Corporate governance, Sarbanes-Oxley, and small-cap firm performance

The recent debate on the onerous costs of compliance with the Sarbanes-Oxley Act has primarily focused on small firms. I study the effects of SOX compliance on such firms by comparing the performance of Canadian small-cap firms that are subject to SOX provisions with those that are not, while: (a) taking into account firms’ internal and external governance mechanisms, including the market for corporate control, and (b) accounting for the simultaneous interactions between alternative governance mechanisms and firm performance. Firms subject to Sarbanes-Oxley experienced an incremental increase in market valuation ranging between 15.7% and 34% depending on the measure of board independence used in the estimation. Some sub-optimal deployment of the endogenous governance mechanisms is observed, while the market for corporate control serves as a positive disciplining factor.     

股权结构、行业特征与公司绩效

本文以1995～2004年沪深两市全部上市公司为总样本,对股权结构与公司绩效关系分行业地进行了描述性统计和多元回归分析。结果表明,相对集中的股权结构有利于企业绩效,股权构成与公司绩效却无显著相关,无可靠证据表明国有股持股比率与企业绩效负相关。     

Corporate Governance and Firm’s Efficiency: The Case of a Transitional Country, Ukraine

In this study, we look for empirical support for the hypothesis that there is a positive relationship between the levels of corporate governance quality across firms and the relative efficiency levels of these firms. This hypothesis is related to Leibenstein’s idea of X-efficiency. We use the data envelopment analysis (DEA) estimator to obtain proxies for X-[in]efficiency of firms in our sample and then analyze them with respect to different ownership structures by comparing distributions and aggregate efficiencies across different groups. We also use truncated regression with bootstrap, following Simar and Wilson Estimation and influence in two stage, semi-parametric models of production process, Simar and Zelenyuk (2003) to infer on relationship of inefficiency to various indicators of quality of corporate governance, ownership variables, as well as industry and year specific dummies. The data is coming from seven industries in Ukraine. “The entrepreneurship structure itself may be critical, with the classic issue of the separation of ownership from control being regarded as one of the earliest and most important sources of X-efficiency” (Button and Weyman-Jones, 1992, American Economic Review). We would like to dedicate this paper to the memory of Christos Panzios—co-editor who handled our paper to almost the very end, whose suggestions and encouragement have helped us substantially improve our paper.     

公司治理与代理成本——来自上市公司的经验证据

本文利用上市公司的数据,分析了公司治理与代理成本之间的关系。结果发现:股权集中度国家股比例、董事会规模、监事会规模、治理环境、公司透明度、企业规模与代理成本显著负相关;股权制衡度、领取报酬的董事比例、领取报酬的监事比例、董事会会议次数、股东大会会议次数与代理成本显著正相关;高管持股、独立董事比例、监事会会议次数、两职分离与代理成本无显著关系;财务杠杆率与代理成本的关系是混合的;国有上市公司和民营上市公司的公司治理与代理成本之间的关系与总样本基本一致。     

The outcomes of variable pay systems: tales of multiple costs and unforeseen consequences

Two veins of research predominate in evaluations of variable pay systems. The first seeks to associate superior financial performance with the use of incentive schemes and the second assesses the success of variable pay systems in effecting behavioural and attitudinal change. This paper argues that both of these approaches suffer from limitations and presents a framework for examining a neglected aspect of the implementation of variable pay systems by considering their operational outcomes and impact on organizations. It contemplates why little evaluation of this kind is conducted and presents a detailed qualitative analysis of the findings from six multiple case studies conducted among medium-sized organizations in the engineering sector. The article contributes to the literature in the area by revealing significant unanticipated costs in management time, administration and staff recruitment and training as a result of pay system change through applying the framework developed, identifying the relative effectiveness of the pay systems and illustrating the scope for organizational context to influence pay system outcomes. It concludes by arguing that the scope for error in managing pay systems raises questions about how far pay systems are effective sources of competitive advantage.     

