Tone at the Top: An Ethics Code for Directors?

Recent corporate scandals have focused the attention of a broad set of constituencies on reforming corporate governance. Boards of directors play a leading role in corporate governance and any significant reforms must encompass their role. To date, most reform proposals have targeted the legal, rather than the ethical obligations of directors. Legal reforms without proper attention to ethical obligations will likely prove ineffectual. The ethical role of directors is critical. Directors have overall responsibility for the ethics and compliance programs of the corporation. The tone at the top that they set by example and action is central to the overall ethical environment of their firms. This role is reinforced by their legal responsibilities to provide oversight of the financial performance of the firm. Underlying this analysis is the critical assumption that ethical behavior, especially on the part of corporate leaders, leads to the best long-term interests of the corporation. We describe key components of a framework for a code of ethics for corporate boards and individual directors. The proposed code framework is based on six universal core ethical values: (1) honesty; (2) integrity; (3) loyalty; (4) responsibility; (5) fairness; and (6) citizenship. The paper concludes by suggesting critical issues that need to be dealt with in firm-based codes of ethics for directors.     

Corporate Governance and Codes of Ethics

As a result of recent corporate scandals, several rules have focused on the role played by Boards of Directors on the planning and monitoring of corporate codes of ethics. In theory, outside directors are in a better position than insiders to protect and further the interests of all stakeholders because of their experience and their sense of moral and legal obligations. Female directors also tend to be more sensitive to ethics according to several past studies which explain this affirmation by early gender socialization, the fact that women are thought to place a greater emphasis on harmonious relations and the fact that men and women use different ethical frameworks in their judgments. The goal of this paper is to determine the influence of these characteristics of the Board in terms of promoting and hindering the creation of a code of ethics. Our findings show that a greater number of female directors does not necessarily lead to more ethical companies. Moreover, within Europe as a continent, board ownership leads to an entrenchment of upper-level management, generating a divergence between the ethical interests of owners and managers. In light of this situation, the presence of independent directors is necessary to reduce such conflicts.     

Ethics and corporate governance: The issues raised by the Cadbury report in the United Kingdom

In the late 1980s there was a series of sensational business scandals in the United Kingdom. There was particular public outrage at the plundering of pension funds by Robert Maxwell, at the failure of auditors to expose the impending bankruptcy of the Bank of Credit and Commerce International, and at the apparently undeserved high pay raises received by senior business executives. The City of London responded by creating a special committee to examine the financial aspects of corporate governance. This paper describes the resulting Code of Best Practice produced by the Cadbury Committee. To reduce the power of executive directors in the boardroom the Code recommends a greater role for non-executive directors, changes in board operations, and a more active role for auditors. The paper reviews the various published reactions to the Cadbury Report, and concludes that the Code is unlikely to halt the incidence of business scandals in the United Kingdom.Colin Boyd teaches at the College of Commerce, University of Saskatchewan. His study of the Zeebrugge Car Ferry Disaster is published in a number of strategy and ethics case-books. In 1993/94 he was a Visiting Research Fellow at the Centre for Applied Ethics, University of British Columbia, which provided financial support for the production of this paper.     

我国公司治理结构中存在的问题及其对策研究

公司治理结构是公司制的核心。目前我国公司治理结构存在的问题主要表现在几个方面:股权过于集中,大股东侵害小股东利益;董事会独立性不强;监事会有名无实等。现阶段,应通过加强董事会的独立性,完善董事责任;充分发挥监事会的监督职能;完善小股东诉讼权制度;引导、加强职工参与公司管理等,完善我国公司治理结构。     

Corporate Governance Reform and CEO Compensation: Intended and Unintended Consequences

Recent scandals allegedly linked to CEO compensation have brought executive compensation and perquisites to the forefront of debate about constraining executive compensation and reforming the associated corporate governance structure. We briefly describe the structure of executive compensation, and the agency theory framework that has commonly been used to conceptualize executives acting on behalf of shareholders. We detail some criticisms of executive compensation and associated ethical issues, and then discuss what previous research suggests are likely intended and unintended consequences of some widely proposed executive compensation reforms. We explicitly discuss the following recommendations for reform: require greater independence of compensation committees, require executives to hold equity in the corporation, require greater disclosure of executive compensation, increase institutional investor involvement in corporate governance (including executive compensation), and require firms to expense stock options on their income statements. We provide a brief summary discussion of ethical issues related to executive compensation, and describe possible future research.     

