Directors Of Public Companies Research Articles

BESTANDEL DELICT PASAL 3 UU PTPK TERHADAP ULTRA VIRES DALAM PENGELOLAAN BADAN USAHA MILIK NEGARA BERBENTUK PERUSAHAAN UMUM

State-Owned Enterprises (BUMN) in the form of Public Companies (Perum) are the driving force as well as the locomotive of the country's economy that can create economic stability, national independence and to keep production that concerns the livelihoods of many people under state control. State-Owned Enterprises (BUMN) are filled by people who are competent in their fields by going through a series of fit and proper tests to be in State-Owned Enterprises (BUMN). Improving the welfare of its people, the state through State-Owned Enterprises (BUMN), in this case the government can also invest in it, solely to accelerate existing development. Directors of Public Companies (Perum) have the authority to carry out their duties and functions. Regarding this authority, it must be maintained so that actions do not occur that exceed the limits of that authority. There is an act of a Board of Directors who exceeds the authority he has in a company, in civil law this is referred to as Ultra Vires, also for Ultra Vires actions which exceed the limits of authority which can also be categorized as an act of maladministration in the Administrative Law regime, however Perum uses money The state in its management is also regulated by Law Number 31 of 1999 as amended and added to Law Number 20 of 2001 concerning Eradication of Corruption Crimes.

Analisis Pengaruh Struktur Dewan Direksi terhadap Kinerja Perusahaan

Purpose - This study aims to determine the effect of the board structure on company performance. This study has 6 independent variables, which consist of the size of the board of directors, independent directors, board of directors meetings, board of directors education, female directors, and managerial ownership.
 Research Method - The sample used in this research is quantitative data with a purposive sampling technique. Based on the criteria, the samples collected from 473 companies in the period 2014-2018. The sample data is tested using panel data regression.
 Findings - This study concludes that all the independent variables have no significant effect on company performance. Board of directors still needs to be controlled to achieve good performance. Independent directors rarely interfere on other director decision. Board of director’s meetings only incurs unnecessary expenses. Board of director's education is just a qualification. Women's board of directors in each country could have difference effect because of cultural differences. There are still many directors in public companies that do not have ownership in the company, so there is still no visible effect on managerial ownership.
 Implication - The findings of this study imply that corporate governance still needs to be strengthened to improve company performance. There are still many problems within the company due to poor governance.

Responding to stockholder proposals, director elections and sayon- pay votes

As boards of directors of public companies prepare for their 2023 annual meetings and, relatedly, consider the voting results from 2022 annual meetings, we are being asked for advice concerning (I) the duties of directors of Maryland corporations and (II) the policies and current practices of the proxy advisory services relating to stockholder proposals, director elections, and Say-On-Pay votes.

The Alchemy of Effective Auditor Regulation

The country is approaching the 20th anniversary of the bankruptcy of Enron Corp., an event that spotlighted the failure of auditors like Arthur Andersen to fulfil their role as gatekeepers and spurred creation of the Public Company Accounting Oversight Board to oversee these auditors. History reveals that Enron was no more than yet another instance of auditors abdicating their responsibility to accurately opine on the financial statements prepared by publicly held companies. The American Institute of Certified Public Accountants, the U.S. Securities and Exchange Commission, Congress, outside directors of public companies and most recently the Public Company Accounting Oversight Board, have all participated in the grand quest for effective regulation of the accountants that audit public companies. After fifty years of effort, the formula for successful regulation of the audit profession remains elusive. In 2020, former President Donald Trump proposed to subsume the PCAOB into the SEC, citing regulatory duplication and budget savings. This proposal could be summarily dismissed as fodder for a deregulatory agenda, but reactions to the proposal from Congress and industry participants outside of the enclave of securities regulators reflect deeper concerns about the non-governmental regulator that beg our attention. This article is the first in a series of planned articles exploring segments of the ultimate question: what is the alchemy of effective auditor oversight? This article begins the discussion of that question with a focus on verifiability, identified by scholars as a necessary component of regulation. This article establishes that regulatory efforts to promote verification as a precursor to public company auditor oversight have been half-hearted at best, and self-interested at worst. This article identifies the need for a complete departure from the stale, recycled approaches for establishing an effective verification system that furthers the goals of auditor oversight – promoting the preparation of fair and accurate audit reports.

