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1 – 10 of over 4000Isabel Acero and Nuria Alcalde
This study investigates whether the proportion of proprietary directors (blockholders or their representatives) on the board's remuneration committee influences vertical pay…
Abstract
Purpose
This study investigates whether the proportion of proprietary directors (blockholders or their representatives) on the board's remuneration committee influences vertical pay inequality in Spanish listed companies and whether this relationship can be conditioned by the concentration of ownership.
Design/methodology/approach
The sample contains information on the individual compensation of 1048 directors of 57 Spanish listed firms during the period 2013–2018 making up an unbalanced panel with 3565 observations. Panel data regressions are used to study how the presence of proprietary directors on the remuneration committee influences the remuneration of directors, focusing not on their absolute remuneration levels, but rather on their relationship to the average remuneration of the organization's employees (as a measure of vertical pay inequality within the company). The authors also investigate whether this relationship is conditioned by firm ownership concentration.
Findings
The results indicate that the presence of proprietary directors on the remuneration committee acts as a mechanism to reduce vertical pay inequality, even in the context of high ownership concentration.
Originality/value
Unlike the majority of previous research dedicated to the independence of the remuneration committee, this study focuses on the role played by proprietary directors. The results help elucidate the importance of proprietary directors to properly monitor and restrain directors' compensation in contexts of high ownership concentration.
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Isabel-Maria Garcia-Sanchez, Beatriz Cuadrado-Ballesteros and Cindy Sepulveda
The purpose of this paper is to examine the moderating effect of media pressure on external directors in relation to disclosure of information on corporate social responsibility…
Abstract
Purpose
The purpose of this paper is to examine the moderating effect of media pressure on external directors in relation to disclosure of information on corporate social responsibility (CSR).
Design/methodology/approach
The paper adopts a multilevel approach, integrating the institutional, organisational and individual levels of analysis in a whole model that explains corporate transparency. The paper uses a sample composed of 98 non-financial listed Spanish companies for the period 2004-2010,
Findings
The results show heterogeneity between external board members. Proprietary directors, representing shareholders, tend to promote adoption of the Global Reporting Initiative guidelines in order to increase value for shareholders. On the contrary, independent directors are risk adverse in relation to the effect that CSR information disclosure could have on their professional reputations.
Research limitations/implications
The sample could be improved, including companies from different countries and more years for the analysis, since the period studied comprises a particular economic setting (2008-2010), a global financial crisis.
Practical implications
Although these results from the Spanish context, the authors recommend that regulatory bodies incorporate provisions into good governance codes that guarantee the existence of quality and comparable CSR information that favours stakeholders’ decision taking.
Originality/value
The image that society has about a company comes from the opinions created from the mass media. The arguments proposed by agenda-setting theory can be managed by companies as a strategic mechanism to respond to society expectations. At present, two of the most studied aspects are the ethical and sustainable behaviours of organisations. These aspects are related to the characteristics of boards of directors, especially to external directors. Independent directors may disagree with disclosing information about CSR practices because they fear that this information would affect their professional reputations, since they are not specialised in these topics. However, proprietary directors favour the disclosure of this information in an attempt to reduce the cost of capital and risk perceived by investors, especially in more sustainable companies.
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Elena Merino, Montserrat Manzaneque and Regino Banegas
Purpose – The purpose of this chapter is to examine the hypothesized effects of board characteristics and performance on directors’ compensation in the Spanish corporations, whose…
Abstract
Purpose – The purpose of this chapter is to examine the hypothesized effects of board characteristics and performance on directors’ compensation in the Spanish corporations, whose corporate governance is a special example of a unitary board system.
Methodology/approach – In order to test the influence of a set of factors on directors’ compensation levels, we have developed several models based on linear panel data regression. The sample included 76 listed companies on the Spanish computerized trading system or Continuous Market for the period 2004–2009.
Findings – The control mechanisms, like board characteristics and performance and their effect on the level of directors’ compensation, depend on the types of director (executive, independent and proprietary).
