View Of Corporate Governance Research Articles

Rehabilitation of the Constructive Dimension of Conflict as the Foundation of a Political Research Program for Shared Governance of the Enterprise

Research into corporate governance could benefit from a clearer recognition of the constructive role of conflict in democratic regimes. With a critical perspective, the current study seeks to demonstrate the political implications of the idea of shared governance in enterprises, which often gets reduced to a technical question in studies that adopt contractual or disciplinary views of corporate governance. In contrast, shared governance of an enterprise may require an implemented culture of conflict, as central to the productive organization. Such a culture can encourage complementarity among the personal projects prioritized by various stakeholders and the social union that they form. This orientation also enables a critical view on the evolution of corporate reform, which in turn raises new questions that can inform a research agenda capable of grappling with the polemogenic atmosphere surrounding and shaping the functioning of enterprises in the 21st century.

Climate Change and Corporate Governance in Spain

This paper addresses the impact of climate change as one of the sustainability factors in the governance of listed companies in Spain. The phenomenon of the fight against climate change is observed inserted in the broader framework of sustainability while it is analyzed and integrated from the point of view of corporate governance in relation to the long-term perspective of the company, non-financial information, corporate purposes and the remuneration of the members of the board of directors, without forgetting to illustrate these issues from the corporate perspective of Spain. The work is framed in the so-called sustainable corporate governance where the fight against climate change takes on a special role.

Employee information in the field of CSR and diagnosis and resolution of the labour conflict

Purpose: The aim of the article is to present the disclosed non-financial information in the area of employees on the example of the examined company and the strategy used by the management to diagnose and remove the employee crisis. In order to achieve the adopted goal, a research question was posed: what determines the increased turnover of employees. The article is a research study. It presents a solution to a specific problem in the examined company. In order to gain a deeper understanding of the main causes of employee turnover, a survey was conducted among employees. The survey covered 1000 respondents. The study is in line with the authors' scientific interests in reporting. Design/methodology/approach: The applied research methods are based on the study of the literature in the field of study and the analysis of non-financial reports in order to identify the reported employee issues in the examined company and the conducted surveys in order to resolve the employee conflict. Findings: The article presents a solution to a specific problem in the examined company. In order to gain a deeper understanding of the main causes of employee turnover, a survey was conducted among employees. The survey covered 1000 respondents. Originality/value: The constant evolutionary processes taking place in the economy stimulate economic, as well as social and environmental development, thus requiring the adaptation of enterprises' communication channels with the market environment. Information presented in a traditional way by financial reporting no longer meets the expectations of potential investors and broadly understood stakeholders who want to base their decisions on the full picture of the situation affecting a given company. This possibility is provided by combining financial issues with non-financial information, and there are still no uniform patterns in the literature regarding non-financial reporting. The implementation of Corporate governance is to secure the interests of the owner and the capital invested in the company, as well as the interests of other stakeholders. A very important additional non-financial information from the point of view of corporate governance is information on the employee area, reporting of which in non-financial statements is still insufficient. There is also little information on resolving employee conflicts. Key words: CSR, corporate governance, non-financial reports, employee issues. Category of the paper: Research paper.

Beyond Primacy: A Stakeholder Theory of Corporate Governance

We develop a stakeholder theory of corporate governance grounded in classical property rights theory, adopting the view that governance should help free individuals to maximize their collective welfare. In contrast to the agency view of corporate governance, we submit that the central problem in corporate governance is to devise coalitional contracting solutions to the collective action problems inherent in team production and team innovation. Agency problems and other contracting problems resulting from shirking, hold-up, market power, and externalities are best understood in this context. We develop design principles for the allocation of property rights to mitigate each of these contracting problems by reducing stakeholders’ vulnerabilities to opportunistic behaviors. We extend earlier efforts to build a stakeholder theory of corporate governance by considering a more comprehensive set of transactions problems and analyzing the comparative efficiency of different governance arrangements for different types of firm-stakeholder relationships and different economic contexts. One conclusion from our theory is that giving primacy to shareholders, or any other group of stakeholders, is a comparatively inefficient solution to governing the modern global and knowledge-driven corporation. We discuss the implications of our theorizing for the debate about the purpose of the firm.

