The differential CEO dominance-compensation and corporate governance-compensation relations: Pre- and post-SOX

We examine the relationship between corporate governance (as measured by traditional corporate governance variables and a new measure of corporate governance, called CEO dominance) and executive compensation, pre- and post-SOX. We conceptualize CEO dominance as a measure of a CEO's power and define it as the difference between CEO pay and the next highest executive's pay divided by the CEO's pay. We argue that for traditional corporate governance variables, the inverse governance-compensation relation that exists pre-SOX will improve post-SOX. On the other hand, we expect a strong and positive CEO dominance-compensation relation to exist both pre- and post-SOX. Consistent with expectations, our results indicate that SOX has changed the relationship between CEO duality and compensation relation, but it has not changed the CEO dominance-compensation relation. This suggests that SOX regulatory reforms do not limit the ability of CEO power to obstruct traditional corporate governance mechanisms in extracting compensation-related rents.     

The Sarbanes-Oxley act and corporate investment: A structural assessment

We assess the impact of the Sarbanes-Oxley Act of 2002 on corporate investment in an investment Euler equation framework. We allow a dummy for the passage of the Act to affect the rate at which managers discount future investment payoffs. Using generalized method of moments estimators, we find that the rate U.S. firm managers apply to discount investment projects rises significantly after 2002, while the discount rate for U.K. firms remains unchanged. The effects of the legislation on corporate investment are asymmetric, and are much more significant among relatively small firms. We also find that well-governed firms, firms with a credit rating, and accelerated filers of Section 404 of the Act have become more cautious about investment.     

Employee Layoffs, Shareholder Wealth and Firm Performance: Evidence from the UK

Abstract:  We examine the financial performance of UK listed companies surrounding the announcement of permanent employee layoffs. We find that poor operating and stock price performance, increased gearing, and threats from external markets for corporate control precede employee layoffs. Layoff announcements elicit a significantly negative stock price reaction, which is driven by announcements that are reactive to poor financial conditions. We also find that layoffs result in significant increases in employee productivity and corporate focus. We conclude that layoffs represent an efficient response to poor financial conditions, but that their occurrence is strongly dependent on pressure from external control markets.     

Insiders’ perspectives of the effects of recent regulation on corporate taxation

Recent legislation and standard interpretations promulgated by governmental bodies and the Financial Accounting Standards Board (FASB) have attempted to address several issues related to corporate taxation. These issues include the lack of transparency regarding specific tax transactions, the difficulty in reconciling the corporate tax return with the corporate income statement, the relative lack of disclosure of tax contingencies in the financial statements, and the impact of internal control on the reliability of the corporate tax return. While the stated objectives of several recent regulations have included improvements in the areas of corporate tax compliance and transparency of financial statements, it is unclear whether these regulations have resulted in the desired effects. This study analyzes the perceptions of 223 corporate tax executives regarding the effects of Internal Revenue Announcement 2002-63, Schedule M-3 of IRS Form 1120, FASB Interpretation Number 48 (FIN 48), and Section 404 of the Sarbanes-Oxley Act. The findings indicate that the respondents perceive an overall increase in tax return transparency and corporate tax compliance as a result of Schedule M-3 and FIN 48; yet the ability of corporations to engage in tax planning has decreased as a result of FIN 48. The respondents also perceive that both FIN 48 and Section 404 of the Sarbanes-Oxley Act have increased their reliance on outside sources for tax compliance work.     

