bluuebunny/crossref_metadata_2025 huggingface dataset:
Corporate governance and firm performance: Evidence from Ghanaian listed companies
Authors: Kyereboah-Coleman Anthony , Adjasi Charles K.D. , Abor Joshua
Published: February 2017

Well governed firms have been noted to have higher firm performance. The main characteristic of corporate governance identified include board size, board composition, and whether the CEO is also the board chairman. This study examines the role corporate governance structures play in firm performance amongst listed firms on the Ghana Stock Exchange. Results reveal a likely optimal board size range where mean ROA levels associated with board size 8 to 11 are higher than overall mean ROA for the sample. Significantly, firm performance is found to be better in firms with the twotier board structure. Results show further that having more outside board members is positively related to firm performance. It is clear that corporate governance structures influence firm performance in Ghana, indeed within the governance structures the two-tier board structure in Ghana is seen to be more effective in view of the higher firm level mean values obtained compared to the one-tier system.
Board composition, audit committee and timeliness of corporate financial reports in Malaysia
Authors: Abdullah Shamsul-Nahar
Published: February 2017

This study attempts to investigate the roles of the composition of board of directors, audit committee and the separation of the roles of the board chairman and the chief executive officer on the timeliness of reporting. The issue of reporting timeliness is important in corporate governance because it is associated with corporate transparency. It is also an important indicator of the value of the information in the financial reports. Given the fact that the board is the highest internal corporate governance system, it is predicted that the characteristics of the board and its sub-committee, namely the audit committee, are associated with the timeliness of reporting. Using Bursa Malaysia (formerly known as the Kuala Lumpur Stock Exchange) Main Board companies data in respect of the financial years 1998 and 2000, the findings show that board independence and the separation of the roles of board chairman and CEO significantly are associated with timelier reporting. The results also indicate that the 1997 financial crisis had adversely affected the timeliness of reporting. These findings imply that during difficult periods, companies tend to take a longer time to prepare their audited financial reports. The positive association between timeliness of reporting and leverage found in this study suggests that the agency costs of debts could play an important role in explaining the timeliness of corporate financial reports. Finally, the negative relation between firm’s profitability and timeliness of reporting is supportive of information signaling theory.
Recipients of governance: Trust and the employee perspective
Authors: Whiteley Alma
Published: February 2017

Purpose - To introduce trust as related to organizational design and management within the broader domain of governance and report on case study research on trust carried out in a large Australian organization. Design/methodology/approach - This paper is in three parts. The first part reviews a selection of ideas and recent writers on trust; the second part describes the methodology of the case study research which focused on relationship management where trust emerged as an important element of relationships. This is followed by examples from the findings. The third part addresses insights and future research. Originality/Value - The study of trust has become an important topic for management and corporate governance during recent years. After discussing scholarly interpretations of trust, empirical research findings are used to provide insight into how employees actually understand and interpret trust.
Underpricing and corporate governance－Evidence from Taiwan securities market
Authors: Lin Tzong-Huei
Published: February 2017

To enhance the corporate governance of listed firms, Taiwan prescribes that the initial public offerings (IPOs) after February 19, 2002, have to set up at least two independent directors and one independent supervisor who posses financial or accounting expertise. The corporate governance reform of Taiwan offers an opportunity to investigate the effect of corporate governance on IPOs market. Using data from Taiwan’s initial public offerings (IPOs), this study documents evidence that the magnitudes of under-pricings of IPOs after 2002 are significantly smaller than those of before. This shows that the corporate governance can reduce the investors’ uncertainty about the IPOs. The empirical evidence also indicates that the percentage of shares holdings owned by directors/supervisors is demonstrated to have negative relationship with the underpricing of the IPOs. This study contributes to the literature in the following ways. First, as Ritter and Welch (2002) suggest that future progress in the IPO underpricing literature will mainly come from agency conflict explanation, this study provides evidence about the effect of corporate governance on IPOs market. Second, as for the issue about the policy implication of the SFB 2002’ rules, this study provides the empirical evidence. Third, whether the government should prescribe the firms to set up independent directors? This study offers a direction for future discussion.
Some thoughts on performance-based pay, earnings management and corporate law from an antipodean perspective
Authors: Teo Eu-Jin
Published: February 2017

Performance-based remuneration theoretically is an effective way of aligning the interests of company management with those of shareholders. However, ‘earnings management’ is a phenomenon that has been well documented by accounting researchers. Empirical studies suggest that corporate officers who are subject to performance-based remuneration may manage company accounting figures to improve their remuneration. This paper contends that such practices are inconsistent with the duties of loyalty to which these officers are subject, and concludes by identifying a corporate governance role for legal advisers in light of such conduct.
The relationship between executive compensation and dividend policy, performance, and corporate governance in closely-held firms
Authors: Hauser Shmuel , Yosef Rami , Solomon Ora , Schohat Ita , Tanhuma Yael
Published: February 2017

