National Corporate Governance Systems Research Articles

PURPOSE, TASKS AND PRINCIPLES OF EFFECTIVE MANAGEMENT OF CORPORATE CULTURE IN JOINT-STOCK COMPANIES

In the context of globalization, the introduction of effective elements of corporate governance for the victory of joint-stock companies in healthy competition is a service that has increased the profitability of companies. Companies impose an individual corporate culture depending on their type of activity and nature. This article discusses the systematization of the conceptual content of functional aspects of corporate culture in joint-stock companies, as well as prevention and resource opportunities of social problems and conflicts in joint-stock companies. The influence of various factors on the definition of corporate culture in joint-stock companies is considered. It consists in developing proposals and recommendations for further improvement of the national corporate governance system in accordance with the Corporate Code in the context of economic diversification and the formation of corporate culture in joint-stock companies.

THE NEED TO FORM A CORPORATE CULTURE IN JOINT-STOCK COMPANIES

In the context of globalization, the introduction of effective elements of corporate governance for the victory of joint-stock companies in healthy competition is a service that has increased the profitability of companies. Companies impose an individual corporate culture depending on their type of activity and nature. This article discusses the systematization of the conceptual content of functional aspects of corporate culture in joint-stock companies, as well as prevention and resource opportunities of social problems and conflicts in joint-stock companies. The influence of various factors on the definition of corporate culture in joint-stock companies is considered. It consists in developing proposals and recommendations for further improvement of the national corporate governance system in accordance with the Corporate Code in the context of economic diversification and the formation of corporate culture in joint-stock companies.

O‘zbekistonda korporativ boshqaruv tizimini tatbiq etish va rivojlantirish

In this article, based on the latest changes and the implementation of the current reform program, the application of the corporate governance system to the joint-stock companies of Uzbekistan, the analysis of the compliance with the global principles of the current corporate governance, and the further improvement of the national corporate governance system in accordance with the corporate code in the context of the diversification of the economy, and in the activities of the joint-stock companies is to develop proposals and recommendations on corporate governance.

Economic Strategizing of the Implementation of Corporate Integration Scenarios of Joint-Stock Companies of Ukraine

In the article researching the main aspects of corporate management strategy at enterprises, familiarization with the principles of corporate management, as well as determining the directions of development of the strategy of corporate integration of joint-stock companies as a whole, the main aspects of corporate management of the enterprise are also indicated. International standards and norms of corporate governance of the Organization for Economic Cooperation and Development (OECD), which are aimed at significantly improving national systems of corporate governance, are considered. The “Code of Corporate Conduct”, a document that describes the organization of the board of directors’ activities and the corporate governance system as a whole, was studied. The rules and procedures for making management decisions related to the enterprise’s activities and the implementation of control procedures, as well as the distribution of rights and responsibilities between divisions according to the enterprise, as well as the principles of corporate governance, specifically from the participation of enterprises of the corporate sector in the political and social life of the country, are considered depends on the level of its economic development. The main indicators of the effectiveness of corporate management were formed, reflecting the degree of compliance with the principles of corporate management, the results of the financial and economic activity of the enterprise, as well as indicators reflecting the risks of corporate management. The directions of the development of the corporate governance system for the economy as a whole are determined, and the need for partnership relations between shareholders is also considered. It was determined that economic strategizing is an integral part of the management system of a joint-stock company – a real embodiment of management relations and involves not only the development of a strategic plan and the organization of its implementation, but also other aspects of management and social activities that allow purposeful transfer of the object to a new quality , that is, goal setting is the basis of strategizing.

