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Myopic going concern practice refers to the current audit going concern opinion that a firm is rewarded a favorable going concern opinion as long as it has the capability to satisfy its debt obligation in the following year. We show, via a structural agency problem we develop in the paper, that such a practice has a potential economic cost to the firm. We study Lucent Technologies Inc. in detail for its loss in economic value and also measure the magnitude of this impact with 500 companies. We find that Lucent should have lost its going concern status in 2002 as it had to sell off its assets to meet debt obligations and nearly 18% of the 500 firms suffer some degree of economic loss due to the agency problem.

Over the last decades, the social sciences have become increasingly concerned with the role of the state and the politics of institutional restructuring. Within mainstream political science this has led to the development of a “state-centered” research program that emphasizes the autonomy of institutions. Marxist theory, however, has continued to adhere to a “society-centered” perspective, seeking to combine an ability to account for institutional change with the analysis of more structural social and economic forces. After some introductory comments that frame the problematic within which the paper is situated (Section 1), I discuss in Section 2 three of the most important recent Marxist attempts to construe the relation between socio-economic imperatives and political institutions. My argument is that Marxists’ attempts to relativize the autonomy of state institutions are too often still based on the postulation of an unexplained structural moment. This leaves them vulnerable to institutionalist claims concerning the autonomous nature of institutions. Section 3 proposes a different way of thinking the role of institutions in capitalist society. This approach breaks with a causalist, structuralist mode of explanation and relies on a more hermeneutic understanding of the role of institutions. I will shift the problematic to the relation between institutions and agency, arguing for a more pragmatist understanding of the role of institutions and an agency-based understanding of the formation of socio-economic imperatives. Section 4 concludes with some thoughts on the prospects held out, as well as the challenges faced, by the approach proposed in this paper.

We examine personnel policies and careers in public agencies, particularly how wages and promotion standards can partially offset a fundamental contracting problem: the inability of public-sector workers to contract on performance, and the inability of political masters to contract on forbearance from meddling. Despite the dual contracting problem, properly constructed personnel policies can encourage intrinsically motivated public-sector employees to invest in expertise, seek promotion, remain in the public sector, and work hard. To do so requires internal personnel policies that sort “slackers” from “zealots.” Personnel policies that accomplish this task are quite different in agencies where acquired expertise has little value in the private sector, and agencies where acquired expertise commands a premium in the private sector. Even with well-designed personnel policies, an inescapable trade-off between political control and expertise acquisition remains.

In this chapter I trace the evolution of Hong Kong's political and administrative systems from one dominated by the bureaucracy to one dominated by the political executive. The change has had profound consequences for governance arrangements in Hong Kong and on reform capacity. I illustrate the impact of the change on the institutional arrangements in one policy domain, food safety.

Partner firms to the same joint venture experience sharply different stock price reactions. These differences cannot be explained by mechanical factors related to differences in firm size and ownership share in the project, nor are they attributable to different partner roles in the project or differences in investor anticipation of the announcement. We conclude that the stock price reactions reflect a revaluation of non-project assets that is different for each partner. Additionally, we find evidence indicating that investors infer information about agency problems (in the sense of Jensen, 1986) from the joint venture announcements and subsequently, revalue the whole firm – not just the marginal project being announced. Finally, we find that free cash flow is value-enhancing for one type of partner firm after we control for the extent of agency problems.

Purpose – This paper aims at re-examining the predictions of agency theory with regard to the negative association between CEO duality (i.e. the Chief Executive Officer, CEO, serves also as the board chairman) and corporate performance. It also examines the role of other corporate governance mechanisms (board size, top managerial ownership and institutional ownership) as moderating variables in the relationship between CEO duality and corporate performance.

Methodology/approach – This paper uses the financial statements for the year 2006 of most actively traded Egyptian companies to examine these predictions of agency theory. Moderated Regression Analysis is used to analyse the empirical data.

Findings – The findings indicated that the hypothesized relationships between CEO duality, the moderating variables and corporate performance have changed. For companies characterized by large boards and low top management ownership, corporate performance is negatively affected by CEO duality and positively impacted by institutional ownership.

Research limitations/implications – A limitation of this study is the use of accounting-based performance measures because of the expected earnings management behaviours by CEOs.

Practical implications – The Egyptian Capital Market Authority should adopt a reform programme to encourage Egyptian listed companies to modify their governance structures by increasing top management ownership and reducing board sizes before incorporating the new governance rules into the listing requirements.

Originality/value of paper – The paper contributes to the literature on corporate governance and corporate performance by introducing a framework for identifying and analysing moderating variables that affect the relationship between CEO duality and corporate performance.

The paradigmatic separation of the strategy and identity literatures constitutes an ongoing problem for the extension of either into more global contexts. The theorization proposed in this chapter presents rhetoric as the means by which the ‘strategy work’ of reimagining future options and the ‘identity work’ of reformulating the meaning of past actions may be integrated in the present moment. By locating both strategy work and identity work within the continuity of experience, we suggest that scholars will be better able to develop theoretically integrated, empirically grounded and globally relevant studies of strategy.

This paper is an exploration of the potential place, if any, for ethics in corporate governance. It begins with the influential role that agency theory has played both in the conception and reform of corporate governance. Its grounding assumption of self-interested opportunism leaves little or no room for ethics beyond what pays. This conception is then contrasted with a Foucauldian view of governance in which ethics is explored in terms of how an ‘ethic’ of shareholder value has been promulgated in the last decade. The third section of the paper explores the contemporaneous explosion of interest in corporate ethics and social responsibility and suggests that there is a nascent disciplinary regime being assembled which may redefine the terms of shareholder value to include environmental and social performance. What is paradoxical about both an ethics of shareholder value and corporate responsibility is that they are effective only through creating a preoccupation with the self and how the self is seen, rather than the other. The final concluding part of the paper suggests that ethics, following Levinas, should be understood in terms of sentience and the ‘responsibility for my neighbour’ that this assigns. Such a view of ethics refutes the individualism that agency theory takes as the essence of human nature, and Foucauldian analysis suggests is the product of disciplinary processes. Its grounding in sentience and proximity however offer it only a local role in corporate governance.

Campaign contributions are typically seen as a strategic investment for firms; recent empirical evidence, however, has shown few connections between firms’ contributions and regulatory or performance improvements, prompting researchers to explore agency-based explanations for corporate politics. By studying intrafirm campaign contributions of CEOs and political action committees (PACs), we investigate two hypotheses related to public politics and demonstrate that strategic and agency-based motivations may hold simultaneously. Exploiting transaction-level data, with over 6.8 million observations, we show that (i) when PACs give to specific candidates, executives give to the same candidates, especially those who are strategically important to the firm; and (ii) when executives give to candidates who are not strategically important, PACs give to the same candidates potentially due to agency problems within the firm.

U.S. venture capital financings of U.S. entrepreneurial firms with up to 213 observations are consistent with the proposition that convertible preferred equity is the optimal form of venture capital finance. This paper introduces new evidence from 208 U.S. venture capital financings of Canadian entrepreneurial firms. In contrast to U.S. venture capital investments in U.S. entrepreneurial firms, U.S. venture capitalists finance Canadian entrepreneurial firms with a variety of forms of finance. The differences between domestic and international U.S. venture capitalist financing structures are not attributable to differences in the definition of the term ‘venture capital’. The data point to the importance of institutional determinants of venture capitalist capital structures within the U.S. and abroad. Among other things, the data indicate that U.S. venture capitalists often do not choose convertible preferred shares in the absence of tax considerations in favor of that financing vehicle.