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1 – 10 of over 2000
Book part
Publication date: 17 October 2014

Moin A. Yahya

Making law in America is not a simple task. It can be legislated by Congress, enforced by the executive, interpreted by the courts, and augmented by a massive body of rules…

Abstract

Making law in America is not a simple task. It can be legislated by Congress, enforced by the executive, interpreted by the courts, and augmented by a massive body of rules created by administrative agencies such as the Securities and Exchange Commission (SEC). The Dodd-Frank Wall Street Reform and Consumer Protection Act (2010) (Dodd-Frank was passed) with an eye to preventing future financial crises. Four years later, many details of Dodd-Frank have yet to be finalized as the SEC is still in the process of developing the regulations that the legislation required them to create. Even once the regulations are finalized by the SEC, the regulations will be challenged by various parties in the courts. The regulations will be either upheld or rejected. Those that are upheld will then face numerous challenges when applied in specific cases, while those rejected will have to be redone all over again. The process of developing these regulations is cumbersome and attracts many of the special interests that were present in the legislative phase of Dodd-Frank and who will also be present in the litigation phases of testing Dodd-Frank in the courts. This paper focuses on the requirement that investment advisors and broker-dealers be deemed as owing fiduciary duties to their clients as a case study for the entangled political economy theory. The paper shows how the development of a simple rule such as whether these fiduciary duties should be owed or not requires years of back and forth between the legislative, executive, administrative, and judicial branches.

Article
Publication date: 18 October 2011

A. Joseph Warburton

The purpose of this paper is to explore whether fiduciary duties impact the behavior of firm insiders. Trust law imposes stricter fiduciary obligations on insiders than corporate

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Abstract

Purpose

The purpose of this paper is to explore whether fiduciary duties impact the behavior of firm insiders. Trust law imposes stricter fiduciary obligations on insiders than corporate law does. This paper seeks to examine whether the difference in fiduciary duties impacts agency conflict, performance, and/or risk taking.

Design/methodology/approach

The paper takes an empirical approach to answering the question by comparing mutual funds organized as trusts and as corporations. The existence of these two types of organizations within the same industry offers a unique laboratory for the study of the effects of fiduciary duties.

Findings

Mutual funds organized in trust form charge significantly lower fees and take on less risk than equivalent mutual funds organized in corporate form. Evidence also suggests that the trusts tend to under‐perform their corporate counterparts, even after adjusting for differences in risk.

Originality/value

Much of the existing literature on firm governance and investor protection focuses on the corporation and, hence, takes organizational form as a given. By comparing trusts and corporations, this paper examines governance at a more fundamental level and exploits heterogeneity in corporate and trust fiduciary duties. The results have implications for corporate governance design, suggesting that heightened fiduciary duties can enhance investor protection by mitigating agency conflict and managerial risk taking, though at the possible cost of inferior risk‐adjusted performance.

Details

Corporate Governance: The international journal of business in society, vol. 11 no. 5
Type: Research Article
ISSN: 1472-0701

Keywords

Book part
Publication date: 7 October 2011

James P. Hawley

Andrew Williams and I have argued since the early 1990s that not only have equity (and subsequently most other assets classes) come to be dominated by institutional ownership of…

Abstract

Andrew Williams and I have argued since the early 1990s that not only have equity (and subsequently most other assets classes) come to be dominated by institutional ownership of various types, an observation that many have made and documented at length, but that the majority of those institutions are fiduciary ones (primarily pension and mutual funds in the United States). More recently pension and mutual funds have been the source of the majority of funds for many ‘alternative’ investments, such as hedge funds, private equity and commodity funds. In the last two decades there have been parallel developments in other countries, although the form of the institutional investors vary widely, from fiduciary ones mostly in common law countries to fiduciary-like ones in many civil law jurisdictions (e.g. the Netherlands), to some sovereign wealth funds (e.g. Norway and Australia and some others) which do not have fiduciary obligations as such, but in their legal mandates and practices are structured much like those that are fiduciary or fiduciary like. As discussed below, all these (in addition to some other large institutional owners) are universal owners, that is, they own a representative cross section of their investment universe (which increasingly is a global universe). Given their ownership structure characterised by a large degree of diversification, universal owners' long-term interests to a large degree coincide with the economy as a whole.