Research limitations/implications (if applicable) – This study has certain limitations mainly related to problems associated with obtaining information. The methodology should be complemented by other types of analyses, such as the influence of the characteristics of the board on the remuneration structure in a greater level of disaggregation.
Practical implications (if applicable) – The results of this research chapter give reasons to regulators and investors to be aware of the importance of the board's characteristics as corporate control mechanisms over the directors’ remuneration and the necessity of connection between directors’ compensation and the firm's performance.
Originality/value of paper – Firstly, descriptive empirical evidence on the level of directors’ compensation is provided within a unitary board system for different types of directors. Secondly, an ample panel data set enables the examination of a set of determinants using panel data methods which control for unobserved firm heterogeneity. Finally, the perspective is extended from executive director compensation to other types of directors, such as proprietary or independent, which are very important features of the Spanish board structure.
Núria Villaescusa and Oriol Amat
The purpose of this paper is to explore how the different elements of the fraud triangle are present in a case of convicted accounting fraud in collusion.
Abstract
Purpose
The purpose of this paper is to explore how the different elements of the fraud triangle are present in a case of convicted accounting fraud in collusion.
Design/methodology/approach
This is a case study research.
Findings
The authors find that when a fraud is carried out in collaboration of several internal and external members of the company, the view of the fraud triangle as an explanation of the fraud from a heuristic point of view is a very limited perspective of the fraud as an opportunity has been designed ad hoc for the fraud commission.
Originality/value
Although there is a vast research on accounting fraud, collusion fraud is still an unexplored area. This study gives light on how a real case of fraud is perpetrated.
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Niels Hermes, Theo J.B.M. Postma and Orestis Zivkov
The paper seeks to analyze to what extent the contents of corporate governance codes of countries in the European Union are driven by external (internationally accepted corporate…
Abstract
Purpose
The paper seeks to analyze to what extent the contents of corporate governance codes of countries in the European Union are driven by external (internationally accepted corporate governance best practices) or domestic (institutions, culture, etc.) forces.
Design/methodology/approach
The paper compares the contents of codes with the priorities set by the European Commission with respect to modernising company law and enhancing corporate governance in the European Union.
Findings
The analysis shows that the majority of the codes of the European Union countries are not in full accordance with the priorities of the European Commission. This may reflect that codes are driven by both external and domestic forces. Whether there is a difference between Western European and Central and Eastern European countries in this respect is also investigated, but no difference, at least at the aggregate level of the codes of both groups of countries has been found.
Research limitations/implications
The analysis excludes five (prospective) European Union members. The analysis does not provide a comprehensive overview of domestic determinants of why codes of individual countries diverge from the European Union communication. Future research should systematically explore whether and to what extent domestic forces are indeed determining the contents of codes and, if so, which country‐specific forces have an impact on establishing code contents.
Originality/value
This paper is the first comprehensive attempt to analyse the contents of corporate governance codes. Such an analysis is important to understand the underlying forces that shape the diffusion of codes and their contents.
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José Ignacio Conde-Ruiz, Manu García and Manuel Yáñez
The purpose of this paper is to analyze the functioning of a non-sanction “soft” gender quota policy structure (a simple recommendation), using the case of Spain. In the first…
Abstract
Purpose
The purpose of this paper is to analyze the functioning of a non-sanction “soft” gender quota policy structure (a simple recommendation), using the case of Spain. In the first part of the paper, the authors have reported the dismal improvement regarding the increase of female percentage presence in the companies’ boards of members.
Design/methodology/approach
The authors provide a detailed sectorial analysis and a classification of board members by type (executive, proprietary, independent and other external). In the second part, the authors exploit the fact that since 2013, the stock-listed companies are legally obliged to respond to a series of questions on gender diversity issues in their annual reports. Using this requirement, the authors perform an analysis using text processing techniques. The authors find that “self-plagiarism” is common in the responses – i.e. they copy responses from previous years – as well as “plagiarism” – i.e. they copy responses from other companies in previous years.
