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1 – 10 of over 54000Socially responsible investment (SRI) engagement currently performs a variety of supportive regulatory functions such as reframing norms, establishing dialogue and providing…
Abstract
Purpose
Socially responsible investment (SRI) engagement currently performs a variety of supportive regulatory functions such as reframing norms, establishing dialogue and providing resources to improve performance, however corporate responses are voluntary. This chapter will examine the potential gains in effectiveness for SRI engagement in a responsive regulatory regime.
Approach
Global warming is a pressing environmental, social and governance (ESG) issue. By using the example of climate change the effectiveness of SRI engagement actors and the regulatory context can be considered. This chapter builds the conceptual framework for responsive regulation of climate change.
Findings
SRI engagement may face resistance from corporations due to its voluntary nature and conflict with other goals. Legitimacy and accountability limit the effectiveness of SRI engagement functioning as a voluntary regulatory mechanism. This chapter argues that the effectiveness of SRI engagement on climate change could be enhanced if it served as part of a responsive regulation regime.
Practical implications
Engagement is used by SRIs for ESG issues. A comprehensive regulatory regime could enhance corporate adaptation to climate change through increasing compliance with SRI engagement. The implication for SRI practitioners is that lobbying for a supportive regulatory regime has a large potential benefit.
Social implications
Responsive regulatory policy involves both support and sanctions to improve compliance, enhancing policy efficiency and effectiveness. There are potentially large net social benefits from utilising SRI engagement in a regulatory regime.
Originality of chapter
In seeking to re-articulate voluntary and legal approaches this research addresses a gap in the literature on climate change regulation.
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Tareq Na'el Al-Tawil and Hassan Younies
The purpose of this paper is to discuss incongruities in the corporate entity over the matter of agency. In lieu of the traditional notion of moral agency theory, the stakeholder…
Abstract
Purpose
The purpose of this paper is to discuss incongruities in the corporate entity over the matter of agency. In lieu of the traditional notion of moral agency theory, the stakeholder model offers congruent grounding to corporate governance. Socially irresponsible or unethical corporate activities are perceived to increase expenses, diminish shareholder value and tarnish business reputations. In contrast, socially responsible corporate practices contribute to positive attitudes to the company and contribute to the creation of competitive advantage.
Design/methodology/approach
This paper follows the ongoing evolution of the regulatory changes instituted after the scandalous corporate fiascos of the present century, such as those of Enron and WorldCom in the USA, Polly Peck in the UK, HIH Insurance and One.Tel in Australia, and Siemens in Germany, inter alia. The exposition also touches on the regulatory metamorphosis of corporate governance in its convergence towards “meta-regulation” with corporate social responsibility at the core.
Findings
While meta-regulation has so far worked in many countries, caution is expressed over the perils of over-reliance on a meta-regulatory approach. Industries or market sectors should also attempt to operate from the start within the confines of self-regulation and government regulation. Market sectors and industries need to find the framework of regulation that is best suited to their operations.
Originality/value
The paper concludes by discussing the observed challenges and implications of such convergence, as well as future directions for law practitioners, academics and researchers in the realm of corporate conduct.
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Whilst taking Nigeria's peculiar institutional configurations into consideration, this paper aims to critically evaluate the Nigerian corporate governance regulatory system, which…
Abstract
Purpose
Whilst taking Nigeria's peculiar institutional configurations into consideration, this paper aims to critically evaluate the Nigerian corporate governance regulatory system, which is characterised by endemic corporate corruption, and to explore how regulatory policy responses can be strategically formulated to ensure corporate vitality and prevent market failures. The paper investigates the antecedents of effective corporate governance regulation in Nigeria.
Design/methodology/approach
This paper employs research method triangulation in order to provide an informative and comprehensive account. The following data collection methods were employed to conduct a survey of corporate governance professionals in academia, in practice (including board directors, managers, current and former CEOs and chairmen across different industries, as well as members of professional accounting and audit associations), and in the Nigerian polity: in‐depth interviews, focus groups, direct observations and case studies.