Janus-faced Effects of Political Connections on Corporate Insider Trading

Whether political connections trigger or inhibit financial misconduct is yet to be concluded. We contend that politically connected firms do evil and good simultaneously. Based on the status attainment perspective, we propose that those firms are Janus-faced in respect of insider trading such that they commit illegal insider trading (substantial misconduct) and voluntarily report the legal insider trading (symbolic compliance) simultaneously. Contextualized in a panel dataset of Chinese private listed firms, we found strong support for Janus-faced effects. Moreover, those organizational substantial misconducts become restrained under a greater stringency of anti-corruption whilst symbolic compliance tends to be stronger given more government subsidies. Overall, the study advances the literature of financial misconduct by unveiling the Janus-faced effects of political connection. It also presents new evidence of the contextualized view of corporate governance while unveiling that government subsidies exacerbate the inclinations of symbolic compliance.

CORPORATE GOVERNANCE PRACTICES LEADS TO VALUE ENHANCEMENT OF STAKEHOLDERS OF LISTED COMPANIES IN TAMIL NADU

The study has made an attempt on the Corporate Governance practices of listed companies in the respective study area. It mainly focuses on the CG and rests upon four pillars, viz., Transparency, Full disclosure, Independent monitoring and being fair to all, especially to minority shareholders. Corporate Governance refers to myriad mechanisms that shape the structure of incentives, disincentives, and prohibitions, under which an issuer's management makes decisions. In a modern corporation operating in a globalised world, concepts of disclosure and corporate governance are intertwined. Disclosure mechanism can be associated with the broader view of corporate governance that is not just restricted to shareholders, but also the aggregate of institutional and organizational factors that influence large decisions of public companies because public companies generates capital from various constituents. Corporate governance is an area that secures how efficiently manages corporations by the use of incentive mechanism, such as contracts, organizations and legislations. Transparency, corporate fairness and accountability are the important pillars of corporate governance. It is known for formally establishing guidelines regarding how a company is going to function. Enhanced and revised corporate governance policies are required in order to reduce the effect of financial crisis. International investors also invest in companies who follow good governance principles. From the international point of view they are the basic building blocks of the market. The researcher has used both Primary data and Secondary data methods of data collection. Simple random sampling method has been adopted for the study. The statistical tools like percentage analysis, chi-Square test, ANOVA and t-Test has been used for the study. The study highlights that 60 per cent of the companies are organizing programmes/talks/training for Independent Directors in matters relating to Corporate Governance. It is found that 100 per cent of the listed companies i.e. all the listed companies have disclosed to the shareholders in the annual report in relation to financial calendar. The basis of non-mandatory provisions and suggested items are to be included in the corporate governance. It can be concluded that listed companies are following only forced regulation and are not showing much interest in the voluntary compliance of rules and regulations.

Analysis of Accounting Information distortion and Dynamic Game Model of Listed Companies in China

Based on the point of view of corporate governance, this paper analyzes the causes of accounting information distortion of listed companies from two aspects of economic interests and administrative interests, probes into the conditions of accounting information distortion of listed companies, and focuses on the problems of insider control, immature manager market, one dominant stock and the false establishment of independent directors. By constructing the dynamic game model of listed company, accounting firm and CSRC, this paper analyzes the important factors that affect the probability of collusion between listed company and accounting firm and the probability of providing distorted accounting information by listed company under Nash equilibrium state, and finally puts forward some corresponding suggestions for the distortion behavior of accounting information of listed company.

Our Board, Our Rules: Nonconformity to Global Corporate Governance Norms

What drives organizational nonconformity to global corporate governance norms? Despite the prevalence of such norms and attendant conformity pressures, many firms do not adhere to them. We build on a political view of corporate governance to explore how different national institutional contexts and organizational conditions combine to produce over- and underconformity to global board independence norms. Using configurational analyses and data from banks in OECD countries, we identify multiple equifinal combinations of conditions associated with over- and underconformity. We also find that over- and underconformity have different drivers. We conjecture that while overconformity is associated with a shareholder–management coalition in liberal market economies, underconformity results from multiple complex combinations of national and organizational conditions that often include dominant blockholders, strong labor rights, and small organizational size. We leverage these findings to abduct theoretical insights on nonconformity to global corporate governance norms. Doing so sheds light on the role of power in conditioning the adoption of global practices and contributes to research on international corporate governance by informing discourse surrounding the globalization of markets.