担保企业集团内部控制机制的案例研究

本文按应国瑞（Robert K. Yin）著作《案例研究：设计与方法》和艾森哈特（Eisenhardt,1989）提出的案例研究的规范程序,从组织管理和人的行为视角,对KZ担保集团及其下属7个子公司的两个层面的内部控制机制进行了嵌入式的单案例研究。通过案例分析验证或修正了本文所提出的理论框架,并对其给予了合理的解释。本文认为,KZ担保集团内部控制机制是对内部控制理论有益的拓展,既扬弃了现有企业内部控制和公司治理理论,也为担保企业集团内部控制的实践提供了启示。     

Dynamics in Ownership and Firm Survival: Evidence from Corporate Germany

This study investigates the determinants of changes in corporate ownership and firm failure for German firms. We find that many of the determinants of failure also affect ownership changes in this bank‐based economy. They include poor performance, weak corporate governance, high leverage, and small firm size. The ownership structure also plays a role for both events. Separate analyses of one of these events are therefore likely to miss important effects. The implications for the German corporate governance system are that the differences to countries with more market‐based systems are not as pronounced as previously speculated.     

The role of unaffiliated bankers on conditional conservatism: Evidence from IFRS information shock

We exploit IFRS mandatory adoption as a source of variation in the demand for conditional conservatism to examine the role of unaffiliated bankers on the level of conditional conservatism. We show that firms with unaffiliated bankers on boards of directors experience a significant increase in the level of conditional conservatism compared with firms without unaffiliated bankers on boards. These findings hold after we account for other country‐level factors that shape the demand for conditional conservatism. Additional analyses show that the role of unaffiliated bankers on conditional conservatism depends also on firm‐specific incentives arising from the contracting environment. Taken together, our findings provide new insights into the role of corporate governance arrangements on financial reporting outcomes.     

控制权机制对公司治理的影响研究

公司控制权是公司治理中的核心问题。近几年，国内关于公司治理的实证研究文献越来越多，但是讨论公司控制权与公司治理之间关系的实证研究文献却并不多，这是我国公司治理研究领域比较薄弱的一个环节。本文从我国证券市场的实际情况出发，以公司控制权机制对公司治理的影响为研究主题，通过实证分析，讨论了公司控制权机制对公司治理绩效的影响，并提出了一些建议。     

公司管理者过度自信、过度投资行为与治理机制——来自中国上市公司的证据

本文从行为金融学视角出发,以2002~2009年中国A股上市公司为研究对象,研究管理者过度自信这一心理因素对公司过度投资行为的影响,并检验了公司内外部治理机制对它的抑制作用。研究表明,中国上市公司的管理者过度自信与公司过度投资行为之间存在显著正相关关系,而现有的公司治理机制并不能对这种非效率行为进行有效约束。本文的研究发现有助于我们更好理解中国上市公司的过度投资行为,也对如何完善中国上市公司治理机制有一定启示意义。     

Additional Evidence on the Association Between Director Stock Ownership and Incentive Compensation

Governance scholars argue that outside directors have little incentive to monitor managers when their equity stake in the firm is not significant. A sample with a substantial level of outside director shareholdings is examined and a negative relationship between incentive compensation and outside director stock ownership is found. While firms pay higher incentive compensation when they have greater investment opportunities, the compensation contains excess pay due to ineffective corporate governance. Overall, the results suggest more effective corporate governance and lower incentive compensation when outside director stock ownership is higher.     

Financial Regulation,Exchange Rate Exposure,and Hedging Activities: Evidence from Korean Firms

ABSTRACT

In this article, we attempt to estimate whether firm-specific exchange rate exposures affected by hedging activities can be improved through financial regulation or supervision. To analyze this, we compose three-step estimations by using a sample of KOSPI 200 firms during 1,803 trading days between 2005 and 2012. We first estimate the relationship between exchange rate exposure and hedging activities and see whether financial regulation had any effect on hedging activities. Furthermore, using TSLS analysis, we estimate the effect of hedging activities on exchange rate exposure, which is caused by tightened financial regulation in the form of corporate governance. We report the following findings. First, firms are less likely to be exposed to exchange risk with more hedging activities. Second, corporate governance has a strongly positive effect on the hedging activities. Firms use more hedging tools when they have a strong structure of shareholder’s protection, clear outside ownership, and a better monitoring system; but the relationship becomes weaker in times of crisis.     

