Beyond the Proxy Vote: Dialogues Between Shareholder Activists and Corporations

The popular view of shareholder activism focuses on shareholder resolutions and the shareholder vote via proxy statements at the annual meeting, which is treated as a “David vs. Goliath” showdown between the small group of socially responsible investors and the powerful corporation. This article goes beyond the popular view to examine where the real action typically occurs – in the Dialogue process where corporations and shareholder activist groups mutually agree to ongoing communications to deal with a serious social issue. Use of the capitalized word “Dialogue” is intended to distinguish this formal process between corporations and shareholders from all the other forms of dialogue or two-way communication exchanged between a corporation and its stakeholders. The phenomenon of Dialogue between a corporation and dissident shareholders has not been analyzed in the academic literature or in the popular press because it occurs behind the scenes and out of sight from media scrutiny. Yet this is where a great deal of social change initiated by shareholder activists is negotiated. This article contributes both theoretically and empirically to the study of Dialogues between shareholder activists and corporations. We explain how Dialogues occur in the context of the shareholder resolution process and examine two Dialogues that focus on international labor issues in two industries. Then data on Dialogues during the period, 1999–2005, from the Interfaith Center on Corporate Responsibility are analyzed. This research contributes to knowledge about the Dialogue process and the emerging literature on corporation–stakeholder engagement.     

Responses to Legislative Changes: Corporate Whistleblowing Policies

Survey responses from Fortune 1000 firms were examined to assess whether firms changed their whistleblowing policies to response to changes in state statutes concerning whistleblowing. We predicted that firms might have created internal channels for whistleblowing in response to new legislation that increased their vulnerability to whistleblowing claims by employees. In fact, very few firms indicated that they had created their policies in responses to legal changes.     

Corporate Directors and Social Responsibility: Ethics versus Shareholder Value

This paper reports on the results of an experiment conducted with experienced corporate directors. The study findings indicate that directors employ prospective rationality cognition, and they sometimes make decisions that emphasize legal defensibility at the expense of personal ethics and social responsibility. Directors recognize the ethical and social implications of their decisions, but they believe that current corporate law requires them to pursue legal courses of action that maximize shareholder value. The results suggest that additional ethics education will have little influence on the decisions of many business leaders because their decisions are driven by corporate law, rather than personal ethics. Jacob Rose is Associate Professor at Southern Illinois University Carbondale. His research emphasizes judgment and decision making in accounting and governance contexts.     

数字金融的公司治理效应--基于非家族股东治理视角

非家族股东治理能够有效助力家族企业实现可持续发展与现代化转型的目标,因而提升非家族股东治理水平具有重要意义。数字金融作为传统金融发展模式的重要创新,能够实现“金融服务实体经济”的目标,促使非家族股东积极参与家族企业治理。基于此,本文以代理理论与社会情感财富理论为基础,探讨了数字金融对非家族股东治理的影响。实证检验发现,随着数字金融的发展,非家族股东治理水平不断提升。其作用机制在于,数字金融能够通过缓解代理冲突、弱化家族控制与强化传承意愿,提升非家族股东治理水平。拓展性分析发现,对于非创业型、融资约束较强、位于金融监管程度较强地区的家族企业来说,数字金融对非家族股东治理的积极效应更显著;数字金融对异质性非家族股东制衡度存在差异化影响,即相较于外资股东与机构股东制衡度,数字金融能够强化国有股东与民营股东对家族股东的制衡;数字金融能够通过提升非家族股东治理水平促进家族企业可持续发展。本文从数字金融视角探究非家族股东治理的动机,丰富了数字金融与非家族股东治理的相关研究。     

Large Shareholder Activism in Corporate Governance in Developing Countries: Evidence from India

Most of the existing evidence on the effectiveness of large shareholders in corporate governance has been restricted to a handful of developed countries, notably the UK, US, Germany and Japan. This paper provides evidence on the role of large shareholders in monitoring company value with respect to a developing and emerging economy, India, whose corporate governance system is a hybrid of the outsider‐dominated market‐based systems of the UK and the US, and the insider‐dominated bank‐based systems of Germany and Japan. The picture of large‐shareholder monitoring that emerges from our case study of Indian corporates is a mixed one. Like many of the existing studies, while we find blockholdings by directors to increase company value after a certain level of holdings, we find no evidence that institutional investors, typically mutual funds, are active in governance. We find support for the efficiency of the German/Japanese bank‐based model of governance; our results suggest that lending institutions start monitoring the company effectively once they have substantial equity holdings in the company and that this monitoring is reinforced by the extent of debt holdings by these institutions. Our analysis also highlights that foreign equity ownership has a beneficial effect on company value. In general, our analysis supports the view emerging from developed country studies that the identity of large shareholders matters in corporate governance.     

