareholders instead of board committees. Such an arrangement is proposed to optimize the benefits for shareholders and boards in forming and operating NCs.

Corporate Executive Background and Corporate Performance

In todays era of intense economic competition and globalisation of the economy, companies and individuals are being pushed to upgrade their backgrounds to adapt to the times and promote their development. This paper focuses on the relationship between executives backgrounds and corporate performance, and learns that executives backgrounds of overseas study and overseas work can help them to make correct corporate decisions and thus improve corporate performance. Although the academic background of executives can help to improve corporate performance, it sometimes contradicts with the maximisation of corporate shareholders interests, and corporations need to pay attention to it, as well as the personal characteristics of executives. The results of the study suggest that it is important to consider the impact of executive background on corporate performance from various aspects and weigh the pros and cons so as to find the most suitable one for the enterprise. Meanwhile, it also suggests the direction of future research in this area.

Do state-affiliated corporate shareholders matter for asset-liability maturity mismatch?

Using a sample of China's listed companies spanning from 2007 to 2021, our study reveals that state shareholders have a dampening effect on the asset-liability maturity mismatch of corporations. In addition, we observe that the impact of state shareholders on the asset-liability maturity mismatch is more pronounced for firms that are non-state-owned and have faster growth. Mechanism test indicates that state shareholders can mitigate asset-liability maturity mismatch by alleviating financing constraints and appointing directors.