Banks’ Governance and Innovation: Evidence from the Listed Firms in China

ABSTRACT

The article investigates the relationship between banks, agency costs, and innovation ability of listed firms. The role of banks in affecting innovation is a very important topic especially in China where banks play more important roles than equity markets. We find that banks providing short-term funds to listed non-high-tech firms dampen their innovation ability significantly. However, the relationship between short-term loans and innovation ability in high-tech firms is insignificant. The effects of short-term loans on innovation ability are significantly different between high-tech and non-high-tech firms. Further examination shows that high-tech firms with more short-term bank loans have significantly less abnormal management expenses than non-high-tech firms in the next year. The reduced abnormal management expenses in the next year significantly enhance the innovation ability in the year after next.     

Financial Systems, Corporate Finance and Corporate Governance

Financial systems of industrialised countries are usually classified as being either capital market- or bank-dominated. This paper tries to shed some light on the validity of this distinction. In order to do this, it analyses two specific roles of the financial sector vis-à-vis the enterprise sector: the role of financing or funding business and the role of capital markets and banks, respectively, in the context of corporate governance. Our analysis of the relevant findings in the literature shows that financing patterns are quite similar between countries, while corporate governance systems are quite dissimilar. The paper discusses how these divergent findings could be made compatible with existing theories and what implications they may have for the question of whether there is a tendency for corporate governance systems in different countries to become as similar as corporate financing patterns seem to be.     

Government Ownership and Dividend Policy: Evidence from Newly Privatised Firms

In this paper we examine the relationship between government ownership and dividend policy. Using a multinational sample of newly privatised firms from 43 countries, we find strong and robust evidence indicating that dividend payout is negatively related to government ownership, consistent with the predictions of agency theory. We also find that country‐level corporate governance affects the relationship between government ownership and dividend policy. Specifically, the adverse effects of government ownership on dividend policy are more pronounced in countries with weak law and order and a lower level of checks and balances. Our results are important, as they show that government ownership, as well as the institutional environment, does in fact affect the critical corporate policies, such as dividend policy, of newly privatised firms.     

境外股东异质性、企业性质与公司治理效率——基于中国上市公司的实证检验

依据2014年一直有境外股东持股的沪深 A股上市公司样本数据,考量不同类型外资持股的治理效应进行实证检验。结果表明：境外股东持股能够提升公司治理效率,不同性质的境外投资者对公司治理的影响存在差异。外资基金和非金融类外资股东的治理效应是显著的,QFII未能对上市公司经营者形成有效监督和制约,外资银行、保险、证券公司反而一定程度上加重了上市公司的代理冲突。此外,外资持股在民营企业中的治理效应优于国有企业。     

Effect of Banking Regulation on Performance: Evidence from Turkey

In this study, we investigate the effect of regulation on banking sector performance in an emerging country context. Consecutive crises in the early 2000s led to three waves of reformist banking regulations in Turkey: (1) the banking sector restructuring program in 2002, (2) limitation of the full deposit insurance system in 2004, and (3) a corporate governance-related banking law in 2005. Results show that these actions had a positive effect on bank lending, asset quality, and profitability. Findings also support the view that the sequence and timing of banking reforms in Turkey acted as a shield against the global financial crisis of 2008.     

Harmonisation of financial reporting before the European Company Law Directives: the case of the Nordic Companies Act

De jure harmonisation of financial reporting began early in the Nordic countries with initial discussions reported as early as the 1930s. Legislation implemented in the 1970s was based on a proposal for a common Nordic Companies Act. This article follows the history of this legislation and analyses it with a view to providing insights into voluntary harmonisation across multiple countries. The main lessons appear to be that (1) Germany had a measurable influence; (2) taxes played an important role which has persisted in some countries, with others resisting change until the 1980s and 1990s; (3) the Nordic countries were among the first to introduce a legal requirement for publication of a funds flow statement; (4) meeting the needs of diverse and dynamic stakeholders was addressed differentially by the Nordic countries; and (5) regional co-operation seems to have been overtaken by events on the broader international stage and the costs of compromise.