Search results
1 – 10 of over 1000Corporate governance is the practice of balancing various stakeholder interests within the legal device of the chartered business. Recent changes in the competitive capitalism…
Abstract
Purpose
Corporate governance is the practice of balancing various stakeholder interests within the legal device of the chartered business. Recent changes in the competitive capitalism including the Great Recession, now entering its second decade, have called for reforms within the defined corporate system. To sketch a wider picture of corporate governance issues and the debate over time, this paper aims to identify two philosophical traditions, a British and liberal tradition and a continental statist tradition, which have bearings for how the legal device of the corporation is understood.
Design/methodology/approach
This conceptual paper combines legal philosophy and legal studies, management studies, economics and economic sociology literatures.
Findings
In the former tradition, the firm and its ownership are exclusively associated with irreducibly individual rights. In the latter tradition, property rights remain the core of legal systems, but rather than being an end in itself (as in the liberal tradition), such property rights are merely the starting point for the individual’s wider engagement in social and public affairs. These two traditions enact the firm differently and emphasize specific benefits. In the former tradition, associated with a shareholder primacy model, individual rent-seeking is foregrounded; in the latter tradition, associated with legal and management scholarship, the team production qualities of the firm are emphasized.
Originality/value
This conceptual paper offers an analysis of the roots of differences between Anglo-American and continental corporate governance traditions, a scholarly study that is of great theoretical and practical relevance in the era of the Great Depression.
Details
Keywords
Nicholas J. C. Santos, John Sealey and Austin G. C. Onuoha
To demonstrate how the Society of Jesus (Jesuits) in the United States through the “National Jesuit Committee on Investment Responsibility” played a significant role as a socially…
Abstract
Purpose
To demonstrate how the Society of Jesus (Jesuits) in the United States through the “National Jesuit Committee on Investment Responsibility” played a significant role as a socially conscious institutional and religious investor in influencing Chevron’s Human Rights Policy 520 and to analyze the factors that contributed to a successful shareholder engagement with the company.
Methodology/approach
Case study based on firsthand information.
Findings
Our conclusion offers support for Allen et al.’s (2012) conclusion of legitimacy (credibility) being the dominant force in a successful engagement.
We found that coalition-building is a significant moderating variable in increasing shareholder salience. This finding contradicts the study by Gifford (2010).
Our conclusion offers support for Allen et al.’s (2012) conclusion of legitimacy (credibility) being the dominant force in a successful engagement.
We found that coalition-building is a significant moderating variable in increasing shareholder salience. This finding contradicts the study by Gifford (2010).
Originality/value of chapter
The chapter is based on the actual process of shareholder engagement with Chevron Corporation that led to the human rights policy and is written mainly based on firsthand information.
Details
Keywords
Purpose – Responsible investor (RI) engagement seeks to change corporate strategic priorities while balancing the financial imperative. This chapter uses an…
Abstract
Purpose – Responsible investor (RI) engagement seeks to change corporate strategic priorities while balancing the financial imperative. This chapter uses an institutional theory framework to explore the tension between financial performance and environmental, social, and governance (ESG) issues in RI engagement.
Methodology – Discourse of the proponent, supporters and opponents of Australia’s first climate change shareholder resolution – a minority proposal, will be analyzed using framing analysis.
Findings – Framing indicated that the discourse emphasized the dominant financial performance logic while often omitting the ESG logic. One possible explanation is that the process of shareholder proposal nomination and the financial imperative of investment organizations effectively co-opted the engagement.
Research limitations – A case of responsible investment engagement is used to illustrate multiple logics in the investment field. Although there are significant limitations to drawing inferences from a single example, the discussion is relevant to RI support for engagement initiatives such as the UN Principles of Responsible Investment clearinghouse and Carbon Disclosure Project Carbon Action. This chapter argues that attempts to change corporate strategic actions on climate change by RI through engagement will be less effective while the financial performance logic provides relatively more legitimacy to investors.
