bluuebunny/crossref_metadata_2025 huggingface dataset:
The perceived importance of selected disclosure items to accountants in Malaysia
Authors: Rahman Azhar Abdul
Published: February 2017

This study examines the perception of one user group (i.e. accountants) in Malaysia regarding the importance of selected items of information that may appear in annual corporate reports by using mail questionnaire. The evidence of this study indicates that the respondents perceive 53 items (95%) as ’important’ to ’very very important’ category and only three items are regarded as ’less important’. They also place greater importance to items of a ‘forward-looking’ nature and information that is beyond the statutory requirements. A comparison with three other studies conducted in developing countries reveal that only five items are ranked among the top ten items between any two countries. The evidence on Malaysia is relevant to other developing countries and beyond
Is it feasible to establish a relationship between motivation and budgeting?
Authors: Cavalcanti Marly , Plantullo Vicente Lentini , Imoniana Joshua Onome
Published: February 2017

The objective of this study was to present the impact of the budgeting process on staff motivation based on the theories of Maslow, Herzberg, Vroom & Robins. With a view to accomplishing our objectives the following research questions were thrown: a) is it feasible to establish a relationship between motivations and budgeting b) is the employee welfare plans capable of influencing the effectiveness of budgetary executions? c) what are the functions of knowledge-based systems in the attainment of budgetary assignments and, d) are the feedbacks from results arising from budgetary analysis, taken to the knowledge of the employees so as to warrant learning from apparent errors? A psychological and analytical inductive approach was adopted to develop the research. Results reveal that the budgeting process is a key staff motivational factor.
The long-run performance of cross-border mergers and acquisitions: Evidence to support the internalization theory
Authors: Francoeur Claude
Published: February 2017

Our study contributes to improving the understanding of cross-border M&As in two domains: evaluation of the long-term financial performance of acquiring firms in cross-border M&As and detection of the determinants of their long-term success. Our results show no sustained gains or losses during the post-acquistion period for Canadian acquirers. In contrast to their performance in domestic M&As, Canadian firms carrying out crossborder M&As do generate enough value to keep up with stockmarket requirements, relative to their risk level as determined by the Fama & French three-factor model and the level of returns generated by peer firms in their main industrial sector. Our findings agree with the internalization theory and suggest that acquiring firms engaged in cross-border M&As can indeed realize efficiency gains and create long -term value for their shareholders, but only under certain conditions: namely, when they possess high levels of R&D and a strong combination of R&D and intangibles
Corporate ownership and technical efficiency analysis in the Spanish real estate sector
Authors: Nanka-Bruce Douglas
Published: February 2017

The real estate sector keeps contributing significantly to the Spanish economy. A recent news article reports the existence of inefficiencies in the nature and delivery of new properties. We investigate the technical efficiency of this sector using a non-parametric “reasonable” benchmarking frontier, acknowledging the marked influence of the sector’s shadow economy. We then relate the results applying a panel data analysis to the shareholding concentration and identity of firm ownership. We find no systematic support for the effect of corporate ownership on technical efficiency
Corporate governance, excess compensation, and CEO turnover in family and non-family businesses
Authors: Lin Ying-Fen
Published: February 2017

The replacement of a CEO is one of the control mechanisms that companies employ to reduce the agency problems. This paper divides companies into non-family businesses and family businesses and investigates the influence of outside directors, outside blockholders, and excess compensation in CEOs termination process. The samples used in the paper come from manufacturing companies in Taiwan listed between 1996-1997; the analytical method is logistic regression model. The conclusion is as follows: 1. the characteristics of family businesses, corporate governance, and excess compensation have no correlation on CEO turnover. 2. External board members play an important role in CEO termination in non-family businesses
The mechanisms of governance in nonprofit organizations
Authors: Machado Filho Cláudio , Fischmann Adalberto , de Mendonça Luciana Rocha , Guerra Sandra
Published: February 2017

This paper discusses the governance issues in nonprofit organizations (NPO). The theoretical framework of agency theory is used to analyze the relationship between agents and principals (donors and volunteers) in such kinds of organizations. Similarly to the for-profit organizations, the mechanisms of incentives and monitoring are crucial to the alignment of interests among principals and agents. However, considering the NPO’s intrinsic characteristics, due to the difficulty to implement external and internal governance mechanisms, the challenges of alignment are far more complicated. The NPOs are idiosyncratic, being in many situations complex to establish performance comparisons with similar organizations
Corporate governance: Rating of the EU member states guidelines
Authors: Krambia-Kapardis Maria , Psaros Jim , Atkins Jill Frances
Published: February 2017

