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Article
Publication date: 9 October 2020

Patrick Velte

This paper aims to analyze the governance-related and financial determinants and consequences of corporate social responsibility assurance (CSRA).

Abstract

Purpose

This paper aims to analyze the governance-related and financial determinants and consequences of corporate social responsibility assurance (CSRA).

Design/methodology/approach

Based on a legitimacy theoretical framework and on the business case argument, the author conducts a structured literature review and includes 66 quantitative peer-reviewed empirical (archival) studies on key CSRA proxies (CSRA adoption, choice of CSR assuror and CSRA quality).

Findings

In line with the business case for CSRA, the literature review indicates that internal corporate governance, country-related governance and specific financial determinants as reporting, firm size and industry (sensitivity) have a positive impact on CSRA adoption.

Research limitations/implications

A detailed analysis of CSRA proxies is needed in future archival research to differentiate between symbolic and substantive use of CSRA. In view of the current regulatory initiatives on CSR reporting and their decision usefulness, future research should also analyze in greater depth CSRA proxies as moderator and mediator variables.

Practical implications

With regard to the increased stakeholder demand on CSRA after the financial crisis of 2008–2009, firms should be aware of the value-added of CSRA to increase the decision usefulness of their CSR reports and firm reputation.

Originality/value

The analysis makes useful contributions to prior literature by focussing on empirical quantitative (archival) research method, structuring research on the business case for CSRA with respect to its governance and financial determinants and consequences for firms and stressing moderator analysis in archival CSRA research.

Details

Society and Business Review, vol. 16 no. 1
Type: Research Article
ISSN: 1746-5680

Keywords

Content available
Article
Publication date: 23 September 2019

Patrick Velte

The purpose of this paper is to focus on audit committees’ financial and industry expertise (FIE) and their impact on the readability of key audit matters (KAMs).

Abstract

Purpose

The purpose of this paper is to focus on audit committees’ financial and industry expertise (FIE) and their impact on the readability of key audit matters (KAMs).

Design/methodology/approach

Based on an agency-theoretical framework, analyses are conducted of data from a sample of UK premium listed companies for the fiscal years 2014–2017 (i.e. 1,319 firm-year observations). Correlation and regression analyses are conducted to evaluate possible associations between FIE in audit committees and KAM readability. The author relies on popular readability measures (Flesch Reading Ease and Fog Index).

Findings

Audit committees’ FIE and KAM readability are positively connected. Combined FIE also has a stronger effect than either financial or industry expertise alone.

Research limitations/implications

Companies, regulators and researchers could be significantly affected by the finding that audit committees’ FIE can have a considerable impact on KAM readability.

Originality/value

The analysis of the link between audit committees’ FIE and KAM readability makes a contribution to prior empirical research on KAM.

Details

Journal of Applied Accounting Research, vol. 21 no. 1
Type: Research Article
ISSN: 0967-5426

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Article
Publication date: 15 October 2019

Patrick Velte

This paper aims to analyze whether chief executive officer (CEO) incentives and characteristics (e.g. CEO power, CEO tenure) are linked with corporate social…

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1080

Abstract

Purpose

This paper aims to analyze whether chief executive officer (CEO) incentives and characteristics (e.g. CEO power, CEO tenure) are linked with corporate social responsibility (CSR) and vice versa.

Design/methodology/approach

Based on upper echelons theory, the author conducts a structured literature review and evaluates 84 empirical-quantitative studies on CEO and CSR variables.

Findings

While the majority of the included studies analyzed the CEO-CSR link, there are indicators for a bidirectional relationship. Moreover, prior research has focused on CEO incentives, especially compensation contracts, and on the US capital market. A major research gap relates to CEO characteristics, e.g. CEO values, education and experience.

Research limitations/implications

Heterogeneous CEO and CSR variables and endogeneity concerns lower the validity of recent studies. Future research is encouraged to implement dynamic regression models, increase CSR and CEO proxies and focus on international samples with country-specific effects.

Practical implications

As CEO activities can have a major impact on CSR activities, the author recommends firms to search for opportunities to make their CSR strategy more comprehensive by their stakeholder communication, thus providing deeper insights into their CSR performance in line with stakeholders’ interests.

Originality/value

The paper is the first literature review on the interaction between CEO and CSR so far. The author explains the main CEO and CSR variables that have been included in research, stresses the limitations of the studies and gives useful recommendations for future research, practice and regulators.

Details

Social Responsibility Journal, vol. 16 no. 8
Type: Research Article
ISSN: 1747-1117

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Article
Publication date: 9 October 2019

Patrick Velte

Based on stakeholder and upper echelons theory, this study aims to analyze whether the link between environmental, social and governance (ESG) performance and financial…

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1807

Abstract

Purpose

Based on stakeholder and upper echelons theory, this study aims to analyze whether the link between environmental, social and governance (ESG) performance and financial performance is moderated by chief executive officer (CEO) power.