A Trans-Atlantic Doctrinal Orientation Made Concrete: Ohio’s First 'Modern' Business Corporation Act (1927)

A Trans-Atlantic Doctrinal Orientation Made Concrete: Ohio’s First 'Modern' Business Corporation Act (1927)

Litigation Risk and the Independent Director Labor Market

After decades of declining litigation risk, independent directors of public companies are viewed as effectively immune to personal litigation costs. However, the unexpected In re Investors Bancorp decision by the Delaware Supreme Court in 2017 lowered the liability threshold only for directors in derivative litigation over their own equity grants. Investors and firms both reacted to this rare increase in director-only litigation risk. First, Delaware firms experienced significant negative short-window returns, concentrated in firms where equity compensation is most important, consistent with investor concerns about attracting and/or retaining qualified directors. Second, Delaware firms added more qualified directors to the compensation committee. Third, Delaware firms with higher abnormal compensation decreased director compensation. Finally, Delaware firms decreased discussion of director pay in 8-K filings and their use of compensation consultants. Overall, results are consistent with firms acting to mitigate litigation concerns.

Shareholders and Stakeholders around the World: The Role of Values, Culture, and Law in Directors’ Decisions

This study sets out to examine the relative importance of legal and cultural institutions and personal values in directors’ discretion. We present first evidence on the way personal and institutional factors together guide public company directors in decision-making concerning shareholders and stakeholders. In a sample comprising more than nine hundred directors from over fifty countries of origin, we confirm that directors hold a principled, quasi-ideological stance towards shareholders and stakeholders, called shareholderism. Directors’ shareholderism correlates with personal values, but also with cultural norms that are consistent with entrepreneurship. Among legal factors, only creditor protection exhibits a negative correlation with shareholderism, as theory would suggest, while general legal origin and proxies for shareholder and employee protection are unrelated to it.

ANALISIS PERLAKUAN AKUNTANSI ATAS PENGELOLAAN BERAS SEJAHTERA PADA PERUM BULOG DIVRE SULAWESI UTARA DAN GORONTALO

The Beras Sejahtera (Rastra), a program that assisted by government, has been working with Public Enterprise Logistics Company (Perum Bulog) in an attempt to improve food security as well as provide protection for underprivileged communities. This research aims to know the accounting of the management of the Beras Sejahtera at Perum Bulog Divre North Sulawesi and Gorontalo. The methods used in this research is descriptive method and qualitative research. This research obtained that the accounting of the management of the Beras Sejahtera at Perum Bulog Divre North Sulawesi and Gorontalo is using accrual-based and the reports are already organized in the regulation of Director Of Public Companies On Accounting Policy in Perum Bulog.Keywords: Analysis, Accounting, Beras Sejahtera