FOCUS: Corporate Dialogue - a new perspective for Public Relations

Recent initiatives in Germany illustrate how major companies have changed their attitudes towards a critical public - and thereby have improved their economic and ethical performance. Prof. Dr. Horst Steinmann and Dipl.-Kfm. Ansgar Zerfaß belong to the University of Erlangen-Nürnberg, Germany.     

Galvanising Shareholder Activism: A Prerequisite for Effective Corporate Governance and Accountability in Nigeria

Shareholder activism has been largely neglected in the few available studies on corporate governance in sub Saharan Africa. Following the recent challenges posed by the Cadbury Nigeria Plc, this paper examines shareholder activism in an evolving corporate governance institutional context and identifies strategic opportunities associated with shareholders’ empowerment through changes in code of corporate governance and recent developments in information and communications technologies in Nigeria; especially in relation to corporate social responsibility in Nigeria. It is expected that the paper would contribute to the scarce literature on corporate governance and accountability in Africa. Olufemi Amao (LLM, Warwick; LLM, Ibadan, Nigeria; LLB, OAU, Nigeria; BA, Ilorin, Nigeria; BL, NLS) is a PhD candidate at the Faculty of Law, University College Cork, Ireland. He is a recipient of the President PhD Scholarship and the Department of Law Scholarship. His current research interests include Corporate Social Responsibility, Corporate Governance, Multinational Corporations and Human Rights. Kenneth Amaeshi is a Research Fellow at Warwick Business School. His research interests include commercialisation of intellectual property assets; governance of global innovation networks; R&D partnerships; sustainable innovation; multinational corporations and corporate social responsibility in developing economies. He is currently studying comparative political economy of corporate stakeholding and corporate social responsibility. He is the 2007 winner of the International award for excellence in the field of interdisciplinary social sciences, awarded by the international journal of interdisciplinary social sciences (Australia/USA).     

Shareholder Primacy,Corporate Social Responsibility,and the Role of Business Schools

This paper examines the shareholder primacy norm (SPN) as a widely acknowledged impediment to corporate social responsibility and explores the role of business schools in promoting the SPN but also potentially as an avenue for change by addressing misconceptions about shareholder primacy and the purpose of business. We start by explaining the SPN and then review its status under US and UK laws and show that it is not a likely legal requirement, at least under the guise of shareholder value maximization. This is in contrast to the common assertion that managers are legally constrained from addressing CSR issues if doing so is inconsistent with the economic interests of shareholders. Nonetheless, while the SPN might be muted as a legal norm, we show that it is certainly evident as a social norm among managers and in business schools—reflective, in part, of the sole voting rights of shareholders on corporate boards and of the dominance of shareholder theory—and justifiably so in the view of many managers and business academics. We argue that this view is misguided, not least when associated with claims of a purported legally enforceable requirement to maximize shareholder value. We propose two ways by which the influence of the SPN among managers might be attenuated: extending fiduciary duties of executives to non-shareholder stakeholders and changes in business school teaching such that it covers a plurality of conceptions of the purpose of the corporation.     

第二大股东持股的治理效应——基于上市公司的实证分析

本文以763家上市公司2003年的横截面数据为样本,通过考察公司绩效与第二大股东持股之间的经验关系,考察了第二大股东持股的治理功能。通过结合上市公司数据建立一个多元模型来说明第二大股东是如何监督第一大股东、影响公司价值的。研究发现,第二大股东的存在没有显示出积极的治理激励功能及对第一大股东的监督激励作用;在我国目前的制度背景下,相对控股是一种最佳的平衡状态。     

Extracting Legitimacy: An Analysis of Corporate Responses to Accusations of Human Rights Abuses

Journal of Business Ethics - We ask what type of neutralization techniques corporations apply to allegations of human rights abuses. We proceed by undertaking a Qualitative Content Analysis (QCA)...     