This paper presents a synthesis and analysis of corporate governance guidelines of the twenty-five European Union (EU) member states. The paper focuses on observable and quantifiable aspects of corporate governance including key aspects pertaining to the composition and operation of the board of directors, audit committee, remuneration committee, nomination committee, and other corporate governance policies. Using an Australian corporate governance ranking system, contained in the Horwath Report, the Corporate Governance (CG) Guidelines were analysed and rated. Based on the rating system, thirteen of the twenty-five EU countries had guidelines that were considered to be lacking in several key areas. In contrast, Ireland and the United Kingdom have the most detailed and rigorous corporate governance guidelines. Countries with less developed economic frameworks have the least detailed and rigorous corporate governance guidelines. Finally the specificity of corporate governance guidelines varies greatly between the various countries either due to the system used (one or two tier systems) or whether the country’s legal system is predominately common or statutory law. The aim of the paper is not to determine the compliance of individual companies on their company’s CG Code but to rate the Codes of the countries so as to assess whether there ought to be stricter regulatory measures by the EU on its member states
Legal insider trading, CEO’s incentives, and quality of earnings
Authors: Ronen Joshua , Tzur Joseph , Yaari Varda (Lewinstein)
Published: February 2017

The recent accounting scandals brought into light the failure of corporate governance mechanisms to curbing earnings management. This study focuses on the insiders who design the managers’ compensation contracts. The contract designers are seen as lacking the financial expertise to correctly uncover the true outcome. However by virtue of their knowledge of the contract details, they can discern the likelihood that the firm’s public report is not truthful. Modeling the firm as a principalagent contract, we show that insiders induce earnings management and make trading gains by designing suboptimal incentives. Given that our results are driven largely by the lack of these directors’ financial expertise, our study has the policy implication that inclusion of financial experts in compensation committees can contribute to transparencies under the current insider trading rules in place
Ownership structure, agency costs, and discount rates
Authors: Krishna-Swamy C. R. , Pashley Mary M.
Published: February 2017

In this paper, we explore the effects of agency costs on discount rates for public sector enterprises as well as private sector enterprises. Ownership structure has a direct impact on agency costs, and discount rates. We show this through an application of the Capital Asset Pricing Model (CAPM) framework. With the addition of agency costs, the discount rate, under uncertainty, for public sector enterprises (PSEs) as well as private sector enterprises (PVTSEs) becomes a variation of the CAPM risk adjusted discount rate plus a premium for agency costs. In some circumstances the impact of agency costs “cancels out,” otherwise it remains a relevant input to the calculation of required rates of return. For PSEs, under risk neutrality, the discount rate is the risk-free rate plus a premium for agency costs
Do financial laws affect investment determinants? Some European evidence
Authors: Utrero-González Natalia
Published: February 2017

Investment-cash flow sensitivities have been extensively analysed. One reason for the excess sensitivity between investment and internal resources is market imperfections. In this article, we try to determine whether this relationship is either affected by the nature of the financial system or associated to other firmspecific determinants such as size or industry. Results show that prudent banking regulation and creditor legal protection reduce investment-cash flow sensitivities, that is, alleviate the inefficiencies associated to asymmetric information and capital market frictions. However, firm characteristics still have a word to say when taking into account financial regulations
Ownership, structure and agency costs in UK firms
Authors: Raj Mahendra , Abdul-Malik Mazida
Published: February 2017

This paper investigates the impact of firm type and ownership structure on agency costs in UK firms. Prior literature suggests that agency costs are significantly higher when an outsider manages the firm. In this paper, we examine the agency costs associated with different types of firms such as subsidiary, holding, foreign-owned and limited companies. We extend our analysis by examining the agency costs for firms with various levels of diffuse ownership. Consistent with the agency theory, we find that firms with single ownership incur lower agency cost. In addition, we find that the type of firm does contribute to the increase or decrease of agency cost
Reply to Caplan on Austrian economic methodology
Authors: Block Walter
Published: February 2017

A Methodenstreit is a debate in economics concerning the philosophy of social science. It involves the issue of which is the property method to pursue in the dismal science. Although this type of debate had its origins two centuries ago, the present paper is a contribution to a more modern Methodenstreit begun by Caplan (1999). It addresses some of the fundamental issues in economics: is this discipline best to be thought of along the lines of an empirical science, such as physics or chemistry (the view of the logical positivist school), or is it more properly described as a branch of logic or mathematics (the perspective of Austrian economics)? Is the argument synthetic a priori a coherent concept (the praxeological perspective), or a mere trivial tautology? Can empirical work (e.g., econometric regression equations) test economic axioms (are there any such things?), or merely illustrate them? These issues underlay the present debate over such issues as indifference (can there be any such thing in economics?), cardinality (is there room in economics for cardinal numbers, or is only ordinality to be tolerated?), continuity (are neoclassical findings the result of an artificial smooth curve assumption, or do they stem from real elements of the economy?), income and substitution effects (can there be backward bending supply curves and upward sloping demand curves?) and demonstrated preference and welfare economics (can government involvement in the economy possibly improve matters, or is this a logical contradiction in terms?)
Secrecy, collusion and coalition building in corporate governance
Authors: Swartz Lee Mick
Published: February 2017