Findings
This study has provided some evidence to support the view that a country's peculiar institutional arrangements influence its predominant model and style of corporate governance regulation. These institutions may be regarded as integral and inseparable constituents of any particular nation, which can either aggregate to facilitate the success of regulatory initiatives and promote good corporate governance or constitute barriers to the implementation of good governance principles.
Originality/value
This paper primarily adds to the literature on corporate governance in sub‐Saharan Africa, whilst extending knowledge on the dynamics of corporate governance regulation in different institutional contexts. The paper further points out some transnational challenges, and suggests more caution, in the diffusion of corporate governance regulatory principles across different institutional environments. This further brings to the fore the need for countries to fashion out their corporate governance regulatory strategies in ways which deal with peculiar challenges, albeit within an umbrella of accepted principles of responsible corporate behaviour.
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The purpose of this paper is to investigate if market discipline and legal environment are sufficient to motivate firms to disclose optimal level of corporate information…
Abstract
Purpose
The purpose of this paper is to investigate if market discipline and legal environment are sufficient to motivate firms to disclose optimal level of corporate information voluntarily in the context of a developing country that is Pakistan. Furthermore, it was examined if regulators have sufficient regulatory capacity to influence the extent up to which politically connected companies disclose corporate information.
Design/methodology/approach
An in-depth investigation was carried out through qualitative content analysis of 200 annual reports from 40 companies listed on Karachi Stock Exchange along with 26 semi-structured interviews from experts in the field of corporate governance.
Findings
Findings from the research indicated that there is an absence of culture for disclosure of information and country’s existing institutional environment is not sufficiently strong to support self-regulation or voluntary disclosure of information. It is argued that stringent disclosure regulation results in better flow of information in politically connected companies and helps in curbing opportunistic behaviour.
Practical implications
This research carries significant policy implications. It is proposed that in addition to mandatory disclosure requirements, the code of corporate governance should indicate desirable disclosure levels for voluntary corporate information as well.
Originality/value
This is the first study to examine the effectiveness of role and usefulness of mandatory corporate disclosure regulation, voluntary disclosure practices, and capacity of regulators to enhance dissemination of corporate information in a developing country with high levels of political corruption and cronyism through an in-depth research.
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Hashim Zameer, Humaira Yasmeen, Ying Wang and Muhammad Rashid Saeed
Understanding the role of corporate strategies in sustainability has become a hot topic for scholarly research. Meanwhile, firms strive to innovate and shape their positive image…
Abstract
Purpose
Understanding the role of corporate strategies in sustainability has become a hot topic for scholarly research. Meanwhile, firms strive to innovate and shape their positive image in the contemporary business arena. Past research has ignored investigating whether and how sustainability-oriented corporate strategies could drive innovation and firm image among external stakeholders. To address the said research gap, this paper examines the path through which sustainability-oriented corporate strategy and environmental regulation improve green corporate image and green innovation capabilities (i.e. green process and product innovation).
Design/methodology/approach
This study adopted a quantitative survey-based method. The online survey was adopted to collect data from employees working at the managerial level in the equipment manufacturing sector. The data collected from 343 managers that was complete in all aspects was used for empirical analysis using structural equation modeling. Direct and indirect relations were evaluated.
Findings
The findings reveal that sustainability-oriented corporate strategy and environmental regulation drive green innovation and green corporate image. Findings further show that external knowledge adoption underpins these effects of sustainability-oriented corporate strategy and environmental regulation.
Originality/value
The study delivers theoretical and practical understandings of the importance of sustainability-oriented corporate strategies to green corporate image and green innovation capabilities.
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This study aims to determine experimentally factors affecting the satisfaction of retail stock investors with various investor protection regulatory measures implemented by the…
Abstract
Purpose
This study aims to determine experimentally factors affecting the satisfaction of retail stock investors with various investor protection regulatory measures implemented by the Government of India and Securities and Exchange Board of India (SEBI). Also, an effort has been made to gauge the level of satisfaction of retail equities investors with the laws and guidelines developed by the Indian Government and SEBI for their invested funds.