Columbia Law School Roundtable on A Governance Research Agenda for the Academy

Since Jensen and Meckling's formulation of the theory of “agency costs” in 1976, corporate finance and governance scholars have produced a large body of research that attempts to identify the most important features and practices of effective corporate governance systems. But for all the research that has been done in the past 40 years, many practitioners continue to see a disconnect between theory and practice, between the questions researched and the questions that need to be answered.In this roundtable, Martijn Cremers begins by challenging the conventional view that limiting “agency costs” is the main challenge confronted by boards of directors in representing shareholder interests and, hence, the proper focus of most governance scholarship. Especially in today's economy, with the high values assigned to growth companies, the most important function of corporate governance may instead be to overcome the problem of American “short termism” that he attributes to “inadequate shareholder commitment to long‐term cooperation.” And he buttresses his argument with the findings of his own recent research suggesting that obstacles to the workings of the corporate control market like staggered boards and supermajority voting requirements may actually improve long‐run corporate performance by lengthening the decision‐making horizon of boards and the managements they supervise.Vik Khanna discusses Indian Corporate Social Responsibility (CSR) spending and its effects in light of a recent law requiring Indian companies of a certain size to devote at least 2% of their after‐tax profit to CSR initiatives. One unintended effect of this mandate, which took effect in 2010, was that all Indian companies that were spending more than the prescribed 2% of profits cut their expenditure back to that minimum, suggesting that CSR and advertising are substitutes to some extent, and that such legal mandates can discourage CSR spending by early adapters or “leaders.” Nevertheless, Khanna also found evidence of social norms developing in support of CSR, including a spreading perception that such spending can help some companies achieve strategic goals.Jeff Gordon closes by arguing that, to the extent investors are short‐sighted, their short‐sightedness is likely to be justified by their recognition that public company directors have neither the information nor the incentives to do an effective job of monitoring corporate managements. The best solution to the problems with U.S. corporate governance is to replace today's “thinly informed” directors with “activist” directors who more closely resemble the directors of private‐equity owned firms. Such directors would spend far more time with, and be much more knowledgeable about, corporate management and operations—and they would have much more of their personal wealth at stake in the form of company stock.

The Role of Corporate Boards: A Roundtable Discussion of Where We're Going and Where We've Been

In this roundtable that took place at the 2016 Millstein Governance Forum at Columbia Law School, four directors of public companies discuss the changing role and responsibilities of corporate boards. In response to increasingly active investors who are looking to management and boards for more information and greater accountability, the four panelists describe the growing demands on boards for both competence and commitment to the job. Despite considerable improvements since the year 2000, and especially since the 2008 financial crisis, the clear consensus is that U.S. corporate directors must become more like owners of the corporation who “truly represent the long‐term interests of all of the shareholders.”But if activist investors appear to pose the most formidable new challenge for corporate directors—one that has the potential to lead to shortsighted managerial decision‐making—there has been another, less visible development that should be welcomed by wellrun companies that are investing in their future growth as well as meeting investors’ expectations for current performance. According to Raj Gupta, who serves on the boards of HewlettPackard, Delphi Automotive, Arconic, and the Vanguard Group,[O]ld‐fashioned institutional shareholders—many of them long‐term buyers and holders—now account for a remarkably large percentage of the ownership of U.S. companies. If you looked closely, I think you would find that, in every large U.S. public company today, as few as 20 large institutional shareholders control 50 to 75% of the stock. And although they're not activists who resort to the proxy process, they are also not the silent shareholders of the past.Although these investors are “bringing enormous pressure to bear on management,” the good news for managements and boards is that such concentration of ownership should make it far easier for them to build trust by making their case directly to “the investment community,” and so win the market support that can give companies the “breathing room” to carry out their long‐term business plans.Another piece of encouraging news for boards is that, by drawing on a more diverse pool of directors than in the past—one that includes a rapidly growing number of women, people of color, and “internationals”—they are finding themselves with a breadth of perspective and experience that has better prepared them to respond to changes in an increasingly global and volatile business environment.

Reporting requirements, targets, and quotas for women in leadership

Reporting requirements, targets, and quotas have been implemented in several countries to increase female representation in leadership. In three studies, we analyze the effectiveness of these strategies from a goal-setting perspective. Study 1 evaluates the relationship between reporting requirements and female representation on boards of directors with data from Fortune 500 companies from 1996 to 2015. Study 2 analyzes the association of reporting requirements, targets, and quotas with the representation of women on boards of directors of public companies across 91 countries. Study 3 evaluates the impact of targets and quotas for women in parliaments across 190 nations. The board diversity reporting directive introduced in the US was followed by an acceleration in the increase of female representation on boards of directors of Fortune 500 companies. Higher goals for women on boards of directors were related to higher female representation. Similarly, higher gender goals and strong enforcement mechanisms in parliaments were related to higher female representation.