This paper studies secrecy in voting and the role of information on coalition building in corporate governance. It finds evidence that supports the coalition building hypothesis and, in part, rejects the agency cost hypothesis. The conditions for insiders and large outsiders to form coalitions are examined. The results are consistent with insiders and large outsiders cooperating and voting as a block to maintain power, this imposes costs on other shareholders. Consistent with the agency theory and the coalition building theory, management initiated amendments have a more negative impact than shareholder initiated amendments. The Vote Your Conscience theory is rejected.
The empirical evidence of the voluntary information disclosure in the annual reports of banking companies: The case of Bangladesh
Authors: Hossain Mohammed , Taylor Peter
Published: February 2017

This study reports the results of an empirical study of the effect of firm- specific characteristics on the voluntary disclosure in the 2000/2001 annual reports of 20 commercial banks in Bangladesh. The conceptual model underlying the study is based on economic and political incentives for providing greater detail in the annual reports and accounts. Three hypotheses have been developed and also a regression has been run to investigate the relationship between dependent and independent variables. The results indicate that size and audit firm variables to be significant in determining the disclosure Thus, the study contributes to the enhancement of knowledge regarding financial reporting and disclosure practices of financial companies under the developing countries context, and provides a basis for the conduct of future research in this area
Compliance risk and the compliance function could enhance corporate governance not only in banks but in other kind of organizations as well
Authors: Apreda Rodolfo
Published: February 2017

This paper sets forth that compliance risk and the compliance function are powerful devices to enhance corporate governance. Firstly, it reviews the contribution made to the subject by the Bank for International Settlements (BIS). Next it argues that compliance risk matters not only in financial but in any other organization. Afterwards, it deals with how the compliance function can be shaped so as to grant independence and accountability to such managerial endeavors. Later, it shows some shortcomings in the BIS’ choice of governance principles. Lastly, it brings forth a set of governance principles related to compliance risk and the compliance function on behalf of financial as well as non-financial organizations
Bondholder wealth effects from dividend changes
Authors: Klock Mark S. , Gleason Katherine I.
Published: February 2017

Bhagat and Romano (2002a, 2002b) document the importance of event study analysis of equity returns in corporate governance. We extend their analysis with the argument that analysis of bond returns around important corporate events can provide additional important information. Such information is particularly important in the current active public discussions over corporate governance. We provide an example of event study analysis of bond returns examining the impact of large dividend changes on both stockholders and bondholders in an effort to differentiate between the information content (transparency) and possible wealth transfers (theft) around dividends. Our study replicates earlier studies on investment grade bonds with ambiguous results using a sample of noninvestment grade bonds. Our results suggest that for ordinary dividend changes, wealth expropriation is a significant explanation in the gain to stockholders.
The management of inflation rate, interest rate and foreign exchange rate risks: A business executive outlook
Authors: Mostert Frederik J. , Mostert Jan Hendrik
Published: February 2017

Inflation rate, interest rate and foreign exchange rate risks are relevant to enterprise stakeholders because they impact in varying degrees on the financial performance of enterprises. Business executives are expected to take reasonable steps for managing these risks and to rely on sound and innovative financial risk management solutions to meet the expectations of stakeholders in their enterprises. This paper aims at improving financial risk management practices by applying insurance principles to the management of inflation rate, interest rate and foreign exchange rate risks. To achieve this objective, the research paper focuses on the features of finite risk insurance and the perceived importance of these features when South African business executives consider strategies to manage the above risks. Finite risk insurance is classified as a form of alternative risk transfer (commonly referred to as “ART”) that relates to the point where insurance, banking and/or the capital market converge in an attempt to efficiently provide enterprises with sufficient financial capacity for protection against a variety of risks. The features of finite risk insurance are highlighted and the views of business executives regarding the importance of these features for the management of inflation rate, interest rate and foreign exchange rate risks are disclosed and analysed. The paper closes with recommendations to providers of financial services based on the needs of South African industrial companies to manage the above risks.
Managerial hedge (effort) incentive, ownership and firm performance: Evidence from founder-CEOs and non founder-CEOs
Authors: Kim Haksoon
Published: February 2017

