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Book part
Publication date: 2 July 2012

Ruth V. Aguilera and Kurt A. Desender

Purpose – This chapter discusses the role that indices of corporate governance have had in comparative corporate governance research.Design/Methodology/Approach – The authors…

Abstract

Purpose – This chapter discusses the role that indices of corporate governance have had in comparative corporate governance research.

Design/Methodology/Approach – The authors begin with a short discussion of what corporate governance is and its main debates. Then, the authors review the main indices (which are also summarized in Table 1), highlighting their strengths and limitations as well as describing some of the findings that emanate from them. Then, the authors discuss the methodological and conceptual assumptions of corporate governance indices that may compromise their construct validity. The authors conclude with some encouraging suggestions for key methodological and research design issues to take into account in future comparative corporate governance.

Findings – Many methodological issues in the measuring and analysis of (comparative) corporate governance remain to be solved. First, although corporate governance practices have a direct effect on some of the firms’ strategic decisions, they may only have an indirect effect on firm performance. Second, it is possible that, after all, causality goes the other way around, i.e., the firm performance explains the adoption of certain governance practices. Third, there are also important challenges in measuring firm financial performance as well as measuring and comparing corporate governance effectiveness between firms from different governance settings.

Originality/Value – This is one of the first chapter to give an overview of the most current corporate governance indices, both academic and commercial, to discuss their underlying assumptions and limitations, and, finally, to provide specific directions for future research regarding comparative corporate governance.

Details

West Meets East: Building Theoretical Bridges
Type: Book
ISBN: 978-1-78190-028-4

Keywords

Article
Publication date: 22 August 2018

Zhiyuan Simon Tan

The purpose of this paper is to contribute to scholarly work on the role of sell-side financial analysts in corporate governance (CG). It examines the more recent work products…

Abstract

Purpose

The purpose of this paper is to contribute to scholarly work on the role of sell-side financial analysts in corporate governance (CG). It examines the more recent work products pertaining specifically to CG that analysts based in the USA and UK have generated in the past two decades, namely, their CGCG reports. Specifically, this paper focusses on analysing how analyst CG reports constitute a comparative space in which the governance procedures of companies are evaluated and “best practices” are created.

Design/methodology/approach

This study involves a social constructivist textual analysis of 48 CG reports produced by analysts based in the USA and UK between 1998 and 2009.

Findings

Analyst CG reports textually construct a comparative space comprising four dimensions. First, the space is constructed for some carefully edited users to evaluate the governance of companies. Second, the construction of this space requires the selection of “building materials”, i.e., governance issues included in the space that render companies amenable to evaluation and comparison. Third, by linking the range of governance issues chosen to formal regulations, firms are rendered governable and regulatory requirements reinterpreted. Lastly, by using different types of inscriptions, such as narratives and tables, the space highlights “winners”, i.e., those companies which do better than others, and constructs their governance procedures as “best practices”.

Research limitations/implications

This research provides a first step towards an in-depth understanding of analyst CG reports. The insights from this paper generate a range of areas for future research, including how these reports are produced and used.

Originality/value

This paper adds to the existing literature focussing on the role of analysts in CG. It extends previous studies by examining the more recent and debatable work products generated by analysts, namely, their CG reports, and suggests an extended CG role for them. Theoretically, analyst CG reports are conceptualised as “inscriptions” that construct “documentary reality”. The notion of “editing” is also drawn upon, to analyse a particular way in which documentary reality is constructed. Accordingly, this paper broadens the theoretical perspectives used in CG research.

Details

Accounting, Auditing & Accountability Journal, vol. 31 no. 6
Type: Research Article
ISSN: 0951-3574

Keywords

Article
Publication date: 3 August 2015

Bryane Michael and S.H. Goo

The purpose of this paper was to determine to what extent Hong Kong’s experience proves (or disproves) theories from corporate governance in the areas of family ownership…

3405

Abstract

Purpose

The purpose of this paper was to determine to what extent Hong Kong’s experience proves (or disproves) theories from corporate governance in the areas of family ownership, concentration, self-dealing in Hong, executive compensation and other issues. This paper – written in the comparative corporate governance tradition – uses data from Hong Kong to discuss wider trends and issues in the corporate governance literature.

Design/methodology/approach

The authors use the comparative corporate governance approach – exposing a range of corporate governance theories to the light of Hong Kong data. The authors purposely avoid over-theorising – leaving the data to speak for themselves for other researchers interested in such theorising.

