Boards of Directors’ Self Interest: Expanding for Pay in Corporate Acquisitions?

Director compensation can potentially represent an ethical minefield. When faced with supporting strategic decisions that can lead to an increase in director pay, directors may consider their own interests and not solely those of the shareholders to whom they are legally bound to represent. In such cases, directors essentially become agents, rather than those installed to protect principals (shareholders) from agents. Using acquisitions as a study context, we employ a matched-pair design and find a statistically significant difference in outside director compensation between acquiring and control firms. Outside directors of acquiring firms earn more than twice as much as their counterparts in the matched-sample. S. Trevis Certo is an associate professor and Mays Research Fellow in the Mays Business School at Texas A&M University. He received his Ph.D. in Strategic Management from the Kelley School of Business at Indiana University. His research focuses on corporate governance (boards of directors, ownership structure, and CEO compensation), top management teams, initial public offerings (IPOs), and research methodology. Richard H. Lester is a clinical associate professor and Director of Academic Entrepreneurship Programs in the Mays Business School at Texas A&M University. He received his Ph.D. degree in Strategic Management from the Mays Business School at Texas A&M University. His current research interests focus on corporate governance, upper echelons and entrepreneurship. Catherine M. Dalton holds the David H. Jacobs Chair of Strategic Management in the Kelley School of Business, Indiana University. She also serves as Editor of Business Horizons, as Research Director of the Institute for Corporate Governance, and as a Fellow in the Randall L. Tobias Center for Leadership Excellence. She received her Ph.D. degree in Strategic Management from the Kelley School of Business, Indiana University. Professor Dalton's research is in corporate governance, with particular expertise in board composition, board leadership structure, executive and director compensation, and firms' ownership structures. Her research spans all types of organizations, including entrepreneurial firms, small businesses, large public corporations, and private organizations. Dan R. Dalton is the founding Director of the Institute for Corporate Governance, Dean Emeritus, and the Harold A. Poling Chair of Strategic Management in the Kelley School of Business, Indiana University. He is a Fellow of the Management in the Kelley School of Business, Indiana University. He is a fellow of the Academy of Management and an inaugural member of its Journals Hall of Fame. Professor Dalton is widely published, with over 280 articles in corporate governance, business strategy, law, and ethics. Additionally, his work has been frequently featured in the business and financial press including, Business Week, Wall Street Journal, Fortune, Economist, Financial Times, Boston Globe, Chicago Tribune, Los Angeles Times, New York Times, and the Washington Post. Professor Dalton regularly addresses public, corporate, and industry groups on corporate governance issues.     

The Economic Inefficiency of Secrecy: Pension Fund Investors’ Corporate Transparency Concerns

In the wake of recent corporate scandals, this paper traces the growing power of pension funds to provide managerial oversight of the firms they hold in their investment portfolios. Increasingly pension funds are exercising their legitimate rights as owners to raise the corporate governance standards of the firms they invest in. Within corporate governance generally, pension funds are shifting their attention away from managerial accountability and toward measures that increase transparency in firm-level decision-making. Pension funds use transparency to ensure that shareholders are the primary interest being served by the firm. Transparency not only aligns managers and owners, it also raises issues of firm behaviour that allow other stakeholders to engage the corporation more broadly. I contend that secrecy is economically inefficient. When organizations are opaque and interests are secret, decision-making can and does distort efficiency. I examine recent pension fund corporate governance campaigns with particular reference to the California Public Employees Retirement System. Dr. Hebb is a senior research associate at the Labor and Worklife Program, Harvard University and the Oxford University Centre for the Environment. She is researching the role of US public sector pension funds and urban revitalization as lead investigator on a two-year Rockefeller and Ford Foundation grant. Her doctoral work at Oxford University examined the impact of pension fund corporate engagement on the corporate governance, social and environmental standards of firm behaviour. She was a Clarendon Scholar at Oxford University and was awarded the prestigious William E. Taylor Fellowship (2003) from the Social Sciences and Humanities Research Council, Government of Canada. Dr. Hebb is also a recipient of the York University Schulich School of Business National Research in Financial Services and Public Policy Scholarship (Canada). Dr. Hebb is also the Director of the Capital Strategies Program at the Carleton Centre for Community Innovation (3ci), Carleton University, Canada. Here her work focuses on the financial and non-financial impact of pension fund economically targeted investment in Canada as part of a three-year SSHRC Initiatives in the New Economy grant.     

