bluuebunny/crossref_metadata_2025 huggingface dataset:
The market response to the Standard & Poor’s transparency and disclosure rankings
Authors: Cheng C. S. Agnes , Collins Denton L. , Huang Henry He
Published: February 2017

This paper investigates whether the Standard & Poors (S&P) transparency and disclosure (T&D) rankings represented new information to the financial markets when the results of the study were released by S&P on October 15, 2002. The S&P T&D rankings report the relative levels of three disclosure dimensions (ownership structure and investor rights, financial transparency and information disclosure, and board and management structure and process) provided by firms in their annual reports (annual report rankings) and complete regulatory filings (composite rankings). The results suggest that the S&P T&D rankings provided new information to the markets on cross-sectional differences in disclosure, and the market responds unfavorably during the event period to firms with large difference in disclosure levels across annual report and other regulatory filings. Further analyses reveal that the results are driven by the subcategory of ownership structure and investor rights.
Status differences as an impediment to building entrepreneurial relational capital
Authors: Collins Jamie D. , Uhlenbruck Klaus , Reutzel Christopher R.
Published: February 2017

We explore a potentially significant impediment facing entrepreneurial firms as they attempt to augment and utilize their relationships with other firms. Social capital has often been argued to be an alternative to contracts for governing inter-firm relationships. We extend existing research by arguing that significant differences in the quality of social capital can exist for entrepreneurial firms with similar sets of capabilities and initial structural connections to potential exchange partners. We specifically explore the influence of status differences between firms’ representatives. We further discuss factors that moderate this influence. Entrepreneurial firms attempting to convert existing weak ties into strong ties with better established firms are most likely to encounter problems due to social status differences between the firms’ representatives. Thus, their ability to rely on the positive aspects of social capital in governing inter-firm relationships is hampered.
Non-executive directors and audit committee: a study on their authority and effectiveness
Authors: Muhamad Sori Zulkarnain Muhamad , Abdul Hamid Mohamad Ali , Mohd Saad Siti Shaharatulfazzah , Evans Jonathan Gerard
Published: February 2017

This study aimed to investigate the perceptions of senior managers of Malaysian publicly listed companies on issues relating to audit committee authority and effectiveness. Questionnaire survey technique was employed to seek the respondents perceptions on seven issues, namely audit committee appoints the auditor, audit committee determines and reviews audit fees, audit committee determines and reviews the auditor’s scope and duties, and audit committee’s reports, meetings, charter and roles. The majority of respondents agreed that auditor would be more effective and independent if audit committee assumed the responsibility to appoint the auditor, determine and review the audit fees, and determine and review the external auditor’s scope and duties. It is also found that disclosure of audit committee report, quarterly meeting and disclosure charter in annual report would enhance the perceptions of users of financial statement concerning the effectiveness of the committee.
Perspectives on corporate governance and firm valuation in Africa
Authors: Ncube Mthuli
Published: February 2017

This paper reviews aspects of corporate governance as it impacts on the valuation and performance of firms. We consider the theoretical framework for corporate governance as an internal regulation mechanism, on the basis of principal agent problems, incentive contracts, and asymmetric information. We also discuss present various corporate governance practices around world. The paper discusses the empirical evidence on how the quality of corporate governance practices impact on the valuation of a form and its general performance. Stylized facts on corporate governance practices in Africa and also presented.
The problem of incentives in building corporate governance models
Authors: Fontes-Filho Joaquim Rubens , Balassiano Moisés
Published: February 2017

The attempt to align interests of executives with those of shareholders has been addressed in the corporate governance context from a predominantly economic outlook based on the agency theory. The models that combine monitoring and control systems in association with financial incentive mechanisms, such as profit and income sharing, stock options, bonds and other benefits, consider an individual to be individualist, opportunist and self-interested, diverging from the assumptions of other theories and contemporary ideas in the area of human resources management. Based on the criticism related to the agency theory, particularly when drawing up incentive schemes, this article aims to look at alternative theories to build corporate governance practices that include considerations on extrinsic and intrinsic motivation of agents.
Impact of corporate governance on voluntary disclosure in Chinese listed companies
Authors: Li Hongxia , Qi Ainian
Published: February 2017