Findings

The authors find that Hong Kong presents corporate challenges that are unique among upper-income jurisdictions – in terms of potentially harmful (shareholder value diminishing) family relationships, shareholder concentration and self-dealing by insiders. The authors also show that excessive executive compensation, accounting and audit weaknesses do not pose the same kinds of problems they do in other countries. The authors provide numerous comments on theoretical papers throughout the presentation in this paper.

Research limitations/implications

The authors chose a relatively unused research approach that eschews theory building – instead, the authors use data from a range of sectors to build an overall picture of corporate governance in Hong Kong. The authors subsequently affirm or critique the theories of others in this paper.

Practical implications

The original analysis conducted by the authors provided 22 recommendations for revising listing rules for Hong Kong’s stock exchange. Others – particularly Asian officials – should consider Hong Kong’s experience when revising their own corporate governance listing rules and regulations.

Originality/value

This paper offers new and original insights in four directions. First, the authors use the empiricist’s method – presenting data from a wide range of corporate governance areas to comment on and critique existing studies. Second, the authors provide a system-wide view of corporate governance – showing how different parts of corporate governance rules work together using concrete data. Third, the authors provide a new study in the comparative corporate governance tradition – another brick in the wall that is “normal scientific progress”. Fourth, the authors pose tentative resolutions to highly debated questions in corporate governance for the specific time and place of Hong Kong in the early 2010s.

Details

Corporate Governance, vol. 15 no. 4
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 23 August 2019

Navajyoti Samanta

For the past two and half decades, there has been a marked shift in the corporate governance regulations around the world. The change is more remarkable in developing countries…

Abstract

Purpose

For the past two and half decades, there has been a marked shift in the corporate governance regulations around the world. The change is more remarkable in developing countries where countries with little or no corporate governance regime have adopted “world class” standards. While there can be a debate on whether law in books actually translates into law in action, in the meantime it might be interesting to analyse the law in books to understand how the corporate governance regime has evolved in the past 20 years. This paper quantitatively tracks 21 countries, most of them being developing and emerging economies, over a period of 20 years. The period covers 1995 to 2014; thus, it traverses the pre and post crisis period in 1999 and 2008. Thus, the paper also provides a snapshot of the macrolegal changes that the countries engage in hoping to stave off the next crisis. The paper uses over 50 parameters modelled on the OECD Principles of Corporate Governance. The paper confirms the suspicion that corporate governance norms around the developing economies are converging on shareholder primacy end of the continuum. The rate of convergence was highest just before the financial crisis of 2008 and has since then slowed down.

Design/methodology/approach

The paper uses data collected from experts. They filled up detailed questionnaire which quizzed them on the rules relating to corporate governance norms in their country and asked them to retrospectively check their data every five years for the past 20 years. This provided an excellent overview as to how the law has evolved in the past two decades on corporate governance. The data were then tabulated using a scoring sheet and then was put together using item response theory (IRT) which is a Bayesian method similar to factor analysis. The paper then follows a comparative approach using heatmaps to analyse the evolution of corporate governance in developing countries.

Findings

Corporate governance norms around the developing economies are converging on shareholder primacy end of the continuum. The rate of convergence was highest just before the financial crisis of 2008 and has since then slowed down.

Originality/value

This is the first time that corporate governance panel data analysis has been carried out on top developing countries across so many parameters for such a long period. This paper also uses Bayesian IRT modelling to analyse the evolution which is novel in its approach especially in the corporate governance literature. The paper thus provides a clear view on the evolution of corporate governance norms and how they are converging on a particular ideology.

Details

Corporate Governance: The International Journal of Business in Society, vol. 19 no. 5
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 23 May 2019

Nicola Cucari

The purpose of this paper is to provide comprehensive mapping of qualitative comparative analysis (QCA) applications in business and management research and to examine the…

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Abstract

Purpose

The purpose of this paper is to provide comprehensive mapping of qualitative comparative analysis (QCA) applications in business and management research and to examine the sub-fields of corporate governance research in this context.

Design/methodology/approach

Through a systematic literature review of 22 articles, the paper describes and analyses how QCA is used in the corporate governance field, what can be learned from the methodology’s implementation in corporate governance studies and why authors justify its use.

Findings

The findings highlight that QCA in corporate governance is still at an early stage of development. The paper encourages governance scholars to use this method to transform QCA from a niche into a mainstream method because it is appropriate for understanding both complex phenomena of social reality and issues of corporate governance that require an approach able to capture configurations of conditions, asymmetric patterns and equifinal explanations.