Reputation Concerns of Independent Directors: Evidence from Individual Director Voting

This study examines the voting behavior of independent directors of public companies in China from 2004–2012. The unique data at the individual-director level overcome endogeneity in both board formation and proposal selection by allowing analysis based on within-board proposal variation. Career-conscious directors, measured by age and the director's reputation value, are more likely to dissent; dissension is eventually rewarded in the marketplace in the form of more outside directorships and a lower risk of regulatory sanctions. Director dissension improves corporate governance and market transparency primarily through the responses of stakeholders (shareholders, creditors, and regulators), to whom dissension disseminates information.

Human capital and professional network effects on women’s odds of corporate board directorships

Purpose– The purpose of this study is to examine the importance of human capital and professional networks for women’s and men’s appointment to the boards of directors of public companies. The study provides an in-depth analysis of how human capital and professional networks contribute to women’s as compared with men’s odds of corporate board membership.Design/methodology/approach– The study analyzes the human capital and professional networks of 494 male and female corporate outside (non-executive) directors appointed between 2005 and 2010 to the boards of US public companies listed in the Standard & Poor’s 500 index. Human capital was measured as director age, education and professional experience (function and role). Professional network variables measured included composition of professional network, network centrality, constraint and cohesion.Findings– The study’s findings reveal that the characteristics that impact the appointment of women as outside directors to public company boards differ from those of men. Relative to men, certain professions such as government relations and education improve the odds of appointment of women to corporate boards, while age lowers women’s odds. The number of network ties and the degree of network cohesion were also significant in predicting the likelihood of female board appointment to public corporations relative to men’s odds. The final model was able to predict female board membership correctly only in 28 per cent of the cases, while male board membership was predicted in 89 per cent of the cases, suggesting that factors other than human capital and professional networks (e.g. their gender) impact women’s appointment to corporate boards.Originality/value– To the authors ' knowledge, this study is the first to comprehensively examine the professional network components of female and male directors along with their human capital in the analysis of their prospects for board appointment. The conceptualization of professional networks as well the depth of quantitative analysis of the network components of the study advance the extant literature on the composition of corporate boards.

Board Oversight of Management’s Risk Appetite and Tolerance: Regulators Claim they Expect it but Change will Not Come Easy

In the aftermath of the 2008 global financial crisis post-mortems were convened in countries around the world to identify what went wrong. A unanimous conclusion was that boards of directors of public companies in general, and financial institutions in particular, need to do more to oversee “management’s risk appetite and tolerance” if future crisis are to be avoided. This finding represents a significant paradigm shift in role expectations while introducing a new concept the Financial Stability Board (FSB) has coined effective “Risk Appetite Frameworks” (RAFs).i Regulators around the world are now moving at varying speeds to implement these conclusions by enacting new laws and regulations. What regulators appear to be seriously underestimating is the amount of change necessary to make this laudable goal a reality.