This study examines the impact of corporate governance on voluntary disclosure in 100 non-financial Chinese listed firms for the period 2003-2005. There are two main findings. (1) Firms with high Managerial ownership have high level of voluntary disclosure. If a firm has a high managerial ownership, managers are much more concerned about the benefit of shareholders and stock options will have incentives to contribute the firm. Thus, a capital structure with high managerial ownership decreases agency costs and increases the voluntary disclosure. (2) The significant correlation is identified ownership concentration with the voluntary disclosure. This is because the largest shareholders have a strong interest in firm performance and therefore a high ability to increase voluntary disclosure. Our empirical results further illustrate that big firms have inclination of voluntary disclosure through stock market and the exogenous mechanism between them is exposed
Corporate governance, disclosure, and minority shareholder expropriation: the saga of DaimlerChrysler
Authors: deB. Harris Frederick H. , Jarrell Sherry L. , McInish Thomas H. , Wood Robert A.
Published: February 2017

This paper examines a series of DaimlerChrysler events and finds unique evidence about whether disclosure requirements can compensate for weak corporate governance standards in protecting minority shareholders from expropriation. We show that strict disclosure requirements, though they improve the flow of information to all shareholders, fail фto substitute for strong corporate governance measures. Strict disclosure complements strong corporate governance, and both may be required to create environments in which firms can raise capital and fund growth opportunities most efficiently
Corporate financing behaviour and vulnerability in Indonesia
Authors: Chevalier Alain , Prasetyantoko Agustinus
Published: February 2017

The chapter examines the financing behaviour of listed companies in Indonesia, in order to understand the micro evidence of the economic vulnerability based upon firm-level data. The findings show that there is an indication of the gearing effect phenomenon in which debt-equity ratio decreases with profitability. In such a case, firm would have higher probability not only of failing to make a return to equity holders but also failing to meet interest cost obligations. In macro sense, the high probability of firm insolvency would lead economy to the financial fragility which could easily be ended in financial crisis. However, the findings also demonstrate that listed firms in Indonesia were trying to match their debt-maturity with their asset maturity. But this strategic action was taken by big firms. Small firms tend to have limited choices in their financing strategy.
Banks: regulation and corporate governance framework
Authors: Ungureanu Maria Cristina
Published: February 2017

The banking sector industry is somewhat unique because it is simultaneously consolidating and diversifying. Banks’ major role in stabilising the financial systems of countries and in spurring their economic growth explains the particularities of their own corporate governance. The specificity of banks, the volatility of financial markets, increased competition and diversification expose banks to risks and challenges. The banking industry is heavily regulated and supervised in every country around the globe. This, in turn, establishes a particular corporate governance system. The paper lays out the specific attributes of banks that influence their regulatory and supervisory environment, which, in turn, creates a unique corporate governance framework for the banking industry. The paper emphasises the benefits and limits of regulations and supervision on banks’ corporate governance and focuses its empirical results on the European Union countries.
Bank equity claims in borrowing firms and loan availability
Authors: Niskanen Mervi
Published: February 2017

This study investigates the effect that bank equity claims in borrowing firms have on the availability of finance to the firm. The results suggest that allowing banks to hold equity claims in borrowing firms enhance debt availability to the firm. The results are consistent with arguments that equity claims may be helpful in transferring the benefits of an ongoing relationships to the borrowers, and thus eventually also enhance investment efficiency in the economy as a whole. The results, however, also suggest that very small or very large bank equity claims in borrowing firms do not have this impact. The results suggest that allowing banks to hold equity in borrowing firms may have some advantages. Policymakers should take this into account when reconsidering or creating regulations in this area.
Institutional ownership and firm’s dividend policy
Authors: Guo Weiyu , Ni Jinlan
Published: February 2017

This paper examines the linkage between dividend policy and institutional ownership within the context of the dividend model of Allen, Bernardo and Welch (2000). Specifically, it provides an empirical test of Allen, Bernardo and Welch (2000)’s novel implication that a tax differential between institutions and retail investors effects dividend policies. Using merge data of US industrial firms from 1980-2002, our results indicate that the dividend paying decision is positively related with institutional ownership. That is, firms with higher institutional ownership are more likely to be dividend payers. Further, we find that the deferred tax or tax credits that the institutional investors own significantly contribute to the dividend initiation decision as well as the level of dividend payments
Peculiarities of privatization and corporate control in Lithuania
Authors: Solnyskiniene Jolanta
Published: February 2017

The article analyzes how ownership structure influences enterprise activity effectiveness, and topicality. The test results about the change of the structure of the stock capital in Lithuanian joint-stock companies during the period of 1999-2003 as well as the change of the effectiveness/results of the enterprise activity depending on the ownership constellation of the control block of the shares were given. Peculiarities of the cooperative management were analyzed.
Determinants of the corporate governance of Korean firms
Authors: Lee Eunjung , Park Kyung Suh
Published: February 2017