Design/methodology/approach

Listed corporations with reference to the German two-tier system (HDAX and SDAX) for the business years 2010-2018 (775 firm-year observations) have been included. Fixed effects panel regression analysis was conducted to analyze the link between ESG performance (in total and its three pillars) and financial performance (ROA), with special reference to the interaction of a CEO power index.

Findings

While ESG performance has a positive impact on financial performance, the link is more pronounced by CEO power. Thus, in line with prior research on the one-tier system, CEO incentives can positively contribute to the CSR-business case in the German two-tier system. The results remain constant after conducting several robustness checks.

Originality/value

A key contribution to the empirical CSR literature can be stated, as the moderating role of CEO power in the ESG–financial performance link is rather neglected in prior studies. Thus, corporate governance and sustainability should be classified as interactive aspects for the business case of a successful stakeholder management.

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Article
Publication date: 22 September 2020

Patrick Velte and Jörn Obermann

This paper aims to analyse whether and how different types of institutional investors influence shareholder proposal initiations, say-on-pay (SOP) votes and management…

Abstract

Purpose

This paper aims to analyse whether and how different types of institutional investors influence shareholder proposal initiations, say-on-pay (SOP) votes and management compensation from a sustainability perspective.

Design/methodology/approach

Based on the principal-agent theory, the authors conduct a structured literature review and evaluate 40 empirical-quantitative studies on that topic.

Findings

The traditional assumption of homogeneity within institutional investors, which is in line with the principal–agent theory, has to be questioned. Only special types of investors (e.g. with long-term and non-financial orientations and active institutions) run an intensive monitoring strategy, and thus initiate shareholder proposals, discipline managers by higher SOP dissents and prevent excessive management compensation.

Research limitations/implications

A detailed analysis of institutional investor types is needed in future empirical analyses. In view of the current debate on climate change policy, future research could analyse in more detail the impact of institutional investor types on proxy voting, SOP and (sustainable) management compensation.

Practical implications

With regard to the increased shareholder activism and regulations on SOP and management compensation since the 2007/2008 financial crisis, firms should be aware of the monitoring role of institutional investors and should analyse their specific ownership nature (time- and content-driven and as well as range of activity).

Originality/value

To the best of authors’ knowledge, this is the first literature review with a clear focus on institutional investor range and nature, shareholder proposal initiation, SOP and management compensation (reporting) from a sustainability viewpoint. The authors explain the main variables that have been included in research, stress the limitations of this work and offer useful recommendations for future research studies.

Details

Journal of Global Responsibility, vol. 12 no. 1
Type: Research Article
ISSN: 2041-2568

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Article
Publication date: 25 February 2020

Jörn Obermann, Patrick Velte, Jannik Gerwanski and Othar Kordsachia

Although principal–agent theory has gained a prominent place in research, its negative image of self-serving managers is frequently criticized. Thus, the purpose of this…

Abstract

Purpose

Although principal–agent theory has gained a prominent place in research, its negative image of self-serving managers is frequently criticized. Thus, the purpose of this paper is to examine how existing theories of agency and stewardship can be combined by using behavioral characteristics.

Design/methodology/approach

This study reviewed articles on the behavior of agents and stewards from the domains of finance, economics, management, corporate governance and organizational research. Additional theoretical and meta-analytical empirical literature from the fields of psychology and sociology was used to account for general patterns of human behavior.

Findings

The results indicate that goal congruency and the perception of fairness can serve as moderators distinguishing agency theory and stewardship theory. Goal congruency can be achieved by stipulating psychological ownership. The perception of distributive and procedural fairness is demonstrated by two major corporate governance mechanisms: performance-based compensation and board monitoring. The results are summarized in six hypotheses that allow a situational, customized corporate governance. These hypotheses can be tested in future research.

Originality/value

Prior work either focused on the merits of principal-agent theory or advocates the utilization of positive management theories, such as stewardship theory. However, little work has been done on bridging the gap between both constructs and develop a more extensive view of management theory.

Details

Management Research Review, vol. 43 no. 8
Type: Research Article
ISSN: 2040-8269

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Article
Publication date: 29 August 2019

Patrick Velte

This study aims to focus on environmental, social and governance (ESG) performance as a whole and individually in its three pillars and their influence on earnings management.

Abstract

Purpose

This study aims to focus on environmental, social and governance (ESG) performance as a whole and individually in its three pillars and their influence on earnings management.

