Implications For Corporate Governance Research Articles

History, ownership forms and corporate governance in India

PurposeThe purpose of this paper is to trace the evolution and persistence of different forms of business ownership in conjunction with the values and institutions that shaped those forms, and discuss the implications for corporate governance in India.Design/methodology/approachResearch paper analyzing broad historical trends, integrating multiple frameworks.FindingsMany ownership forms exist: family, government, professional, and foreign (multinational firms). In each period, shifts in values resulted in shifts in institutional and legislative frameworks, which, in turn, gave rise to different forms of business ownership. The end result, however, has been an amalgamation of diverse co‐existing ownership models, with evidence of evolution towards more balanced values.Research limitations/implicationsComparative research involving other national contexts will help broaden our understanding of the origins and persistence of different forms of governance. Exploration of other governance mechanisms, such as the changing roles of the board of directors or the impact of legislation, also can be explored in the Indian context.Practical implicationsAs multinational firms expand their operations and outsourcing in India, they must understand the existing governance structures in order to better manage their activities.Originality/valuePerspective of corporate ownership and governance in India using a cultural, institutional, and historical perspective.

Investor protection, share repurchases, irrationality and agency conflicts: The implications for corporate governance

This paper provides a theoretical analysis of the effects of the strength of investor rights on a firm’s share repurchase policy in the face of agency conflicts and behavioural biases. We consider three reasons for firms to repurchase their shares; to eliminate agency costs of free cash-flow, to time the market, and to cater to investors. In the first case, we demonstrate that investor rights and repurchases may be complements or substitutes in addressing free cash flow problems. In the second case, we argue that stronger investor rights increase informational disclosure which reduces the ability to time the market using repurchases. In the final case, we argue that stronger investor rights may reduce value reducing repurchase catering. We consider the corporate governance implications of our analysis, and discuss the effects of behavioural factors, such as bounded rationality, overconfidence, and regret, on the efficacy of governance systems to deal with the problems relating to repurchases

Characteristics of CEOs and corporate boards with women inside directors

Women corporate inside (executive) directors constitute an elite minority of leaders of large corporations. This study examines the characteristics of CEOs and boards of Fortune 1000 firms that had women who held the dual leadership positions of corporate director and executive officer in 1998 in order to determine whether firms with women insiders had substantially different characteristics than firms without. We find that compared with firms without women inside directors, firms with women inside directors were characterized by CEOs with longer board tenure, more family ties, and fewer director interlocks, and by boards that were larger, with more insiders, and that utilize a management Chair of the board. Corporate governance implications are drawn for the presence of women at the top of the executive hierarchy.

MANAGEMENT EDUCATION, MEDIA AND CONSULTING AND THE CREATION OF EUROPEAN MANAGEMENT PRACTICE

European management practice is rapidly becoming standardized through the imitation of large actors and the interaction of institutions for management education, management media and management consulting. This process is reinforced by the fact that these three types of institutions are increasingly becoming more homogeneous. The CEMP research reported in this article provided evidence for these developments in terms of the structure of the different fields of management, marked by the development of a number of global actors, particularly of Anglo-American origin. However, our research also showed that the actual dissemination of ideas varies considerably between countries and between companies. Furthermore, the borders between the different fields of management have become blurred, with the various actors acting not solely as knowledge carriers but also as intermediaries and scrutinizers. These results have interesting implications for corporate governance and for the management of European companies in a globalized world.

All's Fair in Love, War & Bankruptcy? Corporate Governance Implications of CEO Turnover in Financial Distress

Prior discussions of management turnover during financial distress have examined bankrupt and non-bankrupt firms as distinct groupings with little overlap. Separately investigating rates of turnover in-bankruptcy and out-of-bankruptcy, without a direct comparison between the two, has resulted in a narrowing of the accepted influence of bankruptcy law to post-petition, in-court decisions. Based on new evidence of CEO turnover in 2001, I argue empirically that this distinction between in-court and out-of-court restructuring has become meaningless from a governance perspective. In 2001, filing for bankruptcy did not change the rate of CEO turnover when one controls for financial condition. This statistically significant finding indicates that the shadow of bankruptcy has lengthened, making bankruptcy law a central tenet of governance policy regardless of whether a Chapter 11 petition is ever filed. After presenting these results, this article considers the implications of these results on the changing perceptions of the role of CEOs and the evolution of the multi-pronged U.S. corporate governance system.

Changes in Germany's Bank-Based Financial System: implications for corporate governance

Throughout the 20th century, banks have dominated Germany's financial system and also played a key role in corporate governance. Recently, however, a number of efforts have been made to increase the role of markets within this bank-based financial system, including regulatory innovations and a reform of the pension system. This article finds that, despite these changes, there are a surprising number of continuities in the structure of the financial system. The German financial system can therefore still be characterised as bank-based. Furthermore, banks have only partially withdrawn from the stakeholder system of corporate governance, and to some extent been replaced by insurance companies. An explanation for these continuities is advanced which emphasises stability in household investment behaviour and in patterns of company sector demand for finance.