Corporate governance predictors of adoption of anti-takeover amendments: An empirical analysis

This study of 481 corporations provides an assessment of the relationship between several corporate governance variables (board composition, type of board leadership, officer and director stock holdings, institutional stock holdings, number of majority owners, existence of severance agreements) and adoption of anti-takeover amendments. The results of analysis suggest that the two groups (adopters/non-adopters) differ significantly in regards to these variables.Paula L. Rechner is an Assistant Professor at the University of Houston. She received her Ph.D., her research interests include corporate governance and executive succession/compensation. Her articles have appeared inAcademy of Management Journal, Strategic Management Journal, Academy of Management Executive, andOrganizational Behavior and Human Decision Processes, among others.Chamu Sundaramurthy, an Assistant Professor of Management at the University of Kentucky, is interested in corporate governance. Her dissertation examines board governance within the context of antitakeover corporate charter amendments adopted between 1984–1988. Her other research interests include executive succession and corporate social responsibility.Dan R. Dalton is the Dow Professor of Management and Director of Graduate Programs, Graduate School of Business, Indiana University. Formerly with General Telephone & Electronics (GT&E) for thirteen years, he received his Ph.D. from the University of California. Widely published in business and psychology, his articles have appeared in theAcademy of Management Journal, Academy of Management Review, Administrative Science Quarterly, Journal of Applied Psychology, Journal of Business Ethics, Strategic Management Journal, Journal of Business Strategy, Behavioral Science, andHuman Relations, as well as many others.     

Mental Models, Moral Imagination and System Thinking in the Age of Globalization

After experiments with various economic systems, we appear to have conceded, to misquote Winston Churchill that “free enterprise is the worst economic system, except all the others that have been tried.” Affirming that conclusion, I shall argue that in today’s expanding global economy, we need to revisit our mind-sets about corporate governance and leadership to fit what will be new kinds of free enterprise. The aim is to develop a values-based model for corporate governance in this age of globalization that will be appropriate in a variety of challenging cultural and economic settings. I shall present an analysis of mental models from a social constructivist perspective. I shall then develop the notion of moral imagination as one way to revisit traditional mind-sets about values-based corporate governance and outline what I mean by systems thinking. I shall conclude with examples for modeling corporate governance in multi-cultural settings and draw tentative conclusions about globalization. Patricia H. Werhane is the Wicklander Chair of Business Ethics and Director of the Institute for Business and Professional Ethics at DePaul University with a joint appointment as the Peter and Adeline Ruffin Professor of Business Ethics in the Darden School at the University of Virginia. Professor Werhane has published numerous articles and is the author or editor of twenty books including Persons, Rights and Corporations, Adam Smith and His Legacy for Modern Capitalism, Moral Imagination and Managerial Decision-Making with Oxford University Press and Employment and Employee Rights (with Tara J. Radin and Norman Bowie) with Blackwell’s. She is the founder and former Editor-in-Chief of Business Ethics Quarterly, the journal of the Society for Business Ethics.     

On the dynamics of corporate size and illegal activity: An empirical assessment

This research, relying on companies continuously listed on the Fortune 500 over a five-year period (n=384), provides an empirical assessment of two hypotheses. Based on 334 violations over the period the results indicate: (1) gross differences in illegal activity based on corporate size, and (2) similar differences in corporate recidivism also based on size. Discussion includes a number of size related dynamics which may account in part for such results. Dan R. Dalton is an Associate Professor of Management and Director of Doctoral Programs, Graduate School of Business, Indiana University. Formerly with General Telephone & Electronics(GT&E) for thirteen years, he received his Ph.D. from the University of California. Widely published in business and psychology, his articles have appeared in the Academy of Management Journal, Academy of Management Review, Journal of Applied Psychology, Strategic Management Journal, Journal of Business Strategy, Behavioral Science, and Human Relations, as well as many others. He is the co-author of Case Problems in Management, Applied Readings in Personnel and Human Resource Management, and the forthcoming Absenteeism, Transfer, Turnover: An Interdependent Perspective. Professor Dalton is also co-principal investigator working on a five year grant provided by the General Motors Foundation in the general area of personnel policy.Idalene F. Kesner received her Ph.D. degree from the Graduate School of Business, Indiana University. She is currently an assistant professor of business policy and environment in the School of Business Administration, the University of North Carolina at Chapel Hill. She is continuing her research in the area of corporate boards and is also working in the areas of CEO succession and corporate takeovers     

The challenge of global ethics

The authors argue that the time is ripe for national and corporate leaders to move consciously towards the development of global ethics. This papers presents a model of global ethics, a rationale for the development of global ethics, and the implications of the model for research and practice.Paul F. Buller is an Associate Professor of management in the School of Business Administration at Gonzaga University where he teaches courses in strategic management. Dr. Buller holds a PhD degree in Business Administration from the University of Washington, and has published a number of articles appearing in academic and practitioner journals.John Kohls is an Associate Professor of Management at Gonzaga University. He teaches classes in Business Ethics, Business, Government and Society, and Organizational Behavior. He has written numerous articles in these areas and conducts Management Development workshops including Ethics, Organizational Culture, and Leadership.Kenneth S. Anderson is an Associate Professor of management at the School of Business Administration, Gonzaga University. His research interests include ethics, burnout, and linkages between strategy and human resource management.     