This paper tries to test three different hypotheses for the relationship between firm performance and characteristics of founder-CEOs and non founder-CEOs using three econometric techniques: OLS, feasible GLS and piecewise linear regression. They are risk-averse hypothesis, ownership hypothesis and hedge (effort) incentive hypothesis. Firm performance increases as hedge (effort) incentive increases. Founder-CEOs’ ownership has positive effect on firm performance when their ownership is between five percent and twenty percent. This is consistent with ownership hypothesis. The risk aversion level of founder-CEOs is negatively correlated with firm performance which is consistent with risk-averse hypothesis. The ownership and risk-averse level of non founder-CEOs are not statistically correlated with firm performance
Effects of underdeveloped equity market on investment
Authors: Muzere Mark L.
Published: February 2017

This paper uses a variant of the Allen, Bernardo, and Welch (2000) model in an open market economy to analyze the effects of equity market development on investment. A country’s underdeveloped equity market may discourage investors from investing in the country. Consequently, an underdeveloped equity market may contribute to home equity bias. Asset prices in a less developed equity market tend to be lower. The results suggest that a government may need to facilitate the development of its equity market to attract investment
Ownership structure and performance in large Spanish companies. Empirical evidence in the context of an endogenous relation
Authors: Alonso-Bonis Susana , de Andrés Pablo
Published: February 2017

The aim of this paper is to study the relationship between ownership structure and firm value. This relationship is analyzed taking into account not only the endogenous character of ownership but also the peculiarities of the Spanish corporate system. For this purpose, we select a balanced panel of 101 companies quoted in the Madrid exchange market from 1991 through 1997. We have applied econometric panel data techniques (generalized method of moments, gmm), which allows us to control the endogeneity problem through instruments. Our results confirm the positive effect of ownership concentration on firm market value. This relationship is robust to the inclusion of variables regarding the nature of the main shareholder, firm industry and time. Furthermore, we present some evidence about the relationship between the type of control (majority and minority) and a firm’s market value
Activity-based costing revisited by managerial economics logic
Authors: Rohde Carsten
Published: February 2017

This paper identifies a number of differences in the treatment of costs and expenditures in activitybased costing (ABC) and a management accounting system based on the managerial economics model.At present, ex ante ABC models incorporating a resource consumption model and a resource spending model with what-if capabilities are recommended for activity-based budgeting in order to make betterinformed strategic and operational decisions. Using a numerical example, the paper demonstrates the resulting cost distortions in ex ante ABC models and their profitability segments when costs are nonlinear and in situations where opportunity costs are relevant. The paper also shows how these distortions can be avoided in a budget layout based on managerial economics
The effect of institutional ownership on the reporting of conservative earnings
Authors: Velury Uma , Jenkins David S.
Published: February 2017

Given the spate of financial reporting scandals and enactment of the Sarbanes-Oxley Act of 2002 following the stock market crash of 1999, we examine the role of institutional monitoring as it pertains to reporting conservatism. Using the Basu (1997) asymmetric timeliness models, we examine the relation between institutional ownership and the conservatism of reported earnings, as defined by the asymmetric timeliness measures. Our results indicate that larger institutional holdings are associated with a decrease in earnings conservatism. We attribute these findings in part to the incentives of large institutional investors to capitalize on private information obtained through their role as corporate monitors. As such, it may be unlikely that large investors would not encourage the timely reporting of bad news
Long-run performance of initial public offerings in the German stock market: The family business experience 1977 to 1998
Authors: Kuklinski Jan , Schiereck Dirk
Published: February 2017

This paper investigates the long-run performance of initial public offerings of 174 family firms floated in Germany between 1977 and 1998. Family businesses typically come closest to the ideal of non- separation of ownership from control. The fundamental change in ownership structure induced by the flotation represents a change in the governance of the firm as for the first time dispersed outsiders buy equity capital. An examination of the stock price performance allows drawing conclusions to explain the impact of governance changes on firm value. A prediction of stock price performance spans two theories: Advantages of modern corporations where management and ownership are separated are cut short by the so-called principal-agent problem. Managers – the agents – could take actions against the interest of shareholders – the principals. Agency problems in closely-held family firms should be less predominant. On the other hand, the rent-protection theory predicts that family owners have incentives to skim private benefits at the expense of firm performance. Depending on the extent of these two effects, family-owned firms should out-, respectively underperform the market. The empirical evidence seems to support the private benefit hypothesis: 3 years after the listing the market-adjusted return was on average –25.31% compared to a broad index. The underperformance increased to –53.50% after 60 months. Even when excluding potential new economy and Neuer Markt biases, the underperformance is a statistically significant –10.50% and –50.13%, respectively.
Corporate governance and corporate social responsibility in Italy: advantages and disadvantages of a non-explicitly-existent system
Authors: D’Orio Giovanni , Lombardo Rosetta
Published: February 2017