Theft and Taxes

This paper analyzes the interaction between corporate taxes and corporate governance. We show that the design of the corporate tax system affects the amount of private benefits extracted by company insiders. A higher tax rate increases the amount of income insiders divert and thus worsens governance outcomes. In contrast, stronger tax enforcement reduces diversion and, in so doing, can raise the stock market value of a company, in spite of the increase in the tax burden. We also show that the corporate governance system affects the level of tax revenues and the ensitivity of tax revenues to tax changes. When the corporate governance system is ineffective, a decrease in the tax rate can increase tax revenues. This corporate governance view of taxes provides a novel justification for the existence of a separate corporate tax based on profits. Tests of the corporate governance implications using Russian data provide evidence consistent with model implications. We test the tax implications in a panel of countries. Consistent with the model, we find that corporate tax rate increases have smaller effects on revenues when corporate governance is weaker.

Enron. Con: “He that filches from me my good name … makes me poor indeed”

This critique functions as an introduction to this special issue of Critical Perspectives on Accounting ; an edition that embraces themes pertaining to the catastrophic collapse of Enron. In an effort to place the research published in this edition in context, I provide a critical analysis of the accounting and corporate governance implications of the demise of Enron, the subsequent public outcry, and the legislative reforms to date. I conclude with an exploration of how the studies in this special issue contribute to understanding the myriad of forces behind major events such as this.

FRS 13 and corporate governance: a fund management perspective

The use of derivative instruments such as futures, options and swaps has become increasingly widespread in the last twenty years, particularly among large companies in economies with well‐developed financial markets. This paper examines the impact of Financial Reporting Standard 13: Derivatives and Other Financial Instruments – Disclosures (FRS 13 hereafter) on isues relating to corporate governance. In particular, the researchers employ an interview survey to investigate: (i) UK institutional investors’ general attitudes towards the recent introduction of FRS 13; and (ii) whether the introduction of FRS 13 has any implications for corporate governance. The results to date indicate that institutional investors may not be treated as a homogeneous group with respect to their expressed views of FRS 13.

Audit committee features and earnings management: further evidence from Singapore

In this paper, we investigate the link between audit committees and earnings management providing a more comprehensive simultaneous analysis of the influence of audit committee features using a sample of 485 firm-years from Singapore's publicly traded firms during the 2000–2001 calendar period. Empirical findings indicate firms with a higher proportion of independent audit committee members are more effective at constraining earnings management. Firms with audit committees that are more diligent and/or lack the presence of independent directors serving simultaneously on a substantial number of boards and committees are more effective at constraining earnings management. These findings are robust to alternative income-incentives facing corporate management. Overall, our findings have implications for stakeholders, regulators, and corporate governance. For example, our findings infer policymakers may need to focus on other audit committee characteristics to strengthen the committee's ability to constrain earnings management rather than continue the present fixation with independence.

Trust Law, Corporate Law, and Capital Market Efficiency

In both the publicly-traded corporation and the private donative trust a crucial task is to minimize the agency costs that arise from the separation of risk-bearing and management. But where the law of corporate governance evolved in the shadow of capital-market checks on agency costs, trust governance did not. Thus, even more than that of close corporations, the law and study of private trusts offers an illuminating counterfactual - a control, as it were - for a playful thought experiment about the importance of capital market efficiency to the law and study of public corporations. The animating idea for this essay is that many of the differences on the agency costs frontier between the public corporation and the private donative trust can be roughly attributed to their relative positions in modern capital markets and the related disparity in their residual claimants' ease of exit. Among other things, this approach reveals a correlation between the trust law model and the views of corporate law scholars who doubt the ECMH and its implications for corporate governance. The essay also discusses the use of market data for assessing breach and damages in corporate and trust litigation and for empirical evaluation of theoretical scholarly analysis in both fields. More generally, comparison of the governance of the public corporation and the private donative trust brings into view the importance of relative price efficiency for the modern approach to corporate governance.

Auditor Selection: What Influences Decisions by Listed Companies?

Major business failures, including Enron and World Com in the United States and Harris Scarfe and HIH in Australia, and related alleged audit failures, have put the choice of auditor on the agenda. The choice of the “right” auditor has economic consequences for an auditee and implications for corporate governance. This paper discusses factors important to explaining auditor choice, including institutional factors (pertaining to the auditee and auditor) and newer emerging criteria as well as networking between directors and auditors. The paper discusses the relevant research and the policy implications for good corporate governance of auditor choice in publicly listed companies.

Shareownership: The foundation of corporate governance

In this article, the authors explore the origins of share ownership and its implications for corporate governance. They trace some of the current problems with governance structure that exist in public companies and what solutions can be applied to correct these problems. The authors also offer some guidance on what it means to be a shareowner. They do not advocate changes to the securities laws and regulations. Rather, they argue for a change in investor attitudes‐a frame of mind that reminds investors of their ownership rights and duties.