Details

Finance and Sustainability: Towards a New Paradigm? A Post-Crisis Agenda
Type: Book
ISBN: 978-1-78052-092-6

Book part
Publication date: 4 September 2019

Barry M. Mitnick and Martin Lewison

Despite the existence of a variety of approaches to the understanding of behavioral and managerial ethics in organizations and business relationships generally, knowledge of…

Abstract

Despite the existence of a variety of approaches to the understanding of behavioral and managerial ethics in organizations and business relationships generally, knowledge of organizing systems for fidelity remains in its infancy. We use halakha, or Jewish law, as a model, together with the literature in sociology, economic anthropology, and economics on what it termed “middleman minorities,” and on what we have termed the Landa Problem, the problem of identifying a trustworthy economic exchange partner, to explore this issue.

The article contrasts the differing explanations for trustworthy behavior in these literatures, focusing on the widely referenced work of Avner Greif on the Jewish Maghribi merchants of the eleventh century. We challenge Greif’s argument that cheating among the Magribi was managed chiefly via a rational, self-interested reputational sanctioning system in the closed group of traders. Greif largely ignores a more compelling if potentially complementary argument, which we believe also finds support among the documentary evidence of the Cairo Geniza as reported by Goitein: that the behavior of the Maghribi reflected their deep beliefs and commitment to Jewish law, halakha.

Applying insights from this analysis, we present an explicit theory of heroic marginality, the production of extreme precautionary behaviors to ensure service to the principal.

Generalizing from the case of halakha, the article proposes the construct of a deep code, identifying five defining characteristics of such a code, and suggests that deep codes may act as facilitators of compliance. We also offer speculation on design features employing deep codes that may increase the likelihood of production of behaviors consistent with terminal values of the community.

Details

The Next Phase of Business Ethics: Celebrating 20 Years of REIO
Type: Book
ISBN: 978-1-83867-005-4

Keywords

Article
Publication date: 1 March 1995

Kit Jarvis

The Law Commission has recently examined fiduciary relations and securities regulation. The purpose of this paper is a re‐examination of some of the questions posed in the…

Abstract

The Law Commission has recently examined fiduciary relations and securities regulation. The purpose of this paper is a re‐examination of some of the questions posed in the Consultation Paper (No. 124) published in April 1992, in the light of recent case law, pending the imminent publication of the Commission's final report on the matter.

Details

Journal of Financial Crime, vol. 3 no. 2
Type: Research Article
ISSN: 1359-0790

Abstract

Details

Research on Professional Responsibility and Ethics in Accounting
Type: Book
ISBN: 978-0-76231-239-9

Article
Publication date: 7 June 2021

Howard Chitimira

Insider trading is treated as a punishable offence in many jurisdictions and countries. In relation to this, various theories were developed to justify and enhance the regulation…

Abstract

Purpose

Insider trading is treated as a punishable offence in many jurisdictions and countries. In relation to this, various theories were developed to justify and enhance the regulation of insider trading in such jurisdictions and countries. For instance, regulatory bodies and the relevant courts in jurisdictions such as the Commonwealth and the European Union as well as in countries such as the USA and the UK have to date developed and consistently applied theories such as the classical theory, misappropriation theory, fiduciary theory, unified theory and equal access theory in their quest to detect, prevent and combat insider trading activities. For the purposes of this article, the aforesaid theories are discussed so as to recommend possible measures that could be adopted by the policy makers to effectively curb insider trading activities in the Zimbabwean financial markets. It is against this background that some theoretical aspects of the insider trading regulation as adopted by the Zimbabwean policymakers, regulatory bodies and the relevant courts are scrutinised in this paper. This is done to, inter alia, investigate possible flaws and the rationale for such direct and indirect application of certain insider trading theorem in Zimbabwe. Thereafter, some recommendations in respect thereof are provided.

Design/methodology/approach

A qualitative research methodology is used in the entire paper.

Findings

It is hoped that the recommendations in the paper will be used by the relevant policymakers to enhance the curbing of insider trading in Zimbabwe.

Research limitations/implications

The paper does not use an empirical research.

Practical implications

It is hoped that the recommendations in this paper will be used by the relevant policymakers to enhance the curbing of insider trading in Zimbabwe.

Social implications

It is hoped that the recommendations in this paper will be used by the relevant policymakers to enhance the curbing of insider trading in Zimbabwe.

