Shareholders Benefit Research Articles

Why Stakeholder Theory is “Non-exploitative”

This essay explores the growing interest in stakeholder theory, especially its non-exploitative nature, arising out of the need to contribute to the long-term and sustainable development of corporations. As corporations continue to grow, the traditional shareholder primacy theory is increasingly challenged, many scholars believe that this theory only pays one-sided attention to the benefits of shareholders, leading to the problem of short-term and financialization of corporations. The stakeholder theory, however, takes into account the benefits of customs, manufacturers, and other stakeholders, and better avoids exploitation. However, there are also some criticisms of stakeholder theory. For example, some people argue that the implementation mechanism of stakeholder theory is not feasible, and there are still groups that are not considered under stakeholder theory, so its non-exploitative nature is questioned. Many of the existing papers focus on the content of stakeholder theory and lack to analyze whether it avoids corporate exploitation through a specific interpretation of its content. The emphasis of this essay lies in analyzing the background and content of stakeholder theory and interpreting why it is not exploitative from the two levels, theoretical basis, and practical application, and contributes to the long-term success and win-win relationship of the company. This essay concludes that stakeholder theory can reduce corporate exploitation both in theory and practice, and contribute to the long-term success and sustainable development of corporations.

Board diversity in Mauritius: a practice theory perspective

PurposeThe aim of this study is to explore how a practice approach can provide an understanding of board diversity practices. Drawing from Schatzki's practice theory, this study considered how board diversity is practiced from the doings and sayings of directors in Mauritius.Design/methodology/approachIn this study, in-depth interviews with directors in listed companies from different industrial sectors were used to collect data.FindingsThe authors' findings indicate that a country's board diversity practices are influenced by the country's unique social, economic and cultural environment. Whilst board diversity practices may appear as the practices that are motivated by compliance, a deeper look at the results reveals that the laws governing board diversity are interpreted very subtly in a way that benefits shareholders' self-interest. A low percentage of female directors on boards and some indications of shareholder-driven practices are also found. Whilst the corporate sector acknowledges the advantages of diversity, there are some practices that they are unwilling to abandon, demonstrating the importance of the teleoaffective structures and normativity in determining what really occurs. Members of boards resolving disagreement further demonstrates the teleoaffective structure.Research limitations/implicationsThis research would be of interest to researchers because of the research's novel approach in studying board diversity which could be used by other researchers to experiment with a practice approach in exploring corporate governance phenomena in unique settings.Practical implicationsThe findings are of relevance to policymakers and regulators who seek to strengthen corporate governance practices in similar settings.Originality/valueThis research contributes to the literature on board diversity by showing that analysing board diversity through a practice approach enables a more comprehensive understanding of practices. The authors' study confirms that practice theory has the potential to re-orient the way board diversity studies are undertaken.

Critical Analysis of Shareholder Benefits from Spin-Offs and Carve-Outs of Carbon-Intensive Businesses: A Study of the Energy Industry

The energy trilemma is a significant challenge of our time, driven by advancing climate change, social and political changes, and the impact of the war in Ukraine. This has led to the traditional business models of the energy industry and utilities being challenged. Against the backdrop of environmental sustainability, energy security, and affordability, this paper examines whether German utilities can achieve greater sustainability while creating shareholder value by divesting their carbon-intensive businesses. The analysis of the spin-off of E.ON-Uniper and the carve-out of RWE-Innogy reveals positive impacts on shareholder value, corporate performance, and a higher share price of all four companies after the splits. One conclusion that can be drawn is that divesting carbon-intensive businesses might create value for the company and its shareholders. However, it is important to note that the analysis did not demonstrate any benefits in terms of improved ESG ratings due to divestment.

Good Corporate Governance dan Penerapannya di Perbankan Syariah

Good Corporate Governance is a set of laws, rules and regulations that must be followed; can also encourage the performance of business resources to function effectively in order to provide long-term economic benefits for shareholders and the surrounding community. This investigation is a type of field research. Adam Malik from Bank Syariah Indonesia KCP Medan conducted this research. Secondary data is a source of information used. Observation and interviews are one of the data collection techniques used by researchers. The conclusions that can be drawn based on the findings of hypothesis testing and referring to the formulation and objectives of the study: The profitability of Islamic banking is positively and significantly influenced by the quality of GCG implementation. According to research findings, GCG has a good and quite large influence on the profitability of Islamic banking. So that there is a positive relationship because the greater the GCG score, the better the performance, and the healthier the bank, the better the relationship. Good corporate governance (GCG) that is not implemented consistently has an impact on the bank's financial performance.