Stewardship Codes and the Role of Institutional Investors in Corporate Governance: An International Comparison and Typology

AbstractOver recent decades, share ownership of listed companies has concentrated into the hands of large institutional investors, challenging the traditional agency theory view of corporate governance as a mechanism to resolve the separation of ownership and control. Alternative theories have emerged to explain the role of institutional investors in corporate governance, each with a slightly different view on the motivations of these powerful shareholders and the nature of their relationship with corporate management. These theories share a common thread – the concept of investor stewardship – yet each theory applies it differently. This paper explores whether institutional investors should act primarily as stewards of their investee companies (agency theory), stewards of beneficiaries’ funds (agency capitalism), stewards of a market/economy (universal ownership) or stewards of society (stakeholder theory), and whether this varies internationally. Through an analysis of national stewardship codes, the paper determines which of these theoretical approaches are most strongly reflected in emerging stewardship policy across the world. It presents a typology of stewardship codes as a framework for understanding cross‐country variation in investor stewardship policy. Stewardship codes influence the shareholder–manager relationship and can encourage integration of wider economic and societal concerns into corporate finance.

The Corporate Governance Machine

The conventional view of corporate governance is that it is a neutral set of processes and practices that govern how a company is managed. We demonstrate that this view is profoundly mistaken: in the United States, corporate governance has become a “system” composed of an array of institutional players, with a powerful shareholderist orientation. Our original account of this “corporate governance machine” generates insights about the past, present, and future of corporate governance. As for the past, we show how the concept of corporate governance developed alongside the shareholder primacy movement. This relationship is reflected in the common refrain of “good governance” that pervades contemporary discourse and the maturation of corporate governance as an industry oriented toward serving shareholders and their interests. As for the present, our analysis explains why the corporate social responsibility movement transformed into shareholder value-oriented ESG, stakeholder capitalism became relegated to a new separate form of entity known as the benefit corporation, and public company boards of directors became homogenized across industries. As for the future, our analysis suggests that absent a major paradigm shift that would force multiple institutional gatekeepers to switch their orientation, advocacy pushing corporations to consider the interests of employees, communities, and the environment will likely fail, unless such effort is framed as advancing shareholder interests.

The impact of family influence and supervisory boards on the basis of executive compensation: Evidence from Germany

In the international literature, there exists a lively discussion about the fundamentals of different executive compensation models. Executive compensation is relevant not only from the point of view of corporate management but also from the point of view of corporate governance and here potential information asymmetries and corporate misconduct. Internal or external metrics, in particular, are used as the basis for compensation. In family businesses, which per se are less likely to offer variable compensation to their executives, it is assumed that internal rather than external metrics are more likely to be used as the basis for compensation. This paper tests this thesis on the basis of an empirical survey of 113 German companies. The empirical study shows clear differences in the use of internal and external metrics as a basis for executive compensation — a fact that has so far not been addressed in other empirical studies.

In search of corporate governance in franchising

A firm’s governance structure and business model might explain the firm’s failure or success. Franchising is a business model that has not received much attention within the corporate governance (CG) literature even though it obviously brings several unique CG challenges. Therefore, we review articles at the interface of CG and franchising. We identify and thematize the literature in four focus areas, each with a different relationship to CG: 1) traditional CG, 2) governance challenges unique to franchising, 3) governance modes, and 4) contracts. We find that the literature largely ignores the traditional view of CG when examining many aspects of franchising. We also find that the franchising literature covers governance topics when discussing governance modes, which provides a basis for developing CG theories. Altogether, our findings open a promising avenue for future research that incorporates CG into studies of franchising.