This paper examines how profitability, dividend policy and the corporate governance of closely-held companies are related to executive compensation. The main finding is that that in spite of the fact that controlling shareholders, and the executives they nominate to represent them, have the ability to exploit firms’ resources at the expense of minority shareholders, their incentive to do so is lower when their ownership exceeds 75% of the voting power. Specifically, in closely-held firms in which the controlling shareholders hold more than 50% and less than 75%, the incentive to prefer higher compensation and avoid paying dividends is greater than that in companies in which major shareholders hold more then 75% of the firm’s equity. For the latter, since they the vast majority of firm’s shares is held by them, the firm is to a large extent more private than public. In such case, the incentive to exploit minority shareholders is small. Indeed, in companies in which the voting power of controlling shareholders exceeds 75%, their profits are higher, the compensation paid to their executive is lower, and they appear to have the tendency to share more dividends in comparison with other companies
International effects of the Andersen accounting and auditing scandals: Some evidence from the UK, US and Australian stock markets
Authors: Handley-Schachler Morrison , Li Steven
Published: February 2017

In this paper, we use event study methodology to examine the effect of two highly publicized accounting failures, at Enron and WorldCom both audited by Arthur Andersen, on the total stock returns of some companies in the UK also audited by Arthur Andersen. The results vary substantially between countries. We find no evidence of a significant impact in the UK or US. There is some evidence of negative abnormal returns at the time of the Enron scandal in Australia. However, this reaction was very short-lived and the negative abnormal returns on the stocks of Andersenaudited companies had been fully recovered within a week. Our results suggest that sharing an auditor with a firm that has issued corrections to accounts which have previously received an unqualified audit opinion does not significantly affect market perceptions of firms’ value, which suggests that the choice of auditor has little, if any, impact on market perceptions of the reliability of published financial information.
Corporate ownership structure and management earnings forecast
Authors: Umezawa Toshihiro , Goto Ujo
Published: February 2017

The purpose of this paper is to examine how the structure of corporate ownership impacts the accuracy of management earning forecasts in Japan. An evaluation of the financial reporting reform from 2000 is also presented. As a result, corporate ownership structure variables, such as managerial ownership, financial institution ownership, foreign investment ownership and corporation ownership, are negatively associated with the accuracy of management earnings forecast. We find that corporate ownership structure makes the manager announce more accurate management earnings forecasts. In addition, the reform of financial reporting system in 2000 has an influence on the quality of financial disclosures
Dividend taxation, ownership structure and payout policy: Evidence from India
Authors: Krishnamurti Chandrasekhar , Narasimhan M.S.
Published: February 2017

Despite the widespread criticism against double taxation of dividends, most countries follow the policy of taxing the same income twice – once when the corporations earn it and a second time when shareholders receive it. Critics of the double taxation policy clamor for its abolition citing the economic inefficiencies it engenders. In 1997, the Indian government eliminated double taxation of dividends by exempting dividend income from personal taxes but requiring the firms to pay a 10% tax on the amount of dividend distributed. Using this rule change as a natural experiment, we examine the impact of this rule change on firm valuation. We show that elimination of double taxation on dividends is not unambiguously beneficial to the stockholders of the firm. We find that tax status and ownership structure play a significant role in explaining the direction of observed changes in valuation. An interesting finding of this paper is that shareholders seem to value visibility. Visible firms are subject to the disciplining effect of more stringent disclosures in the financial press. We do find pervasive evidence that firms increased their dividends subsequent to rule change. We however, do not find any association between the change in dividends and ownership structure
Family control, auditor independence, and audit quality: Empirical evidence from the TSE-listed firms (1999-2002)
Authors: Chen Ching-Lung , Yen Gili , Fu Chung-Jen , Chang Fu-Hsing
Published: February 2017

he present study posits that auditors have weaker bargaining power when facing clients with ultimately controlling family members as opposed to clients without. By analyzing clients’ magnitude of discretionary accruals in company with audit reports, the present study examines empirically the influence of family-controlled clients on the audit quality. The empirical results, as expected, reveal that the magnitude of discretionary accruals of a family-controlled firm, given receiving a standard unqualified audit report, is significantly larger than a firm that has no ultimately controlling family members. Moreover, family-controlled firms with larger positive discretionary accruals, as expected, are more likely to receive a standard unqualified audit report than clients without ultimately controlling shareholders. The above empirical results suggest that the audit quality is indeed deteriorated when an auditor faces a family-controlled client.
Financial contracting and operating performance: The case for OBRA and efficient contracting
Authors: Maisondieu-Laforge Olivier , Kim Yong Ho , Kim Young S.
Published: February 2017