Моделі корпоративного управління: світовий досвід та проблеми формування в Україні в умовах сучасних викликів та загроз

The concept and specificity of corporate governance models is defined. A comparative assessment of the most common types of corporate governance models, in particular: Anglo-American, German, Japanese, Family, or model W (the widely-held corporation model), which is presented in Anglo-Saxon countries and model B (the blockholder model), widespreaded in other countries of the world is carried out. The peculiarities of the national model of corporate governance formation were studied. It is substantiated that for the transitional financial system of Ukraine any direct copying of the models of industrially developed countries for the formation of a national system of corporate governance is absolutely impractical, however, it is important to take into account the world experience, mental peculiarities of the corporate sector formation and functioning, which in the complex will contribute to the economic growth of our state. The prospects for the development of the national model of corporate governance, which depends directly on the need to improve the system of functioning of the corporate sector of the Ukrainian economy and requires a number of problematic issues, namely: improvement basic principles and provisions of corporate governance; transformation of the state as a shares owner into an effective shareholder by creating a proper system of state regulation of the capital market; shadowing of the corporate sector to improve the procedure of disclosure and increase the level of transparency of operations; improvement of the organizational and management structure of joint-stock companies; formation of an effective corporate control system are outlined.

АКЦИЯДОРЛИК ЖАМИЯТЛАРИ КУЗАТУВ КЕНГАШИ ФАОЛИЯТИДА МУСТАҚИЛ ДИРЕКТОРЛАР РОЛИНИ ОШИРИШ МАСАЛАЛАРИ

The article analyzes the activities of the supervisory boards of joint-stock companies, the need to increase the role of independent directors in order to ensure the transparency of the activities of the supervisory board, the institution of independent directors, the issues of formation, organizing the association of independent members of the supervisory boards of Uzbekistan and its regulation, protecting the rights and interests of independent members of the supervisory boards in state bodies and other organizations, the formation of a community of highly qualified and professional independent directors in the country and the improvement of the national system and practice of corporate governance.

Convergent and divergent trajectories of corporate governance

This Special Issue revisits the classic question of comparative corporate governance research, namely whether national corporate governance systems are converging. More specifically, it focuses on several ‘convergence vectors’ which comprise the political, legal, economic and social arrangements that influence or drive the international trajectories of governance systems towards a common denominator. Taken together, the contributors to this Special Issue invite us to think critically about the functional explanations commonly mobilized in favour of convergence and consider instead the convergence debate from a broader and more interdisciplinary point of view.

Convergent and Divergent Trajectories of Corporate Governance

This Special Issue revisits the classic question of comparative corporate governance research, namely whether national corporate governance systems are converging. More specifically, it focuses on several ‘convergence vectors’ which comprise the political, legal, economic and social arrangements that influence or drive the international trajectories of governance systems toward a common denominator. Taken together, the contributors to this Special Issue invite us to think critically about the functional explanations commonly mobilized in favor of convergence and consider instead the convergence debate from a broader and more interdisciplinary point of view.

EU Regulatory Measures Following the Crises: What Impact on Corporate Governance of Financial Institutions?

Purpose: This study investigates the relevance of certain EU regulatory measures introduced in response to the financial and sovereign debt crises for corporate governance and their possible impact on the modalities of company operation, notably in terms of risk assessment and management. Design/Methodology/Approach: The contribution is based on a review of literature and an analysis of EU legislative and soft law measures agreed in 2008 onwards pertinent to corporate governance, notably of financial institutions due to their systemic relevance. The applied research methodology includes a combination of theoretical and analytical methods. Findings: It is submitted that there is an observable trend of extending the power of shareholders and of regulation in the public interest at the cost of the management power. Moreover, certain aspects of corporate governance seem to steadily evolve from code-based 'soft law' norms to mandatory rules. Practical Implications: EU regulatory-corrective measures constitute ‘grosso-modo’ a desirable progress towards a more transnational approach. However, there can be no single blueprint for reforms given the differences between national systems of corporate governance, including their scope, contents, and means of implementation. Hence, the potentials of an incentive-oriented approach should be better exploited in both national and EU level regulatory activities. Originality/Value: The study offers an updated account of the most recent EU legislative activity in the area up to the end of the 8th term of the European Parliament. It may be used for corporate governance practitioners allowing for informed adapting to the new regulatory framework and trends in the foreseeable future.