Design/methodology/approach

Companies listed on the German Prime Standard (DAX30, TecDAX and MDAX) for the business years 2011-2017 (548 firm-year observations) are included in the empirical quantitative study. A correlation and regression analysis is conducted to analyze the impact of ESG performance as determined by the Asset4 database of Thomson Reuters on accruals-based earnings management (AEM) and real earnings management (REM).

Findings

ESG performance has a negative influence on AEM but not on REM. Moreover, by dividing the three different factors of ESG performance, governance performance has the strongest negative impact on AEM in comparison to environmental and social performance. This study also suggests a bidirectional relationship between ESG performance and earnings management.

Originality/value

The analysis makes a key contribution to research as the link between ESG performance and their three components and earnings management are analyzed for the German two-tier system for the first time. Corporate practice, regulators and researchers should recognize that ESG performance and financial reporting should be discussed together.

Details

Journal of Global Responsibility, vol. 10 no. 4
Type: Research Article
ISSN: 2041-2568

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Article
Publication date: 12 December 2018

Patrick Velte

The purpose of this paper is to summarize the key findings of meta-analyses in accounting, auditing and corporate governance research.

Abstract

Purpose

The purpose of this paper is to summarize the key findings of meta-analyses in accounting, auditing and corporate governance research.

Design/methodology/approach

A structured literature review on 63 meta-analyses related to financial accounting, management accounting, auditing, and corporate governance is conducted.

Findings

Most of the previous meta-analyses have been focused on the topic of corporate governance with a clear focus on board composition as an independent variable and by integrating research- and country-specific moderating variables. Meta-analyses in management accounting are rare; furthermore, no meta-analysis in tax accounting has been published yet.

Originality/value

Meta-analyses on these topics are expected to become increasingly important in the following years because of the increased number of empirical quantitative research. This literature review gives useful insights for research, practice and regulation.

Details

Meditari Accountancy Research, vol. 27 no. 1
Type: Research Article
ISSN: 2049-372X

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Article
Publication date: 13 June 2017

Patrick Velte

The purpose of this paper is to concentrate on environmental, social and governance performance (ESGP) in total and divided in each component and evaluate their impact on…

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7057

Abstract

Purpose

The purpose of this paper is to concentrate on environmental, social and governance performance (ESGP) in total and divided in each component and evaluate their impact on financial performance (FINP).

Design/methodology/approach

The study covers a sample selection of companies listed on the German Prime Standard (DAX30, TecDAX, MDAX) for the business years 2010-2014 (412 firm-year observations). A correlation and regression analysis was carried out to evaluate possible links between ESGP as determined by the Asset4 database of Thomson Reuters and accounting and market-based measures of FINP (Return on Assets [ROA] and Tobin’s Q).

Findings

ESGP has a positive impact on ROA but no impact on Tobin’s Q. Furthermore, by analyzing the three different components of ESGP, governance performance has the strongest impact on FINP in comparison to environmental and social performance.

Originality/value

The analysis makes a key contribution to the empirical corporate social responsibility (CSR) research as the author breaks down ESGP into their three components and include both accounting-based and market-based FINP measures for the German setting for the first time. Not only companies but also regulators and researchers are affected by the notion that CSR and FINP are close together and should be lead to a successful stakeholder management.

Details

Journal of Global Responsibility, vol. 8 no. 2
Type: Research Article
ISSN: 2041-2568

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Article
Publication date: 9 May 2016

Patrick Velte

The purpose of this paper is to analyse women on management board and their impact on environmental, social and governance (ESG) performance in two European two-tier countries.

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3275

Abstract

Purpose

The purpose of this paper is to analyse women on management board and their impact on environmental, social and governance (ESG) performance in two European two-tier countries.

Design/methodology/approach

The empirical quantitative paper covers a sample of German and Austrian companies which are listed at the Prime Standard of the Frankfurt and Vienna Stock Exchange for the business years 2010-2014 (1,019 firm-year observations). A correlation and regression analysis is conducted to measure a possible link between gender diversity and ESG performance in these European countries.

Findings

Multiple regressions state that female members in the management board do have a positive impact on ESG performance, measured by the AssetFour database by Thomson Reuters. Surprisingly, CSR expertise does not have a significant impact on ESG performance, whether the implementation of a CSR committee has a positive and significant link with ESG performance.

Originality/value

The analysis is the first empirical study that has a focus on Germany and Austria as the main representatives of the European two-tier system. Findings have implications for both users and public policy and suggest that current national and European regulations on corporate governance and CSR could have a great impact on future CSR performance and market reactions.

Details

Journal of Global Responsibility, vol. 7 no. 1
Type: Research Article
ISSN: 2041-2568

Keywords

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