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1 – 10 of over 1000Being a director, regardless of the size or nature of the enterprise, is different to being an employee, manager, shareholder or customer. It is not size or dollar value that…
Abstract
Being a director, regardless of the size or nature of the enterprise, is different to being an employee, manager, shareholder or customer. It is not size or dollar value that makes the responsibilities of a board member different from those of an executive. Some, for instance ethical responsibilities, are common regardless of size. One key issue is to do with personal integrity and another to do with the integrity of decision making by the board. The chapter looks at who should be responsible for training the board, and provides a conceptual framework on which training could be based. Practice and example are the key ways in which ethics is learnt, and examples are provided of the way in which case studies can be used to enhance personal integrity and moral courage, and to develop and entrench decision processes in the board which enhance the integrity of its decision making.
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Purpose – This chapter traces the creation of a market for strategy by management consulting firms during the second half of the twentieth century in order to demonstrate their…
Abstract
Purpose – This chapter traces the creation of a market for strategy by management consulting firms during the second half of the twentieth century in order to demonstrate their impact in shaping debates in the subject and demand for their services by corporate executives.
Design/methodology/approach – Using historical analysis, the chapter draws on institutional theory, including institutional isomorphism. It uses both primary and secondary data from the leading consulting firms to describe how consultants shifted from offering advice on organizational structure to corporate strategy and eventually to corporate legitimacy as a result of the changing economic and regulatory environment of the time.
Findings/originality/value – This study provides a historical context for the emergence of corporate and competitive strategy as an institutional practice in both the United States and around the world, and provides insights into how important this history can be in understanding the debates among consultants and academics during strategy's emergence as an academic subject and practical application.
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Bin-Hsien Lo, Lon-Fon Shieh, Yi-Cheng Shih and Min-Der Hsieh
This chapter examines the relationship between directors and officers (D&O) liability insurance and stock-price synchronicity by testing competing corporate governance-related…
Abstract
This chapter examines the relationship between directors and officers (D&O) liability insurance and stock-price synchronicity by testing competing corporate governance-related monitoring and moral hazard-related agency conflict hypotheses. Testing a sample of stocks listed on the Taiwan Stock Exchange and the Taipei Exchange for 2008–2020, the empirical results of this study indicate that D&O insurance in Taiwan is negatively correlated to stock-price synchronicity. This negative relation is robust to a battery of tests, including those of fixed-effects regression models, alternative sample periods, alternative synchronicity measures, and alternative insurance measures. Further evidence indicates that this negative relationship is more pronounced among firms with greater agency problems, especially during periods of high market uncertainty. Overall, these findings support the corporate governance-related monitoring hypothesis, which posits that firms with greater D&O insurance are likelier to be characterized by better governance structures and information transparency. Additionally, their stock prices are more likely to reflect firm-specific information in a timely and precise manner, and they are more likely to have lower synchronicity with the industry and market.
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This chapter explores the advantages (for large investors) of directly owning productive assets, compared with indirect ownership through stock in corporations. Significant…
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This chapter explores the advantages (for large investors) of directly owning productive assets, compared with indirect ownership through stock in corporations. Significant factors are agency costs and recent changes in the tax and regulatory environment. Recent corporate scandals have led to legislative and regulatory responses that significantly increase the monitoring costs and other burdens of becoming or remaining a public corporation. As a result, there has been a substantial increase in going-private transactions, particularly among smaller public companies. Acquisitions and minority equity positions that allow large corporations to join with smaller companies have also increased. The pressures to go private are not entirely new, however. This chapter, reflecting collaboration by professors of finance and business law, traces the legal concept that the corporation is an entity separate and apart from its owners, showing how the legal status of corporations hinders resolution of conflicts among the parties to the enterprise. Thus, there have long been fundamental flaws inherent in the corporation as the form of organization for certain activities. The current wave of Sarbanes–Oxley restructuring via private equity firms is part of a significant increase in direct ownership of major assets by institutional investors. Direct ownership prevents management expropriation of resources, and is preferable to corporate ownership whenever other alternatives for indemnification or liability limitation are available (such as insurance, limited partnerships, limited liability companies, etc.). Finally, the renewal of direct ownership is not a radical shift, but a return to long-established tradition in the organization of business activities.
