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This book is a policy proposal aimed at the democratic left. It is concerned with gradual but radical reform of the socio‐economic system. An integrated policy of industrial and economic democracy, which centres around the establishment of a new sector of employee‐controlled enterprises, is presented. The proposal would retain the mix‐ed economy, but transform it into a much better “mixture”, with increased employee‐power in all sectors. While there is much of enduring value in our liberal western way of life, gross inequalities of wealth and power persist in our society.

Incentive‐based executive compensation is regarded as a mechanism for alleviating agency problems between executives and shareholders. Seventy‐three New Zealand (NZ) listed companies are used to examine the relationship between executive incentive compensation schemes (ICS) and firm performance. The results suggest that neither compensation level nor adoption of an ICS are significantly related to returns to shareholders or ROA. However, there is a statistically significant relationship between Tobin's q and both CEO compensation and executive share ownership. Further, the evidence suggests the recent compensation disclosure requirements in NZ are not yet stringent enough to allow adequate analysis of the link between ICSs and corporate performance.

The purpose of this paper is to investigate the relation between the value of executive director share ownership and discretionary accruals.

This study uses a dataset of 1,173 firm‐year observations drawn from 188 Australian listed companies for the period 2000‐2006. The analysis is based on multivariate regression analysis and ordinary least square models were used to investigate the relation between the value of managerial ownership and discretionary accruals. The issue of potential endogeneity is addressed by using a simultaneous equation system.

A negative relation is found between value of managerial share ownership and discretionary accruals at lower levels of value of ownership, which is consistent with the theorised incentive alignment that as the managers commit more resources to their firms, stakeholders impose less contractual constraints specified in terms of accounting numbers and managers make lower accrual adjustments. After a certain level of value of ownership is attained, a positive relations seen, consistent with increased discretionary accrual adjustments associated with stakeholders anticipating managerial entrenchment. Also, it is found that these results are driven by firms with income increasing, as opposed to income decreasing, discretionary accruals.

Shares and options are forming an increasing proportion of executive remuneration that continues to be the subject of much debate amongst regulators and in the media. Showing that the value of share ownership may be an effective internal governance mechanism to help align incentives adds to the debate and has policy implications.

The paper's primary contribution is finding that the value (as opposed to proportion) of share ownership, typically representing a sizeable proportion of managers' undiversified wealth, is a potentially direct driver of theorised incentive alignment and entrenchment effects associated with share ownership.

Refers to previous research on investment opportunity sets, financing policies, board monitoring and directors’ shareholdings and the proportion of non‐executive directors (NEDs) on the board on the negative relationship between investment opportunities and leverage. Tests them on 1998 data from 437 top Australian companies, explains the methodology and presents the results, which suggest that the negative relationship (i.e. asset substitution or underinvestment) decreases with higher levels of executive director shareholdings or higher proportions of NEDs; and that underinvestment is greatest for firms with low management share ownership. Recognizes the limitations of the study and suggests some avenues for further research.

This study examines the relationship between board composition and firm value, and the extent to which this relationship may be affected by a company’s investment opportunity set. There is little research that examines this issue, particularly for the New Zealand market. Of the research that exists, and generally for the research that examines how board composition affects firm performance, the findings have been mixed. Using a randomly chosen sample, which improves the external validity of results from prior studies, we find that board composition of high growth option firms is positively related to firm value, and this relationship is maintained when more refined measures that proxy the characteristics of outside directors (such as tenure of outside directors, the level of outside director equity ownership, the number of other board positions held by outside directors, and the total proportion of non‐executive directors, including grey directors) are recognised.

The purpose of this study is to examine the impact of recent corporate governance reforms on the association between governance practices and earnings management.

This study examines the impact of corporate governance reforms by using a firm fixed‐effect, cross‐sectional analysis of 200 firms listed on the Australian Stock Exchange (ASX) for the financial years ending in 2000 and 2005. This paper examines the association between firms' corporate governance practices and the quality of financial reports as measured by the magnitude of earnings management pre‐ and post‐the governance reforms (CLERP 9 and ASX Corporate Governance Council (CGC)).

The results of this study indicate that certain governance practices are important in limiting earnings management. In particular, board independence and audit committee (AC) independence, are associated with lower performance‐adjusted discretionary accruals, one commonly used measure of earnings management. However, increasing executive shareholdings provides incentives to manage earnings.

This study is important to investors, academics and policy makers as it demonstrates that governance reforms that encourage firms to adopt better governance practices reduces the likelihood of earnings management.