Does a Compressed Workweek Benefit Shareholders? An Event Study Analysis of Belgium’s Adoption of the Four-Day Workweek

Does a Compressed Workweek Benefit Shareholders? An Event Study Analysis of Belgium’s Adoption of the Four-Day Workweek

The Effect of Venture Capital on Invested Firms’ Social Responsibility: Evidence from Venture Capital’s Exits

ABSTRACT The impact of venture capital firms (VCs) on invested firms’ shareholder benefits is extensively examined in the literature, but few studies consider VCs’ impact on invested firms’ other stakeholder benefits. In this paper, we use the exit of VCs from a 2010 to 2017 sample of Chinese listed firms as a shock in a difference-in-differences analysis to investigate VCs’ influence on invested firms’ corporate social responsibility (CSR). We find that CSR decreases significantly after VCs’ exits, particularly if VCs are not state-owned or are short-term investors in firms. A further analysis shows that VCs’ exits affect firms’ shareholder, creditor, employee, and environmental benefits. VCs improve CSR by alleviating their agency costs and reducing their financial constraints, both of which increase significantly after VCs’ exit from firms. The effect of VCs on CSR also appears to improve corporate performance, implying that this positive effect is consistent with shareholder benefits.

Supply Chain Finance Arrangements and Shareholder Benefits

ABSTRACT Supply chain finance (SCF) is a buyer-led financial innovation used to optimize working capital and increase liquidity within the supply chain. Advertised as win-win, little is known of the benefits to firms or shareholders. I explore whether these arrangements are beneficial to the initiating firm and whether such benefits percolate to the buyer’s investors. I find that although a firm’s days payable outstanding increases post-adoption, SCF arrangements are not beneficial to all firms. Liquidity and profitability decrease post-adoption. I also find that shareholders respond negatively to SCF adoptions, but this response may be attenuated by some firms increasing share repurchases.

Shareholders in the Dutch Eighteenth-Century Atlantic Trade

This article provides the first quantitative evidence of the indirect benefits of shareholders of the Middelburgse Commercie Compagnie (MCC), a Dutch Atlantic trading company and the biggest slave trader in the eighteenth-century Dutch Republic. MCC shares provided its owners with a preferred status as suppliers and customers of the company. This article focuses on two years, 1725 and 1770, and finds that approximately one third of the MCC shareholders in both years acted as suppliers or customers of the company. The financial incentives of the directors appear to be better aligned with the financial interests of the shareholders in 1770 compared to 1725.

ESG and Managerial Agency Problems

Criticism of conventional shareholder supremacy triggered urges for incorporating the stakeholder perspective and the Environmental(E), Social(S) and Governance(G) issues in managerial decisions. However, the corporations in Korea still lack proper corporate governance to protect shareholder benefits from managerial agency problems. In that case, adopting vague, not readily assessable objectives may lead to a lack of managerial accountability and exacerbate the agency problem. We find that Tobin’s Q of firms without good governance declined when their environmental and social ratings improved, suggesting “E,” “S,” and “G” are not independent. Corporations should prioritize establishing

Impact of corporate governance and CEO remuneration on bank capitalization strategies and payout decision in income shocks period.

The purpose of this research is to explore corporate governance and CEO remuneration with banks capitalization strategies and payout policy within the Pakistani banking context. Data were obtained from the financial statements of scheduled banks listed on the Pakistan stock exchange from 2005 to 2020. The findings of the research study revealed that corporate governance mechanisms that promote the bank's shareholders' interests are linked to low capitalization strategies. The size of the board of directors has a significant impact on the capitalization of banks. Banks' capitalization techniques are also adversely correlated with effective board size. The shareholder benefits from low capitalization. Corporate governance is positively related with banking sector instability, as seen by this negative correlation. Bank capitalization strategies have a significant impact on CEO remuneration. In the event of an income shock, dividend payout is essential. Banking sector payout policies are negatively related with corporate governance. In the event of a negative income shock, financial institutions reduce dividends. As a result, it has been argued that effective corporate governance benefits shareholders by reducing capitalization tactics and limiting financial institutions' aggressive payouts.JEL classificationG21, G30, G32, G35.

CEO Political Leanings and Store-Level Economic Activity during the COVID-19 Crisis: Effects on Shareholder Value and Public Health.