When corporate governance is effective, new managerial contracts should maximize shareholder wealth. This paper examines operating performance measures after the Omnibus Budget Reconciliation Act (OBRA) of 1993 was passed. We find that firms affected by OBRA’s $1 million cap on cash compensation experience an improvement in operating performance improves during the three years following contract revisions. Although prior performance was low, the postcontracting performance for affected firms is on par with comparison group. These findings are consistent with effective corporate governance and efficient contracting and contrary to expropriation theory.
Family business lifecycle: The application of 3d life cycle model and 7 SS framework
Authors: Lissoni Juliano , Pereira Maurício Fernandes , Serra Fernando , da Cruz João Benjamim
Published: February 2017

Three subsystems sustain the lifecycle of family business (FB); family, ownership and business. This article’s purpose is to show how the 7 Ss Framework can be used to identify different aspects of FB behavior during its lifecycle, together with the three-dimensional lifecycle model as a tool to identify changes that influence both growth and the process of building a “well-performing” organization. The proposed model was tested in a family business in Brazil (RBS Group). The conclusions lead to a clear comprehension of family business evolution, as well as of the organizational foundations that sustain the creation of a well-performing organization
The exit right granted to minority shareholders in English, Italian and Chinese law: Path-dependence resistance to global-convergence
Authors: Carone Marco
Published: February 2017

Looking at the evolution of the exit right granted to minority shareholders by different company law systems through the lens of economic history may reveal the extent to which path-dependence is resisting to global convergence. The role played by the privatisation of large corporations in the development of Italian company law has been of the utmost importance: in an effort to shift, in a few years, from the state-ownership structure of the industrial system to a partial private-ownership one, company law has been significantly amended with the hope to artificially reproduce the conditions of an efficient and liquid market
Predatory pricing
Authors: Barnett II William , Saliba Michael , Block Walter
Published: February 2017

Predatory pricing is logically impossible, because it necessarily involves pricing below cost. However, cost, properly understood as opportunity cost is subjective and is incommensurable with money prices; more important, to price below cost implies rationally choosing an alternative (selling at price) that is suboptimal, since cost is the most highly valued alternative not chosen. When critics declare that predatory pricing is to price below cost, they mean to set a price below some measure of money expenses. But this entails all kinds of problems; which concept of expense – marginal is most obvious; but also the issue of the present value of alternatives, which means discounting expected revenues and expected expenses.
Shareholders’ coalitions and control contestability: The case of Italian voting trust agreements
Authors: Gianfrate Gianfranco , Zanetti Laura
Published: February 2017

Since ownership structures characterized by the presence of multiple large shareholders are extremely common around the world, the effects of having such a controlling structure are receiving increasing attention in literature. More than one third of Italian listed companies are controlled by coalitions of shareholders bound together by agreements called “voting trusts” which represent an interesting opportunity to study the consequences of having multiple large shareholders who share the control of firms. We perform an event-study on voting trust announcements (2004-2006), showing significant abnormal returns in both the event day and the following day. The sign of this cumulative reaction is negative for announcements of new/renewed trusts and positive in the cases of trust terminations. These findings are consistent with the “entrenchment effect” hypothesis linking the ownership structure and the firm value. As a general result, the presence of multiple large shareholders tied within a voting trust, by curbing the company’s contestability is reflected in a lower valuation of the firm
Internal audit risk assessment and legal risk: First evidence in the Italian experience
Authors: Miglietta Angelo , Anaclerio Mario , Bettinelli Cristina
Published: February 2017

The objective of this article is to analyze how Italian Firms comply with the Internal Audit rules regarding the administrative liability of entities and to explain what the effect on the organizational structure was. In particular we collected data from 21 companies listed on the S&P/MIB index by sending a questionnaire to each Internal Audit Director. We show the features of internal audit system required by the 231 Italian Decree and how risk assessment and internal audit could serve as Corporate Governance Instruments. The 231 Italian Decree, like the Sarbanes-Oxley Act enhances and extends companies’ accountability, transparency and integrity especially in business conduct. The innovativeness of this work is due to the idea of considering these elements as influential for the risk management optimization. As a consequence, a risk reduction can be achieved by improving the organizational and management models. Thought is commonly accepted that the risk optimization leads to a reduction of the cost of capital for the enterprise, there is a difficulty in estimating how much the value provided could be
Corporate control, family firms and dividend decisions in Canada
Authors: Gadhoum Yoser , Bergeron Michel Y. , Gueyié Jean-Pierre
Published: February 2017