John W. Kensinger and Stephen L. Poe
This paper explores the advantages (for large investors) of directly owning productive assets, compared with indirect ownership through stock in corporations. Significant factors…
Abstract
This paper explores the advantages (for large investors) of directly owning productive assets, compared with indirect ownership through stock in corporations. Significant factors are agency costs and recent changes in the tax and regulatory environment. Recent corporate scandals have led to legislative and regulatory responses that significantly increase the monitoring costs and other burdens of becoming or remaining a public corporation. As a result, there has been a substantial increase in going-private transactions, particularly among smaller public companies. However, the pressures to go private are not entirely new. We trace the legal concept that the corporation is an entity separate and apart from its owners, showing how the legal status of corporations hinders resolution of conflicts among the parties to the enterprise. Thus, there have long been fundamental flaws inherent in the corporation as the form of organization for certain activities. Direct ownership of major assets by investors prevents future expropriation of resources, and is preferable to corporate ownership whenever other alternatives for indemnification or liability limitation are available (such as insurance, limited partnerships, limited liability companies, etc.). Finally, the renewal of direct ownership is not a radical shift, but a return to long-established tradition in the organization of business activities.
When a board is faced with a choice of aiding the public or government during a crisis, or more generally any corporate social responsibility initiative, well established…
Abstract
When a board is faced with a choice of aiding the public or government during a crisis, or more generally any corporate social responsibility initiative, well established doctrines of American corporate law can protect directors from legal liability in a shareholder derivative lawsuit. A hallmark trait of the public corporation is a separation of ownership and control (Berle & Means, 1932). Accordingly, managers have great authority over corporate assets. Delaware corporate law provides that “[t]he business and affairs of every corporation organized under this chapter shall be managed by or under the direction of a board of directors.”2 The board has the authority to manage the “business and affairs” of the corporation, which in the judgment of the board may include corporate social responsibility initiatives and decisions based thereon.
Omer Berkman and Shlomith D. Zuta
The research question we address in this paper is whether the effort invested by the internal auditor in the firm is associated with better firm performance. Our measure of effort…
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The research question we address in this paper is whether the effort invested by the internal auditor in the firm is associated with better firm performance. Our measure of effort is the number of audit hours invested in the firm, and firm performance is measured by the likelihood of a restatement of the firm's financial results. This study is the first to analyze this question, an endeavor made possible by a difference in disclosure requirements regarding internal audit effort between the US and Israel. Our analysis is conducted using hand-collected data on firms traded on Tel Aviv Stock Exchange (TASE) during the period 2010–2014. We expect that auditor effort is negatively associated with the likelihood of restatements of the firm's financial results. Indeed, our findings support this hypothesis. We also consider the association between restatements and two audit committee characteristics – the degree of independence and the degree of expertise of its members. However, these associations are not upheld by the data.
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John E. Tyler, Evan Absher, Kathleen Garman and Anthony Luppino
This chapter demonstrates that social business models do not meaningfully prioritize or impose accountability to “social good” over other purposes in ways that (a) best protect…
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This chapter demonstrates that social business models do not meaningfully prioritize or impose accountability to “social good” over other purposes in ways that (a) best protect against owners changing their minds or entry of new owners with different priorities and (b) enable reliable accountability over time and across circumstances. This chapter further suggests a model – a “social primacy company” – that actually prioritizes “social good” and meaningful accountability to it. This chapter thus clarifies circumstances under which existing models might be most useful and are not particularly useful, especially as investors, entrepreneurs, employees, regulators, and others pursue shared, common understandings about purposes, priorities, and accountability.
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