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1 – 10 of over 3000Nikolaos Kavadis and Xavier Castañer
To show that differences in the extent to which firms engage in unrelated diversification can be attributed to differences in ownership structure.
Abstract
Purpose
To show that differences in the extent to which firms engage in unrelated diversification can be attributed to differences in ownership structure.
Methodology/approach
We draw on longitudinal data and use a panel analysis specification to test our hypotheses.
Findings
We find that unrelated diversification destroys value; pressure-sensitive Anglo-American owners in a firm’s equity reduce unrelated diversification, whereas pressure-resistant domestic owners increase unrelated diversification; the greater the firm’s free cash flow, the greater the negative effect of pressure-sensitive Anglo-American owners on unrelated diversification.
Research limitations/implications
We contribute to corporate governance and strategy research by bringing in owners’ institutional origin as a shaper of owner preferences in particular with regards to unrelated diversification. Future research may expand our investigation to more than one home institutional context, and theorize on institutional origin effects beyond the dichotomy between Anglo-American and non-Anglo-American (not oriented toward shareholder value maximization) owners.
Practical implications
Policy makers, financial analysts, owners, and managers may want to reflect about the implications of ownership structure, as well as promoting or joining corporations with particular ownership configurations.
Social implications
A shareholder value-destroying strategy, such as unrelated diversification has adverse consequences for society at large, in terms of opportunity costs, that is, resources could be allocated to value-creating activities instead. Promoting an ownership configuration that creates value should contribute to social welfare.
Originality/value
Owners may not be exclusively driven by shareholder value maximization, but can be influenced by normative beliefs (biases) stemming from the institutional context they originate from.
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Theresa Hammond, Christine Cooper and Chris J. van Staden
The purpose of this paper is to examine the complex and shifting relationship between the Anglo American Corporation (Anglo) and the South African State (“the State”) as reflected…
Abstract
Purpose
The purpose of this paper is to examine the complex and shifting relationship between the Anglo American Corporation (Anglo) and the South African State (“the State”) as reflected in Anglo’s annual reports.
Design/methodology/approach
This paper builds on research on the role of annual reports in ideological conflict. To examine the ongoing relationship between Anglo and the State, the authors read all the annual reports published by Anglo American from 1917 to 1975, looking for instances in which the corporation appeared to be attempting to address, criticise, compliment, or implore the State.
Findings
During the period under study, despite the apparent struggles between the South African State and Anglo American, the relationship between the two was primarily symbiotic. The symbolic confrontation engaged in by these two behemoths perpetuated the real, physical violence perpetrated on the oppressed workers. By appearing to be a liberal opponent of apartheid, Anglo was able to ensure continued investment in South Africa.
Social implications
The examination of decades’ worth of annual reports provides an example of how these supposedly neutral instruments were used to contest and sustain power. Thereby, Anglo could continue to exploit workers, reap enormous profits, and maintain a fiction of opposition to the oppressive State. The State also benefited from its support of Anglo, which provided a plurality of tax revenue and economic expansion during the period.
Originality/value
This paper provides insights into the ways the State and other institutions sustain each other in the pursuit of economic and political power in the face of visible and widely condemned injustices. Although they frequently contested each other’s primacy, both benefited while black South African miners suffered.
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Richard Tudway and Ana‐Maria Pascal
This purpose of this paper is to examine four separate though interconnected questions concerning corporations operating, in Anglo American jurisdictions.
Abstract
Purpose
This purpose of this paper is to examine four separate though interconnected questions concerning corporations operating, in Anglo American jurisdictions.
Design/methodology/approach
The paper first examines the nature of the limited liability corporation as an entity dedicated to maximizing shareholder value, and how far this role is consistent with the pursuit of wider policies of corporate social responsibility (CSR). Second, it reviews the ownership arrangements of the corporation, the fiduciary duties of board directors and how this is translated into the task of maximizing shareholder value through the pursuit of profits. Third, it investigates how directors position themselves commercially in maximizing shareholder value and whether shareholders express views on how shareholder value can best be maximized. Finally conclusions are drawn on how best corporations and their directors can address the challenge of meeting shareholder value and how far this implies realignment in terms of wider societal expectations. The method of research used includes an examination of statute law governing the corporation, judge's law, regulatory law, other soft law in the context of outsider controlled capital markets. Relevant published research material is also declared in the bibliography.
Findings
Conclusions drawn suggest that the premise of maximization of shareholder value may very well entail the pursuit by directors of wider social and economic objectives consistent with CSR, if this is consistent with the enhancement of shareholder value. They also point to a lack of clarity on the question of what is expected of directors in meeting their fiduciary and broader director's duties as expressed in the objective of maximizing shareholder value. Evidence suggests that there is little effective communication between shareholders and directors on how best shareholder value can be maximized. Specifically the analysis focuses on how best to overhaul the mechanisms of governance and accountability if directors and the shareholders they represent are to develop and execute rational commercial policies aimed at maximizing shareholder value.