The purpose of this paper is to examine the relationship between dividend payments, firms’ decisions control and the nature of family firms, in order to assess whether large shareholders expropriate wealth from minority shareholders in Canada. Using data collected from various sources, we formulated and tested three hypotheses related to this issue using OLS and logit regression models. Our results indicate that in Canadian firms, dividends are used as a protective mechanism for minority shareholders against the possibility of expropriation by large shareholders. The protective power of dividend, however, seems less effective in Canadian family firms. The hidden reason is the control that families exert on the dividend payout policy. Overall, our results show no clear evidence of expropriation of wealth inflicted on small shareholders by large shareholders. This research has shown that the financial policies of Canadian firms in which a family represents the majority of the shareholders are insufficiently studied and deserve the attention of finance academia and professionals, due to their significant impact on corporate dividend policy
Fall of “organ bank” relationship over bank failure and consolidation wave: Experience in pre-war Japan
Authors: Okazaki Tetsuji , Sawada Michiru , Wang Ke
Published: February 2017

This paper examines how the close ties between banks and non-bank firms – so called “organ bank” relationship in Japanese banking literature – declined through bank failures and banking consolidations in pre-war Japan. With a unique dataset compiled for 1,007 Japanese banks from 1926 to 1936, we measure the degree of “organ bank” relationship by the number of persons who worked as directors or auditors for a bank and a non-bank firm at the same time. We observe that this number of “director interlocking” declined along our sample period, when there were lots of bank failure, bank merger and acquisition events. Our findings suggest that banking consolidation and selection thorough failures may help to eliminate the detrimental connections between banks and non-bank firms, based on Japan’s experience
Toward an empirical institutional governance theory: Analyses of the decisions by the 50 US state governments to adopt generally accepted accounting principles
Authors: Carpenter Vivian L. , Cheng Rita Hartung , Feroz Ehsan H.
Published: February 2017

In this paper, we develop and empirically test an institutional governance theory for explaining the decisions by the population of 50 US state governments to adopt Generally Accepted Accounting Principles (GAAP) for external financial reporting. Governmental accounting studies have generally explained the governance choice of an accounting method in terms of the economic consequences of these choices for managerial welfare and other microeconomic determinants of those decisions. While the explanatory power of these models are generally good, there is often a large unexplained variance which is presumably not explainable in terms of the extant agency models of accounting choice. Our study develops an institutional governance theory and demonstrates that institutional governance variables in conjunction with traditional economic agency variables can improve the explanatory power of government accounting choice models. Our empirical results are consistent with the stipulations of the institutional governance theory
Block-ownership and earnings management in Malaysian listed firms
Authors: Mohd-Ali Salsiah , Hassan Mohamat Sabri , Mohd-Saleh Norman
Published: February 2017

This study examines the association between level of block ownership and earnings management activities in Malaysian listed companies. Agency theory suggests separation of ownership and control gives rise to manager’s incentives to select and apply accounting techniques opportunistically at the expense of the shareholders. The existence of block ownership may reduce the agency cost to shareholders since block-holders are in a better position and capacity to monitor the management. Our results indicate that there is no significant relationship between the level of block-ownership and the magnitude of discretionary accounting accruals. This indicates that block-ownership is not an effective mechanism in mitigating aggressive earnings management by firms. However, further analysis indicates that institutional and holding block-ownerships are negatively related to the discretionary accruals. This suggests that institutional block and controlling block ownerships have more incentives and possess more sophisticated mechanisms to entail better control toward managerial opportunistic behaviours
The role of ethics: a look into the Argentine business world
Authors: Debeljuh Patricia
Published: February 2017

This paper is directed towards providing an Argentine perspective on the role of ethics in the business world. Although in the past several countries have investigated the institutionalization of ethics within corporate life, a concrete study into that field has never been properly undertaken in Argentina. However, a bird’s eye view of the ethics policies currently enforced in companies operating in Argentina creates an adequate context for understanding the ethics phenomenon as it has emerged in that country. To that effect, the major companies conducting business activities in Argentina were questioned on various subjects, ranging from company size to motivation behind providing an ethical background from which to do business, in order to allow a comprehensive analysis on company life in Argentina, as related to ethics. The survey conducted presented evidence that a wide sector of the Argentine business world believe ethics to be a factor of ever-growing importance, which would explain the relatively recent measures taken to instill ethical standards of conduct within corporations.
The ethical and theoretical context of corporate governance
Authors: Huehn Matthia
Published: February 2017