This paper investigates the determinants of the corporate governance of the firms listed on the Korea Stock Exchange. We find that ownerships by controlling shareholders tend to have negative effects on their corporate governance, and the negative effects are more significant on the board structure and the managerial transparency of the sample firms. On the other hand, foreign shareholders exercise positive effects while institutional investors are shown to be passive on the corporate governance issues. The empirical results suggest that investors’ or regulator’s effort to improve the corporate governance of Korean firms should be directed to the improvement of the board structure and managerial transparency
Corporate governance and ownership structure in Brazil: causes and consequences
Authors: Rogers Pablo , Dami Anamélia Borges Tannús , de Sousa Ribeiro Kárem Cristina , de Sousa Almir Ferreira
Published: February 2017

The literature indicates that, mainly in countries with high stock concentration, the ownership structure is an important internal mechanism of control of the corporate governance, with effects in the companies’ value and performance. In Brazil, the existing relationship among corporate governance - ownership structure - performance is still not conclusive. The present study investigates if there is any relationship among ownership structure, financial performance and value in the Brazilian nonfinancial public companies with stocks negotiated in the São Paulo Stock Exchange, between the period of 1997 to 2001, as well as the determinant of the level of concentration of the ownership in these companies. In the empiric investigation it was used a multiple regression analysis through the estimators of the Ordinary Least Squares with heteroscedasticity in accordance with White (1980). Concerning the used methodology, the results indicate that the variables of ownership structure as defined do not have influence on the financial performance and value of the companies. Remaining to the determinant of the ownership structure of the Brazilian non-financial public companies, the results indicate that the ownership structure can be explained by the size of the firm, market instability and regulation, being the latter the main determinant of the ownership structure.
Ownership structures and capital allocation: evidence from estimating production functions under alternative specifications
Authors: Hobdari Bersant
Published: February 2017

New and rich panel data for a large and representative sample of firms are used to estimate the effect of ownership structures on capital allocation. This issue is examined in a production function framework under alternative specifications. Our estimates confirm differences in capital allocation across firm under different ownership structure. Furthermore, we find that: (i) most of Estonian firms operate at the wrong point on their production function (ii) insider owned firms suffer from under-investment, (iii) state and domestic outsider owned firms display over-investment (iv) there is evidence of widespread managerial discretion
Structures of ownership and control in Spanish firms between 1997 and 2006
Authors: del Orden-Olasagasti Olga , Garmendia-Lazcano Aitor
Published: February 2017

When approaching the study of how financial systems carry out their role in the control of the good governance of enterprises, many articles of research have centred on the analysis of the ownership structure of these firms. Attempts have been made to see if differences exist, in the nature and degree of concentration of ownership, in the level of pressure and control exercised over the managers and the repercussion of all this on the manner of managing the business. The intention of our research article is to shed light on the development of the structures of ownership and control in Spanish enterprises between 1997 and 2006, and their possible influence on the results of these enterprises
Study of explanatory factors of audit quality assurance: comparison of Canada, France, Japan and Denmark cases
Authors: Masmoudi Sana Mardessi
Published: February 2017

The objective of this paper is on the one hand, to examine the differences of legal audit of four countries especially Canada, France, Japan and Denmark pertaining to four different judicial systems. In addition, to wonder about the factors which can influence audit quality assurance, particularly, those relating to judicial system of country, growth opportunities and ownership structure. The empirical results show, initially, that specificities of judicial system are positively associated with audit quality assurance appreciated by the size of audit firms. Then, growth opportunities influences partially the size of audit firms. Lastly, ownership structure does not seem to have a significant impact on the search for a high audit quality.
Firm size, board of directors’ quality, managerial ownership and level of voluntary disclosure in Thailand
Authors: Chobpichien Jakkravudhi , Haron Hasnah , Ibrahim Daing Nasir , Hartadi Bambang
Published: February 2017

Despite intensive efforts to determine the nature of the relationship between the firm size and the level of voluntary disclosure (VDI), empirical studies of this issue have produced mixed results. This paper attempts to delve deeper into this complex phenomenon by employing a resource dependency perspective to hypothesize a model of mediation as board of directors’ quality index (BOQI) is moderated by a high concentration of CEO’s ownership (HCEO). The findings suggest that the larger firm size, the higher is the BOQI and this in turn will lead to the higher VDI. These relationships appear to be weaker when there is moderation as HCEO, produced by the mediation process of the BOQI, and when this process is controlled, the residual moderation of the treatment effect is reduced. Further, board size as control variable is found to have a positive significant influence on BOQI and VDI.
The interrelationship between the South African private equity industry and black economic empowerment
Authors: van Heerden Jakobus Daniël
Published: February 2017