Corporate governance crisis down under: Post-Enron accounting education and research inertia

Abstract

Australian and New Zealand accounting academic responses to corporate governance and reporting failures is a story not simply told in the context of high profile international corporate failures such as Enron and WorldCom. This study notes a sequence of major Australian corporate failures that predate Enron and WorldCom. Through research into professional, business and research literature, profession and governmental/regulatory websites, and interviews with senior accounting academics across Australia and New Zealand, it also highlights a tale of limited response by Australian and New Zealand accounting academics and investigates the manifest and latent drivers of this inertia. The corporatisation and commercialisation of universities and related governance processes emerge as root causes of accounting academics' general failure to address recent major breakdowns in corporate governance and reporting in the business world. The paper closes by reviewing opportunities for change in an otherwise embattled environment.     

Environmental performance,sustainability, governance and financial performance: Evidence from heavily polluting industries in China

This study seeks to contribute to the existing business strategy and the environment literature by examining the effect of governance structures on Chinese firms' environmental performance, and consequently ascertain the extent to which the financial performance–environmental performance nexus is moderated by governance mechanisms. Using a sample of Chinese companies from heavily polluting industries over a 5-year period, our baseline findings suggest that, on average, board size and governing board meetings are positively associated with Chinese firms' environmental performance, whilst board independence and gender diversity have positive, but insignificant association with firms' environmental performance. Our evidence suggests further that the examined internal governance mechanisms have a mixed moderating effect on the link between financial performance and environmental performance. Our findings have important implications for company executives, environmental activists, policy-makers, and regulators. Our results support insights drawn from agency, resource dependence, stakeholder, and legitimacy theories.     

股权结构对上市公司绩效的影响

文章总结了国外的研究成果,说明股权结构是通过影响公司治理机制来影响公司的业绩,并分析了中国上市公司股权结构的缺陷与成因,以及中国上市公司治理机制的缺陷,同时提出了改善治理绩效的对策。     

公司治理与现金股利分配倾向——来自中国上市公司的经验证据

本文以2002～2008年沪深A股765家上市公司为样本,实证检验公司治理结构对现金股利分配倾向的影响.结果发现:股权集中、国有控股、董事会规模大、高管薪酬高和选择四大会计师事务所的上市公司倾向分配现金股利,流通股比例高和独立董事规模大的公司不倾向分配现金股利,董事会领导权结构的影响不显著.同时,公司治理好的公司发放现金股利的倾向大,而公司治理差的公司的倾向小.进一步发现,中国上市公司具备发放现金股利的能力,却"不想"派现.     

Gender diversity and firm performance: evidence from Dutch and Danish boardrooms

Drawing on the business case for gender diversity, this article examines whether board gender diversity has a positive effect on firm performance, based on evidence from the Netherlands and Denmark. We use empirical data on 186 listed firms observed in 2007. Almost 40% have at least one woman in the boardroom. Within boards, the average share of women is only 5.4%. To investigate the impact of board gender diversity, two-stage least-squares estimation is applied, using Tobin’s Q as a measure of performance. Our findings indicate that on the basis of this data-set, there is no relation between board diversity and firm performance.     

Toward sustainable development: Board characteristics,country governance quality,and environmental performance

The objective of this study is to examine the effects of board characteristics and country governance quality on both individual aspects and the overall level of environmental performance through the lens of agency, resource dependency, and institutional theories. The study is based on a sample of 3023 firm-year observations from European companies operating in 22 countries between 2009 and 2016. Data on the resources, emissions, and innovation dimensions of environmental performance and board governance data were collected from the Refinitiv database, whereas financial data were extracted from the Worldscope database. The study employs a multilevel modeling analysis and the generalized method of moments (GMM) estimation technique to analyze the data. The findings suggest that board gender diversity and the presence of a corporate social responsibility and sustainability committee have a positive impact on environmental performance. The results also show that country governance quality is positively related to environmental performance. The findings have important implications for practitioners, regulators, and policymakers with respect to the effectiveness of corporate governance mechanisms and country governance systems in determining corporate environmental practices.     