The paper investigates the foundations of corporate governance. It traces the current practical problems of corporate governance to the epistemological and ethical problems of the current mainstream management theory. Management theory has gradually been subverted by economism, an ideological and extreme version of mainstream economics. The paper isolates and discusses the three axioms of economism which are deemed to be especially problematic for management/corporate governance theory. The three axioms are: the assumptions that humans always follow the rational principle, that value-free research and application of management tools is possible, and that theory takes primacy over reality. These axioms plus what has been called the “gloomy vision” create a theory of management which is amoral and which in turns leads to immoral and dysfunctional corporate governance.
The evaluation of investment opportunities by South African venture capital and private equity investors
Authors: Mostert Frederik J. , Mostert Jan Hendrik
Published: February 2017

The financial performance of enterprises is relevant to all stakeholders. Business executives should therefore evaluate and select investment opportunities that will enhance the financial performance of enterprises to meet the expectations of enterprise stakeholders. The objective of this research paper focuses on the improvement of the evaluation process of investment opportunities. The empirical study included enterprises that invest venture capital and private equity as they should be experienced in the evaluation of financial and business risks of investment opportunities. Recommendations are based on the available literature and empirical results of the study and should be valuable to business executives as well as academics. The recommendations should inevitably lead to the improvement of the process according to which investment opportunities is evaluated
Corporate governance and control in Nigerian banking institutions: matters arising
Authors: Achua Joseph K.
Published: February 2017

This paper identifies ‘weak corporate governance’ as the major cause of crises in Nigerian banking institutions. It contends that corporate governance is an innovative alternative banking practice that caters appropriately for the needs of all stakeholders in sharp contrast to the conventional banking, which often marginalizes most of the essential stakeholders, as well as vitiates their corporate control. The paper argues that the existing banking reforms, though potentially worthwhile, may even be harmful if corporate governance and control principles are misplaced or misapplied. It therefore cautions that in today’s borderless economy, purposeful corporate governance is not an option but a necessity; and recommends that regulations should fill in the existing slit to synchronize diversity, dissent and differences in corporate governance for a robust banking sector
Liquidity and the choice to abandon production in declining industries
Authors: Caton Gary L.
Published: February 2017

The study presents tests of several theoretical hypotheses that are potential determinants of the choice to abandon production in declining industries. A binary qualitative choice model of the abandonment decision is estimated. The probability of choosing abandonment is found to be positively related to the firm’s debt ratio, and negatively related to liquidity at the firm level, the level of efficiency of the operating unit, and uncertainty about liquidity at the operating unit level as measured by output and input price variability. Results are also presented for a multinomial choice model accounting for the full menu of capacity decisions open to the firm over time. The results are robust across all specifications as well as to alternative statistical assumptions
The inefficient management and disciplinary motives for takeover in Australia
Authors: Bugeja Martin , da Silva Rosa Raymond
Published: February 2017

The disciplinary motive and removal of inefficient target management are widely cited as explanations for takeovers. This study tests the prevalence of these explanations using Australian takeover targets from 1990 to 2002. We find that the vast majority of target firms are unlikely candidates for disciplinary action. Contrary to the disciplinary hypothesis, we find that target shareholdings are highly concentrated and are more concentrated than non-target firms. Unlike Agrawal and Jaffe’s (2003) US study, we find ASX targets are typically poor performers but, contrary to the inefficient management hypothesis, we find that takeover success is higher for better performing targets
The effect of board and audit committee independence on earnings management in Spain
Authors: Fernández Méndez Carlos Fernandez , Arrondo Garcha Ruben
Published: February 2017

This paper investigates the role played by the board and the audit committee as a mean to improve the quality of financial statements’ information in Spanish firms. We use abnormal accruals as a measure of earnings management and therefore as a proxy of the quality of financial statements. Additionally, we analyse from an agency theory perspective whether the ownership structure affects the managerial incentives to manipulate the firms’ results. Results show that the board and audit committee independence mitigates accounting manipulation practices. However, we find no evidence that the ownership structure affects the extent of corporate earnings management. We have also found that financial leverage is an incentive for the managers to manipulate accounting figures. Our findings are in line with the Spanish authorities’ recommendations to foment the formation of independent mechanisms of control.
The substitution effect between managerial control mechanisms and its effect on the creation of value in reference to firm diversification
Authors: Cuervo García Álvaro , Reyes-Recio Luisa
Published: February 2017