ABSTRACTMaintaining economic output during the COVID‐19 pandemic results in benefits for firm shareholders but comes at a potential cost to public health. Using store‐level data, we examine how a CEO's political leaning impacts this trade‐off. We document that firms with a Republican‐leaning CEO experience a relative increase in store visits compared to firms with a Democratic‐leaning CEO. The increase in store visits is associated with higher sales and positive abnormal stock returns. However, we also document higher COVID‐19 transmission rates and more employee safety complaints in communities where establishments with higher store traffic are managed by a Republican‐leaning CEO.

ANTITRUST AND INEQUALITY

ANTITRUST AND INEQUALITY

CEO Compensation and Cronyism in Emerging Economies: Evidence from India

This study investigates the cronyism evidence in Indian listed firms and examines if excessive CEO and directors compensation reflect pay reciprocity impacting firm performance. Further the impact of CEO’s ties with the controlling owner on excess compensation, pay reciprocity and cronyism is also examined. OLS fixed effects regression on NSE 500 firms during 2002–2020 has been used for investigating the evidence of cronyism and the impact of CEOs’ ties with the controlling owner on cronyism. Based on the analysis it is observed that CEO compensation is strongly linked to CEO characteristics and corporate governance in addition to economic determinants. Consistent with reciprocity norms, we report a positive relationship between excess CEO compensation and excess director compensation, especially in firms where the CEO has ties to the controlling owner. However, pay reciprocity does benefit shareholders by improving subsequent firm value. Our findings indicate that excess CEO compensation increases subsequent firm value, especially in firms where the CEO has ties to the controlling owner.

Audit process, private information, and insider trading

While the shareholder benefits of audits are well documented, evidence on whether audits can facilitate opportunistic behavior by corporate insiders is scarce. In this paper, we examine whether the audit process facilitates one particular form of opportunism: informed trading by corporate insiders. We focus our analysis on insider trading around the audit report date. We find an increase in trading around the audit report date and that the increase is abnormally large for firms that subsequently report modified opinions. The abnormal increase in trading is concentrated among officers and non-audit committee independent directors, and most pronounced in first-time modified opinions and modified opinions in years where financial results are subsequently restated. These trades are highly opportunistic: they predict restatements, and as a consequence, we show they avoid significant losses. Collectively, our findings provide novel evidence that insiders appear to exploit private information about the audit process––a process ostensibly designed to protect shareholders––for opportunistic gain.

Industry influence in healthcare harms patients: myth or maxim?

To explore the many areas where industry influences healthcare and the subsequent effects on patient care. Case studies are used to illustrate examples of beneficial and harmful effects of this influence.To raise awareness of the effects of industry influence and for readers to consider their own potential conflicts of interest.To suggest potential ways to improve the current system with a focus on solutions which have successfully been trialled already.

The Sharing of Costs and Benefits of Rural Environmental Pollution Governance in China: A Qualitative Analysis through Guanxi Networks Perspective

Concern has been expressed in many parts of the world that community relations in rural areas are breaking down, making issues such as rural environmental degradation harder to resolve without external regulation. Guanxi is a specific Chinese idiom for characterizing social networks, as a broad term to represent existing relations among people, which can be loosely translated as ‘‘relationship’’. Based on a case study of an underdeveloped mountainous area of Southern China, this paper examined the problem from the perspective of guanxi, and explored the impacts of internal group differentiation catalyzed by pig farming pollution and the subsequent influences on the distribution of costs and benefits of different shareholders. It was found that the guanxi in the village were changed from blood relationship centered to economic interest centered. This disparity exerts a significant influence on the distribution of costs and benefits of pollution control and exacerbates environmental inequalities. This means that pig farmers dominated the narrative of pig farming pollution, while the ordinary villagers chose to suffer without protesting, which hinders the advancement of pollution control, and pig farmers took the benefits of weak pollution control and managed to transfer the external cost to others, while others became direct victims. The paper concludes that the rich become richer and the poor become poorer in both economic and environmental perspectives. It is strongly suggested that guanxi should be integrated into the consideration and decision-making process of rural environmental governance in order to guarantee the efficiency and efficacy of its implementation.