Corporate governance practices that address climate change: an exploratory study

This exploratory study sought to investigate how well 98 firms in three industries, across 10 countries, are addressing climate change through five specific governance practices. The findings suggest that non‐US firms demonstrate higher performance on the governance dimensions than their US counterparts. Further, by separating firms into low versus high performers on the governance dimensions, some board structure variables, such as number of directors and an independent board chair, were associated with higher performing firms. The study contributes both to institutional and agency theory. For example, coercive isomorphisms in regions of the world, such as Europe, might be driving firms to demonstrate that they are addressing climate change at the governance level in order to gain legitimacy. As for agency theory, this study offers both confirmatory and contradictory results regarding board independence. For example, firms who separated the CEO–board chair role achieved better governance on climate change, while at the same time firms who demonstrated lack of independence with respect to the inside versus outside director ratio also achieved better governance on climate change. This paves the way for additional research in understanding how board structure influences organizational phenomena. Copyright © 2009 John Wiley & Sons, Ltd and ERP Environment.     

Corporate governance and firm efficiency: evidence from China's publicly listed firms

This paper applies a two‐stage, double bootstrapping data envelope analysis approach to investigate whether and to what extent various distinctive corporate governance practices affect productive efficiency in a sample of 461 publicly listed manufacturing firms in China between 1999 and 2002. We find that firm efficiency is negatively related to state ownership while positively related to public and employee share ownership. In addition, the relationship between ownership concentration and firm efficiency is U‐shaped, indicating the presence of tunneling activities by the largest shareholder. Among three types of controlling shareholder, state exerts the most negative impact on firm efficiency, followed by state‐owned legal entities. These results provide strong evidence that political interferences have reduced firm efficiency. It shows that the proportion of outside directors and the number of board meetings are positively associated with firm efficiency, suggesting that board of directors can be an effective internal governance mechanism. Furthermore, provincial market development, a proxy for the strength of external governance mechanism, is positively related to firm efficiency. Overall, our findings illustrate that restructuring state‐owned enterprises via improvements in corporate governance has enhanced firm efficiency, but partial privatization without transfer of ownership and control from the state to the public remains a major source of inefficiency in corporate China. Copyright © 2008 John Wiley & Sons, Ltd.     

How the CEO power and age dissimilarity shape the chair-CEO pay gap: Empirical evidence from China

Using data on China’s listed firms from 2009 to 2018, this paper investigates how the chair-CEO age dissimilarity and CEO power affect the chair-CEO pay gap from both managerial power theory and optimal contract theory. We find that CEO power and age dissimilarity have opposite effects on pay gap between the chairman and the CEO. And the cognitive conflict caused by age dissimilarity can effectively restrain the compensation-seeking behavior of CEO for non-performance compensation growth. More importantly, both the age difference and its sign have important value. When we consider age dissimilarity between the CEO and the entire board of directors, our hypotheses are still confirmed. Finally, we document that both CEO ability and co-working time between chairman and CEO could reduce the inhibition effect of age dissimilarity on compensation incentive from capability and relationship view. Overall, the results are beneficial to reform the top managers’ compensation incentive system and to improve the explicit and implicit supervision mechanisms.     