This paper aims to investigate the relationships between two governance mechanisms such as active shareholder control and the board of directors, as well as their effect on the creation of value for the shareholder, using firm diversification strategy as the moderating variable. These relationships indicate the existence of a substitution effect between both governance mechanisms, with a more inactive board in firms with large shareholders. On the other hand, the analysis of governance mechanisms and firm diversification strategy indicate the positive effect of shareholder concentration on the creation of value for shareholders in non-diversified firms and, the positive effect of the board of administration on the creation of value for shareholders in diversified firms
How is the allocation in Brazilian bookbuilding equity offerings?
Authors: Saito Richard , Marques Pereira João André
Published: February 2017

We examine five bookbuilding processes in the Brazilian equity market from 2003 to 2004. In a bookbuilding process, the investment bank has the discretionary power to price the offer and to allocate shares among interested investors. We analyze the allocation determinants and we find empirical evidence that bookbuilding process induce investors to disclose superior information. In addition, we also find evidence that bookbuilding process allows the investment bank to benefit disperse ownership as well as to have a higher allocation for long-term investors
On the relationship between ownership-control structure and debt financing: new evidence from France
Authors: Boubaker Sabri
Published: February 2017

The paper deals with external debt financing in controlling minority structures (CMSs), a very pervasive corporate organizational structure in France outside CAC 40 firms. Since large controlling shareholders in such firms maintain grip on control while owning only a small fraction of ownership rights, we are in a situation where their interests depart from that of the minority shareholders. Using a sample of 377 French firms, we show that firms featuring a substantial likelihood of expropriation (higher discrepancy between cash flow rights and control rights or group-affiliated), present lower leverage ratios than others due to debt supply restrictions. Contrariwise, the presence of second large controlling shareholder is perceived by external finance suppliers as a pledge against expropriation. Therefore, such firms exhibit high debt levels.
Independent auditing involvement with corporate governance issues
Authors: Rodgers Waymond , Choy Helen , Guiral Andres
Published: February 2017

This research paper supports the notion that the independent auditing function tied to corporate board actions can influence accountability of corporate social responsibility strategy and implementation. These issues are instrumental in that stakeholders that includes shareholders, analysts, regulators, activists, labor unions, employees, community organizations, and the news media are requesting that firms be accountable not only for their own performance but for the performance of their entire supply chain, and for an ever-changing set of ethical issues. We present a Throughput Model that depicts independent auditors’ reporting to firms’ board of directors may improve its market valuation against the backdrop of an ever more complex global economy with continuing economic, social and environmental inequities
Mergers and the rights of minority shareholders in Pakistan
Authors: Ahmed Shah Sikander
Published: February 2017

Mergers are not only becoming prevalent in the contemporary, but are also considered a phenomenon of the gravest concern both from a legal as well as from a business perspective. In fact the law seems to be suspicious when mergers involve controlling shareholders having vested interests making such consolidation decisions. The interest and betterment of the minority shareholders is considered to be a prime concern both from a societal as well as from an economic standpoint. It is for this reason that mergers are heavily regulated and monitored by both the Courts as well as administrative/regulatory agencies such as the SECP in Pakistan. This paper first lays out the procedural workings of a merger in Pakistan and then analyzes the legal provisions to determine the adequacy of such laws in providing requisite protection to minorities in mergers. An elaborate discussion of the relevant landmark cases follows. Judicial interpretation of statutes, judge made law, rules and policy considerations are also discussed. A pragmatic determination of the level of protection actually awarded to minority shareholder in mergers is also elaborated upon. At this juncture, the shortcomings in the relevant Pakistani legal infrastructure such as corruption, nepotism and ineptness are also highlighted.
An analysis of corporate governance information disclosure by Canadian banks
Authors: Maingot Michael , Zeghal Daniel
Published: February 2017

The study reports on the disclosure of governance information by Canadian banks. The information was found through their corporate Web sites. The online information was taken from the Corporate governance Web page and through the annual reports and the proxy circulars. We focused on the disclosure of the corporate governance practices implemented by our sample of 8 banks. A coding sheet was developed to evaluate the corporate governance disclosure of our sample. Our analysis indicates that the bigger the bank, the more disclosure there is. Overall, our results suggest that the choices to disclose and the extent of disclosure are influenced by the strategic considerations of management. We also found that, to be able to find full and complete information on governance, the investor should refer to the annual reports and the proxy circulars and not only focus on the corporate governance Web page.
Does it pay for acquirers to be friendly?
Authors: Dube Sema , Glascock John L. , Romero Rafael
Published: February 2017

