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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.

The purpose of this paper is to look inside the “black box” in corporate governance (CG) measurement, and shed some light on how to construct a transparent, reliable and valid index, considering equally both the academics and practitioners’ perspectives.

A synthesized literature review is presented and a CG index is developed combining the strengths of three different methodologies: the Delphi method, the classical test theory (CTT) and the analytic hierarchy process (AHP). This approach helps authors to break the process into separate steps and to select the appropriate techniques to support their decision regarding the norms, the criteria, the variables and the weights that someone should use to construct a CG index.

The authors’ analysis indicates that a well-designed CG index requires a combination of research methods to identify the best options to solve several methodological issues in index construction. For the application of this multi-methodology in Greece, the authors used two equal and independent samples to explore the different perspectives regarding the importance of the index criteria and sub-criteria. This process provides evidence that the opinion of academics and practitioners in Greece tend to converge. Moreover, it is found that this multi-methodology produces the highest variation in CG scores and ranking orders, as opposed to a traditional approach, in measuring CG disclosure, an important issue with econometric implications.

The limitations of this study are associated with the methods used.

This paper provides practical implications for investors and commercial vendors. For the former, it highlights the need to be more cautious and/or suspicious when they use CG ratings, meaning that they should comprehend the base of the ratings models, and for the latter, it demonstrates the importance of enhancing the transparency in CG indices construction.

The value of the paper lies in improved understanding of the methodological issues in constructing CG indices. This is quite interesting because this approach could serve as a roadmap for other researchers.

The purpose of this paper is to examine how publicly available accounting risk metrics influence the aggressiveness of managers’ discretionary accounting decisions by making those decisions more transparent to the public.

The experiment used a 2 × 3 between-participants design, randomly assigning 122 financial reporting managers among conditions in which we manipulated whether the company was currently beating or missing analysts’ consensus earnings forecast and whether an accounting risk metric was indicative of low risk, high risk or a control. Participants chose whether to manage company earnings by deciding whether to report an amount of discretionary accruals that was consistent with the “best estimate” (i.e. no earnings management) or an amount above or below the best estimate.

Aggressive (income-increasing) earnings management is deterred when managers believe such behavior will cause their firm to be flagged as aggressive (i.e. high risk) by an accounting risk metric. Some managers attempt to “manage” the risk metric into an acceptable range through conservative (income-decreasing) earnings management. These results suggest that by making the aggressiveness of accounting choices more transparent, public risk metrics may reduce one type of earnings management (income-increasing), while simultaneously increasing another (income-decreasing).

The operationalization of the manipulated variables of interest may limit the study’s generalizability.

Users of accounting risk metrics (e.g. investors, auditors, regulators) should be cautious when relying on such risk metrics that may be of limited reliability and usefulness due to managers’ incentives to manipulate their companies’ risk scores by being overly conservative in an effort to prevent being labeled “aggressive”.

By increasing the transparency of the aggressiveness of accounting choices, public risk metrics may reduce one type of earnings management (income-increasing), while simultaneously increasing another (income-decreasing).

The purpose of this paper is to assess the association between country-level corporate governance and earnings management (EM). It aims to investigate whether the Governance Metrics International (GMI; acquired by Morgan Stanley Capital International in 2014) rating for national corporate governance on a country level is a significant explanatory variable for the country-level EM score or otherwise.

In a sample of 280 country-year observations during the period from 2000 to 2009, the paper measures national corporate governance quality using GMI ratings scores and whether the corporate governance model is Anglo Saxon or otherwise.

The findings of this study show that corporate governance is a significant indicator of lower EM levels in a country.

Corporate governance rating firms play a vital role in public markets. GMI provides country-level corporate governance ratings to assess the quality of corporate governance in several countries. The findings of this study show preliminary evidence that GMI ratings of corporate governance provide good guidance to investors on the quality of corporate governance in a country.

This paper is the first empirical attempt to examine the association between country-level corporate governance, GMI ratings for country-level corporate governance and EM.

The purpose of this paper is to explore what organizations can do to facilitate the retention and advancement of women professionals into top leadership positions. A social exchange framework is applied to examine ways organizations can signal support for and investment in the careers of women professionals, and ultimately the long-term work relationship.