Enterprise logic vs product logic: the development of GE’s computer product line

The following article focuses on corporate strategies at General Electric (GE) and how corporate-level interventions impacted the market performance of the firm’s general purpose commercial mainframe product set in the period 1960–1968. We show that in periods of both divisional independent planning and corporate-level planning strategic governance, central decisions interfered in the execution of GE’s product strategy. GE’s institutional ‘enterprise logic’ negatively impacted the ‘product logic’ of its computer product line leading to a weakened position in the market for these systems.     

On the antecedents of corporate severance agreements: An empirical assessment

This study of major corporations (n=481) provides an empirical assessment of the effects of several corporate governance variables (CEO duality, boards of director composition, officers and directors common stock holdings, institutional common stock holdings, number of majority owners) on the adoption of so-called severance agreements. A discriminant analysis indicates a significant multivariate function. Wilks lambda univariate analyses suggest that the percentage of common stock held by owners and directors and number of majority stock holders are the more robust discriminators. Dan R. Dalton is Professor of Management and Director of Doctoral Programs, Graduate School of Business, Indiana University. Formerly with General Telephone & Electronics (GT&E) for thirteen years, he received his Ph.D. from the University of California. Widely published in business and psychology, his articles have appeared in the Academy of Management Journal, Academy of Management Review, Journal of Applied Psychology, Journal of Business Ethics, Strategic Management Journal, Journal of Business Strategy, Behavioral Science, and Human Relations, as well as many others. He is the co-author of Case Problems in Management, Applied Readings in Personnel and Human Resource Management, and the forthcoming Absenteeism, Transfer, Turnover: An Interdependent Perspective. Professor Dalton is also co-principal investigator working on a five year grant provided by the General Motors Foundation in the general area of personnel policy. Paula L. Rechner is an Assistant Professor in the area of Strategic Management at the University of Illinois, Champaign-Urbana. She received her Ph.D. from Indiana University in 1986. Her primary research interest is corporate governance; specifically, her work has focused on corporate boards of directors and board leadership. In addition, she has been actively involved in research projects concerning strategic decision making, corporate control issues, and improving research methodology. Her articles have appeared in Organizational Behavior and Human Decision Processes, Strategic Management Journal, and Academy of Management Executive, as well as others.     

Corporate Identity,Ethics and Reputation in Supplier–Buyer Relationships

Multi-national corporations (MNCs) have been criticised for not behaving ethically in some situations, which could have a negative effect on their reputation. This study examines the ethics of a large MNC in its relationship with its suppliers. A brief literature review of corporate identity, business ethics and buyer–supplier relationships is undertaken. The views and perceptions of the buying staff and the suppliers to a large South African MNC are obtained and discussed. The results indicate that this MNC has a good corporate reputation among both its suppliers (an important stakeholder) and its own buying department. The existence and implementation of formal codes of ethics was found to be a necessary, but not sufficient condition for good ethical practice. Candid relationships with suppliers emerged as a second and important factor. Ethical perceptions of buyers by suppliers are driven by the management of corporate identity, through the elements of ethical standards and candid relationships. We present a model of corporate identity/reputation in Buyer–Supplier Relationships. Michael Bendixen is a Professor of Research Methodology and Statistics at the H. Wayne Huizenga School of Business at Nova Southeastern University, Florida. His research interests include business ethics, governance and culture. His articles have appeared in the European Journal of Marketing, Industrial Marketing Management, Journal of Business Research, Journal of International Business Studies and Journal of Marketing Management amongst others. Russell Abratt is a Professor of Marketing at the H. Wayne Huizenga School of Business at Nova Southeastern University, Florida. His research interests include corporate identity management and business ethics. His articles have appeared in the Journal of Business Ethics, Journal of Business and Psychology, European Journal of Marketing, Journal of Marketing Management, Industrial Marketing Management, and Business Horizons amongst others.     