Design/methodology/approach
To accomplish the study’s goals, a well-structured questionnaire was created with the help of a literature review, and copies of it were filled by Punjabi retail equities investors with the aid of stockbrokers, i.e. intermediaries. Amritsar, Jalandhar, Ludhiana and Mohali-area intermediaries were chosen using a random selection procedure. Xerox copies of the questionnaire were given to the intermediaries, who were then asked to collect responses from their clients. Some intermediaries requested the researcher to sit in their offices to collect responses from their clients. Only 373 questionnaires out of 1,000 questionnaires that were provided had been received back. Only 328 copies were correctly filled by the equity investors. To conduct the analysis, 328 copies, which were fully completed, were used as data. The appropriate approaches, such as descriptives, factor analysis and ordinal regression analysis, were used to study the data.
Findings
With the aid of factor analysis, four factors have been identified that influence investors’ satisfaction with various investor protection regulatory measures implemented by government and SEBI regulations, including regulations addressing primary and secondary market dealings, rules for investor awareness and protection, rules to prevent company malpractices and laws for corporate governance and investor protection. The impact of these four components on investor satisfaction has been investigated using ordinal regression analysis. The pseudo-R-square statistics for the ordinal regression model demonstrated the model’s capacity for the explanation. The findings suggested that a significant amount of the overall satisfaction score about the various investor protection measures implemented by the government/SEBI has been explained by the regression model.
Research limitations/implications
A study could be conducted to analyse the perspective of various stakeholders towards the disclosures made and norms followed by corporate houses. The current study may be expanded to cover the entire nation because it is only at the state level currently. It might be conceivable to examine how investments made in the retail capital market affect investors in rural areas. The influence of reforms on the functioning of stock markets could potentially be examined through another study. It could be possible to undertake a study on female investors’ knowledge about retail investment trends. The effect of digital stock trading could be examined in India. The effect of technological innovations on capital markets can be studied.
Practical implications
This research would be extremely useful to regulators in developing policies to protect retail equities investors. Investors are required to be safeguarded and protected to deal freely in the securities market, so they should be given more freedom in terms of investor protection measures. Stock exchanges should have the potential to bring about technological advancements in trading to protect investors from any kind of financial loss. Since the government has the power to create rules and regulations to strengthen investor protection. So, this research will be extremely useful to the government.
Social implications
This work has societal ramifications. Because when adequate rules and regulations are in place to safeguard investors, they will be able to invest freely. Companies will use capital wisely and profitably. Companies should undertake tasks towards corporate social responsibility out of profits because corporate houses are part and parcel of society only.
Originality/value
Many investors may lack the necessary expertise to make sound financial judgments. They might not be aware of the entire risk-reward profile of various investment options. However, they must know various investor protection measures taken by the Government of India & Securities and Exchange Board of India (SEBI) to safeguard their interests. Investors must be well-informed on the precautions to take while dealing with market intermediaries, as well as in the stock market.
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This paper examines post‐Enron developments in UK audit and corporate governance regulation. It considers the latest government‐initiated reviews into audit regulation…
Abstract
This paper examines post‐Enron developments in UK audit and corporate governance regulation. It considers the latest government‐initiated reviews into audit regulation, specifically those conducted by the Co‐ordinating Group on Audit and Accounting Issues and the DTI Review Team, and into corporate governance, specifically those undertaken by Derek Higgs and Sir Robert Smith. The paper notes that the reviews were undertaken in the context of developments initiated both before and after the collapse of Enron, including, respectively, the new system for the regulation of the UK accountancy profession as established by the Accountancy Foundation, and the US Sarbanes‐Oxley Act. The reviews have been welcomed by government and thus should play a large part in setting the agenda for the future regulation of UK audit and corporate governance. The proposals for auditing share a number of characteristics with the recommendations of a pre‐Enron empirical study which investigated the regulation of UK listed company audit, although significant distinctions remain. The proposals for corporate governance continue the ‘comply or explain’ approach and do not recommend passing its regulation from the Financial Reporting Council to another independent body of ‘stature’ such as the Financial Services Authority (FSA). It is concluded that key to successful implementation of recent proposals will be the need, for audit, to demonstrate that there is no cosy relationship between regulators and the auditing profession, especially the ‘Big Four’ firms, and, for corporate governance, a willingness to look outside the ‘one‐size‐fits‐all’ approach.