Findings
The insufficient progress in respect to the goals of the Law of Equality of 2007 (enacted by Spanish authorities) and the lack of interest that can be inferred from the companies’ responses included in their annual reports lead the authors to consider the necessity of changing the law on the corporate policies gender quotas in Spain.
Originality/value
It is the first study that realizes this type of analysis for Spain.
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This chapter describes some of the characteristics of the firms analysed in this study. Section 5.2 outlines the size of firms, measured by annual revenue and employee numbers. It…
Abstract
This chapter describes some of the characteristics of the firms analysed in this study. Section 5.2 outlines the size of firms, measured by annual revenue and employee numbers. It then discusses the implications for reporting entity status, preparing general-purpose financial reports and annual reports. Section 5.3 outlines the intellectual capital disclosure signals – narrative, visual and numerical – and their measurement output. Section 5.4 introduces ownership of equity held by directors in firms and its implications. Section 5.5 outlines firms' share ownership and shareholder distribution. Section 5.6 provides a summary of the chapter.
Patricia Molinero-Díez, Virginia Blanco-Mazagatos, Inigo Garcia-Rodriguez and M. Elena Romero-Merino
This study aims to evaluate changes in the presence of women on Spanish boards after the Unified Good Governance Code of Listed Companies (2006) and the Organic Law 3/2007 on…
Abstract
Purpose
This study aims to evaluate changes in the presence of women on Spanish boards after the Unified Good Governance Code of Listed Companies (2006) and the Organic Law 3/2007 on Gender Equality, and this study compares the educational background of women and men directors. Also, this study analyses the influence of gender diversity and educational background of women directors on economic performance, corporate social responsibility (CSR) and, ultimately, firm value. In addition, this study explores the differences in board gender composition and its effect on firm value during the crisis and post-crisis periods. Finally, this study analyses the different influence of women directors depending on their typology.
Design/methodology/approach
This study uses a system of structural equations and a sample of 4,101 directors of 30 Spanish companies listed on IBEX-35 over 2008–2017.
Findings
The results show that women’s presence on boards has grown since 2008, and they have higher educational background than men. This study finds that women directors improve economic performance and CSR, though results are non-significant for firm value. Women directors with a bachelor’s or master’s degree increase economic and social performance but reduce firm value. Women directors with business or industry-related studies positively influence CSR but business specialisation negatively affects economic performance and firm value.
Originality/value
This study analyses the direct and indirect effect of women directors on firm value, the influence of their educational background and the potential differences arising from the economic situation (crisis) and the type of board position they hold.
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Philip M. Linsley and Philip J. Shrives
This paper examines risk information disclosed by UK public companies within their annual reports. The types of risk information disclosed are analyzed and the authors examine…
Abstract
Purpose
This paper examines risk information disclosed by UK public companies within their annual reports. The types of risk information disclosed are analyzed and the authors examine whether a relationship exists between company size or level of risk and risk disclosure totals.
Design/methodology/approach
No prior empirical studies of the risk information content of annual reports have been undertaken. To analyze the risk disclosures, a sentence‐based approach was used.
Findings
Overall the results indicate that the companies sampled are not providing a complete picture of the risks they face. There is minimal disclosure of quantified risk information and a significant proportion of risk disclosures consist of generalized statements of risk policy. More usefully directors are releasing forward‐looking risk information. The principal driver affecting levels of risk disclosure is company size and not company risk level.
Research limitations/implications
Further risk disclosure research is possible in many different areas. Cross‐country studies could be undertaken as could risk disclosure studies within specific industry sectors. A limitation of the sentence‐based methodology is that it does not measure the quality of the risk disclosures and therefore different methods may be adopted in future studies.
Practical implications
Professional bodies attempting to improve risk reporting have not convinced directors of the benefits associated with greater voluntary risk disclosure. In the UK this has led to a mandatory requirement to provide better risk information being forced upon companies through legislation enacted by the UK government.
Originality/value
The area this paper researches is of particular importance given recent accounting scandals that have occurred. No previous risk disclosure studies have been published, therefore this exploration is also valuable in linking risk management and transparency.
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