Corporate Governance,Agility, and Survival

Abstract

Most corporate research has focused on (i) dimensions of governance that are relatively easy to measure (e.g., ownership structure, boards of directors, and executive compensation) and (ii) the role that governance arrangements play in mitigating agency costs. This paper takes an evolutionary perspective to corporate governance in which the concept of corporate agility, i.e., the ease with which firms adapt to changes in their respective environments, plays a prominent role. I argue that decentralization, which is understudied in the literature, promotes agility and predict that it is directly related to corporate performance and survival during periods of rapidly changing environments. The paper also discusses how some governance features that often are viewed through the lens of either mitigating or exacerbating agency costs are cast in a different light when their effects on corporate agility are considered.     

Corporate Codes of Conduct: The Effects of Code Content and Quality on Ethical Performance

Corporate codes of conduct are a practical corporate social responsibility (CSR) instrument commonly used to govern employee behavior and establish a socially responsible organizational culture. The effectiveness of these codes has been widely discussed on theoretical grounds and empirically tested in numerous previous reports that directly compare companies with and without codes of conduct. Empirical research has yielded inconsistent results that may be explained by multiple ancillary factors, including the quality of code content and implementation, which are excluded from analyses based solely on the presence or absence of codes. This study investigated the importance of code content in determining code effectiveness by examining the relationship between code of conduct quality and ethical performance. Companies maintaining high quality codes of conduct were significantly more represented among top CSR ranking systems for corporate citizenship, sustainability, ethical behavior, and public perception. Further, a significant relationship was observed between code quality and CSR performance, across a full range of ethical rankings. These findings suggest code quality may play a crucial role in the effectiveness of codes of conduct and their ability to transform organizational cultures. Future research efforts should transcend traditional comparisons based on the presence or absence of ethical codes and begin to examine the essential factors leading to the effective establishment of CSR policies and sustainable business practices in corporate culture.     

董事会权力结构比较研究——兼论对我国公司治理的借鉴意义

董事会是公司权力执行机关 ,具有股东与公司在权力上的承接关系。但由于信息不对称 ,可能导致董事滥用权力造成损害性后果 ,且股东及监事的监督作用又具有滞后性。因此 ,对发达国家公司法律制度与我国制度现状进行有效评析 ,借鉴与设计有效的董事会内部权力制衡构架 ,对完善我国公司治理结构具有现实意义。     

Do Internal Governance Mechanisms Impact on Firm Performance? Empirical Evidence from the Financial Sector in China

The financial sector plays an important intermediary role in the Chinese economy. However, there has been very limited research concerning improvement in corporate governance within this sector. Using an unbalanced data set of 139 firm-year observations covering 1999 to 2009, this study examines the impact of internal governance mechanisms on the performance of Chinese listed financial institutions. Findings suggest that state ownership, legal person ownership, board size, and supervisory board meetings are negatively related to the profitability of these institutions, whereas factors including ownership concentration, foreign ownership, independent directors, board meetings, and supervisory board size have no impacts.     

Ethical Sourcing Codes of Large UK-Based Corporations: Prevalence,Content, Limitations

Codes of conduct have become the perhaps most often used tool to manage corporate social responsibility (CSR). Researchers have primarily analysed such documents at company-wide or trans-company levels, whereas there is a dearth of studies into the use of codes for particular corporate functions. Hence, this article will examine one particular group of sub-company level codes, namely codes of conduct that stipulate CSR criteria for suppliers. Examining such ethical sourcing policies adopted by the FTSE100 corporations, the article draws out what environmental, social and economic issues large corporations perceive to be important in the management of their supply chains. At an aggregate level, the coverage of CSR issues is rather extensive, yet at the level of the individual corporation a degree of selectivity in the issues that are addressed becomes noticeable. The code content analysis furthermore confirms the business case and public pressure to be the most important drivers of CSR. Finally, the study highlights the role of isomorphic processes in the adoption of CSR tools.     