This paper investigates the relationship between the South African private equity industry and government’s black economic empowerment (BEE) legislation. As the private equity industry of South Africa was formalised only in 1999, literature and data regarding the industry is limited. The research is therefore more qualitative in nature, and is based on a combination of media and journal articles, domestic as well as global surveys, personal communication with experts in the industry and other relevant research. The study suggests that the need to earn black economic empowerment credentials is one of the major driving forces behind the growthexperienced in the South African private equity industry, and at the same time this growth leads to an accelerated BEE transformation process, resulting in an interrelationship between the industry and BEE.
Corporate governance problem and its implications for transition economies
Authors: Mateev Miroslav
Published: February 2017

This paper examines the corporate governance problem in Central and Eastern European (CEE) countries and the major implications of highly concentrated ownership in these countries on their economic development. Our main message is that ownership and control in transition economies will remain highly concentrated in short-term aspect, and regulatory intervention should focus on protecting minority shareholder interests while maintaining the incentives for entrepreneurship and large shareholder monitoring. We also argue that the corporate governance system in transition economies will have to rely on active involvement and monitoring by large shareholders, even after the emergence of a class of professional managers. Moreover, our empirical results support Berglöf and Pajuste (2003) findings that controlling shareholders (strategic investors) are critical to the successful restructuring of privatized firms; minority protection is also important to attract outside capital, but it may reduce the disciplinary role of the market for corporate control
Investor reaction to new issuances of U.S. high-yield debt
Authors: Wolfe David R.
Published: February 2017

This paper investigates firms issuing high-yield debt and the impact on their stock price by identifying determinants of the negative abnormal return that surrounds the announcement of an issue in the short-run. It is learned the length, coupon payment and amount of the issue are significant in explaining the CAR as is the age of the firm, first-time issuers and the marketplace where its stock trades. Firm performance ratios including the current and total-asset-turnover ratio also have explanatory power. These determinants of the CAR have an explanatory power approaching 55%.
Management entrenchment and performance: case of Tunisian firms
Authors: Hachana Rym , Hajri Jamila
Published: February 2017

Since entrenchment strategy has a real impact on performance, we examine in this paper the relationship between entrenchment and performance. This study is based on cross-section data of 21 quoted Tunisian companies (from both manufacturing and service sector) over the period 2000 to 2006. Our evidence contributes to understanding the role played by several entrenchment pathways, such as the ownership structure, the debt policy and the structure of the board of directors. In this paper, we aim to shed light on these governance’s features by indicating by which channel entrenchment strategy is carried out in Tunisian companies.
Ownership structure and bid-ask spread: evidence from Tunisian companies
Authors: Boujelbéne Nadia Belkhir , Bouri Abdelfettah
Published: February 2017

The majority of previous studies are limited to study the aspects of the ownership structure within the framework of government of company without wondering about the incidence of this mechanism on the stock liquidity. The objective of this paper is to examine the relationship between ownership structure and market liquidity. From a sample of Tunisian firms listed in the period from 2001 to 2005. We showed that ownership concentration by blockholders is positively related to spread. A positive but generally insignificant relation is found between spreads and insider ownership. However, institutional ownership does not add any explicative power to the liquidity.
Impact of managerial power and the personal characteristics of CEO on the performance: case of the Tunisian companies
Authors: Ben Cheikh Sana , Zarai Mohamed Ali
Published: February 2017

The main objective of this article consists in determining the impact of the management power and the manager’s personal characteristics on the performance of the highly-rated enterprises. This paper examines two approaches. The first one specifies the leader’s power by referring to the management characteristics as a group of personal sociological and professional aspects. The second one is concerned with the effect of these characteristics on the companies’ performance. In order to test the validity of the theoretical hypotheses, the empirical study is based on a sample of 32 Tunisian highly-rated enterprises during the period 2000-2005. The results have shown that the leader’s power, made up of indicating variables, plays an important role on the stock exchange and accounting performance. This fact leads us to conclude that all management characteristics contribute to the reinforcement of this power and to its effects on the enterprises’ performance.
Does managerial entrenchment matter in risk taking? Evidence from the Tunisian context
Authors: Belanes Aroui Amel , Omri Abdelwahed
Published: February 2017

Building on agency and prospect theory views, many researchers have analyzed the executive risk-taking behavior. They have usually put in evidence the role of the mechanisms of corporate governance. In this research, we try to point out that even managerial entrenchment does matter. We consider the non financial firms that are listed in the Tunisian Stock exchange during the 1996 - 2006 period. To reveal the managerial risk taking, we apply factor analysis so as to construct a global index. To find out the impact of managerial entrenchment on risk-taking, we consider the ownership of the manager, his experience within the firm as well as his age. The size of the firm is also worth investigating while exploring managerial risk taking. The results are somewhat robust to different specifications. They may enhance and extend the agency-based corporate governance literature on executive risk-taking. But above all, they may shed some light on the emerging markets context namely the Tunisian one.
Agency problems in the public contracting context
Authors: Lozano Maria Belén
Published: February 2017