There is limited research on the association between corporate governance practices or the recent corporate governance reforms (ASX CGC Recommendations and CLERP 9) on earnings management in Australia. This study extends the literature by demonstrating the impact of recent corporate governance reforms on board independence, AC effectiveness and executive directors' shareholding and the association with earnings management.

“All things are in a constant state of change”, said Heraclitus of Ephesus. The waters if a river are for ever changing yet the river endures. Every particle of matter is in continual movement. All death is birth in a new form, all birth the death of the previous form. The seasons come and go. The myth of our own John Barleycorn, buried in the ground, yet resurrected in the Spring, has close parallels with the fertility rites of Greece and the Near East such as those of Hyacinthas, Hylas, Adonis and Dionysus, of Osiris the Egyptian deity, and Mondamin the Red Indian maize‐god. Indeed, the ritual and myth of Attis, born of a virgin, killed and resurrected on the third day, undoubtedly had a strong influence on Christianity.

This paper examines whether the financial performance of the firm is associated with the risk‐taking propensity of executives, which is inferred from the structure of their share option portfolio. The objective of this paper is to determine if executives have greater risk bearing preferences when they have more share options than shares in their firm. In turn, executives' risk‐taking preferences suggest that these decision‐makers adopt value‐increasing strategies. The results of this study support this notion. The results of the study of 182 Australian firms demonstrate that the negative relationship between firm risk and firm performance is weaker when executives hold a higher proportion of share options than shares in their investment in the firm. These results hold implications for executives' compensation contracts. That is, executives who share in their firms' risk via share options are more likely to undertake risky activities with high‐expected performance outcome.

The purpose of this paper is to identify firms in the UK adopting a policy of high cash and low leverage and investigate how executive ownership contributes to this decision.

Firms following this policy are identified both by using a fixed classification approach and the analysis of the distribution of cash and leverage. Logit analysis is then used to estimate the probability of adopting the policy as a function of executive ownership.

Extreme financial policies are suboptimal as firms adopting these policies tend to undershoot (overshoot) their target leverage (cash holdings) ratios. The impact of the executive ownership on the probability of adopting this policy is U-shaped, in line with the alignment–entrenchment hypothesis.

Despite the substantial presence of non-executive directors in the boards and a significant amount of shareholdings by executive directors, the firms under analysis have adopted suboptimal financial policies possibly because poorly governed or because executive ownership is the range where entrenchment is feasible.

This is the first attempt at recognising policies of high cash and low leverage as being explicitly interdependent. It is also the first study focussing on the UK, a country of interest, because ownership structure is relatively dispersed. Moreover, instead of choosing fixed threshold levels of the variable in defining the extreme financial policy, this paper proposes the analysis of the distribution of cash holdings and leverage and accounts for target levels of cash and leverage.

The aim of this paper is to investigate the dynamics between executive ownership and excess cash policy in the UK.

The authors identify firms adopting an excess policy using a joint criterion of high cash and cash higher than the target. Logit analysis is used to estimate the impact of executive ownership and other governance characteristics on the probability of adopting an excess cash policy.

The results suggest that, in the UK, the impact of the executive ownership on the probability of adopting an excess cash policy is non-monotonic, in line with the alignment-entrenchment hypothesis. The results are robust to different definitions of excess cash policy, to alternative specifications of the regression model, to different estimation frameworks and to alternative proxies of ownership concentration.

The authors’ approach provides a new measure of the excess target cash for the firm. They show the need to identify an excess target cash policy not only by using an empirical criterion and a theoretical target level of cash, but also by capturing persistence in deviation from the target cash level. The authors’ measure of excess target cash calls into questions findings from previous studies. The authors’ approach can be used to explore whether excess cash holdings of UK firms and the impact of managerial ownership have changed from before the crisis to after the crisis.

The authors’ measure of excess target cash allows identifying in practice levels of cash which are abnormal with respect to an equilibrium level. UK firms should be cautious in using executive ownership as a corporate governance mechanism, as this may generate suboptimal cash holdings and suboptimal firm value. Excess cash policy might be driven not only by a poor corporate governance system, but also by the interplay between agency costs of managerial opportunism and cost of the external finance which further research could explore.

Actually, “how much cash is too much” is a question that has not been addressed by the literature. The authors address this question. Also, this amount of cash allows the authors to study the extent to which executive ownership contributes to explain the out-of-equilibrium persistency in the cash level.