Does governance culture exist and can it be mandated?

Mindell Reiss Nitkin (Simmons College, Boston, Massachusetts, USA)

Journal of Accounting & Organizational Change

ISSN: 1832-5912

Publication date: 14 September 2012

Abstract

Purpose

The purpose of this paper is to investigate the orientation of a firm's governance choices along a continuum of shareholder voice to managerial power and tests whether the governance orientation of a firm can survive regulation.

Design/methodology/approach

Using a sample of 873 firms, a set of three index measures is constructed reflecting the orientation of a firm's governing rules, the orientation of the board of directors and the overall orientation of both types of governance structures. The resulting measures are compared pre‐ and post‐SOX.

Findings

While specific, individual governance components, such as independence, can be regulated, the overall orientation of a firm's governance mechanisms, as manifested by its aggregate choice of governance structures, appears to be constant overtime suggesting that it is difficult to regulate the governance orientation of a firm.

Research limitations/implications

The findings may be limited due to sample bias. There is both survivor bias and listing bias in the sample. To be included in the sample, firms needed to be publicly listed from 1998 through 2006 and needed to be listed on a major S&P index for each of those years.

Practical implications

The paper highlights ways in which companies circumvent the intention of regulations such as SOX. The paper therefore has implications for regulators and shareholders.

Originality/value

While the index method has been used before it has not been used to compare the impact of regulation on governance orientation. That makes this paper of value to regulators when considering the cost and benefit of regulations.

Keywords

Citation

Reiss Nitkin, M. (2012), "Does governance culture exist and can it be mandated?", Journal of Accounting & Organizational Change, Vol. 8 No. 3, pp. 310-339. https://doi.org/10.1108/18325911211258326

Download as .RIS

Publisher

:

Emerald Group Publishing Limited

Copyright © 2012, Emerald Group Publishing Limited

Please note you might not have access to this content

You may be able to access this content by login via Shibboleth, Open Athens or with your Emerald account.
If you would like to contact us about accessing this content, click the button and fill out the form.
To rent this content from Deepdyve, please click the button.