Originality/value
The paper breaks new ground in linking CSR to the enhancement of shareholder value and in suggesting that directors may be negligent in their duty to promote shareholder value if they fail do so. The paper should be of interest to company directors, company legal advisors; other corporate lawyers involved in litigation against directors, and policy makers in government.
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Carol A. Adams and Glen Whelan
The purpose of this paper is to conceptualise how future changes in corporate social disclosure (CSD), aimed at improving accountability for corporate performance to key…
Abstract
Purpose
The purpose of this paper is to conceptualise how future changes in corporate social disclosure (CSD), aimed at improving accountability for corporate performance to key stakeholder groups, might be brought about.
Design/methodology/approach
Drawing on the work of the Austrian economist Ludwig von Mises with respect to human (and organisational) action and the work of Leon Festinger and Kurt Lewin with respect to human (and organisational) change, the paper examines how academics and other corporate stakeholders might effect changes in CSD.
Findings
Managers act in a way which maximises their formal happiness (from von Mises) and change occurs following the creation of cognitive dissonance (Festinger) which leads to “unfreezing” (Lewin). Stakeholders can effect change by creating cognitive dissonance. With specific reference to Anglo‐American limited liability and publicly traded corporations, such cognitive dissonance and unfreezing normally involves a perceived threat to profitability.
Research limitations/implications
Research and theorising in corporate social disclosure patterns should take as given: that the managers of Anglo‐American limited liability and publicly traded corporations continue to be strongly encouraged, via both legal and remunerative means, to maximize shareholder wealth; and that this state of affairs significantly influences the information which management choose to disclose. Future research might instead examine and consider means of creating sources of dissonance significant enough to result in managerial concern for change within the constraints imposed on managers of Anglo‐American corporations. Such research might be conducted by engaging with organisations and their stakeholders.
Practical implications
The findings have implications for the manner in which corporate stakeholders act and interrelate with others in order to effect change towards more complete and credible sustainability reports which demonstrate accountability for material impacts to key stakeholder groups.
Originality/value
The paper focuses on how change in corporate behaviour might be brought about given the personal motivations and institutional constraints imposed on the behaviour of corporate actors.
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Business corporations (and unincorporated joint-stock companies) formed in Britain and the United States in the eighteenth century and the first half of the nineteenth century…
Abstract
Business corporations (and unincorporated joint-stock companies) formed in Britain and the United States in the eighteenth century and the first half of the nineteenth century were lightly regulated by today’s standards and, as startups, sold equity directly to investors without the aid of intermediaries, yet they suffered relatively few governance breakdowns. That is because republican government-style checks against the arbitrary power of any group of stakeholders (managers, blockholders, directors) suffused their founding documents (charters/constitutions, articles of agreement, bylaws), raising the expected costs of defalcation above the expected benefits. Over the latter half of the nineteenth century, however, the original checks disintegrated. They were functionally replaced twice, first by financial capitalism a la J. P. Morgan, then by corporate raiders and takeover specialists like KKR, but politicians neutralized the first and managers (and judges) the second, leaving many widely held corporations today under the control of CEOs/Board Chairmen who can self-deal with near impunity and have apparent incentives to do so. A return to the precepts of the republican model could help to improve governance outcomes in the future.
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Nada K. Kakabadse, Andrew Kakabadse, Alexander Kouzmin and Yvon Pesqueux
The purpose of this paper is to examine the critical assumptions lying behind the Anglo American model of corporate governance.
Abstract
Purpose
The purpose of this paper is to examine the critical assumptions lying behind the Anglo American model of corporate governance.
Design/methodology/approach
Literature review examining the concept of a nexus of contracts underpinning agency theory which, it is argued, act as the platform for neo‐liberal corporate governance focusing on shareholder wealth creation.
Findings
The paper highlights the unaddressed critical challenge of why eighteenth century ownership structures are readily adopted in the twenty‐first century.
Social implications
A re‐examination of wealth creation and wealth redistribution.
Originality/value
The paper is highly original due to the fact that few contributions have been made in the area of rethinking shareholder value.
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This paper aims to accomplish two purposes: firstly, it revisits the “positional identity” – the ambivalent-hybrid disposition – of human resource management (HRM) in the…
Abstract
Purpose
This paper aims to accomplish two purposes: firstly, it revisits the “positional identity” – the ambivalent-hybrid disposition – of human resource management (HRM) in the (postcolonial) Global South. Secondly, it seeks to reframe the role of Southern agents of the epistemic community of HRM, particularly human resource (HR) managers, in managing people in the South.