Corporate Social Responsibility (CSR): Models and Theories in Stakeholder Dialogue

The pharmaceutical sector, an industry already facing stiff challenges in the form of intensified competition and strategic consolidation, has increasingly become subject to a range of pressures. Crucially, in common with other large-scale businesses, pharmaceutical firms find themselves ‹invited’ to respond positively to the corporate ‹social’ responsibility (CSR) expectations of their stakeholders. Consequently, individual managers will almost certainly be obliged to engage in some form of stakeholder dialogue and this, in turn, means that they will have to make difficult choices about which practices to adopt. This real-world management predicament runs parallel to an academic interest in CSR stakeholder dialogue theory and models. Accordingly, the approach of this paper is to focus primarily on the academic debate surrounding stakeholder dialogue, by reviewing past attempts to research and theorise the subject, by identifying gaps and weaknesses in the literature, and by proposing a new analytical model. The central aim of the proposed new model is to offer a unified, structured, systematic, and comprehensive approach to CSR decision making whilst simultaneously providing a practical framework for CSR executives who face the challenge of responding in an effective manner to stakeholders. The model outlined here is currently being employed to conduct international comparative empirical research into stakeholder dialogue practices amongst UK and German pharmaceutical firms. In the longer term the intention is to use the model to undertake international comparative research encompassing a broader range of countries and industries.     

Consumer Responses to Corporate Social Responsibility (CSR) in China

This research explores how consumers respond to Corporate Social Responsibility (CSR) in China with a multiproduct, comparative survey. Empirical results conclude that (1) Chinese consumers, who show a high level of awareness and trust of CSR, are more likely to transform a good CSR record into positive corporate evaluation, product association, and purchase intention; (2) Consumer responses to CSR vary across different product categories. Those firms selling experience products (vs. search and credence products) are more likely to gain consumers’ positive product associations and purchase support through CSR practices; and (3) The relationships between consumer demographics and their CSR responses are not linear, and those consumers with a middle level of age and income would respond to CSR more positively. Managerial implications are provided.     

From Resistance to Opportunity-Seeking: Strategic Responses to Institutional Pressures for Corporate Social Responsibility in the Nordic Fashion Industry

Using survey responses from 400 fashion companies in Denmark, Norway, Sweden, Finland, and Iceland, we examine the diversity of strategic responses to institutional pressures for corporate social responsibility (CSR) within the Nordic fashion industry. We also develop and test a new model of strategic responses to institutional pressures that encompasses both resistance and opportunity-seeking behaviour. Our results suggest that it is inconsistent pressures within, rather than between, stakeholder groups that shape strategic responses to CSR pressures and that increasing pressures stimulates opportunity-seeking at the expense of compliance.     

Management Responses to Social Activism in an Era of Corporate Responsibility: A Case Study

Social activism against companies has evolved in the 50 years since Rachel Carson first put the US chemical industry under pressure to halt the indiscriminate use of the chemical DDT. Many more companies have come under the spotlight of activist attention as the agenda social activists address has expanded, provoked in part by the internationalization of business. During the past fifteen years, companies have begun to formulate corporate responsibility (CR) policies and appointed management teams dedicated to CR, resulting in a change in the way companies interact with social activists. This paper presents findings from a longitudinal case study of managerial responses to social activism targeted at a company with relatively well-advanced CR practices and reputation. The case describes the unfolding of the internal processes over an 8-year period, including the role played by different managers and the tensions in the decision-making processes. The findings emphasize how values and beliefs in the company interact with economic arguments and how those are mediated through functions and relationships in the company and beyond. The paper shows how critical managers’ understanding of the motivations of activists behind the campaign is in shaping their actions. It reveals the paradoxical outcomes that can result from social activism at the level of the firm, the industry, and the field.     