The greatest distinctions between corporate governance practices around the world appear to result from differences in law and not from differences in recommendations that emanate from the types of codes adopted. With the evolution of the concept of Corporate Governance the area of connections with the concept of Corporate Social Responsibility has become more and more wide. The possible way to separate ownership and control, so the corporate governance in the private sector of Italian economic system, has not been based on a unique model but on a set of different models for the different kind of enterprises involved. This paper analyses the connection between corporate governance and corporate social responsibility focusing on the Italian case where, since the system of corporate governance has never been clearly defined, the current outcome shows a unique system that well incorporates both concepts
Equity research credibility in the Italian stock market
Authors: Cervellati Enrico Maria , Della Bina Antonio Carlo Francesco , Pattitoni Pierpaolo
Published: February 2017

In this paper we verify the degree of reliability of brokerage analysts’ recommendations, with reference to Italian IPOs and measure their long-term performance, distinguishing among affiliated and non-affiliated analysts, to test the conflict of interests hypothesis against an alternative ‘superior information hypothesis’. The empirical evidence shows that IPOs recommended by affiliated analysts have a long-run performance that is worse than firms recommended by unaffiliated ones by a relevant amout. This result supports the conflict of interest hypothesis, while it seems to be inconsistent with the hypothesis that underwriter analysts have superior information
The Societas Europaea – a step towards convergence of corporate governance systems?
Authors: Braendle Udo C , Noll Juergen
Published: February 2017

Since October 2004 the idea of a European Company, the Societas Europaea, has become reality and companies are allowed to incorporate in this legal form. Concerning corporate governance the Statute allows the companies to choose between a two-tier organisational structure typical for Civil Law countries and a one-tier organisational structure which is predominant in Anglo-Saxon Common Law countries. By analysing the regulations of Austria and the United Kingdom for the two board systems to elaborate the respective advantages and pitfalls, we find a strong evolution of the systems towards each other. As the board system is an integral component of a corporate governance system, the Societas Europaea highlights a major step towards convergence of these systems
Corporate mergers and the impact if pre-merger variance, leverage and maturity of bonds on wealth transfers
Authors: Rathinasamy R. S. , Shrieves Ronald E. , Krishna-Swamy C. R.
Published: February 2017

This paper addresses several hypotheses concerning wealth transfers among bondholders and stockholders in two firms which merge. In so doing, several refinements relative to the previous research in this area are introduced. We find evidence which supports the presence of diversification effects (coinsurance) to some bondholders, incentive effects (risk increases) to other bondholders, and wealth transfers between stockholders and bondholders. This study examines the impact of 49 industrial mergers between 1970 through 1984 on the returns to bondholders and stockholders of the merging firms. Results indicate that bondholders of the acquired firm group gain significantly in the announcement month, suggesting a diversification effect for acquired firm bondholders. Acquiring firm bondholders suffer significant losses in the pre-announcement month supporting the incentive effects hypothesis for the acquiring firm bondholders. Further analysis indicates that abnormal returns to bondholders are greater for firms with high variance and high leverage pre-merger. We do not find any direct evidence that differences in maturity of merging firms’ bonds have a significant impact on merger-related bondholder returns. We find evidence of wealth transfers between stockholders and bondholders of merging firms and some support for the theory that bondholder returns are negatively related to the pre-merger correlation between cash flows of the merging firms. In total, the empirical findings enable more definitive conclusions regarding the wealth effects of mergers on important classes of claimholders of merging firms, and buttress the theoretical developments relating to wealth transfers among those claimholders.
The impact PF large shareholders on firm risk-taking: Evidence from a small market
Authors: Graham Michael
Published: February 2017

his paper investigates the impact of active large shareholders on three measures of firm risk-taking. The results suggest a positive relationship between active large shareholding and income instability risk as well as strategy risk. Large shareholding was found not to exert any influence on risk based on stock returns
The legitimacy of corporate social responsibility
Authors: Stratling Rebecca
Published: February 2017

Based on deliberations on the legitimacy of CSR from the perspective of stakeholder and legitimacy theory on the one hand and the more critical view of Milton Friedman and Michael Jenson on the other hand, this paper analyses how major energy companies legitimise their CSR activities in their Annual Reports and their CSR reports. The research indicates that managers recognise the potential contribution of CSR to long-term financial performance of firms as well as the need to socially legitimise the firm’s operations. A surprisingly limited number of the companies in the sample take a very explicit strategic approach to CSR by stressing long-term shareholder value maximisation. The CSR policies therefore appear not to focus solely on a strategic stakeholder approach geared towards maximising shareholder value but to reflect considerations raised by legitimacy theory
Motives for partial acquisition: Evidence from the effects of CEO change on the performance of partially acquired U.S. target firms
Authors: Torabzadeh Khalil , Dube Sema
Published: February 2017