This paper employed a qualitative methodology; specifically, semi-structured interviews with 20 women executives, in primarily the US hospitality industry, were conducted. The interviews were recorded, transcribed, and content analyzed.

Organizations are likely to strengthen the retention of their female professionals if they signal support through purposeful, long-term career development that provides a sightline to the top, and ultimately creates more female role models in senior-level positions. Organizations can also signal support through offering autonomy over how work is completed, and designing infrastructures of support to sustain professionals during mid-career stages. Findings are used to present a work-exchange model of career development.

This research is an exploratory study that is limited in its scope and generalizability.

The proposed work-exchange model can be used to comprehensively structures initiatives that would signal organizational support to – and long-term investment in – female professionals and enable them to develop their career paths within their organizations.

Through offering a work-exchange model of career development, this paper identifies components of organizational support from a careers perspective, and highlights the factors that could potentially contribute to long-term growth and retention of women professionals.

The purpose of this paper is to explore the ability of commercial governance ratings (CGR) to predict firm performance.

Based on the review of the corporate governance literature, the authors pose five hypotheses on the relationship between CGR and firm performance. Then, the authors test these hypotheses for the latest version of the Institutional Shareholder Services Inc. (ISS) index (Quickscore) with a sample of firms formed by the constituents of the Standard and Poor’s Europe 350 stock market index.

The authors have not found a consistent significant relationship between Quickscore ratings and firm performance. This main result holds across a variety of checks.

Some of the additional analyses are conducted with rather small samples. The results of these analyses have to be carefully taken. Recommendations for further research are offered.

The results call into question the usefulness of CGR, marketed by influential consultant companies, and which are becoming increasingly popular among investors, as reliable predictors of firm performance.

Despite an increasing body of research on the use of CGR as predictors of firm performance, the available research is heavily concentrated in the US market. No previous study has explored this relationship using the recently developed ISS index Quickscore in a cross-European setting. The use of a cross-country sample of companies allows the authors to address the impact of institutional factors on the CGR-firm performance relationship. Moreover, the authors do not limit the study to the overall scores of the index but examine also the partial scores (pillars) which intend to assess specific dimensions of governance. This makes the evaluation of the relationship more complex and challenging.

The purpose of the current study is to revisit the relationship between CSR and firm market performance. The authors examine whether a gap between the firm's internal and external CSR moderates the CSR-firm market performance relationship. Additionally, the authors propose that the moderating effect of the CSR gap on this relationship is mediated by firm visibility.

The initial sample is the Fortune 500 firms during the years 2004–2013. The final panel data sample consisted of 1,300 firms and 6,128 observations from 2004 to 2013. The authors obtained data from five different sources: Compustat North America Fundamental Annual, GMI Ratings, Execucomp, IBES and KLD Stats.

The results of this research find evidence that both internal CSR and external CSR were positively related to firm market performance, but that the relationship was stronger for firms with equal emphasis on external and internal CSR activities. Furthermore, the negative moderating effect of the CSR gap was mediated by the firm visibility.

The findings of the study advance our understanding of the CSR-FP relationship. First, the theoretical arguments and the empirical evidence highlight that the CSR-FP relationship exists and that its magnitude is contingent upon the gap between internal and external CSR investments. Second, the authors enhanced theoretical understanding of how and why CSR relates to firm performance by exploring firm visibility as a mediator. Specifically, the authors introduced firm visibility as a mechanism which explains the effect of the interaction of overall CSR with the CSR gap on firm performance.

Despite the increasing demand for socially responsible investments (SRIs) and the importance of information intermediaries in providing corporate social responsibility (CSR) performance information through SRI screens, relatively little is known about the relationship between nonprofessional investors’ views regarding SRI, their use of SRI screens and their actual SRI behavior. This study aims to distinguish between investor views about the importance of corporate environmental responsibility (environmental performance importance views) and whether they view environmentally responsible firms as yielding higher returns (environmental performance return views). It examines the association between these views, SRI screen use and reported SRI holdings.