Design/methodology/approach
This paper takes inspiration from the postcolonial theory of Homi Bhabha, his notions of hybridity, the Third Space and colonial positionality, to revisit the positional identity of HRM and to reframe the role of HR managers in the South.
Findings
In postcolonial Southern organisations, HR managers play a dual role – as “mimics” and “bastards” of Western discourses of HRM. The dual role tends to put the managers in Southern organisations in a “double–bind”.
Research limitations/implications
This paper helps in the understanding of the role of HRM as well as HR managers in Southern organisations regarding the (post-)colonial legacy of the South.
Originality/value
This paper provides new insights into the identity of HRM in the Global South beyond the dualistic understanding of HR practices, such as convergence–divergence and the mere form of crossvergence. It argues that hybridisation of HRM in Southern organisations takes place in the form of (post-)colonial hybridity.
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The purpose of this paper is to present a case study of Curaçao as a small island coping with globalization and to contribute to the development of a framework to discuss…
Abstract
Purpose
The purpose of this paper is to present a case study of Curaçao as a small island coping with globalization and to contribute to the development of a framework to discuss globalization and corporate governance.
Design/methodology/approach
The paper starts to integrate three scenarios: globalization, the paradigmatic approach of corporate governance, and the categorization of organizations. This framework is then applied to the case of Curaçao.
Findings
Globalization of Curaçao involves the introduction of the Anglo‐American model of governance into several actors. This is a major change that the society finds difficult adapting to. A significant part of the population is at risk of being excluded.
Originality/value
The paper contributes to a multi‐paradigm approach to corporate governance, and in analyzing the globalization of small islands.
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This paper aims to examine whether directors duties, as they are typically presented in Anglo‐American corporations law, remain appropriate and relevant given recent corporate…
Abstract
Purpose
This paper aims to examine whether directors duties, as they are typically presented in Anglo‐American corporations law, remain appropriate and relevant given recent corporate governance developments and trends in global product and capital markets.
Design/methodology/approach
The paper employs a comparative approach, examining aspects of corporate governance developments in the UK, the US and Australia.
Findings
The paper finds that product and capital markets are increasingly placing a premium on good corporate social responsibility and hence, Anglo‐American corporations law should be reformed to clarify directors' capacity to address broader stakeholder concerns.
Originality/value
The paper provides a comprehensive summary of important currents in contemporary corporate governance and provides a market‐driven justification for changing corporations law.
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Thomas Clarke and Soheyla Gholamshahi
The purpose of this chapter is to analyse how in recent years the rediscovery that extreme inequality is returning to advanced economies and has become widespread. What is at…
Abstract
Purpose
The purpose of this chapter is to analyse how in recent years the rediscovery that extreme inequality is returning to advanced economies and has become widespread. What is at issue are the causes of this inequality. It is becoming clear that the wider population, particularly in Anglo-American economies have not shared in the growing wealth of the countries concerned, and that the majority of this wealth is being transferred on a continuous and systemic basis to the very rich. Corporate governance and the pursuit of shareholder value it is argued has become a major driver of inequality.
Methodology/approach
The current statistical evidence produced by leading authorities including the US Federal Reserve, World Economic Forum, Credit Suisse and Oxfam are examined. The policy of shareholder value and the mechanisms by which the distributions from business take place are investigated from a critical perspective.
Findings
While the Anglo-American economies are seeing a return to the extremes of inequality last witnessed in the 19th century, the causes of this inequality are changing. In the 19th century great fortunes often were inherited, or derived by entrepreneurs from the ownership and control of productive assets. By the late 20th century as Atkinson, Piketty and Saez (2011) and others have highlighted, the sustained and rapid inflation in top income shares have made a significant contribution to the accelerating rate of income and wealth inequality.
Research implications
The intensification of inequality in advanced industrial economies, despite the consistent work of Atkinson and others, was largely neglected until the recent research of Picketty which has attracted international attention. It is now acknowledged widely that inequality is a serious issue; however, the contemporary causes of inequality remain largely unexplored.
Practical/social implications
The significance of inequality, now that it is recognized, demands policy and practical interventions. However, the capacity or even willingness to intervene is lacking. Further analysis of the debilitating consequences of inequality in terms of the efficiency and stability of economies and societies may encourage a more robust approach, yet the resolve to end extreme inequality is not present.
Originality/value
The analysis of inequality has not been neglected and this chapter represents a pioneering effort to relate the shareholder value orientation now dominant in corporate governance to the intensification of inequality.
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