A company may acquire shares in another corporation to discipline the target management and improve target performance, or to gain inter-corporate perquisites such as higher dividends and favorable business deals to the detriment of the other shareholders of the target firm. We investigate the change in the post-acquisition share and operating performance, the dividend policy, the liquidity, and growth prospects of U.S. firms whose shares were partially acquired by other corporations during 1995-2000, wherein the target firms remained independent publicly traded companies following the acquisition. Using a change in CEO post acquisition as a proxy for the extent to which the acquirer wishes to change the direction of the target management, we find that target firms where the CEO was retained show negative risk adjusted abnormal share returns and significant deterioration in operating performance after the acquisition while having a substantial increase in CEO compensation compared to those target firms that replace their CEO during the post acquisition period. This suggests that disciplinary motives may predominate where the acquisition leads to a change in CEO, while obtaining inter-corporate perquisites may be the motivation in acquisitions that do not lead to replacement of the target firm CEO. We do not find support for financial perquisites such as higher dividends that are subject to inter-corporate exclusion.
Macroeconomic determinants of corporate performance and failure: evidence from an emerging market the case of Jordan
Authors: Zeitun Rami , Tian Gary Gang , Keen Steve
Published: February 2017

This study investigates the impact of aggregate economic risk on a company’s performance and failure in a panel estimation using 167 Jordanian companies during 1989-2003. Our finding shows that unanticipated changes in interest rate negatively and significantly affect firms’ performance measured by ROA, which suggests that an interest rate rise increases the cost of borrowing and then further negatively affects a firm’s profit. We also found that both the production manufacturing index and Islamic credit facilities positively and significantly affect a firm’s performance. The positive and significant impact of Islamic credit facilities reflects the importance and the significance of the role of Islamic credit facilities in increasing a firm’s performance measured by ROA.
Corporate governance: an international comparison
Authors: Dorweiler Vernon P. , Yakhou Mehenna
Published: February 2017

Commerce has reached a global basis. Either trade regulation has eased, or deployment of production facilities has been adopted. Laws and regulations limit commercial practices in individual countries. Below the level of commerce is control of corporations, internally and externally; that is corporate governance. This research is to explore corporate governance, as laws and regulations enforcing control of corporations on a comparative global basis with commerce. While the scope of the research is broad, descriptions are specific to corporate purposes
Private interest and social interest of shareholders: empirical evidence from China
Authors: Li Weian , Niu Jianbo
Published: February 2017

We try to explore the relation among three factors: the private benefits that main shareholders can obtain from the firm, the social benefits derived from a certain ownership structure and the ownership concentration costs. Different corporations have different optimal governance mechanism. Noticing the substitute relation between the level of the management-and-shareholder-conflicts and the different governance mechanism, we take use of the data from China’ stock market and conduct an empirical analysis on the influence both of the different shareholder’s participating in governance and the ownership structure over corporate performance, and have reached two conclusions. First, in the companies with a higher level of conflicts between the management and the shareholders, the shareholder will be more active in participating in governance because the benefits earned here is much more than the company with a lower level of conflicts. Second, when the other governance mechanisms in one company perform poorly, the shareholder is less active in participating in governance because the extra benefits earned here cannot offset their costs. So only in these companies with poor governance mechanisms, the shareholders’ active monitoring can produce benefits. These conclusions can help our further research on the relationship among the shareholder supervision, ownership structure and corporate value, and we should also re-evaluate some traditional theoretical viewpoints
Equity-based incentives: wealth transfers, disruption costs and new models
Authors: Nwogugu Michael
Published: February 2017

This article seeks to: a) introduce new models of incentives, including those that completely solve the problems of “Back-dating” and “Re-pricing” of employee stock options and equity-based incentives; b) introduce new theories of unwarranted wealth-transfers and Disruption Costs inherent in the use of Equity-based Incentives (“EBIs”). Several recent detailed studies found that there is widespread ESO/EBI-related fraud and non-compliance, which could have damaging effects on public confidence in financial systems and increase market volatility.
Family business governance: perspectives, research and recommendations
Authors: Astrachan Joseph H. , Keyt Andrew D. , Mcmillan Kristi S. , Lane Suzanne
Published: February 2017