Board size and acquisition outcome: The moderating role of home country formal institutional development

The effect of acquirer's board size on the outcome of an acquisition (i.e., whether an announced deal gets abandoned or completed) was examined on the basis of a sample of 775 cross‐border acquisitions. The study took into consideration the moderating effect of formal institutional development of the home country. Results showed that board size was negatively associated with the likelihood of deal abandonment and that this relationship was weaker for home countries where formal institutional development was high. The study contributes to the literature on group decision‐making theory, institutional view of corporate governance, and acquisition outcome.

Corporate Governance and Protection of Stakeholders Rights and Interests

The paper takes a holistic view of corporate governance (CG) and protection of stakeholders’ rights and interests. It analyzes whether effective boards of directors in addressing shareholders’ interests prove to be effective in guaranteeing the interests of the rest of the firm’s stakeholders. It discusses how corporate governance should be shaped in relation to existing firms, according in particular to some subjective criteria of fairness and fair play. It defines CG and explains the concept by stating its principles and codes as contained in the Organization for Economic Cooperation and Development (OECD). It states that countries such as Nigeria, the United States and the United Kingdom have developed their CG principles with corporate social responsibility (CSR) intent by using as a guideline the OECD principles and other sources of rules and principles of CG which includes the Companies and Allied Matters Act, Investment and Securities Act and a host of others. It states that the concept of CG applies to corporate businesses across the globe by highlighting the importance and specifying the distribution of rights and responsibilities among various corporate stakeholders such as board members, managers, shareholders and outlining the rules and procedures for making decisions. In doing so, it also provides the mechanism by which the company’s objectives are set, ways to achieve these and monitoring performance. The paper acknowledges that CG is a vital issue where a corporate organization is concerned but asserts that it is impossible for an organization to satisfy all stakeholders hence it is best to create a balance between meeting organizational objectives and that of its stakeholders.

Corporate governance attributes and listed SMES’ debt maturity

PurposeThis paper aims to develop a cross-country analysis of the similarities and differences in the debt maturity structure of listed SMEs from the point of view of corporate governance (CG) attributes in two different economic environments: an OECD (Spain) country and a non-OECD (Argentina) country.Design/methodology/approachUsing data from listed SMEs in the Argentinian SME segment (pooled data from 2012 to 2015) and 31 listed SMEs in the Spanish Mercado Alternativo Bursátil for growing firms (MAB_GE)(2014), bivariate and multivariate analyses are performed.FindingsSpanish firms with a higher ownership concentration and a large controlling shareholder have higher short-term liabilities (STL) ratios. Participation of women on the board has a negative relation with the STL ratio only for Spain. The participation of corporations in ownership and a Big4 auditor have a negative relation with the STL ratio for both countries.Practical implicationsThese results will help SME managers understand the effects of the application of good governance policies. The study also gives regulators a guideline to develop standards to assist in efficient borrowing in terms of seeking funding in alternative capital markets.Originality/valueFirst, the results provide evidence about the financial impact on the STL ratio of CG attributes in listed SME. Second, as far as the authors know, this is the first paper to analyse the CG attributes of listed SMEs in an OECD country and a non-OECD country. Third, the paper presents CG data derived from an ad hoc basis elaborated from different websites and databases.

Boards and Sustainable Value Creation: The Legal Entity, Co-Determination and Other Means

Boards of directors face growing pressures to engage with systemic risks and sustainable value creation. In this article I explore how an entity view in company law provides a consideration of the status, architecture and purpose of the modern corporation that theoretically offers the capacity to integrate such issues in corporate strategy. I also explore how specific models of corporate architecture such as co-determination relate to such an entity view. Exploring different perspectives on the VW case I show how a dominant view of corporate governance conflicts with the assumptions underlying co-determination. In relation to these issues I argue that the entity view and co-determination do not provide panacea for the reform of corporate governance theory and practice, but provide conceptual building blocks that may be used to engage in a creative way with notions of status, architecture and purpose in order to enhance the capacity for company directors to engage with systemic risks and sustainable value creation in corporate strategy.