Originality/value

This paper is original research on the theoretical aspects of the regulation of insider trading in Zimbabwe.

Details

Journal of Financial Crime, vol. 29 no. 1
Type: Research Article
ISSN: 1359-0790

Keywords

Article
Publication date: 30 January 2009

Stephen B. Young

The paper presents an overview of perspectives on corporate governance grounded in the Common Law legal traditions of the UK and the USA. It further discusses whether that…

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Abstract

Purpose

The paper presents an overview of perspectives on corporate governance grounded in the Common Law legal traditions of the UK and the USA. It further discusses whether that perspective is suitable for global application.

Design/methodology/approach

The paper presents personal observations on the operational dynamics of rules and practices of corporate governance as necessary functional supports for large scale financial capitalization of enterprise under conditions of modern industrialization.

Findings

The paper concludes that the US perspective on corporate governance is rationally related to objective requirements of financing enterprise and that, as capital markets become larger and more liquid around the world, the corporate governance regimes will, in the main, come to resemble the US model. Though cultural variations on the US pattern are compatible with the purposes of corporate governance to constrain abuse of power in private corporations.

Practical implications

The implication of this paper is for the implementation of corporate governance regimes in emerging market countries, i.e. that flexibility is permissible but a focus on transparency and accountability under all circumstances is required.

Originality/value

The contribution of the paper is to provide a framework for balancing the rules and practices of US corporate governance with the cultural styles and patterns of different national regulatory settings.

Details

International Journal of Law and Management, vol. 51 no. 1
Type: Research Article
ISSN: 1754-243X

Keywords

Article
Publication date: 3 May 2016

Tareq Na’el Al-Tawil

This paper aims to underline and evaluate what corporations are as artificial entities, the concept of corporate governance (CG) in the twentieth century and whether a corporation…

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Abstract

Purpose

This paper aims to underline and evaluate what corporations are as artificial entities, the concept of corporate governance (CG) in the twentieth century and whether a corporation owes allegiance to its key stakeholders in the twenty-first century.

Design/methodology/approach

Because it requires development in the twenty-first century, a clarification of the key areas of reform in “global corporate governance” is overdue. These include an analysis of the stakeholder role; the logic and effect of the codes of corporate practise such as in the Cadbury Code and Combined Codes. The “value chain theory” in CG and how it should be placed not only on financial value but also on natural, human and cultural values will looked at. This paper also provides a brief insight into major multi-national corporate collapse. The Enron case, for example, highlights how such mishaps can be avoided to rekindle trust and transparency, as well as disclosure to authorities, shareholders and the public.

Findings

This paper looks at how public interest and consumer interest play a role in corporate existence by analysing an inevitable change in the twenty-first century from absolute corporate control to public/consumer control and have an influence in areas like environmental, ethical and employee protection and recognition. The emotional side of a corporation is brought to life to win the hearts of consumers and the public. How this fares in the light of profits and long-term Environmental Management Scheme investment will be evaluated.

Originality/value

This paper ends with a general conclusion, summarising the necessary changes to governance and the author’s opinion on the realities of change: will it work, will it improve the living standards or will it just increase the gap between well-organised and ill-fated economies?

Details

Journal of Financial Crime, vol. 23 no. 2
Type: Research Article
ISSN: 1359-0790

Keywords

Book part
Publication date: 19 May 2009

William W. Bratton

This chapter collects and categorizes the principal theoretical debates respecting corporate law in the United States. What emerges is not a synthetic whole but a dialectic…

Abstract

This chapter collects and categorizes the principal theoretical debates respecting corporate law in the United States. What emerges is not a synthetic whole but a dialectic framework. Corporate law's theoretical debates do not resolve; their arguments and conclusions are determined by metapolitical preferences and unverified notions about aligning productivity incentives. But despite the debates, the acknowledged premise that corporations exist to create wealth by producing goods and services at a profit directs all theories of corporate law to two objectives. First, corporate law encourages long-term investment and risk-taking by facilitating a delegation of decision-making authority from the providers of capital to the expert managers who deploy it. Second, corporate law facilitates investment in producing assets at the lowest possible cost of capital, securing the presence of liquid trading markets in corporate securities.

Details

Law & Economics: Toward Social Justice
Type: Book
ISBN: 978-1-84855-335-4

1 – 10 of over 2000