社会资本与超额在职消费：激浊扬清还是推波助澜

作为企业治理的重要问题之一,代理成本诱发超额在职消费引起各界广泛关注。文章以2007—2019年A股上市公司为初始样本,考察我国各省(自治区、直辖市)社会资本水平差异对超额在职消费的影响。研究表明,社会资本显著提高了超额在职消费,起到推波助澜的负面效用;进一步研究表明,公司治理水平维度上通过提高机构投资持股比例、短期债务融资比例及扩大独立董事比例和监事会规模均能抑制社会资本加剧超额在职消费的负面效用,公司治理环境维度上通过强化企业内部治理环境、加快市场化进程亦能削弱社会资本对超额在职消费的"推波助澜"。以上结论为社会资本利弊之争提供有益补充,亦凸显非正式制度与正式制度的治理替代效应,同时为企业完善内部治理水平及政府优化制度环境与规则治理以抑制社会资本负面效用提供一定借鉴。     

From Chain Liability to Chain Responsibility MNE Approaches to Implement Safety and Health Codes in International Supply Chains

This article examines whether the involvement of stakeholders in the design of corporate codes of conduct leads to a higher implementation likelihood of the code. The empirical focus is on Occupational Safety and Health (OSH). The article compares the inclusion of OSH issues in the codes of conduct of 30 companies involved in International Framework Agreements (IFAs), agreed upon by trade unions and multinational enterprises, with those of a benchmark sample of 38 leading Multinational Enterprises in comparable industries. It is found that codes of the IFA group have a higher implementation likelihood in OSH than the codes of the benchmark group. Further, European firms, culturally more used to stakeholder involvement, score higher than their US and Japanese competitors, and hence are more capable of addressing the safety and health issues in international supply chains. The implementation likelihood of codes seems closely related to the type of corporate CSR approach.     

董事会结构与公司治理绩效的实证分析

独立董事制度为公司的权益资本和管理雇佣契约提供了更为安全的治理措施。但分析表明,那种认为董事会独立性越强,公司治理效率越好的想法是不恰当的。信息获取能力的约束以及非执行董事和执行董事之间的博弈水平使得董事会结构与公司治理绩效之间存在显著倒U型关系。     

独立董事与会计信息披露质量研究

独立董事制度是完善公司治理结构的一项重要举措,独立董事制度在公司治理结构的各个部分能够充分发挥作用的情况下,能为会计信息质量提供可靠的保证。到目前为止,我国大多数上市公司都建立了独立董事制度,人们重视的方面也已经从发展的规模转移到运作和治理有效性的角度上。在大多数上市公司都建立了独立董事制度的情况下,应该充分发挥董事会尤其是非执行董事的监督参与决策的职能,从而更好地提高会计信息披露质量。只有完善充分发挥作用的公司治理结构,才能为企业经营决策及外部投资者提供高质量的会计信息。     

独立董事的声誉资本对公司治理效率的影响

本文运用我国上市公司2010～2012年的年报数据实证分析独立董事对公司治理效率的影响,研究结果表明,独立董事的实践经验、薪酬比重、参与公司会议的次数以及声誉资本对上市公司的绩效和公司治理效率具有不同程度的显著性影响。独立董事的声誉资本作为一种激励与约束相容的方式能够有效提升上市公司的治理水平,对公司绩效提高产生积极的作用。因此,在聘请独立董事时,把握好独立董事的贡献与薪酬关联的“度”以及充分利用好独立董事的声誉资本对于完善公司治理结构和提升公司治理水平至关重要。     