Friendly acquisitions have lower premiums and legal fees, entail less disruption of target activities and are typically less controversial than hostile acquisition, but the market does not seem to distinguish between friendly and hostile acquisitions in the short term. We study the long-term performance and risk metrics of acquirers and find that friendly acquisitions, in conjunction with other acquisition characteristics such as method of payment and mode of acquisition, tend to be risk increasing transactions and may also show a decrease in long-term post-acquisition abnormal performance
The association between corporate governance and product diversification in Brazilian firms: an empirical study
Authors: Mendes-da-Silva Wesley , Black Ervin L. , Mallett Joshua S.
Published: February 2017

In this paper we examine the association between product diversification and corporate governance. We add to the pool of current knowledge in three ways. First, we include the effects of strategy on diversification in our model. Second, we eliminate observations that have both good corporate governance and unchanging, high diversification that Anderson et al (2000) attribute to a confounding theory. Third, we use Brazilian data. Using Brazilian companies allows us to see the corporate governance norms, diversification norms, and the existence of a diversification discount in a developing market. We find that there is a positive association between the strength of corporate governance and a company’s level of diversification. We also find that the level of corporate governance significantly affects whether a company is highly diversified. Finally, we find that there is a diversification discount for Brazilian companies. However, after controlling for the effect of corporate governance on diversification, we find that highly diversified firms do not have a significantly different Tobin’s Q.
Determinants of internet financial disclosure in an emerging market: lessons from Brazil
Authors: Mendes-da-Silva Wesley , Christensen Theodore E. , Richardson Vernon J.
Published: February 2017

Disclosure transparency is one of the pillars of good corporate governance. Moreover, the digital age has produced a dramatic shift in the corporate communication paradigm. As a result, companies increasingly use the Internet as a means of disseminating and disclosing financial information to shareholders, analysts and other interested capital market participants. This research examines the determinants of voluntary disclosure of financial information on the Internet by Brazilian firms. Cross-sectional analyses based on 291 non-financial companies listed on the São Paulo Stock Exchange in 2002 indicate that both firm size and the quality of corporate governance are positively related to the level of voluntary disclosure of financial information on the Internet. These results are consistent with the notion that Brazilian firms with incentives to improve financial transparency disclose more financial information on the Internet. Compared to similar Internet disclosures of U.S.-domiciled companies, this study finds that corporate governance is an incremental determinant of Internet financial disclosure for Brazilian enterprises
Risk metrics: assessing executive stock options plans
Authors: Dayananda P.W.A.
Published: February 2017

This paper considers deriving measures for assessing the benefits to firms as a result of granting executive stock option plans. The metrics developed relate to assessing the expected total earnings of the company attributed to executives due to executive stock option award. The paper derives metrics based on number of shares as well as on total value of assets. The values of these metrics can be used to compare and asses the benefits to the company in awarding stock option grants by comparing the metrics with actual realized changes in total earnings. The research work in the paper complements the empirical research of Murphy (1999) and others who found the pay-performance sensitivities due to executive stock option awards. Illustrations of the metrics are carried out to show their properties and in particular for the firm WAL-MART.
Capital structure and corporate governance: the French case
Authors: Jeffers Esther , Plihon Dominique
Published: February 2017

The world economy has undergone major changes during the last twenty years. Financial markets have grown spectacularly on the international level. In particular, stock markets rose substantially in the 1990s. At the same time, the combined process of deregulation and financial innovations transformed the internationalization of financial activities into financial globalization, which witnessed a considerable strengthening of both the impact and freedom of action of the main players. France did not remain unaffected by this evolution, much the contrary. This was all the more impressive given the historical weakness of the country’s financial markets. Many studies have been devoted to the growth of financial markets and many others to corporate governance, but the influence of the capital structure and the forms of governance on corporate strategies have rarely been empirically evaluated in the literature, due to the scarcity of relevant data. This paper aims at understanding (I) how the capital structure of French corporations has changed and, through an empirical study, (II) how this change may have impacted their strategy
Resilience: the resumption of shareholder primacy
Authors: Proimos Alex
Published: February 2017

The once dominant and inconsiderate player in corporate governance, the shareholder, has faced increasing pressure from its rival stakeholders (creditors and the general public) and their agents (i.e. the management and directors) eager to unproportionately increase their stake. The idea of shareholder primacy in corporate governance is while previously was losing its dominance as corporate law versus stakeholder theory could be set for an even stronger come back.
Are corporate governance systems typologies relevant? Evidence from European transfers of ownership rights
Authors: Abdesselam Rafik , Cieply Sylvie , Le Nadant Anne-Laure
Published: February 2017

