Sound Corporate Governance Research Articles

THE SHAREHOLDER WEALTH EFFECTS OF CALPERS' FOCUS LIST

Shareholder activism can help to protect shareholder value by promoting sound corporate governance practices. As an active institutional investor, CalPERS takes its role in the corporate governance process very seriously. In addition to many other initiatives, CalPERS publishes each year a list of six to twelve public companies with poor corporate governance principles and poor financial performance—its well‐known “Focus List”—in the hope that the managements of these companies will be motivated to improve their performance and increase shareholder value for CalPERS and their other equity owners.In an attempt to assess the effectiveness of CalPERS' governance program, the authors examine the market impact of the Focus List and find that companies on the list experience positive excess stock returns of about 12% over the three months following release of the list. Moreover, this wealth effect is even greater for companies with a large, widely dispersed shareholder base, as might be expected given the relative inability of such shareholders to act collectively.

Corporate Governance in Malaysia

This article examines the corporate governance system in Malaysia. A sound corporate governance system should help create an environment conducive to the efficient and sustainable growth in the Malaysian corporate sector. Since the Southeast Asian financial crisis in 1997 – 98 (‘financial crisis’), corporate governance has become a key policy issue confronting many Southeast Asian countries, including Malaysia. This article considers the distinctive problems of corporate governance in Malaysia, despite several steps for reform that have taken place since the financial crisis. There will be a brief discussion on the meaning of corporate governance and an overview of the present status of corporate governance in Malaysia, in particular after the financial crisis.

Between Bureaucracy and Market: Chinese Industrial Groups in Search of New Forms of Corporate Governance

This article investigates the peculiar and contradictory nature of the ongoing construction of a system of corporate governance in China. The analysis attempts to overcome the limits of traditional corporate studies that tend to focus on enterprise management, and puts the issue within the framework of the systemic and political relationships that shape economic management and state intervention in large enterprises in transitional socialist systems. The emergence of a specific managerial culture within the market and of winners among the enterprises is related to the position still held by the state in the enterprise and by the access to competitive markets available to enterprises. State-owned enterprises enjoy the protection of their status but they are more successful and adopt a more profit-oriented management culture if they operate in internationalised and competitive markets rather than in the strategic low-profit, state-dominated sectors. Owing to continuous interaction between enterprise management and external (policy or macroeconomic) factors, and to the absence or underdevelopment of most of the institutions generally necessary for a sound corporate governance system (financial markets, bank independence, free press etc.) privatisation does not seem sufficient to engender all-round market-led governance.