Practical implications – Integrating the ESG logic with the financial logic is vulnerable to co-optation due to incommensurability. Operationalizing both logics requires establishing a boundary between ESG and financial logics to develop legitimacy.
Social implications – RI engagement on climate change has the potential to be an important part of the social response to the sustainability agenda.
Originality – In applying institutional theory to RI climate change activism this chapter presents original insights into the potential of engagement to effect change.
Details
Keywords
This chapter assesses the impact of socially responsible investing (SRI) in terms of its role in governance. Governance refers to the rules, incentives, institutions and…
Abstract
Purpose
This chapter assesses the impact of socially responsible investing (SRI) in terms of its role in governance. Governance refers to the rules, incentives, institutions and philosophies for coordinating, controlling and supervising behaviour. The SRI sector purports to be a mechanism of market governance, such as through its codes of conduct and targeting of individual companies by engagement or divestment.
Method/approach
This subject-matter of the chapter is evaluated primarily through a conceptual and theoretical argument rather than empirical research.
Findings
Social investors’ capacity to ‘govern’ the market is constrained by gaps and deficiencies in the legal frameworks for the financial economy. Fiduciary law controlling institutional investors is the most important element of this governance framework. The SRI movement is starting to broaden its agenda and strategies to include advocacy for regulatory reform. But the SRI industry has devoted attention to its own voluntary codes of conduct, such as the UNPRI, which do not yet provide a sufficiently comprehensive or robust substitute for official regulation.
Social implications
Paradoxically, whereas SRI once stood for taking action through the financial economy when governments had failed to act, the sector is also somewhat dependent on the state to provide an empowering governance framework. But state regulation itself may be strengthened by partnership with the SRI industry, such as by utilising its codes of conduct to supplement official legal standards.
Originality/value of the chapter
The chapter deepens insights into the relationship between the SRI sector as a largely voluntary movement and its legal governance through the state or the market.
Details
Keywords
The 2008/2009 World Financial Crisis underlined the importance of social responsibility for the sustainable functioning of economic markets. Heralding an age of novel heterodox…
Abstract
The 2008/2009 World Financial Crisis underlined the importance of social responsibility for the sustainable functioning of economic markets. Heralding an age of novel heterodox economic thinking, the call for integrating social facets into mainstream economic models has reached unprecedented momentum. Financial Social Responsibility bridges the finance world with society in socially conscientious investments. Socially Responsible Investment (SRI) integrates corporate social responsibility in investment choices. In the aftermath of the 2008/2009 World Financial Crisis, SRI is an idea whose time has come. Socially conscientious asset allocation styles add to expected yield and volatility of securities social, environmental, and institutional considerations. In screenings, shareholder advocacy, community investing, social venture capital funding and political divestiture, socially conscientious investors hone their interest to align financial profit maximization strategies with social concerns. In a long history of classic finance theory having blacked out moral and ethical considerations of investment decision making, our knowledge of socio-economic motives for SRI is limited. Apart from economic profitability calculus and strategic leadership advantages, this paper sheds light on socio-psychological motives underlying SRI. Altruism, need for innovation and entrepreneurial zest alongside utility derived from social status enhancement prospects and transparency may steer investors’ social conscientiousness. Self-enhancement and social expression of future-oriented SRI options may supplement profit maximization goals. Theoretically introducing potential SRI motives serves as a first step toward an empirical validation of Financial Social Responsibility to improve the interplay of financial markets and the real economy. The pursuit of crisis-robust and sustainable financial markets through strengthened Financial Social Responsibility targets at creating lasting societal value for this generation and the following.
Details
Keywords
Shah Md Taha Islam, Ratan Ghosh and Asia Khatun
The purpose of this study is to investigate whether financial resource allocation decisions for corporate social responsibility (CSR) depends on slack resources and free cash flow.
Abstract
Purpose
The purpose of this study is to investigate whether financial resource allocation decisions for corporate social responsibility (CSR) depends on slack resources and free cash flow.