The American National System of Corporate Governance

Introduction Corporate governance (CG) has recently been extensively discussed, intensely debated and variously defined in the United States. For the purposes of this chapter, CG shall mean the internal arrangements within a corporation intended to provide reasonable assurances that corporate directors and officers make and implement decisions in accordance with their duties of care and loyalty to their corporations. CG in the United States is often associated with the recent initiatives taken in the wake of corporate scandals such as Enron and MCI. While the recent initiatives are undoubtedly important, their significance can best be understood in the context of the existing frameworks under corporate and securities law. The current initiatives in the United States (i.e. the recently adopted CG provisions in the listing requirements for the New York Stock Exchange (NYSE) – and the provisions of the Sarbanes–Oxley Act of 2002 – often called “Sarbanes– Oxley”) in important ways simply add to the governance measures already in place pursuant to corporate law and securities regulation in the United States. Only after understanding foundations in corporate law and securities regulation in the United States is it possible to understand the significance, and the limitations, of the recently adopted NYSE listing requirements and of Sarbanes–Oxley. In general, the recent NYSE initiatives attempt to improve the degree of independence among directors of corporations listed there so that they are better able – and more likely – to meet the performance standards currently applicable to directors under corporate law (i.e. duties of care and loyalty), but the NYSE does not change those standards. Unfortunately, the NYSE listing requirements do not have the force of law. Sarbanes–Oxley, on the other hand, in general, attempts to improve the independence of external auditors and corporate directors so that they are better able – and more likely – to prepare public disclosures in form and substance required by US securities regulations. There are also provisions intended to enhance the care with which corporate officers prepare required public disclosures. Unfortunately, Sarbanes–Oxley applies only to disclosure requirements under US securities regulations. With limited exceptions, Sarbanes–Oxley is not specifically intended to apply to directors’ or officers’ broader obligations to their corporations or the standards applicable to their performance of those obligations.

The relationship between shareholder protection through regulation and the demand for external auditor services

Auditing is one of the most obvious corporate governance mechanisms, and auditors play one of the most central gatekeeping roles in the corporate governance system. The auditing function has typically been examined as if it is essentially independent of the legal context in which it is applied. However, some studies emphasize that the auditor’s governance role is likely dependent on the national corporate governance system in which an auditor operates. One area that has received attention is how the legal environment, including the strength of shareholder protection regulations, affects the demand for auditing. However, entirely contradictory understandings of this relationship can be derived from the literature: that these two mechanisms act as substitutes and that they act as complements. A potential explanation for this discrepancy is that prior studies use static measures of regulations as proxies for shareholder protections and proxies for auditing service demand that have been criticized for being too rough. By using the Shareholder Protection Index developed by the Centre for Business Research at Cambridge and four measures capturing nuances of auditing service demand, this study makes a novel contribution to this line of research. By using data from two countries, the UK and Sweden, that belong to different legal traditions, the analysis also tests whether this aspect has any impact on the relationship between shareholder protections and auditor demand. The analysis shows that the demand for auditor services in general is positively correlated with the level of shareholder protection imposed by regulations, i.e., these two corporate governance mechanisms are compliments. There is no support for the argument that a country’s legal origin affects this relationship. The general interpretation is that the level of shareholder protections imposed by regulations will drive the demand for auditor services and that this is the case irrespective of a country’s legal origin. This study provides in-depth knowledge on the relationship between the legal environment and the demand for auditing, offers valuable information about the impact and consequences of legal reforms and is therefore especially valuable for policymakers and academics interested in this topic.

Reforming corporate governance in Uzbekistan in line with the global principles

Today Uzbekistan, one of the independent Central Asian countries, has headed for reforming and improvement of corporate governance system, and as a result of implementing the reform program there have been introduced significant improvements in the country’s corporate governance system. Nevertheless, in spite of recent developments and improvements in the sphere of corporate governance we still do not know whether corporate governance practice is implemented in compliance with the global principles of corporate governance. The purpose of this paper is to analyze the compliance of corporate governance system of Uzbekistan, which has been formed out of the recent developments and implementation of current reform program, with the global principles of corporate governance, and work out recommendations and suggestions for further improvement of national corporate governance system in line with the global principles. Specifically, the paper identifies nature and extent of specific strengths and weaknesses in corporate governance of Uzbekistan to determine the further reform priorities leading to the improvement of corporate governance and economic performance in the country. The G20/OECD Principles of Corporate Governance is used as a benchmark for our analysis. At the end, the paper concludes that the country still has some weaknesses in corporate governance, and gives recommendations and suggestions as the measures to be undertaken for further improvement of national corporate governance system in line with the global principles of corporate governance.