Recent research raises serious questions as to the applicability of current corporate governance recommendations for family businesses. While perhaps valuable for listed companies, they may be harmful to family businesses because they arise from a market model rather than a control model of corporate governance. This chapter provides guidelines that will lead to greater board accountability and, in turn, positive identifiable results in board and company performance. These guidelines also incorporate propositions for further consideration by family business researchers.
Efficiency of Sarbanes-Oxley act: willingness-to-comply and agency problems
Authors: Nwogugu Michael
Published: February 2017

Using the events that occurred in a series of corporate transactions in the US (Nwogugu (2004)), this article analyzes the efficiency of the Sarbanes-Oxley Act (“SOX”; 2002, USA) and introduces new quantitative models of Willingness-To-Comply which is a statistical measure of the employee/company’s propensity to comply with SOX and similar regulations.
Corporate governance of state-owned enterprises in China
Authors: Yu Miaojie
Published: February 2017

In the last thirty years, China has undergone three stages of corporate governance mechanisms, namely, (1) the “power-delegating and profit-sharing” system; (2) the “contracted managerial responsibility” system; and (3) the corporatization of large stateowned enterprises (SOEs). This paper will explore each mechanism, their advantages and disadvantages in detail. The main finding is that the various practices of corporate governance of SOEs are not suitable for China’s SOEs mainly due to the lack of sufficient incentive. Instead, a mixed mechanism of the “control-based” and the “marketoriented” mechanisms is more attractive given China’s unique institutional setting
Corporate ownership in Spain
Authors: Santana-Martin Domingo Javier , Aguiar-Diaz Inmaculada
Published: February 2017

In this paper we analyse the structure of ownership in non-financial Spanish listed companies in the period 1996-2002, focussing on the control chain methodology. The results obtained show that the main shareholder’s control threshold stands at about 29% of the voting rights and that in 2002 families were the ultimate owners in 52.7% of the firms. On the other hand, the use of pyramid structures continues to increase. In 2002, 29.1% of the companies were controlled in this way, which means that the ratio of voting rights to cash flow rights for this year was 0.89
A study of determinants of social disclosure level in UK banks
Authors: El-Bannany Magdi
Published: February 2017

This paper investigates the determinants of the social disclosure level in UK banks over the period 1981-1996. Content analysis is used to measure the social disclosure level. The regression results show that market structure, investment in information technology and risk factors, which have not been considered in previous studies, have a significant impact on the social disclosure level. In addition, bank size and profitability are significant but the listing status and the age of the bank are insignificant.
Ownership structure and voluntary disclosures: the case of French-listed firms
Authors: Lakhal Faten
Published: February 2017

This paper investigates the relationship between ownership structure and voluntary earnings disclosures under high ownership concentration of French-listed firms. The findings show that French managers are less likely to make voluntary disclosures when they are controlled by a large shareholder or by a family, suggesting that low legal protection leads to expropriation of minority shareholders. The results also show that the proportion of foreign institutional investors in capital is likely to mitigate this relationship since institutional investors signal good minority shareholders’ protection to the market.
Value management in weakly growing industries an empirical analysis using the chemical industry as an example
Authors: Pidun Ulrich , Wolff Michael
Published: February 2017

In the literature, growth is discussed as a key value lever within the framework of value-based management as it creates opportunities to generate additional free cash flow and thus to increase the value of the company. However, opportunities for high growth rates, for example through technical innovations or the creation of new customer groups, are not equally distributed across industries. Using 61 companies from the chemical industry as an example, it is shown that above average capital market performance is possible also in industries with below average growth rates. The requirement for this to take place is the consistent exploitation of all available levers of value management. In contrast, a pure focus on increasing profitability has not proven to be a sustainable value creation strategy.
Separation of control rights and cash-flow rights in emerging economies: theory and Mexican evidence
Authors: Fairchild Richard , Garro Paulin Alma
Published: February 2017

Researchers have identified that corporate ownership structures appear to be quite different in developed and developing economies. For instance, Castañeda Ramos (1999) provides evidence of considerable separation of cash-flow rights and control rights accruing to inside and outside equityholders in publicly listed firms in Mexico. Insiders use mechanisms such as dual voting rights, majority rules and pyramids to maximise their control rights while holding minimal cash-flow rights. In contrast, there is a much closer alignment of cash-flow rights and control rights in developed countries such as UK or US. The purpose of this paper is to develop a game-theoretic model that explains these features. We argue that factors in emerging markets, such as large private benefits of control, extreme risk, low investor protection, inefficient capital markets, and governments sympathetic to incumbent management at the expense of outside investors, all contribute to insiders’ incentives to create a separation of cash flow and control rights. We present evidence from Mexico that supports our results
One size does not fit all: small companies and ASX corporate governance compliance
Authors: da Silva Rosa Raymond , Etheridge Dane , Izan Izan H. Y.
Published: February 2017