Originality/value

This is the first complete overview of the existing literature concerning QCA’s application in corporate governance research and reveals implications for its future use. In this way, it extends the previous work on QCA’s benefits to management researchers and other critical reviews of applications in QCA. This study encourages scholars to renew their understanding of corporate governance issues through a new analysis method that can help to discover conceptual and empirical relations among case-oriented and variable-oriented analyses in terms of interrelations to examine corporate governance practices holistically.

Details

Corporate Governance: The International Journal of Business in Society, vol. 19 no. 4
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 30 January 2009

G.J. Rossouw

The principles, regulations and directives associated with corporate governance constitute a view of the role, responsibilities and obligations of corporations within a given…

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Abstract

Purpose

The principles, regulations and directives associated with corporate governance constitute a view of the role, responsibilities and obligations of corporations within a given society. Identifying the ethics of a specific corporate governance regime entails making explicit the moral responsibilities and obligations of corporations in society as well as the ethical values associated with these responsibilities and obligations. In order to make meaningful global comparisons between the ethics of corporate governance regimes, a number of vital distinctions need to be made. The purpose of this paper is to introduce and discuss three such distinctions.

Design/methodology/approach

Conceptual clarifications and distinctions are considered with regard to three pairs of related concepts: the ethics of governance and the governance of ethics; external and internal corporate governance; and shareholder and stakeholder orientations in corporate governance.

Findings

The conceptual distinctions that have been considered are vital for making useful comparisons between the ethics of different corporate governance regimes around the world. Neglecting these conceptual distinctions can lead to misunderstanding and confusion in the global discourse on the ethics of corporate governance.

Practical implications

The paper provides a theoretical framework for comparing four regional perspectives on the ethics of governance, namely from Africa, Asia, Continental Europe and North America. It also provides a framework for any other global comparative study on the ethics of corporate governance.

Originality/value

The paper provides a conceptual framework for making global comparisons with regard to the ethical underpinnings of corporate governance regimes. It thus assists in creating a framework for a global discourse on the ethics of corporate governance.

Details

International Journal of Law and Management, vol. 51 no. 1
Type: Research Article
ISSN: 1754-243X

Keywords

Article
Publication date: 26 April 2019

Saad Almohammed Alrayes

The global financial crisis of 2007-2008 prompted a significant debate on corporate governance and shareholder empowerment. A question arises as to whether shareholders ought to…

Abstract

Purpose

The global financial crisis of 2007-2008 prompted a significant debate on corporate governance and shareholder empowerment. A question arises as to whether shareholders ought to be further empowered to have a greater influence over the companies’ activities. Yet, it is not self-evident that shareholder empowerment ensures better-run companies’ corporate activities. Thus, the purpose of this paper is to critically examine, identify and explain the corporate regulation forms and control collectively to evaluate the effectiveness of shareholder empowerment fully.

Design/methodology/approach

To do so, this paper sets out a comparative analysis approach between two jurisdictions, the UK and Delaware in the USA. The paper further addresses by undertaking three case studies; Barclays Plc which illustrated the Comply or Explain role, AVIVA (2012) that concentrated on the impact of the shareholder revolt, and the case of Hills Stores Co. v. Bozic (2000), which involved a claim brought by shareholders on the grounds of a breach of fiduciary duty.

Findings

This paper argues that the shareholder empowerment theoretically provides an effective means through which corporate activities can be regulated. However, to do this, account must be taken that a distinction should be made between long-term and short-term investors to encourage shareholder engagement by responsible long-term investors. Furthermore, the shareholders can exercise their powers effectively and influence the Board’s decision to award executive compensation.

Originality/value

This paper offered two distinct contributions: assessing whether in times of crisis shareholder empowerment represents a way to regulate corporate activities and by assessing the distinction between the perception of shareholder empowerment and the reality in practice.

Details

Journal of Financial Regulation and Compliance, vol. 27 no. 2
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 18 July 2019

Navajyoti Samanta

Since the late 1990s, developing countries have been encouraged by international financial organisations to adopt a shareholder primacy corporate governance model. It was…

Abstract

Purpose

Since the late 1990s, developing countries have been encouraged by international financial organisations to adopt a shareholder primacy corporate governance model. It was anticipated that in an increasingly globalised financial market, countries which introduced corporate governance practices that favour investors would gain a comparative advantage and attract more capital leading to financial market growth. This paper aims to empirically test this hypothesis.