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This paper aims to examine the limitations of promoting corporate social responsibility (CSR) regulation and suggests a model for improving accountability in CSR practices through…
Abstract
Purpose
This paper aims to examine the limitations of promoting corporate social responsibility (CSR) regulation and suggests a model for improving accountability in CSR practices through stakeholder engagement-based inclusive regulation framework that is effective, coherent and responsive.
Design/methodology/approach
This conceptual paper uses desk-based research to analyse extant literature on the concept of regulation of CSR by looking at examples, benefits and limitations before proposing a framework for improving CSR regulation.
Findings
The paper finds that the system of promoting CSR through self-regulation or introducing prescriptive regulation without sustainable stakeholder engagement is ineffective and inefficient.
Originality/value
The paper is original in its development of a new framework of “Inclusive Regulation” as a strategy for limiting the shortcomings of prescriptive regulation and enhancing self-regulation as CSR tools. It thus contributes to both theoretical and policy perspective in the enhancement of prescriptive and self-regulation in CSR-regulation discourse.
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Ian P. Dewing and Peter O. Russell
Under the Financial Services and Markets Act 2000, the Financial Services Authority (FSA) is the single regulator of firms in the UK financial services industry. The Act grants…
Abstract
Purpose
Under the Financial Services and Markets Act 2000, the Financial Services Authority (FSA) is the single regulator of firms in the UK financial services industry. The Act grants extensive powers to the FSA such that it can impose by rules and regulations additional corporate governance requirements on firms in the financial services industry. The legislative and regulatory requirements also extend to individuals under the FSA approved persons' regime. The purpose of the paper is to examine this individualization of corporate governance.
Design/methodology/approach
The paper first explores the rise to significance of internal control and risk management in corporate governance and regulation, and links this to Beck's risk society and individualization theses. The extent of the individualization of corporate governance by the approved persons' regime is explored by examining three sources of evidence: the FSA's documents setting out the approved persons' regime; the initial perceptions about the implementation of the approved persons' regime from interviews with high‐level individuals in the financial services industry; and the outcomes of illustrative FSA enforcement actions against individuals.
Findings
The findings are that the FSA has developed a comprehensive and formidable apparatus for the individualization of corporate governance in the UK's financial services industry. It is argued that a discourse based on the interpretive evaluations of internal control and risk management may be replacing a discourse based on the quantitative techniques of management accounting, which may be characterised as the demise of the “calculating self” and the rise of the “auditable self”.
Practical implications
The FSA's approved persons' regime could be developed as a model for other areas of the private and public sectors, where for regulatory purposes it may be desirable to identify approved or official roles.
Originality/value
The ability of regulators to “make” corporate governance by rules and regulations is relatively unexplored. Also, the focus of corporate governance is on firms rather than individuals. The paper considers the extension of corporate governance from the firm to the individual that may be achieved by regulation.
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Ngozi Okoye and Juliana Siwale
There have been various forms of regulatory intervention by the central banks of countries to streamline microfinance activities and ensure effective corporate governance of…
Abstract
Purpose
There have been various forms of regulatory intervention by the central banks of countries to streamline microfinance activities and ensure effective corporate governance of microfinance institutions (MFIs). Considering the limited amount of research in this area and the need to ensure regulatory effectiveness, the purpose of this paper is to evaluate the impact of regulatory provisions on the attainment of effective corporate governance in MFIs in Nigeria and Zambia.
Design/methodology/approach
Interviews were conducted with regulators at the Central Bank of Nigeria and the Bank of Zambia, directors and executive management officers of MFIs and executives of apex associations of MFIs in both countries.
Findings
The paper presents five significant findings which are that the regulations have enabled negative outcomes in areas such as board composition, the ownership requirements in the regulations have resulted in differing governance implications, the certification requirements for board members are problematic in practice, supervision by regulators is ineffective and has impacts on risk management and the principle of consultation with stakeholders is inadequate in both countries.
Practical implications
Regulatory provisions must be robust and fit for purpose to ensure the microfinance initiative in emerging economies achieves the objectives of enhancing financial inclusion and economic development of the society.
Originality/value
The paper addresses an area of limited research and provides empirical findings in relation to regulation and corporate governance in developing economies, which would help to ensure regulatory effectiveness.
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