Corporate Governance Systems Diversity: A Coasian Perspective on Stakeholder Rights

We examine corporate governance diversity within a Coasian framework of stakeholder rights, where the central role of governance is to ensure that necessary firm-specific investments are made. This Coasian perspective on stakeholder theory offers a unifying framework towards a global theory of comparative corporate governance, bridging the gap between economic theories of the firm and stakeholder theory, also offering an economics-based alternative to agency theory that explicitly accounts for stakeholder rights. The Coasian perspective encompasses a diversity of corporate governance systems, but does not imply a unique global corporate governance benchmark. We posit that governance is firm dependent and endogenous conditional on the constraints imposed by a national governance system; consequently, there should be no systematic relationship between governance and firm performance once the national constraints are controlled for. However, the same national corporate governance system constraints confer comparative advantages to firms whose efficient levels of firm-specific investments are favored.

I Heard it through the Grapevine: Market Control of Controlling Family Shareholders

Manuscript Type Empirical Research Question/Issue This paper addresses the issue of whether controlling family shareholders are exposed to market control. The paper advances the theory that the expected performance of controlling shareholders, inferred from their track records, is constantly reflected in the market value of controlled firms. Research Findings/Insights By using event-study methodology, we show that unexpected acts that are detrimental to minority shareholder interests performed by controlling family shareholders lead to short-term negative abnormal returns in firms that otherwise are completely unaffected by the detrimental acts, but are controlled by the same family-based business group. Theoretical/Academic Implications The results shed new light on the significance of track records in corporate governance that have implications for research on informal corporate governance mechanisms, governance of family firms, and, possibly, comparative corporate governance. The results also have tentative implications for the understanding of the function of family-controlled business groups consisting of industrially unrelated firms by suggesting a function that has heretofore been neglected. Practitioner/Policy Implications The results have implications for reform work in corporate governance by showing that practitioners and regulators must consider variability in non-legal corporate governance mechanisms when analyzing and attempting to change different national corporate governance systems to achieve desired effects.

DEVELOPMENT OF CORPORATE GOVERNANCE IN TRANSITION COUNTRY: EVIDENCE FROM UZBEKISTAN

This paper empirically analyzes the development of corporate governance in the case of Uzbekistan as a transition country. Specifically, the reforms implemented for over two decades for strengthening and improvement of national corporate governance system, the measures undertaken by the government for improvement of corporate relations in the joint-stock companies, the stages of progressing corporate governance, the current problems of corporate governance are studied as well as the author’s views and thoughts on the development process of corporate governance in the country are stated in this paper. This empirical paper also shows the specific approach for reforming the corporate governance system in the country, and presents evidence suggesting an impact of Uzbekistan’s corporate governance developments on the domestic stock market performance. At the end of paper, the author makes conclusion and brings some suggestions to further develop the corporate governance in Uzbekistan.

Agency Theory in Practice: a Qualitative Study of Hedge Fund Activism in Japan

AbstractManuscript TypeEmpiricalResearch Question/IssueWe look at the reaction to hedge fund activism of managers and shareholders in Japanese firms and explore the implications of our findings for agency theory.Research Findings/InsightsConfrontational shareholder activism of the kind practiced by American and British hedge funds in Japan during the 2000s failed to gain acceptance from Japanese investors and managers or to alter the internal focus of corporate governance practices in Japanese firms.Theoretical/Academic ImplicationsWe use a qualitative research design which treats the standard agency‐theoretical model of the firm as only one possible approach to understanding corporate governance, to be tested through empirical research, rather than as an assumption built into the analysis. We find that Japanese managers do not generally regard themselves as the shareholders' agents and that, conversely, shareholders in Japanese firms do not generally behave as principals. Our findings suggest that the standard principal‐agent model may be a weak fit for firms in certain national contexts.Practitioner/Policy ImplicationsFor policymakers, our work demonstrates the importance of understanding the distinctive features of national‐level corporate governance arrangements. For practitioners, it cautions against the view that national corporate governance systems are converging around the model of shareholder primacy and directs attention to the need for investors to be informed of the diversity of practices across different countries.