Control and Collaboration: Paradoxes of Governance

Corporate governance is an increasingly provocative topic, evident in ongoing debates between proponents of control versus collaborative approaches. We accommodate these contrasting approaches within a paradox framework, using agency and stewardship theories to elaborate the underlying tensions and to emphasize the value of monitoring, as well as empowerment. Building from these tensions, we examine reinforcing cycles that foster strategic persistence and organizational decline. We conclude by discussing means of managing control and collaboration, highlighting the implications for corporate governance.

Firms' Decisions Where to Incorporate

This paper empirically investigates the decisions of publicly traded firms where to incorporate. We study the features of states that make them attractive to incorporating firms and the characteristics of firms that determine whether they incorporate in or out of their state of location. We find that states that offer stronger antitakeover protections are substantially more successful both in retaining in-state firms and in attracting out-of-state incorporations. We estimate that, compared with adopting no antitakeover statutes, adopting all standard antitakeover statutes enabled the states that adopted them to more than double the percentage of local firms that incorporated in-state (from 23% to 49%). Indeed, we find no evidence that the incorporation market has even penalized the three states that passed antitakeover statutes widely viewed as detrimental to shareholders. We also find that there is commonly a big difference between a state's ability to attract incorporations from firms located in and out of the state, and we investigate several possible explanations for this home-state advantage. Our findings have significant implications for corporate governance, regulatory competition, and takeover law.The data on which this paper is based is available for downloading at Lucian Bebchuk's home page.

Effective Corporate Governance: from the perspective of New Zealand fund managers

Institutional investment in New Zealand public companies has important implications for corporate governance of those companies. This study investigates the corporate governance issues that are perceived as important by fund managers, and the extent to which they become involved in the governance aspect of their portfolio companies. 14 NZ fund managers from a total population of 20 were interviewed. The findings reveal that fund managers would like to see more independence in governance processes and structure: for example, the proportion of independent directors, the CEO's role and the selection of new directors. In terms of remuneration for executive directors, fund managers in Australia and New Zealand prefer performance‐based remuneration, but they admit that the formulation of appropriate schemes is complex. Two cases of intervention in the governance affairs of publicly listed companies attest to the active interest of fund managers.

Misreporting Corporate Performance

This paper develops a model of the causes and consequences of misreporting of corporate performance. We model why and when managers of public companies will choose to misreport and to invest in creating opportunities for misreporting. Even managers who cannot sell their shares in the short run might misreport in order to improve the terms upon which the company would be able to issue equity to finance new projects or stock acquisitions. When managers are free to sell some of their holdings in the short-run, incentives to misreport and the incidence of misreportin g i n c r e a s e t o a n e x t e n t d e p e n d i n g o n the fraction of their holdings that managers may sell and on their ability to sell without the market knowing about it. Investments in misreporting have real economic costs and lead to distortions in capital raising decisions, with firms that misreport raising too much equity and firms that do not misreport raising too little. Lax accounting and legal rules increase investments in opportunities to misreport and the incidence of misreporting and, as a result, reduce ex ante share value. Our analysis provides a range of testable predictions concerning the periods, industries, and type of firms in which misreporting is likely to occur. The analysis also has implications for corporate governance and executive compensation.

Does the Evidence Favor State Competition in Corporate Law?

One of the central debates in corporate law concerns the merits of regulatory competition in this area. Supporters of state competition have long proclaimed that the empirical evidence clearly supports their view. We argue that the existing empirical evidence on which supporters of state competition have relied does not warrant this claim. The empirical evidence, we show, is in fact entirely consistent with the opposing view that state competition works poorly with respect to some corporate issues, such as takeover regulation, that substantially affect corporate managers’ private interests. We also put forward a new approach to the empirical study of the subject, based on analyzing the determinants of companies’ choices of state of incorporation. Evidence obtained employing this approach indicates that, contrary to the beliefs of state competition supporters, states that amass antitakeover statutes are more successful in the incorporation market. Supporters of state competition, we conclude, should revisit some strongly held positions. Our conclusions have significant policy implications for corporate governance, takeover law, and the role of federal law in the corporate area. JEL classification: G30, G38, H70, K22.

The Ludwig report: implications for corporate governance

The Ludwig report concerning currency trading losses at AIB plc was issued in March 2002. This paper reviews the Ludwig report and assesses possible implications of the report for internal control and corporate governance procedures in treasury departments.

Savings and Accumulation Strategies of Urban Market Women in Harare, Zimbabwe

Previous articleNext article No AccessSavings and Accumulation Strategies of Urban Market Women in Harare, Zimbabwe*Emily Chamlee‐WrightEmily Chamlee‐WrightBeloit College Search for more articles by this author Beloit CollegePDFPDF PLUSFull Text Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmail SectionsMoreDetailsFiguresReferencesCited by Economic Development and Cultural Change Volume 50, Number 4July 2002 Article DOIhttps://doi.org/10.1086/343134 Views: 198Total views on this site Citations: 32Citations are reported from Crossref © 2002 by The University of Chicago. 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