Forum-Selection Bylaws Refracted Through an Agency Lens

Forum-selection bylaws are controversial when they are unilaterally adopted by directors of public companies acting pursuant to a generic bylaw power. The legitimation of such bylaws by the Delaware Court of Chancery in Boilermakers Local 154 Retirement Fund v. Chevron Corp. cleared the way for ever-more-aggressive uses of bylaw power in provisions mandating arbitration of internal-governance claims or imposing one-way fee shifting on shareholder plaintiffs. This Article uses the oblique perspective afforded by agency law to critique these bylaws and clarify the underlying issues they raise. In particular, agency doctrine includes precise articulations of concepts of consent and knowledge. The Article's analysis undermines the assumption that underpins the reasoning in Boilermakers: by investing in a corporation in which directors hold generic power to adopt, amend, or repeal bylaws, shareholders become parties to a flexible contract through which they impliedly consent to directors' later uses of their bylaw power (subject to ex-post judicial review under equitable doctrines). In the world of the flexible contract, shareholders are deemed to know facts not in existence when they invest, which is inconsistent with the knowledge required by agency doctrine for effective consent by a principal. Even when considered alongside boilerplate consumer contracts, the flexible contract is a singular instance, in part because its subject matter is an ongoing governance relationship. The article proposes statutory revisions to the Delaware General Corporation Law to address these vulnerabilities by making forum-choice for shareholders more parallel to section 3114 (applicable to the assertion of personal jurisdiction over directors and officers) and section 102(b)(7), which enable but also regulates provisions that exculpate directors against monetary liability.

The Growing Executive Compensation Advantage of Private Versus Public Companies

Private companies have a natural governance advantage over public companies—one that stems mainly from the presence on their boards of their largest owners. This governance advantage is reflected in the greater effectiveness of private company executive pay plans in balancing the goals of management retention and incentive alignment against cost. Private company investor‐directors are more likely to make these tradeoffs efficiently because they have both a much stronger interest in outcomes than public company directors and more company‐specific knowledge than public company investors.Furthermore, private company boards do not have to contend with the external scrutiny of CEO pay and the growing number of constraints on compensation that are now faced by the directors of public companies. Such constraints focus almost entirely on one dimension of compensation governance—cost—in the belief that such constraints are required to limit the ability of directors to overpay their CEOs.In practice, any element of compensation can serve to improve retention or alignment, as well as being potentially costly to shareholders. Furthermore, any proscribed compensation element can be “worked around” by plan designers, provided the company is willing to deal with the complexity. For this reason, rules intended to deter excessive CEO pay are now effectively forcing even well‐intentioned public company boards to adopt suboptimal or overly complex compensation plans, while doing little to prevent “captured” boards from overpaying CEOs. As a result, it is increasingly difficult for public companies to put in place the kinds of simple, powerful, and efficient incentive plans that are typically seen at private companies—plans that often feature bonuses funded by an uncapped share of profit growth, or upfront “mega‐grants” of stock options with service‐based vesting.

Is Delaware Losing its Cases?

Delaware's expert courts are seen as an integral part of the state's success in attracting incorporation by public companies. However, the benefit that Delaware companies derive from this expertise depends on whether corporate lawsuits against Delaware companies are brought before the Delaware courts. We report evidence that these suits are increasingly brought outside Delaware. We investigate changes in where suits are brought using four hand‐collected data sets capturing different types of suits: class action lawsuits filed in (1) large M&A and (2) leveraged buyout transactions over 1994–2010; (3) derivative suits alleging option backdating; and (4) cases against public company directors that generate one or more publicly available opinions between 1995 and 2009. We find a secular increase in litigation rates for all companies in large M&A transactions and for Delaware companies in LBO transactions. We also see trends toward (1) suits being filed outside Delaware in both large M&A and LBO transactions and in cases generating opinions; and (2) suits being filed both in Delaware and elsewhere in large M&A transactions. Overall, Delaware courts are losing market share in lawsuits, and Delaware companies are gaining lawsuits, often filed elsewhere. We find some evidence that the timing of specific Delaware court decisions that affect plaintiffs' firms coincides with the movement of cases out of Delaware. Our evidence suggests that serious as well as nuisance cases are leaving Delaware. The trends we report potentially present a challenge to Delaware's competitiveness in the market for incorporations.