This survey synthesizes the study of public contracts from an agency perspective, detecting possible inefficiencies in the contracting context between government and firms. In this sense, we offer a clear analysis framework in order to improve efficiency in contracting processes. To do this, we have divided this situation into two conflicts of interest. On the one hand, we have the conflict between citizens and the firm with which the services will be contracted (fundamentally when there is a divergence in the price determination) and, on the other hand, the difference in interests between citizens and public officials. This analysis from a managerial perspective allows us to delve more deeply into a topic scarcely treated in the literature: the relationship of firms to the public sector. It also allows us to reflect on the efficient (or inefficient) behavior which firms are subject to in the contracting process.
Structure and voting behavior of the board of directors: theoretical and experimental evidences
Authors: Li Chun-An , Lee Kun-Chin
Published: February 2017

We examine the value of outsiders by voting behavior of boards. Our model proves that boards with a majority of trustworthy but uninformed outsiders can implement institutionally preferred policies and augment corporate performance by upgrading resource allocation. Our laboratory experiments strongly support this conclusion that higher proportion of appointed outsiders yields more efficient boards. We also find outsider-dominated boards, given enough time, will reduce information asymmetry among directors and thereby execute institutionally preferred policies.
The impact of internal and external monitoring measures on firm’s dividend payout: evidence from selected Malaysian public listed companies
Authors: Leng Chang Aik
Published: February 2017

This paper examines the impact on dividend payouts of internal and external monitoring measures instituted by companies to improve their corporate governance structures. The study involves 120 selected Malaysian listed companies over a four-year period from 1996 to 1999. This period encompassed the 1997/98 Asian financial crisis which affected most countries in the Southeast Asian region including Malaysia. Due to the combination of cross-sectional and time-series data, panel data regression techniques were used to analyse performance of the firms using both fixed effects and random effects models. Using dividend payout as the dependent variable, it was established that the size of firm, gearing ratio (borrowing) and the proportion of non-executive directors on a company board significantly influenced the dividend payout of firms. The impact of size on dividend payout of firms followed a quadratic fashion with payout increasing with the size of the firm up to the optimal size of around 11,321 million ringgit, in terms of turnover. Beyond that, firm‟s dividend payout declined with increasing size. The study also found that company borrowing had a negative effect on dividend payout. Finally, increasing the proportion of non-executive directors in a firm could lead to a decrease in dividend payout.
South Africa’s largest public sector pension funds: a collective developmental role?
Authors: Wildsmith Helen
Published: February 2017

As significant long-term domestic investors, South Africa‟s largest public sector pension funds have an interest in helping South Africa move onto a sustainable development path. However, this paper tentatively concludes that, although there is a possible collective developmental role for these funds, this is unlikely to occur unless leadership from government or the funds emerges. If a leadership role is chosen, government should probably focus on a transition management approach to sustainable development, trustees on the implementation of long-term investment policies, and the members of the investment community on a high leverage initiative, possibly linked to the Financial Sector Charter review. Some of the tentative conclusions reached in this paper also provide pointers for overseas pension funds and their stakeholders. Firstly, governments could support collective action between the largest public sector pension funds globally, and in return develop an unusually powerful long-term voice in support of a transition to sustainability. Secondly, a more significant role for these funds will highlight the issue of prioritisation, and the development of legitimate processes is likely to be needed. Thirdly, full implementation of genuinely long-term investment policies will probably lead to significant changes in the role funds play in the investment industry, possibly including the establishment of their own investment co-operatives.
The political economy of governance and development: Towards a new worldview.
Authors: Adams Ismail
Published: February 2017

This paper focuses on governance from an institutional economic perspective in trying to better understand the complexities of the decision making process and their implications for economic outcomes and growth. The paper is divided into six sections. Section I provides an introduction and background. Section II sketches various governance models within the conventional western paradigm. These are basically the „market-based‟ model and the „relationship-based‟ model. A recent third paradigm is also gaining momentum in the literature, namely „family capitalism‟ or the „family business‟. Together, these three models or frameworks may be construed as the quantitative perspective to governance, driven by a rule-based environment. It will be indicated that these models are a necessary but not sufficient condition for effective and qualitative delivery of governance ensuring trust, honesty and integrity. This section also emphases the critical importance of institutions, cultural traditions, value systems, mores and history as crucial ingredients in the development process over and above issues of compliance.
Is it better to change top management after a merger or acquisition?
Authors: Chen Jian , Xi Youmin
Published: February 2017