An anti-takeover strategy by limitation of voting rights: A model and a numerical approach

This study develops a new trade-off view of corporate governance from an examination of rules that limit voting rights as a defensive measure against a hostile takeover attempt. The theoretical framework concerns a listed company, the capital of which is mainly detained by atomistic shareholders and the power of which is in the hands of a minority shareholders, the hard core. The latter wants to block any hostile takeover and constructs a device based on two parameters allowing it to act on the limitation of the voting rights: a threshold and a scale-down coefficient.

Alternative Governance and Corporate Financial Fraud in Transition Economies: Evidence From China

How corporate governance mechanisms function in transition economies is a key topic for corporate governance researchers and policy makers. We propose that alternative governance mechanisms are in place to mitigate corporate fraudulent behaviors in the fluid state of transition economies where the establishment and enforcement of corporate governance legislation are presently insufficient. Drawing on the twin set of institutional logics—the institutional embeddedness logic and the institutional substitution logic—we posit that three salient types of prevailing alternative governance mechanisms (relational, administrative, and foreign governance) play important roles in transition economies because they are complementary to the institutional conditions at the time of the transition process. Conducting a bivariate probit analysis of a matched sample of corporate financial fraud cases in China, we find that strategic alliances, business group affiliation, nontradable state shares, local government ownership, use of foreign auditors, and foreign listing can deter corporate financial fraud, while foreign listing is also effective in detecting fraud. We also find that the deterrence effects of strategic alliances and business group affiliation become weaker as law development improves, while foreign listing and legal governance are completely substitutive. Our study provides a contextualized view of corporate governance that connects its effectiveness with institutionalization and the institutional state of a country. Our study also enriches our understanding of some unfamiliar forms of governance mechanisms that are in place and complementary to a country’s institutional conditions.

Board Independence and Firm Performance in the IT Industry: The Moderating Role of New Entry Threats

Prior research on corporate governance has offered contradictory empirical evidence on the relationship between the independence of the board of directors (the degree to which the board consists of outside directors who are not affiliated with the company) and firm performance. Building on the contingency view of corporate governance, we argue that the presence of significant new entry threats (NET), a unique feature that differentiates the IT industry from many other industries, is a critical contextual variable that moderates this relationship. Leveraging a novel NET measure based on text mining, we show that facing high NET, firms with boards that have a higher proportion of independent directors, who contribute to explorative organizational learning, carry out more effective monitoring, and offer independent opinions in strategic decision making, outperform firms with fewer independent board members. To address the endogeneity of board independence, we use the enactment of the Sarbanes-Oxley Act and related changes to the NYSE/NASDAQ listing rules as exogenous shocks; we show that our results are robust to the correction for endogeneity issues. Further, we show that our findings are generalizable to other high tech industries that face significant threats of new entry emerging from fast-moving industry dynamics. However, these results do not extend to slow-moving industries that have a stable market structure and thereby face lower and more homogenous levels of NET. We discuss the implications for future research, and provide managerial guidelines for practice as well.

Banks and Labor as Stakeholders: Impact on Economic Performance

Traditionally, the impacts of the rights of financial institutions and workers on corporate performance have been analyzed independently. Yet theory clearly indicates that it is the combination of (changes in) relative powers of different stakeholders that affects a firm overall performance. Using U.S. state level and state-industry level data, we investigate how output growth is affected by bank branch deregulation, and change in equity rights and employment protection occurring over the period 1972-1994. We find that financial liberalization positively and greater workers’ rights ambiguously impact overall state growth. In terms of channels, while the effect of financial liberalization does not differ across industries that vary in external financing dependency, employment protection promotes those industries that are more knowledge (skilled-labor and intangibles)-intensive. The results hold controlling for changes in shareholders’ rights, which itself is not significant. They suggest that financial liberalization operates mostly through an efficiency channel (re-allocating resources better), while employment protection creates better incentives and encourages more sector-specific, human capital investments. Overall, the results show that the strength of stakeholders’ protection affects performance through efficiency channels and provide support for a stakeholders’ view of corporate governance. JEL Classification Numbers: G18, G30, G38, J08, J80, J83