Corporate Social Responsibility and Worker Rights: Institutionalizing Social Dialogue Through International Framework Agreements

International framework agreements (IFAs) represent a new generation of transnational agreements between multinational companies and global trade union federations. This paper analyzes the impact of such an agreement on a successful union organizing campaign in Colombia in 2012. We argue that management strategies towards corporate social responsibility and social dialogue influence the impact of IFAs on worker rights. However, this relationship is mediated by the capacity of managers and worker representatives at multiple levels to mobilize their capabilities. The results highlight the importance of institutionalized dialogue between managers and worker representatives, of the dissemination of capabilities across multilevel coordination structures and, most importantly, of their complementarities at various levels.     

Ideology and the Balanced Scorecard: An Empirical Exploration of the Tension Between Shareholder Value Maximization and Corporate Social Responsibility

In a society where the ideology of shareholder value maximization (SVM) prevails, how do evaluators make appraisal and bonus decisions when corporate social responsibility (CSR) measures and financial measures in the balanced scorecard (BSC) point in different directions? To explore this question, we conducted two studies to develop and test a conceptual framework. Participants were asked to evaluate the performance of two managers, using a case we wrote about a commercial bank. We found that (1) evaluators are more willing to drop CSR performance measures than financial measures from the evaluations; (2) perceived CSR relevance is influenced by where evaluators stand in regard to CSR (“stakeholder view” in the “Perceptions of the Role of Ethics and Social Responsibility” or PRESOR scale) and also by where evaluators believe shareholders stand (shareholder support); and (3) there is a financial bias in appraisal and bonus decisions when CSR measures are used in the BSC, consistent with SVM ideology. We conclude by discussing the implications of the influence of SVM ideology on the use of CSR measures in terms of business research, practice, and education.     

控股股东股权质押与公司慈善捐赠决策——基于成本收益视角下的不同行为选择分析

股权质押在解决控股股东资金短缺问题的同时,也会增大其控制权转移风险,慈善捐赠可能会缓解这种风险.然而,慈善捐赠会使公司资金流出,控股股东因此会权衡成本收益来选择慈善捐赠的时机,并考虑其他备选方法.本文选取2008—2018年我国A股上市公司为样本,实证发现:控股股东股权质押比例与公司慈善捐赠水平之间呈倒U型关系.在不同股权质押区间,慈善捐赠与不同盈余管理手段之间具有共存或替代关系,公司会作出策略性选择以缓冲控制权转移风险.分析师关注使两者之间的倒U型关系变成了正相关关系.本文的研究加深了投资者、监管机构和审计师对上市公司规避控制权转移风险方式的理解,有助于他们采取相应的决策.     

Non-Libertarianism and Shareholder Theory: A Reply to Schaefer

Libertarianism and the shareholder model of corporate responsibility have long been thought of as natural bedfellows. In a recent contribution to the Journal of Business Ethics, Brian Schaefer goes so far as to suggest that a proponent of shareholder theory cannot coherently and consistently embrace any moral position other than philosophical libertarianism. The view that managers have a fiduciary obligation to advance the interests of shareholders exclusively is depicted as fundamentally incompatible with the acknowledgement of natural positive duties – duties to aid others that have not been acquired by some prior commitment or transaction. I argue that Schaefer is mistaken. Positive duties are incompatible with the shareholder model only if we must contribute to their fulfilment in the corporate context; only if we have some reason to think that it is not possible or not permissible to discharge these obligations entirely in our private lives or through our various other roles and capacities. But we have no good reason to accept this. I argue that individuals are presumptively free to decide how and when to discharge their positive duties, and that buying shares does not cause this presumption to lapse. Hence a non-libertarian moral theory can be held without incoherence by a proponent of the shareholder model.     

Regulatory Responses to the Rise of the Market for Corporate Control in Britain in the 1950s

This article examines the evolution of the regulation of takeovers in Britain in the 1950s. Takeovers began in the early 1950s arousing hostility from the authorities which regarded them as undermining economic policy. A series of bids culminating in the struggle for control of the Savoy Hotel in 1953 led to official directives which covertly curtailed the phenomenon by restricting funds for bidders. There was a second wave of bids in the late 1950s following the relaxation of restrictions on bank lending in 1958. The battles for British Aluminium and Watney Mann aroused public interest and put the restriction of takeovers on the political agenda in the run-up to the General Election of 1959. The response was the publication of a set of self-regulatory guidelines by City practitioners, which was ignored. It is argued that this was what the authorities intended since they had come to regard the threat of takeover as a useful discipline on management.