Data mining with its role in marketing, sales support and customer identification data analysis

In the current times, large amounts of data are collected in databases in various fields for exapmple the retail market, banking, and medical care. However, for users, complete information is not necessarily helpful. Along these lines, separate helpful data from a lot of information. This valuable information extraction measure is called information mining or information disclosure and information measure (KDD). The entire course of finding and deciphering designs from information incorporates many advances, like choice, pre-preparing, change, information extraction and translation. Information mining supports venture promoting. Also nowadays, it is no longer possible for a company to succeed without relying on data-driven statistics to understand the needs of customers in this rapidly evolving world. Henceforth, there has become an urgent need to analyze data in order to develop products based on customer needs and desires. Companies can no longer be satisfied with just advertising campaigns to attract or retain customers. Data analysis also helps to reshape relationships and interactions with customers, and to market products more effectively, which leads to stimulating and increasing sales. This article aimed not only at identifying the role of data analysis and its use in the field of marketing and sales, but also at revealing the extent of the impact of data analysis and exploration on marketing and sales. It also showed that the forces of competition that pervade the business world are the ones that exert pressure over the market operating companies to work efficiently and effectively to maintain and increase their market share, and then achieve profitability and therefore the benefit of shareholders. To achieve the study objectives, the researcher used the descriptive method and a critical review of the theoretical literature and previous studies related to the topic. The study found that data analysis technology plays an essential role for every element of customer relationship management. Through data analysis applications, the project can transform the vast number of records in its clients' database into an integrated picture of its clients. The study also recommended companies that deal with huge amounts of data to use data mining techniques because of their analytical capabilities that help the company convert its customers’ data into useful information to be used in making relationship management decisions with them.

Too much of a good thing? Corporate social responsibility and the takeover market

We examine the relation between corporate social responsibility (CSR) and firm value using the takeover market as an empirical setting. Firms with high or low CSR scores experience a greater likelihood of takeover and lower wealth gains in takeovers relative to firms with moderate policies. These findings indicate that the takeover market acts as a corrective mechanism for firms that over- or under-invest in CSR. Our results are robust to controlling for governance and alternative motivations for mergers and are evident in sub-samples where CSR is arguably more important. Our findings are not driven by poor management of target firms. Overall, the evidence suggests that CSR generally benefits shareholders, however, very high or low CSR scores appear to be harmful.

Executive Compensation and Firm Performance Relationship

The relationship between executive compensation and firm performance is well documented in the existing literature. However, in the case of Asia Pacific firms, the least attention is paid while investigating this relationship. This study examines the relationship between executive compensation and firm performance in the Asia Pacific firms throughout 2007–2019. We use the total salary paid to chief executive officers and equivalent, the total compensation paid to the CEO, and the equivalent and total salaries and bonuses paid to the CEO and equivalent as a measure of executive compensation. For the firm performance, both accounting measure (ROA) and market measure Tobin’s [Formula: see text] (TQ), and various control variables were used. We found that a firm performance has a positive relationship with total compensation paid to CEO and total salaries and bonuses paid to the CEO. Our results support the agency theory by confirming that higher CEO compensation will lead towards higher firm performance by motivating executives to maximize shareholder benefits. However, the total salary does not have any significant relationship. The overall result of the study indicates that the results of the Asia Pacific regions complement the results obtained in another part of the developed world. The results are supported by the social comparison theory. The study has a practical implication for policymakers, business owners, shareholders, and executives by suggesting aligning their business strategies based on compensation parameters for achieving the best firm performance.

Excess control rights in family firms: A socioemotional wealth perspective

AbstractResearch Question/IssueThis study attempts to uncover a hidden benefit of shareholders' excess control rights in family firms by examining whether excess control rights can reduce the likelihood of financial misconduct in family firms, compared with nonfamily firms.Research Findings/InsightsWe argue that excess control rights are especially useful for family‐owned firms, compared with firms with other types of ownership, in preventing financial misconduct. They afford family owners the ability to guard against misconduct that can damage the founder's legacy and reduce the family's socioemotional wealth. We also investigate two boundary conditions, the presence of a family member as the board chair and the family's public visibility, that validate our proposed theoretical mechanism. In these scenarios, the family owner's socioemotional wealth is particularly high and could be impacted severely by misconduct. Results from a sample of 2516 publicly traded firms in China support our theory.Theoretical/Academic ImplicationsOur study challenges traditional agency theory about excess control rights by exploring the potential of excess control rights to mitigate principal–agent problems and prevent financial misconduct in family firms.Practitioner/Policy ImplicationsRegulators who make decisions to forbid or permit excess shareholder control in publicly listed firms must be aware that excess shareholder control could deter financial misconduct in family firms.