Corporate governance reform: character‐building structures

This paper argues that corporate governance reformers in Anglo‐American jurisdictions should consider a different approach in their quest for better corporate governance. Traditionally, corporate governance reform has taken a structural approach, tightening the rules around the number of independent directors required on boards and committees and fine‐tuning the definition of independence. However, such an approach has failed to achieve effective corporate governance. Moreover, this approach is informed by the arguably discredited assumption that individuals are rational self‐interest utility maximizers. This conceptual paper questions why corporate governance scholars and regulators remain uncritical of this assumption and suggests an approach to reform inspired by a different view of human nature. Indeed, incorporating an actor‐based approach to reform into existing structures may better achieve effective corporate governance while addressing an unjustified adherence to this flawed assumption.     

Interim succession: Temporary leadership in the midst of the perfect storm

The corporate governance environment has changed. The rate of CEO successions is naturally trending up, succession planning is in dire need of repair, and boards are under increasing pressure to focus on oversight. This confluence of events creates a ‘perfect storm.’ Within this new environment, interim successions are on the rise. But is it all bad news? This article explores the decision of corporate directors to use temporary chief executive officers (CEOs) and the roles served by these interim leaders. We include a typology of interim CEOs and prescribe the contexts in which organizations can strategically pursue this type of succession. We conclude with a list of recommendations for how boards can most effectively manage interim leadership in the new corporate governance environment.     

Reactivity and Passivity After Enforcement Actions: Better Late Than Never

We examine the dynamics between enforcement actions and the responses from both the board of directors and supervisory boards amid China’s governance reform. Rather than examining determinants of fraudulent activities, we investigate, after enforcement actions are imposed, whether the board of directors and supervisory boards react differently, and whether their different reactions play a role in preventing future occurrences of frauds. We find that both boards react to enforcement actions, but only the responses from the board of directors help us curb future enforcements under certain circumstances. The supervisory board fails to play any role in preventing future enforcements, even though it is one of the two monitoring mechanisms in the listed companies. Policy implications are discussed.     

The influence of firm and executive characteristics on performance-vested stock option grants

Motivated by the considerable changes over the last two decades in the form and composition of executive remuneration schemes and the increasing use of performance-vested stock options (PVSOs), this study examines the determinants of PVSO grants. Using data on 4193 executive-year observations of 1373 executive directors in 243 FTSE 350 non-financial companies from 1999 to 2004, I examine the factors that influence PVSO grants at both the firm and the executive level. While controlling for unobservable industry, firm, and executive level fixed effects, the evidence shows that the PVSO grants awarded to individual executives are associated with observable features of corporate governance and indicators of managerial power. More specifically, the results support the following statements: (1) good corporate governance structures facilitate the use of PVSO plans; (2) the proportion of PVSO grants in the total compensation package is smaller for top mangers with more controlling power; (3) PVSO plans are less frequently used to compensate managers who are approaching their retirement and/or have a large equity stake in the firm; (4) relative to non-CEO executives, CEOs are more likely to be rewarded with PVSOs.     

The Media Impact of Board Member Appointments in Spanish-Listed Companies: A Gender Perspective

Recent corporate governance literature on gender diversity within boards has linked the effect of an increase in gender diversity to the firm’s corporate reputation. This paper analyzes the media impact of appointing new directors of Spanish companies at a particularly significant moment, during the period from 2007 to 2010, just a year before and 3 years after the Gender Equality Act was passed. By analyzing female and male board nominations in Spanish IBEX-35 companies, the paper examines whether appointing a female does have greater visibility than appointing a male, and thus a potential signaling effect for corporate stakeholders and an effect on the firm’s reputation. Results indicate that the effect on press visibility of appointing a female versus a male is negligible, although there is significant media visibility for new executive directors, in particular for the case of the only woman nominated as an executive director during the period. The paper contributes to the existing literature on gender diversity in corporate governance, specifically its effect on corporate reputation. The paper also offers information relevant to policy making and in particular to the current debate over quotas for women on boards.