Governance Control Mechanisms Research Articles

Mapping the emergence of the theme of corruption in the area of corporate governance: a bibliometric review of the literature

Objective: Despite the evident theoretical importance of corporate governance as a mechanism for controlling corrupt practices, as far as we know there are no review articles that relate these themes. In this sense, the objective of this article is to map the emergence and evolution of corruption in the area of corporate governance and present the state of the art and trends in future studies on these topics.
 Method: This article is a bibliometric review, it is a statistical analysis method that provides a quantitative understanding of the academic literature on a given scientific field. The bibliometric techniques used are cocotation analysis and bibliographic matching analysis. In other words, we sought to understand the theoretical roots and identify the frontiers of knowledge.
 Results: In the co-citation analysis, 4 theoretical clusters (theoretical bases) were identified and in the pairing, 6 theoretical clusters (frontiers of knowledge) were identified. It is clear from the graphic mappings that current research (frontiers) has more congruence between the different themes, while the research that forms the theoretical bases is more idiosyncratic.
 Originality/Relevance: As far as we know, this is one of the first articles to store knowledge about corruption in the area of corporate governance and cluster it into theoretical bases and boundaries.
 Theoretical/methodological contributions: The pairing analysis identified the following main topics in vogue: Disclosure of sustainability reports; Institutional Theories; Political connections; Corporate Governance Control Mechanisms; National culture; Foreign investments; Organizational performance; Financial paper; Factors determining bribery; and role of national and international regulatory agencies.

The influence of Corporate Governance and the external mechanisms of control in trade-off among results management strategies

The objective of the study was to analyze the influence of corporate governance (CG) and external control mechanisms on the trade-off among results management strategies by discretionary accruals and by operational decisions. The sample consisted of 177 companies listed in B³. Corporate governance was investigated through the index developed by Leal et al. (2015). The results management was captured by Paulo’s model (2007) in the case of discretionary accruals, by the Roychowdhury’s model (2006) in the case of operational expenses and the Vuong’s test (1989) for the trade-off among these strategies. The study extends the investigations in the scope of results management by investigating whether endogenous (corporate governance) and exogenous (external control mechanisms) facts to the company influence the managers in their options by managing the results by discretionary accruals or operational decisions. In the results, it was verified that corporate governance and external control mechanisms influence the trade-off among the outcome strategies. The presence of these variables led managers to prioritize management utilization through discretionary accruals to the detriment of management through operational decisions. The research contributes to the literature on results management by detecting variables that influence the managers’ discretionary decisions as to which management strategy to use, bringing practical contributions to signaling to the stakeholders that governance and external control mechanisms are effective in their role of inhibiting results management.

Mapping the corporate governance scholarship: Current state and future directions

AbstractResearch Question/IssuesWe conduct a comprehensive analysis of all scholarly publications in the field of corporate governance (CG) since the Enron scandal of 2001. Using bibliometric methods, we identify prominent themes that have served as the foundation of CG research, prominent topics in the field along with their temporal developments, and recent trends in CG research. In addition, we identify the authors and journals that have had the biggest impact in the field.Research Findings/InsightsWe document that the number of annual publications in CG has increased by a factor of eight since the early 2000s, with research articles being published in a wide variety of general interest journals, as well as in outlets specialized in the field of CG. We identify six research themes as the foundation of CG research: the theoretical foundations of CG, ownership, CG mechanisms and firm outcomes, disclosures, the board of directors, and family firms. We further find 19 major bibliographic keyword clusters that have been explored by researchers in the past 20 years. Research on corporate social responsibility (CSR) and sustainability, governance mechanisms, control mechanisms and disclosures, board diversity, CG in family firms, and CG in the Chinese context are the most dynamic areas of research in recent years.Theoretical/Academic ImplicationsWe systematically analyze the literature on CG and outline theoretical foundations, structuring academic contributions by keyword clusters. Links between keyword clusters as well as the most dynamic research areas are identified. The analysis provides guidance for researchers regarding suitable outlets for the different thematic clusters and helps as a basis to identify research opportunities.Practitioner/Policy ImplicationsWe document growing research interest in the field of CSR and sustainability. The growing body of literature in these areas can inform CG and CSR policies in the future. Our comprehensive bibliographic analysis provides an overview of CG research themes across research disciplines and streams of the literature.