Evolution and Structuration of Corporate Governance Models Over Time and Accross Countries

Using social responsibility ratings on over 663 companies belonging to 18 European countries in 2000 and 2010, this paper examines whether or to what extent stylized models of Corporate Governance (CG) shape national systems of CG and firm commitments in the long run. In doing so, we question arguments in favor of convergence versus continued divergence and alignment versus resistance or status quo. In particular, we assess the factors that explain these trends and the detected processes. Our findings are manifold but principally highlight the structuring dimension of both the shareholder-oriented and stakeholder- oriented models of CG, and the role of micro-economic factors in explaining the changing and varying practices of firm commitments.

Internet-Based Corporate Disclosure and Market Value: Evidence from Latin America

Manuscript Type: Empirical. Research Question/Issue: We examine the relationship between an Internet-based corporate disclosure index and firm value, and evaluate the relatively understudied corporate use of the Internet by firms listed in the seven largest stock markets of Latin America (Argentina, Brazil, Colombia, Chile, Mexico, and Peru). Research Findings/Insights: We find a positive and strong relation between our corporate governance disclosure index and the Tobin’s Q for firms in Latin America. More specifically, we find, after controlling for firms’ characteristics, industry and country of origin, that an increase in 1% in the Internet-Based Corporate Disclosure Index causes an increase of 0.1592% in the Tobin’s Q and an increase of 0.0119% in the firm’s ROA. This result is statistically and economically significant for our sample of Latin American firms. These findings are robust after considering the potential endogeneity of our regression variables and after performing a battery of other robustness checks. Theoretical/Academic Implications: The evidence shown here contributes to the mounting literature that suggest that firms can differentiate themselves by self-adopting better corporate governance practices and, more specifically, better financial and corporate disclosure measures using the Internet. That is, even in a weak investor protection setting, firms can enhance their market value by self-adopting good corporate disclosure practices. Practitioner/Policy Implications: The results presented in this paper are relevant not only for Latin America but also for other emerging markets and regions attempting to improve their corporate disclosure practices. These results suggest that national corporate governance systems should pay attention and guarantee a minimum of disclosure using the Internet.

Varieties of private self-regulation in European capitalism: corporate governance codes in the UK and Germany

Voluntary codes of best practice have become increasingly prominent in corporate governance regulation. Given their similarity in focus and substance, the global spread of private self-regulation in corporate governance is often attributed to the rise of institutional investors and seen as signalling a global convergence of standards among the traditionally divergent national corporate governance systems. Drawing on institutionalist approaches of Comparative Political Economy, we argue that national code developments are strongly shaped by national state– economy relationships, in particular by domestic ‘key coalitions’. Comparing the emergence of corporate governance codes in the UK and Germany, our study reveals marked differences with respect to the formulation, substance and function of codes in national corporate governance. In the UK, the code largely reflects the demands of institutional investors for stricter standards. In contrast, members of the traditional German ‘stakeholder coalition’ pushed for a code that was intended to be more of a marketing than a regulatory instrument.

Revisiting the Party Paradox of Finance Capitalism: Social Democratic Preferences and Corporate Governance Reforms in Switzerland, Sweden, and the Netherlands

The “party paradox” thesis claims that in the context of the legal corporate governance reforms of the 1990s, which aimed at adjusting national corporate governance systems to the “finance capitalism” of the Anglo-American type, center-left parties promoted proshareholder corporate governance reforms, whereas center-right parties opposed such reforms. Based on case studies of Switzerland, Sweden, and the Netherlands, this article shows that this thesis does not apply to two of these cases: In Sweden and the Netherlands a broad coalition uniting center-right and center-left parties opposed— with considerable success—proshareholder reforms. Therefore, the author argues that firm-level explanations of the “party paradox” are insufficient to understand the variance in center-left preferences across different cases. Instead, the historical role of labor in different countries is critical in the formation of center-left preferences. Where labor was not excluded from the formation of corporate governance structures, center-left support for proshareholder reform was weak.