Design/methodology/approach

The present research paper quantitatively investigates whether adopting shareholder primacy corporate governance norms has had any impact on the growth of the financial market, focusing on nineteen developing countries between 1995 and 2014. Time series indices are prepared for corporate governance regulations, financial market development along with three control indices. Then a lagged multilevel regression between these indices is used to investigate the strength of causality between the adoption of pro-shareholder corporate governance and the growth of the financial market.

Findings

The research paper finds that shifting towards a shareholder primacy model in corporate governance has a very small effect on growth of financial market in developing countries. Overall the financial, economic and technological controls have much more impact on the growth of financial markets.

Originality/value

This paper conclusively ends the discussion as to whether change in corporate governance has any impact on financial market growth of a country. The papers uses Bayesian econometric model. The paper thus signals the end of LLSV led question as to whether law can affect finance.

Details

Corporate Governance: The International Journal of Business in Society, vol. 19 no. 5
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 20 July 2012

Robert Eberhart

This paper aims to present evidence that the adoption by Japanese firms of a shareholder‐oriented, more transparent, system of corporate governance creates greater corporate value…

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Abstract

Purpose

This paper aims to present evidence that the adoption by Japanese firms of a shareholder‐oriented, more transparent, system of corporate governance creates greater corporate value in comparison to the traditional system of statutory auditors.

Design/methodology/approach

This study uses panel data of Tokyo Stock Exchange listed companies to explore the potential convergence of corporate governance systems by examining the value differences between Japanese firms selecting one of two legal systems. A random‐effects panel regression is used to analyze the data. The dependent variable of the study is Tobin's q.

Findings

This paper finds a significant increase in firm valuation, as measured by Tobin's q, for companies that adopted the alternative of the Anglo‐American type committee system, even though comparative financial data show little difference in performance after adoption. This finding is attributed to signal sending, as companies that adopted this system signal a choice toward transparency via monitoring by outsiders, suggesting a reduction of asymmetric agency costs. The paper finds that the committee corporate governance system produces higher corporate value than the traditional auditor governance. The study also finds evidence that it is the signal provided by adoption of the credible system, not the financial performance variables, that accounts for this difference.

Social implications

The data support the central idea that corporate governance laws have consequences and encourages additional study of the effects of corporate signaling and the consequences of increased shareholder orientation of agents.

Originality/value

This paper takes advantage of the unique opportunity afforded by Japan's introduction of a dual system of corporate governance in 2003, when companies were offered a choice to adopt a new system of outside directors, which is a shareholder‐oriented committee system. It establishes that firm value can be created by a signal that corporate governance provides.

Details

Journal of Asia Business Studies, vol. 6 no. 2
Type: Research Article
ISSN: 1558-7894

Keywords

Article
Publication date: 30 January 2009

G.J. Rossouw

The purpose of this paper is to investigate whether there is a global divergence or convergence with regard to the ethics of corporate governance.

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Abstract

Purpose

The purpose of this paper is to investigate whether there is a global divergence or convergence with regard to the ethics of corporate governance.

Design/methodology/approach

Regional perspectives on the ethics of corporate governance from four regions, namely, Africa, Asia, Continental Europe and North America are first briefly introduced and characterized in terms of distinctions between the ethics of governance and the governance of ethics, internal and external corporate governance, and shareholder and stakeholder orientations to corporate governance. Thereafter these regional perspectives are compared in order to determine whether there is a global divergence or convergence with regard to the ethics of corporate governance amongst these four regions of the world.

Findings

There are four factors that potentially may have an impact on the ethics of corporate governance, namely, patterns of ownership, the prevailing view of the role of the firm in a society, cultural and societal norms, and socio‐political priorities. The influence of these factors makes a global convergence on the ethics of corporate governance neither likely nor desirable.

Research limitations/implications

Not all regions of the world were included in this comparative study. Regions that need to be included in future studies are Latin America, Central Asia and the Middle East.

Practical implications

The main finding, namely, that a global convergence on the ethics of corporate governance is neither likely nor desirable, should be taken into consideration by promoters of global corporate governance standards.

Originality/value

Based on regional perspectives from Africa, Asia, Continental Europe and North America, the paper provides a global perspective on the question of whether there is global divergence or convergence with regard to the ethics of corporate governance amongst these four regions of the world.

Details

International Journal of Law and Management, vol. 51 no. 1
Type: Research Article
ISSN: 1754-243X

Keywords

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