Nonprofit Governance in an Age of Compliance

The stakes for proper nonprofit governance are extremely high. Over 1.5 million nonprofits are registered with the IRS, collectively employing 12 million people and accounting for 5.4% of US GDP. Yet while for-profit companies have significant checks on the behavior of boards and management, nonprofit firms lack many of the same types of internal and external governance control mechanisms. Covid-19 is just the latest shock to expose the lack of preparedness and capability of many nonprofit boards in fulfilling their essential governance functions. This Article contributes to the corporate governance literature by identifying aspects of nonprofit governance that create unnecessary risk to nonprofit entities and to society overall. Currently many governance failures that would be corrected in traditional for-profit entities go unaddressed among nonprofits. We make unique contributions to addressing these governance shortcomings by suggesting an enforcement reorientation by both public and private actors. Our novel solutions encompass disclosure, certification, oversight by state attorneys general, and federal actors.

Organisational and accounting responses to bankruptcy: the case of the Ferrara Monte di Pietà (1598 and 1646)

The Monte di Pieta of Ferrara, established in 1507, played a preponderant role in the socio-economic development of Ferrara. The charitable organisation contributed to the development of a financing system addressed to poor social classes and of a financial intermediation market, becoming an intersection between supply and demand of money. The institution experienced alternating times of prosperity and crisis. Therefore, the paper aims at analysing how it responded to the bankruptcy events occurred in 1598 and 1646 in terms of governance, patrimony, informational and accounting system and control mechanisms. The results show that the reforms had different outcomes. In fact, while the first one was efficient, it wasn’t effective, leading to another bankruptcy. On the contrary, the second reform was effective but inefficient, because it prevent another bankruptcy to occur, but worsened the organisational procedures.

E-Lance Enabled Network Exchanges within Supply Chains

E-business based e-lance networks can impact the coordination and completion of work within organizations and improve efficiencies in global supply chains. This may be particularly true for organizations mitigating sudden demand spikes, or lacking internal expertise and bandwidth. However, little is known about what governance and social control mechanisms impact network success. Utilizing data from 14,644 projects, this research tests a theory of network governance specific to this new emerging e-lance economy by integrating transaction cost economics with the concepts of social controls. For transaction costs, findings indicate that higher average project values lead to more projects and more money being exchanged, but more bids leads to less monetary exchange. For social controls, restricting access by sealing bids and not disclosing budget amounts leads to less bidding, but not disclosing budgets is associated with more projects being posted. The authors further find that the best predictor of e-lance success across all measures is the number of projects posted in the prior time period.

Governance and control in networks: a case study of the Universal Postal Union

Purpose– The purpose of this paper is to adopt “whole network” perspective and analyzes the governance and control mechanisms in the Universal Postal Union (UPU), one of the oldest and largest inter-governmental networks, through the lens of institutional entrepreneurship theory. The purpose is to introduce a typology of network governance forms to the accounting literature and to analyze the governance and management control mechanisms within the UPU, a “participatory federation” (Provan, 1983) type of network that has managed the challenges of collective collaboration since 1875.Design/methodology/approach– The study benefits from unlimited access to all archival materials of the UPU such as minutes of Congress and committee meetings since 1875 as well as secondary documents and market studies related to the postal sector. The data reported in this study are derived from the archives of the UPU in Berne, Switzerland and interviews conducted with senior officials.Findings– Drawing on the work of Provan (1983) and Provan and Kenis (2008) the authors identify five “ideal type” network governance forms based on such variables as differences in the relative power of network participants and whether these networks have arisen spontaneously or due to external coercion, the authors classify the UPU as a “participatory federation.” Within the theoretical boundaries of this typology the authors identify the multi level governance structures and the use of management control mechanisms by each level of governance. The authors introduce a distinction between the “network constitutional organization” that focusses on the socialization of network members and strategy-level orchestration of the overall network and the “network administrative organization” (NAO) that mobilizes management accounting and control mechanisms to monitor, encourage and facilitate member collaboration. The authors propose that control within a participatory federation is enacted through collective entrepreneurship by governance bodies using management accounting and control mechanisms as institutional carriers.Research limitations/implications– The paper is focussed on the current state of the UPU’s network structure and processes and did not explore the dynamics around the emergence of the different network governance and control mechanisms. An exploration of the collective construction by network participants of the need for these mechanisms would provide insights into how they emerge and might lead to a better understanding of the role of NAOs in networks.Practical implications– The paper highlights the challenges faced by collaborative networks and identifies enabling characteristics of a participatory federation’s governance bodies. The empirical observations within the context of the UPU contribute to the theoretical understanding of the desirable characteristics of participatory federations that might be applicable to similar public and private collaborative networksOriginality/value– This study expands the knowledge of management accounting and control systems in networks. It bridges a gap in the accounting literature by adopting a “whole network” perspective and by differentiating types of network governance structures that use management accounting and control systems. This contributes to the understanding of accounting and control across the full range of organizational forms.