In this paper, we analyzed the relationship between turnover of top management and performance of listed companies after takeover. We made a hypothesis that after equity change of listed corporations, the turnover of top management improved the performance of these corporations. We chose the sample of listed corporations in Shenzhen and Shanghai security exchanges which had equity change, and we used the assessment of the “Operating Performance” Methodology to analyze the performance of these listed corporations empirically. We find that the company which had turnover of top management after the corporate control right changed, had significant performance improvement, and had better performance than the company which had not had turnover of top management after the corporate control right changed.
Board changes following mergers
Authors: Paul Donna L.
Published: February 2017

This study documents an overall increase in board independence and size following completed mergers. The increase in board size is positively related to the size of the target firm, suggesting either that large targets have bargaining power to negotiate inclusion of their directors on the board of the merged firm, or that high target director representation is perceived to be vital in mergers of equals. The change in board independence is positively related to post-merger cash flow difficulty, suggesting that independent directors are more likely to be added if the firm faces financial constraints.
Audit committees in listed companies: an international comparison of composition and meetings
Authors: Gansbeke Esmée Van , Everaert Patricia , Sarens Gerrit , De Beelde Ignace
Published: February 2017

This paper compares the number of audit committee (AC) members, meeting frequency and the presence of internal auditors at AC meetings of listed companies according to their country of domicile. We consider the USA, the UK, the Netherlands, France and Belgium. Hypotheses are developed based on differences in corporate governance codes. Data are gathered from annual reports of 100 listed companies in these countries. Our results indicate fewer AC members in the Netherlands, and a higher frequency of AC meetings in the UK and Belgium, countries where corporate governance codes do not proscribe a minimum number of meetings. The presence of an internal auditor at AC meetings was, on average, highest for firms listed in the USA.
Influences of proprietary and political costs on disclosure of directors’ and executives’ remuneration and ownership
Authors: Taylor Dennis
Published: February 2017

Remuneration to, and ownership by, directors and top executives (D&Es) of listed companies have been subjected to calls for transparency as part of the corporate governance movement. Using the annual reports of 161 Australian listed companies, this study investigates the comparative impacts of proprietary and political information costs on management ‘s voluntary disclosure decisions concerning D&Es’ cash-based and equity-based remuneration, termination benefits, related-party transactions, shares held, and changes in ownership in their company. A firm’s investment opportunity set (using both market-based and accounting-based measures) is treated as a proxy for proprietary costs, while media attention and shareholder activism are used to proxy for political costs of voluntary disclosure. Results of this study provide evidence of the relative importance of two major types of information costs, proprietary and political, in influencing management’s (i.e., D&E’s ) decision concerning the extent to which they disclose sensitive details of their remuneration and ownership
The budget constraint in the governance of organizations
Authors: Dallago Bruno
Published: February 2017

The paper suggests a partial solution to the disjunction between the institutional environment and the institutions of governance by considering the budget constraint. This approach is put in the perspective of the comparative analysis of economic organizations as discrete structural alternatives. The budget constraint presents a whole range of alternative values that are distinct by different transaction costs that organizations meet. Following different values of budget constraint, bounded rationality and opportunism are allocated to alternative uses and asset specificity takes different forms. This approach requires that the discriminating alignment solution considers the prevailing value of the budget constraint, which opens the need for a comparative perspective on efficacious organizational governance. A second level of governance is corporate governance. The debate over corporate governance is centered around decision-making power and the existence of quasi-rents that organizations produce. Given different values of the budget constraint, the definition of what are efficacious systems of decision-making power and appropriation of quasi-rents are distinct in the shareholder value and the stakeholder interest paradigms
Sources of liquidity commonality, asymmetric information and ownership structure in emerging markets: evidence from the Chinese stock market
Authors: Zheng Xinwei
Published: February 2017

This study examines if common factors of liquidity can be determined by ownership structure measured by asymmetric information in an emerging market that has adopted an order-driven trading system. Using China as a case for the study, I select a broad sample of stocks from two separate Chinese stock exchanges to measure and analyse the relationship. My empirical evidence seems significant and pervasive. These findings about the Chinese stock market provide useful pointers for understanding commonality in emerging economies and shed critical light on a new dimension of the working of emerging markets
Entry, exit, ownership structure and the efficient market hypothesis: a case study of the Kuala Lumpur stock exchange
Authors: Sivalingam Vglingam
Published: February 2017