Nonprofessional investor participants completed an online survey about their SRI investment views, screen use and investment behavior. The survey yielded 201 usable responses.

The strength of participants’ environmental performance importance and environmental performance return views is positively associated with their use of SRI screens and the proportion of their portfolios held in SRIs. SRI screen use only partially mediates the association between investors’ environmental performance importance and return views and their SRI holdings.

The study does not precisely address what types of SRI screens nonprofessional investors may be using. It does not control for investors’ specific experience with SRIs, nor does it examine how or why investors come to believe that environmental responsibility may improve a company’s return potential.

The fact that SRI screen use only partially mediates the association between investors’ views and their SRI holdings suggests that either reliable, unfiltered CSR information is important for nonprofessional investors or some investors are choosing SRIs without obtaining adequate relevant information.

The study’s findings confirm earlier research findings which show an association between investors’ pro-environmental views and their decision to invest in SRIs (Williams, 2007; Nilsson, 2008) and suggest that nonprofessional investors are becoming aware of the positive relation between environmental performance and firm value (Dhaliwal et al., 2011; Clarkson et al., 2013; Hawn et al., 2014; Matsumura et al., 2014).

This study simultaneously examines the influence of environmental performance importance (an “alternative” investment perspective) and environmental performance return (a “traditional” investment perspective) on investors’ SRI behavior.

The aim of this chapter is to propose a critical analysis of socially responsible investing (SRI) through debate and reconstruction. Our goal is therefore to try to understand how the definition of ethics in finance has steered SRI towards a financial approach where ethics is guided by finance.

This chapter proposes a two-point approach consisting of a meta-debate and development perspectives. Each approach is divided into three debates (ideological and philosophical, scientific and practical), which are interconnected.

The chapter concludes that the debate on mainstream SRI is necessary but should be re-discussed, as it is preventing in its current form the concept from developing and being grounded in real ethical values, sacrificing the individual ethics that should be driving investing decisions.

The chapter proposes to rethink the paradigm around SRI through a conceptual framework that re-inserts finance within ethics, where non-financial performance and impact investment should be at the centre of the scientific debates, leading to an SRI based on exclusion, the consideration of controversies and social impact measurement.

Social media have recently become an important strategic marketing tool to increase firm value. Based on an integrated theoretical framework, this study aims to examine the market reaction at the time of the creation of a Twitter platform for 312 firms from the Fortune 500 firms.

To test the hypotheses related to the effect of social media platforms on firm value, the event history analysis (EHA) was used, also known as event study, usually designed to examine the impact of a historical phenomenon for the US Fortune 500 firms that developed a Twitter platform.

A significant market reaction was found around the starting date of Twitter activities for the subsample of firms that are not contaminated by any other corporate announcements, but not for the overall sample. The market reaction is higher for firms with two-way interaction strategies rather than one-way messaging in both the uncontaminated subsample and the overall sample. It is higher in smaller firms, firms with losses and those with a family and/or a dominant shareholder. Further, firms in the contaminated subsample are likely to follow a two-way strategy after a positive revision of their earnings per share. We have run several robustness checks, including cross-validation on a holdout sample, and these findings remain consistent.

The integrated theoretical framework is another significant contribution. To our knowledge, this is the first study across disciplines that integrates the social exchange theory (SET), social representation theory (SRT), social network analysis (SNA), social identity theory (SIT), signaling theory (ST) and the impression management theory (IMT) into one framework that is built around information as a resource and social interaction.

The results suggest that Twitter can be used to add value if firms interact and reciprocate with the various stakeholders.

Firms using social media must interact and reciprocate with the various stakeholders.

This research is different than the published research on this topic in that it examines the impact on stock prices of the introduction of a specific social media platform, i.e. Twitter. The present results of the paper add to the prior research on database marketing and show that marketing “with” the customer is adding more value than marketing “to” the customer. The use of the net extends the scope of database marketing into a certain form of interaction marketing with “face-to-face” interaction within the relationships between the firm and its customers. Finally, the conditions under which social media platforms are used in an interactive manner are shown, and depicts that firms are more likely to use a two-way interactive strategy following a one-year period of positive momentum.