Multi-skilling in small and medium-sized engineering firms: evidence from Wales and Germany

A cross-national empirical study of forty-six engineering SMEs in Wales and two regions of Germany analyses the extent to which multi-skilling of staff is occurring, the underlying reasons for such developments, and how well placed firms are in relation to prevailing labour-market and training infrastructures strategically to develop hybrid occupations. We identify four types of skill accretion, only some of which presage net enhancements of the order of skills exercized. New quality assurance or continuous improvement programmes, and organizational restructuring, were the main reasons for multi-skilling. A majority of companies encouraged skill expansion on an ad hoc basis, yet strategic exploitation of multi-skilling incorporating comprehensive training support remained infrequent, especially in Germany. Nevertheless, a minority of the German multi-skilling leads to the award of innovative 'hybrid' qualifications fusing two skilled occupations. The breadth of German initial craft training both facilitates and inhibits potential for further multi-skilling in practice. In Wales, greater flexibility in occupational and training structures provides largely unrealized potential advantages over Germany in developing multi-skilling, especially as a means to resolve recurrent shortages of skilled workers. Welsh SMEs have preferred tentative, incremental, 'bolt-on' approaches to multi-skilling that facilitate only limited external transferability.     

Evolving corporate governance and firms performance: evidence from Japanese firms

This study is an attempt to investigate the implications of the ownership structure and control transfers in the Japanese corporate market, which are attributed mainly to the government’s liberalization policies during 1990s. It appears that institutional shareholdings—either financial or non-financial corporations—are associated with poor performance, whereas the foreign and domestic private ownerships lead to an improvement in the performance of the firms. We observe that unwinding the cross-shareholding between banks and corporations and mutual transfers among non-financial institutions allows for efficiency gain. Furthermore, the ownership transfer to private and foreign individuals is consistently associated with high market value, which implies that individuals’ transfers lead to an increase in efficiency.     

Corporate Governance and Performance of Indian Firms: The Effect of Board Size and Ownership

The paper reviews international literature on corporate governance and firm performance and investigates the relationship in the Indian context, taking into account the endogeneity in the relationship. Governance parameters include board size, directors’ shareholding, institutional and foreign shareholding, while the fragmentation in shareholding is captured by public shareholding. A simultaneous equation regression model for Tobin’s Q, as a measure of firm performance, is attempted using these variables, while controlling for industry effects and other non-governance variables. The data corresponds to a panel of 340 large, listed Indian firms for the period 1997–2001 spread across 24 industry groups.     

信息化对公司管理的影响及内部审计对策

随着社会信息化程度的提高,计算机应用日益广泛。但是,由于有计算机舞弊现象的发生,给计算机技术的应用带来了严峻的挑战,也给公司的管理带来了极大的风险。维护计算机信息系统的安全已成为各公司信息化建设的重点。文章从信息化对公司风险管理、内部控制、治理结构等几个方面进行了分析。     

信息化对公司管理的影响及内部审计对策

随着社会信息化程度的提高,计算机应用日益广泛,但是,由于有计算机舞弊现象的发生,给计算机技术的应用带来了严峻的挑战,也给公司的管理带来了极大的风险,维护计算机信息系统的安全已戍为各公司信息化建设的重点,文章从信息化对公司风险管理、内部控制、治理结构等几个方面进行了分析。     

Bank ownership and governance quality in India: Evolution and detection of convergence clubs

Utilizing a novel panel dataset for the period from 2009 to 2018, this paper investigates how the corporate governance of Indian banks has evolved since the post-global crisis and identifies convergence clubs among banks in distinct ownership groups. It also presents optimal policy priorities for specific aspects of corporate governance. To assess the quality of bank corporate governance, we used a non-parametric “Benefit-of-the-Doubt” (BoD) approach to create a bank-wise composite index of corporate governance based on 48 governance norms. Empirical results have shown that while Indian banks have made remarkable progress in adhering to the mostly mandatory corporate governance norms in the past few years, but their current level of governance isn’t adequate to characterize it as a “socially-efficient” structure. A typical public bank generally prioritized maintaining adequate disclosure and transparency, by and large, while a private bank focuses more spotlight on audit function, followed by risk management and board quality. The results based on Phillips and Sul’s (2007, 2009) clustering and merging algorithms reveal two convergent clubs in the private banking segment and a sole club in the public sector banking segment.