Design/methodology/approach
The study's sample consists of 202 company-year observations from 51 financial institutions over the period 2015–2019. The authors collected CSR data from CSR review reports published by the Central Bank (Bangladesh Bank). The financial and governance data are collected from corporate annual reports and year-end review reports published by the Dhaka Stock Exchange. This study uses both the random-effect and generalized estimating equation models to test the hypotheses.
Findings
The authors establish two key findings consistent with the predictions of slack resource theory and free cash flow theory. First, the authors find a significant and positive relationship between slack resources and CSR expenditure. This result also supports the traditional thinking about corporate giving – that doing well enables doing good. Second, the author show that increases in free cash flow are associated with increases in CSR expenditure. This indicates the presence of agency problems between managers and shareholders regarding CSR expenditure.
Originality/value
This study is the first to show the positive impacts of slack resources and free cash flow on CSR expenditure in an emerging economy characterized by both capital constraints and high salience of CSR expenditure. The study has important implications for regulators, advocacy groups, shareholders and analysts in emerging economies that share similar contextual characteristics.
Details
Keywords
Katinka Van Cranenburgh, Daniel Arenas, Jennifer Goodman and Céline Louche
The purpose of this paper is to deepen the discussion about religious organisations’ (ROs) potential to practise their faith by means of their investments, rather than keeping…
Abstract
Purpose
The purpose of this paper is to deepen the discussion about religious organisations’ (ROs) potential to practise their faith by means of their investments, rather than keeping both issues separate.
Design/methodology/approach
The authors adopted a qualitative exploratory approach using seven cases of social shareholder engagement (SSE) by Christian organisations. It focused on creating knowledge from best practices.
Findings
Within the three Christian organisations studied, the authors identified three significant features that relate to their religious nature and affect their SSE: having a structured belief system, a grassroots network and a long-term perspective. These features can be instrumental in impacting company behaviour and society at large.
Research limitations/implications
The authors chose three ROs for their relevance and comparative features, but this limited sample size makes it hard to generalise the research findings.
Practical implications
This paper invites ROs to review their potential for actively owning their shares to be consistent with their faith and create change in business and society at large. Besides, ROs, with their unwavering belief system, extensive grassroots networks and long-term approach, are a force in the shareholder engagement field to be reckoned with by business.
Originality/value
The paper presents multi cases of ROs active in using their investments to create change in companies and society at large.
Details
Keywords
This purpose of this chapter is to explore the political significance of modern socially responsible investing, specifically the emergence of investor governance networks (IGNs…
Abstract
Purpose
This purpose of this chapter is to explore the political significance of modern socially responsible investing, specifically the emergence of investor governance networks (IGNs) and the collective activism of investors.
Design/methodology/approach
The research for this analysis is based upon insights and methodologies from political science, specifically within international relations and the constructivist theoretical approach. Investor networks are explored as social phenomena, an expression of changing values, and the contested realm of contrasting norms within the financial sector.
Findings
The chapter shows that the development of investor networks have followed a three-stage historical progression of emergence, transformation, and expansion. The increasing collective action by investors manifest in the creation of IGNs reflects the political nature of socially responsible investment in a world where governments are reluctant to lead and act on issues of importance to all citizens, not just investors. As such, these networks are part of the emerging global public domain, a transnational arena of discourse, contestation, and action where investors play a crucial role in articulating what is acceptable behavior by corporations.
Originality
The research in this chapter explores a particular aspect of socially responsible investment – the mobilization of collective action by investors – as a political phenomena, not just as an economic one, that has evolved over time. Very little research into SRI has been done from a political science perspective, contextualizing the rise of such investment as the confluence of collective action by increasingly powerful political actors in society. As such, the chapter has value to both scholars and observers of SRI because it emphasizes that the mobilization of investor networks results from broader societal dynamics that should not be underestimated by financial specialists and citizens alike.
Details