Determinants Of Ethical Climate In The Firm: The Role Of Governance Control Systems And Environmental Uncertainty

Corporate governance mechanisms essentially reside in the control structure/systems of most organizations and provide, theoretically at least, a conduit to support a better organizational ethical climate. This linkage, however, has seldom been portrayed this way in the literature and, correspondingly, there are virtually no empirical studies to offer increased understanding, especially with respect to the professional accountant in practice. Accordingly, this paper empirically assesses the governance mechanisms sanctioned by the International Federation of Accountants (2009) as determinants of an organizations ethical climate based on evidence from a Canadian sample of CFOs/controllers. The ethics/leadership literature relating to ethical climate provides the theoretical underpinnings while organizational contingency theory supports examining the moderating effects of perceived environmental uncertainty (PEU). Increases in corporate governance control mechanisms are found to positively influence ethical climate. A significant relationship persists under both low and high levels of PEU but, as expected, it is much stronger when the level of PEU is low which raises concerns about how to embrace a stronger ethical climate when uncertainty is high. This paper contributes to the governance and ethics literature by providing empirical evidence that normative directives on evaluating and improving governance in organizations from global accounting authorities, such as the IFAC, are effective in shaping firms ethical climates in practice.

Governance Systems in Family SMEs: The Substitution Effects between Family Councils and Corporate Governance Mechanisms

The main objective of this paper is to explore the role of family councils vis‐à‐vis corporate governance mechanisms. Particularly, the paper explores whether family councils perform only their distinctive family governance role or if they also substitute for the roles performed by corporate governance control mechanisms. Based on a sample of 243 talian family s, our research findings show that the family council partially substitutes the shareholders' meeting and the board of directors in playing their respective corporate governance roles of ownership and monitoring. These findings are interpreted in the light of both agency and relational perspectives.

The Relationship between Earnings Quality, Control Mechanisms of Corporate Governance, and Future Stock Price Returns: The Case of the Netherlands

This article extends prior research on the relation between earnings quality (assessed by accruals) and future stock price returns and adds new research on the relationships between direct and indirect corporate governance mechanisms of control with accruals and future stock price returns. We study public companies of the Netherlands and find the presence of mispricing associated with very high and very low accruals. We also find evidence that direct corporate governance control mechanisms, such as the existence of separate, independent, and skilled audit committees, are related to higher earnings quality and higher future stock price returns.

Offshoring Business Process Services and Governance Control Mechanisms: An Examination of Service Providers from India

As emerging markets increasingly rely on service businesses through offshore outsourcing, we examine the role of governance control mechanisms in improving performance among business process outsourcing (BPO) service providers in India. Using data collected from 205 emerging market‐based BPO service providers in India, we examine the antecedents and consequences of establishing governance control mechanisms in BPO service providers. Specifically, we examine how structural (use of contracts with the client), administrative (effective allocation and demarcation of responsibilities within the firm), and relational (collaboration and information sharing with the client) mechanisms drive the performance of a BPO service provider operating in an emerging market. We also examine how key task‐related (task connectivity and task security) and client‐related (end customer orientation and global control) antecedents influence the use of different governance control approaches in this environment. Our analysis finds that both task connectivity and task security significantly impact use of structural and administrative mechanisms, whereas end customer orientation is significantly associated with the strength of the relational mechanisms governing the emerging market‐based BPO service provider and its client. Further global control significantly influences the strength of the structural mechanisms between the client and the BPO service provider. Finally, the three mechanisms have a complementary influence in driving the BPO service provider's performance.