Corporate governance systems vary considerably across Europe, reflecting the differences in the financial and legal systems, and in corporate ownership structures. The purpose of this paper is to identify the relevant governance system typologies. To test the robustness of the typologies, we study transfers of ownership rights that may be an important determinant of corporate governance in the largest European economies. Results overall invalidate the expectations induced from the theoretical analysis of national corporate governance systems. They suggest that the classical typologies are insufficient to distinguish between governance systems as they miss to capture institutional complementarities and political differences. Our unexpected results could also suggest a convergence of the systems, not towards the Anglo-American model, but towards a new model.
Dividend policy and corporate governance: a research note
Authors: Smith Frank S. , Puleo Victor , Casey K. Michael
Published: February 2017

This paper explores the relationship between a firm’s dividend payment and an external perception of whether the firm exercises good corporate governance. Consistent with an agency explanation of dividend payout, we find that firms with higher corporate governance scores do pay lower dividends. The reduced cost associated with not seeking external funds as often as firms with higher dividends can be listed as a benefit for firms seeking to be known as better corporate citizens.
Determinants of firm-level technical efficiency: evidence using stochastic frontier approach.
Authors: Sinani Evis , Jones Derek C. , Mygind Niels
Published: February 2017

By estimating stochastic frontiers we investigate the determinants and dynamics of firm efficiency. We use a representative sample of Estonian firms for the period 1993-1999 – and are able to address problems that plague much previous work, such as the endogeneity of ownership. Our main findings are that: (i) foreign ownership increases technical efficiency; (ii) firm size and higher labor quality enhance efficiency, while soft budget constraints adversely affect efficiency; (iv) Estonian firms operate under constants returns to scale; (v) the percentage of firms operating at high levels of efficiency increases over time. As such our findings provide support for hypotheses that a firm’s ownership structure and its characteristics such as firm size, labor quality, soft budget constraints and time of privatization are important for its technical efficiency.
Ownership structure, board of directors and R&D investments: evidence from France
Authors: Mezghanni Basma Sellami
Published: February 2017

The purpose of this research is to analyze the impact of the characteristics related to the ownership structure and board of directors, as mechanisms of governance, on the research and development (R&D) intensity. The study carried out on a sample of French companies belonging to the SBF 250 index shows that ownership concentration and duality of chief executive officer and chairman roles have no significant effect on the R & D intensity. The board sizes as well as the proportion of inside directors in the board have a positive and significant effect on R & D intensity. However, the participation of outside directors in capital tends to urge managers to reduce R&D investment level
Corruption and corporate governance: a cross-national study
Authors: Ng David T. , Qian Kun , Dix Adam
Published: February 2017

This paper examines the importance of country-level corruption in explaining the variation of firm-level corporate governance. Analysis of firm-level corporate governance data and country level corruption data on over 400 companies in 26 countries confirms the hypothesis that corruption has a statistically significant negative impact on the quality of a firm’s corporate governance. One standard deviation increase in country-level corruption is associated with a 0.5 to 0.7 standard deviation decrease in firm-level corporate governance scores.
Why bidding firms do not hire financial advisors in mergers and acquisitions
Authors: Davidson Wallace N. , Tong Shenghui , Proctor Richard
Published: February 2017

In this paper, we examine why some bidders decide not to hire investment bank advisors in M&A transactions. We build a sample of 181 M&A transactions in which the acquiring firms do not hire investment bank advisors, and compare them with a control sample of 181 M&A transactions in which the acquiring firms hire investment bank advisors. We find that the transaction costs are the primary reason that investment banks are hired as advisors for bidders in M&A transactions. In addition, the information asymmetry and contracting costs are the other two reasons that bidders hire investment banks in M&A transactions.
Market monopoly is apodictically impossible
Authors: Block Walter E.
Published: February 2017

According to standard economic analysis, the level of competition can be calculated to a nicety based on the number of competitors in an industry. In the alternative Austrian viewpoint, there can only be presence or absence but not degrees of competition; it exists if there are no legal barriers to entry, and does not if there are any such. The present paper plays out this distinction through the prism of DiLorenzo’s (2004) publication.
Un-constitutionality of real property taxation and location incentives, and some associated economic effects
Authors: Nwogugu Michael
Published: February 2017

This article shows that the present regime of real property taxation and location incentives are inherently unconstitutional. The analysis in this article pertains to US state/local laws/regulations governing tax assessment, tax collection, tax foreclosures and incentives offered to firms to relocate to states (although much of it is applicable in most common law jurisdictions.