The objective of this paper is to provide a new theoretical perspective on testing the Efficient Market Hypothesis in the Kuala Lumpur Stock Exchange (KLSE). Previous studies have shown that the KLSE is weak form efficient or at most semi strong form efficient. However, an adequate explanation has not been provided as to why the KLSE is not strong form efficient. The paper suggests that this is because the KLSE does not approximate the neoclassical competitive model in terms of entry, pricing and exit. There are barriers to entry and exit and hence to the free flow of accurate and complete information in the KLSE. The securities offered for sale are also underpriced as there is extensive government intervention to ensure adequate returns to investors. The market is also dominated by large government owned and family owned conglomerates. This together with a segmented market for three classes of investors, that is, the bumiputras, the other Malaysians and foreigners ensures that resources are not allowed to flow to their most value users and hence prices are not competitively set. The paper ends by noting that the KLSE is moving from a government dominated exchange for securities to a market system as a result of recent reforms and policy changes
Partial-adjustment-models of dividend policy behaviour for industrial Jordanian firms
Authors: Haddad Ayman E. , Al-Shattarat Wasim K. , Al-Hamadeen Radhi M.
Published: February 2017

This study examined the inter-temporal Dividend-Per-Share (DPS) behavior. The estimated partial adjustment-models included Lintner’s (1956), Darling’s (1957) and Brittain’s (1966) models. The results reported from the partial-adjustment-models indicated that Lintner’s model was the best-fit model for Jordanian firms. Previous dividends and current earnings had the most influence on the DPS inter-temporal behavior, indicating that Jordanian firms follow a persistent dividend policy. While dividends are persistent, Jordanian firm’s smooth dividends less than their counterparts in developed markets
Special investment, ownership – holding arrangement and incentive efficiency: a theoretical model analysis on ownership bonding within enterprise group
Authors: Lin Xu-dong
Published: February 2017

A theoretical explanation for partial ownership arrangement existing among group members is provided under the background of specific investment between vertical suppliers and buyers. Through installing specific investment degree parameter, relative bargaining capability parameter, outside option value parameter and average premium (discount) price coefficient into the same model framework, some major conclusions are obtained about the relations between the first-best partial ownership and those parameters. In final, the interrelations between the first-best partial ownership and special investment efficiency are discussed, and it’s pointed out that under the conditions of the same technical parameters, the investment efficiency in the case that the upstream firm belongs to public-company type is greater than that in the case of the owner-managed company type
Asset securitization problems and prospects
Authors: Seetharaman Arumugam , Raj John Rudolph , Saravanan A.S.
Published: February 2017

Applying off balance sheet financing mechanism is largely driven by its practicality, flexibility, and the most importantly it provides a platform for cheaper capital and solves many accounting related issues. Off balance sheet financing, particularly asset securitization, will continue to become the most dominant financing alternatives in view of its multi-functional capabilities in solving financing requirement and hedging needs. Asset securitization has been widely applied by the emerging economies in helping them during the economic crisis. Securitization has also been a lifesaver for banks in helping them recapitalizing during financial crisis. Securitization to a certain extent has contributed to the disintermediation of commercial banks being a major provider of capital. Despite the significant benefits and impacts, asset securitization has also its flaws or weaknesses. A flaw in structuring the deal could be one of the contributory factors of a failed deal. It could also attract excessive abuse, which consequently will be catastrophic to the financial system. Thus, proper control and regulation of off-balance sheet financing is inevitable
Taxation & dividend policy: new empirical evidence
Authors: Chkir Imed , Saadi Samir
Published: February 2017

The present paper takes advantage of two important changes in the Canadian taxation of capital gains in Canada to examine the interaction between taxation and corporate dividend policy. Our empirical results suggest that Canadian firms did not increase their dividend payout after the reduction of capital gains exemption in 1987; however, they did so when the remaining $100,000 capital gains exemption in 1994 was eliminated. Moreover, we find that firms with high level of control concentration tend to pay fewer dividends. Our finding suggests taxation does influence corporate dividend policy.
A survey of the extent of corporate social disclosure: the case of banking companies in India
Authors: Hossain Mohammed , Momin Mohmood Ahmed
Published: February 2017