Delaware Corporate Litigation and the Fragmentation of the Plaintiffs’ Bar

Since 2000, a growing proportion of lawsuits against directors of public companies incorporated in Delaware have been filed outside Delaware. There has also been a large increase in the likelihood of litigation challenging MA (2) changes in how the Delaware courts selected lead counsel encouraged non-Delaware filing by firms who were unlikely to win lead counsel status in Delaware; (3) potential obstacles associated with launching a suit in a jurisdiction other than Delaware become less of a concern to the plaintiffs’ bar. This Article draws upon data and insights developed more fully in a related policy-oriented paper: “Delaware’s Balancing Act”, Indiana Law Review (forthcoming 2012), and a related empirical paper (“Is Delaware Losing its Cases”, Journal of Empirical Legal Studies (forthcoming 2012)).

CEO Turnover in Private Equity Sponsored Leveraged Buyouts

Manuscript Type: Empirical Research Question/Issue: We examine the governance role of private equity (PE) firms in post-LBO companies in the US. We propose and test whether PE firms remove entrenched CEOs or CEOs who cause agency problems. Research Findings/Insights: Using archival data from a sample of 126 PE sponsored LBOs in the USA between 1990 and 2006, we document a CEO turnover rate of 51 per cent within two years of an LBO announcement. We find that the boards of directors replace CEOs in companies with high agency costs, as measured by low leverage and a high level of undistributed free cash flow. In addition, unlike the boards of directors in public companies, the boards in post-LBO companies tend to replace entrenched CEOs. Finally, the boards are more likely to replace CEOs if pre-LBO return on assets is low. Theoretical/Academic Implications: According to the agency theory, a PE-sponsored LBO is a new organizational form that reduces agency costs by enhancing corporate governance. This study uses CEO turnover as a setting to test that prediction. We find that PE firms replace CEOs who can cause agency problems, thus providing empirical support for the proposition that PE firms improve corporate governance in LBO companies. Practitioner/Policy Implications: This study offers insights to policy makers who are interested in regulating PE firms. Our results suggest that, in the US, PE firms provide effective corporate governance mechanisms by replacing incompetent and entrenched CEOs. In addition, our results provide a set of factors for PE firms to consider when they make CEO retention decisions.

The United Kingdom's Companies Act of 2006 and the capital asset pricing model

PurposeThe purpose of this paper is to consider the attainment of the corporate objective of the UK Companies Act of 2006 Section 172(1) from the perspective of financial valuations that are reliant on the cost of capital. The cost of capital plays an important role in many of the models and propositions that are routinely used for financial valuation and decision making.Design/methodology/approachFrom the perspective of financial valuations that are used to guide decision making that is in accordance with the corporate objective of the UK Companies Act of 2006 Section 172(1), managers and directors require a valid, reliable, and interpretable cost of capital. The theory, models, and propositions of financial management, whether they be investment, financing, or distributions (Sections 829‐853) decisions, are dependent on the cost of capital. This paper has three main tasks. First, the relevant sections of UK corporate statute with regard to the corporate objective need to be identified and presented. Second, a brief review of the function and role of the cost of capital for the valuations upon which investment, financing, and dividend decisions are based, is undertaken to ensure that the role and function of this key financial metric is clearly recognized. Third, since the capital asset pricing model (CAPM) is so widely and exclusively used, often without recourse to other approaches to calculation of the cost of capital, an update of CAPM empirical evidence is undertaken to affirm the 2004 findings and subsequent recommendations by Fama and French that the CAPM is not an acceptable way of calculating the cost of capital.FindingsIt is doubtful whether directors, who use an empirically invalid and unreliable valuation model such as the CAPM to calculate the cost of capital, will be able to meaningfully and purposefully make decisions consistent with the “enlightened shareholder value”. Managers and directors need to use approaches to the cost of capital that are valid and can be empirically verified.Practical implicationsThis paper recommends that directors of public companies who make decisions using financial valuations that embody the cost of capital should ensure that models other than the CAPM are used; otherwise, they may find it difficult unable to defend challenges to their statutory duty of attaining the corporate objective.Originality/valueAn update of CAPM empirical evidence is undertaken to affirm the findings and subsequent recommendations by Fama and French (2004) that the CAPM is not an acceptable way of calculating the cost of capital.