The ASX Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations (Released March 2003) has been criticised as unduly prescriptive and potentially costly, particularly for small firms. Using a sample of 518 West Australia and Queensland based ASX listed companies, we show that small companies are less likely to comply with several of the ASX recommendations than large companies. We also show that some agency controls largely ignored in the recommendations, such as substantial shareholders, may substitute for some of the corporate governance mechanisms recommended by the ASX. We also consider the effect that the extent of director interlocking may have on compliance, and find that it is minimal. Overall, the results of this research provide a timely reminder that when it comes to corporate governance, one size does not fit all.
Corporate social responsibility and shareholder value implications
Authors: Syriopoulos Theodore , Merikas Anna , Vozikis George S.
Published: February 2017

The study assesses the implications for shareholder value induced by investing in companies promoting corporate social responsibility (CSR) among members of the Greek CSR Firm Network which consistently pursues CSR strategies. Alternative dynamic volatility models to identify the best fit that adequately describes the risk-return profile of these stocks were estimated, while the EGARCH model which takes into account asymmetric volatility effects was found to be statistically satisfactory in explaining CSR risk and return. The impact of volatility appears to be persistent though varying across Greek CSR companies and shareholder value hence may fluctuate considerably, as CSR stocks may not necessarily present a low risk asset class
Does audit committee independence improve information content of earnings under the Sarbanes-Oxley act?
Authors: Baryeh Loretta , Chang Jui-Chin , Sun Huey-Lian
Published: February 2017

We examine the relationship between information content of earnings and the disclosure of audit committee independence under the Sarbanes-Oxley Act (SOX) and the Securities Exchange Commission (SEC) rulings. Specifically, we are interested in the difference in information content of earnings measured by earnings response coefficients between non-U.S. and U.S. firms in 2002 due to the fact that non-U.S. firms were not required to comply with the audit committee independence requirements while most U.S. firms were already in compliance with the rulings. Using 82 non-U.S. firms and 82 matched U.S. firms from the New York Stock Exchange (NYSE), we find evidence that the U.S. firms have higher information content of earnings than the non-U.S firms in 2002. The information content of earnings is found to be positively related to board and audit committee independence. For non-U.S. firms, we also find that early compliance with audit committee independence requirements is favorably recognized by the market. Our findings provide evidence that disclosures of fully independent audit committee and other corporate governance information under the SOX regulations as well as the SEC rulings actually improve information content of earnings.
Case of public reprimands
Authors: Ismail Hashanah
Published: February 2017

This paper examines the relationship between the contents of a report, the Statement of Corporate Governance, required to be included in the Annual Report of listed corporations, and the receipt of public reprimands. Since the formalization of good corporate governance in the Code, all listed companies are required by rule PN9 to include how they have applied the principles and the extent of compliance with best practice found in the Code. The paper is based on companies that received public reprimands in the first three quarters of 2005 and we compared the contents of the statement of corporate governance of a matched pair of companies which did not receive public reprimands to see if such statements differ between the two groups. We do not see any difference between the two groups.
The effects and determinants of extensive disclosure: evidence from Japan
Authors: Kitora Yuko , Okuda Shin’ya
Published: February 2017

It is believed to be increasingly important for firms to be engaged in extensive disclosure in Japan. This paper simultaneously investigates the relationship between Corporate Social Performance (CSP) and corporate attitude toward extensive disclosure and between corporate attitude toward extensive disclosure and corporate reputation. We find that corporate attitudes toward extensive disclosure and CSP are positively correlated and that corporate attitudes toward extensive disclosure and corporate reputation are positively correlated. This evidence indicates that firms are engaged in extensive disclosure as a component of their corporate strategy in social responsibility activities and that those with more positive attitudes toward extensive disclosure appear to be able to develop and maintain better relationships with their various stakeholders.
The dynamics of CEO compensation and firm performance: are executive compensations excessive?
Authors: Huang Ying , Chen Carl R.
Published: February 2017

We evaluate the dynamics of executive compensation and shareholder returns. In observing the level of compensation, we notice that CEOs’ salaries, bonuses, annual stock options, and accumulation of stock options all showed strong or explosive growth. We postulate that the marginal productivity of CEO compensation diminishes over the sample period due to this substantial growth. Our empirical results support this hypothesis. Using both single equation and simultaneous equation models, we find the marginal effect of compensation on total shareholder returns declines substantially. The results support the concerns that the public has expressed about the levels of CEO compensation.