The study provides the level of corporate social responsibility disclosure of the Indian banking sector. Corporate citizenship is the business strategy that shapes the values underpinning a company’s mission and the choices made each day by its executives, managers and employees as they engage with society. The bank in the society plays not an important role in any country but also behave a good citizen. Within this framework we investigated 38 banks listed on the Mumbai Stock Exchange and considered only annual report for the year 2002-03. The result shows that Indian banks are disclosing considerable amount of social information in the annual reports. The study also reveals that almost 90per cent of sample banks disclose human resource development, staff training and social/community services information. The study at least has given a scenario of the position of corporate social responsibility in Indian and especially in banking sector which is practicing as a voluntarily and acted as corporate citizen. However, more in-depth study is needed to the financial sector in the developing countries in order to understand the status of the corporate social responsibility in the world as a whole
The relationship between the bio-energy concept stocks in Taiwan and the international stock markets
Authors: Huang Chia-Hsing , Ho Liang-Chun
Published: February 2017

This research explores the relationship among the bio-energy company stock index in Taiwan, TAIEX, DJI, Nikkei 225 and SSE composite index for a period from January 1, 2005 to March 11, 2008. Test results indicate two things are noteworthy: 1. Granger causality tests show that the interaction between the bio-energy company stock index in Taiwan and TAIEX is one-way only; however, that between the bio-energy company stock index in Taiwan and DJI is two-way. 2. According to the results of variance decompositions, though TAIEX has the highest explanation power; nevertheless, the explanation strength tends to decrease. On the contrary, DJI and Nikkei 225 manifest constantly increasing strength in explanation. Accordingly, the influence of DJI upon the bio-energy company stock index in Taiwan keeps rising and can’t be ignored.
Ownership structure and risk disclosure: a study of Malaysian listed companies
Authors: Amran Azlan , Che Haat Mohd Hassan , Abdul Manaf Ahmad Rosli
Published: February 2017

This research focuses on the importance of ownership structure as a determinant of risk disclosure. It is expected to contribute to the literature particularly in the Malaysian context, where risk disclosure practice is in the infancy stage. This study uses multiple regressions in assessing the variability of the extent of risk disclosure. The overall results confirm that highly concentrated ownership would lead to high agency problem, which then leads to less disclosure. This implies that, to promote greater transparency in countries where many of the large listed companies are family-owned, more stringent laws that mandates adequate risk disclosure is clearly warranted. This would ensure that the needs of all stakeholders are properly met
Reconsidering the measures of shareholders value: a conceptual overview
Authors: Terblanche Nic
Published: February 2017

Economic and finance theory dictates that the major purpose of a firm is to create value. Value can be considered from different points of view. Advances in two distinctly different functional areas of business, namely marketing and financial management, initiated a reconsideration of our understanding of what constitutes a firm’s value. On the one hand marketing was called upon to become more financially accountable and at the same time intangible assets on balance sheets require that the asset or group of assets should be separately identifiable, protected, transferable and enduring. Brands represent a significant fraction of the intangible, and hence, total value of many firms. This situation made various researchers call for the integration of the disciplines of marketing and finance. The blend of empirical customer research and financial measures to produce measures such as, for instance, CLV holds a great deal of promise to support our understanding of value creation in firms and how that translates into shareholder value
The causes of voluntary resignation of independent directors
Authors: Yeh Yin-Hua , Shu Pei-Gi , Su Yu-Hui
Published: February 2017

In this research we investigate the possible determinants of voluntary resignations of independent directors. The results from 82 IPO firms with voluntary resignations of independent directors in the 2002-2006 periods show that independent directors concern more of the governance structure than of the performance and risk measures when making resignation decision. Specifically, we find that the most discerning variables for voluntary resignation are related party transactions, non-unqualified reports from the associated auditor, and total shareholdings of the large shareholders. Independent directors under the adverse conditions that hinder them from effective monitoring would choose voluntary resignation. Our findings potentially contribute to the literature in two threads. First, we comprehensively investigate the possible determinants from different dimensions and find that corporate governance would be more important than performance and risk in triggering the voluntary resignations of independent directors. Secondly, we prove that independent directors in an ownership-concentrated economic such as Taiwan are at best performing passive monitoring. Resignation would be their last resort when they are incapable of counterbalancing the predominant power of controlling owner
The effects of corporate governance mechanisms and investment opportunity set on firm performance
Authors: Chang Ruey-Dang , Chang Yeun-Wen , Chang Ching-Ping , Hu Fiona
Published: February 2017

This study uses investment opportunity set (IOS) as an environmental factor, and investigates its moderating effect on the relationships between corporate governance mechanisms (including internal and external corporate governance mechanisms) and firm performance. The empirical results using regression analysis show: (1) The IOS does not have a moderating effect on audit quality and firm performance. (2) The negative relationship between institutional investor ownership and firm performance is stronger for firms with higher investment opportunities. (3) When CEO is the chairman of the board, high growth firms can lead to better firm performance. (4) The relationship between the IOS and pledged shares ratio of directors and supervisors has positive influence on firm performance