The relationship between earnings quality, control mechanisms of corporate governance, and future stock price returns. The case of the Netherlands

This article extends prior research on the relation between earnings quality (assessed by accruals) and future stock price returns and adds new research on the relationships between direct and indirect corporate governance mechanisms of control with accruals and future stock price returns. We study public companies of the Netherlands and find the presence of mispricing associated with very high and very low accruals. We also find evidence that direct corporate governance control mechanisms, such as the existence of separate, independent, and skilled audit committees, are related to higher earnings quality and higher future stock price returns.

Governance Paradigms of Public Universities: An international comparative study

This study aims to develop a conceptual model of the wider influencing forces impacting the governance paradigms of public universities. It draws on the multi-theoretical governance concept and seeks to identify these forces through the lens of chief audit executives using a qualitative research approach. The interview data supported by published literature reveal universities are affected differently by a number of common influencing forces, resulting in different governance paradigms. These findings provide insights as to the causal factors that shape a public university’s governance paradigm. The practical implications of the findings are that these forces need to be taken into account in future governance studies of universities as it provides the basis to determine their stakeholder base; consequent contractual obligations with them; and the governance control mechanisms and processes to be developed and implemented at the board, operational and assurance levels of governance.

The Post-Modern Corporation, Private Property, and the 'Gaygency' Problem: Revisiting Berle and Means’ 'Corporate Governance Suspense Thriller' at the Nexus of Citizens United, Sarbanes-Oxley, and Defined Contribution Retirement Plans

Government policies’ unintended consequences permitted corporate agents to disconnect economic ownership from control, exploit corporate governance doctrine, and alter historic capital extraction methods throughout the past thirty years. From 1981-2011, market returns reflected these problems and defied existing risk / return theories. Simply put, bonds counterintuitively outperformed stocks for a generation. This Article develops a paradigm-shifting framework in the scholarship concerning investor capital returns and corporate governance control mechanisms. To understand material causes of the problem, this Article examines empirical and theoretical data drawn from legal, economic, and financial literature to analyze a combination of primacy, corporate governance, agency costs, and value drivers.The analysis suggests that stockholders’ failure to exert sufficient greed in the face of statutory, regulatory, judicial, and other structural reforms led to the death of shareholder primacy. Because stockholders lost the fight for meaningful control of corporate governance and squandered their future ability to efficiently extract historically expected value from corporations, something must fill that void. To spur further research and dialogue on these matters, this Article forwards a disruptively innovative paradigm of junkholder primacy. Specifically, this Article concludes that ex ante negotiated junk bond contracts permit investors to assert primacy, regain governance controls, reduce agency costs, and extract high returns.

The relations between transactional characteristics, trust and risk in the start-up phase of a collaborative alliance

The aims of this paper are to, first, explain how managers’ perceptions of trust in partners and alliance risk, at the start-up phase of an alliance, may influence the choice of governance structure and control mechanisms, and second, to study how processes and activities may enhance levels of trust between partners, mitigate risk and complement formal controls to form an effective control package. A case study of a collaborative alliance in the construction industry is drawn on to examine these relationships and processes. The alliance was characterised by high asset specificity, high environmental and behavioural uncertainty, and high transaction frequency. Activities that were undertaken in the period leading up the formation of the alliance (the pre-alliance phase) and during the interim alliance, led to an increase in goodwill trust and reduced managers’ perceptions of both relational and performance risk. Alliance governance structures, as well as behaviour controls, output controls and social controls, and processes that led to the development of trust and mitigation of risk, formed part of the control package.

Disclosure patterns in derivatives reporting by UK firms: implications for corporate governance

This paper provides a description of an empirical investigation into the disclosure of information concerning the use of derivatives and other financial instruments in corporate annual reports of UK firms following the introduction of Financial Reporting Standard 13 (FRS 13) 'Derivatives and other financial instruments ? disclosures'. The results indicate that the implementation of this standard was associated with a substantial increase in derivatives-related information available in corporate annual reports. It is argued that this increase in disclosure has implications for the corporate governance and internal control mechanisms of the reporting companies.

Simultaneous Relationships among Ownership, Corporate Governance, and Financial Performance

We draw on the many aspects of corporate governance examined in the developed economies and extend them to the Chinese environment. We find evidence of strong linkage and interdependence in the use of different control mechanisms. While there are significant relationships between the governance control mechanisms and firm performance, these disappear when using simultaneous equation estimation. Our findings support the argument that governance control mechanisms operate independently and they are substitutes for one another.