Ethics programs and their dimensions

All organizations have ethics programs which consist of both explicit and implicit parts. This paper defines corporate ethics programs and identifies a number of their components. Corporate ethics programs' structural and behavioral dimensions are proposed which may allow further examination of such program components and their impacts. Finally, fifteen propositions are suggested which describe the influence of founder values, competitive pressures, leadership, and organizational problems on corporate ethics programs and the manageability of such programs.Steven N. Brenner is currently Sponsored Professor of Business Ethics and Corporate Social Responsibility at Portland State University, Portland, Oregon. He served from 1983 through 1987 as Associate Dean for Graduate Programs in its School of Business Administration. Dr. Brenner has written articles forHarvard Business Review, The Academy of Management national MeetingsProceedings, The JAI PressResearch on Corporate Social Performance and Policy, and other publications. He has served as the Chairman and Program Chairman for the Social Issues in Management Division of the Academy of Management and is Chairman of the International Association of Business and Society's 1992 meeting to be held in Leuven, Belgium. He teaches courses in corporate social responsibility, business ethics, managing in a regulated world, business/government relations, business policy and organizational politics. During 1989–90 he was on a sabbatical leave doing research on corporate social responsibility and acting as Chair of the Academy of Management's Ethics Task Force which wrote the Academy's Code of Ethical Conduct.This work was supported in part by a grant from the Chiles Foundation, Portland, Oregon.     

The Multinational Corporation and Global Governance: Modelling Global Public Policy Networks

Globalization has increased the economic power of the multinational corporation (MNC), engendering calls for greater corporate social responsibility (CSR) from these companies. However, the current mechanisms of global governance are inadequate to codify and enforce recognized CSR standards. One method by which companies can impact positively on global governance is through the mechanism of Global Public Policy Networks (GPPN). These networks build on the individual strength of MNCs, domestic governments, and non-governmental organizations to create expected standards of behaviour in such areas as labour rights, environmental standards, and working conditions. This article models GPPN in the issue area of CSR. The potential benefits of GPPN include better overall coordination among industry and government in establishing what social expectations the modern MNC will be expected to fill. David Detomasi is an assistant professor of international business at the School of Business, Queen’s University, Kingston, Ontario Canada. His research areas include corporate governance, corporate social responsibility, and business and society.     

中国上市公司首席财务官(CFO)薪酬及其影响因素研究

首席财务官(CFO)在现代公司治理结构中的地位和作用日益增强,薪酬的高低对其在公司治理中职能的发挥具有重要的影响。根据2006年披露的我国上市公司年度报告,全面地对1081家上市公司首席财务官(CFO)的年度薪酬及其相关问题进行了研究,有助于系统地了解和认识我国上市公司首席财务官年度薪酬的基本状况及其影响因素。     

The theory of pluralism in corporate governance: A conceputal framework and empirical test

The concept of pluralism in corporate governance is stated as an emergent theory. Grounded in the concept of enhancing the input of various stakeholders and lessening the control of managers in corporate governance, the theory is the foundation of proposed legal changes in corporate governance and the board of directors. While more pluralistic control has been conceptually linked to improved social performance of the firm, this proposition is not supported in an empirical investigation.Rick Molz' main area of research is in strategic response to public policy initiatives. He has had articles published inColumbia Journal of World Business, Management International Review, The Journal of Business Research, Long Range Planning, The Journal of Business Strategy, andThe Journal of Business Ethics, as well as chapters and cases in several edited volumes.     

Why Stakeholder And Stockholder Theories Are Not Necessarily Contradictory: A Knightian Insight

The normative foundations of the investor centered model of corporate governance, represented in mainstream economics by the nexus-of-contracts view of the firm, have come under attack, mainly by proponents of normative stakeholder theory. We argue that the nexusof- contracts view is static and limited due to its assumption of price-output certainty. We attempt a synthesis of the nexus-of-contracts and the Knightian views, which provides novel insights into the normative adequacy of the investor-centered firm. Implications for scholarship and management practice follow from our discussion. S. Ramakrishna (Rama) Velamuri is Assistant Professor at IESE Business School, where he teaches Entrepreneurship and Negotiation in the MBA and executive education programs. He is also a visiting professor at the Indian School of Business in India, the University of Saarland in Germany, and the University of Piura in Peru. His research has been published in both academic and practitioner outlets: Journal of Business Venturing, Business Ethics Quarterly, Journal of Entrepreneurial Finance and Business Ventures (forthcoming), Universia Business Review, Financial Times Mastering Management Series, The Hindu, Business Line, Actualidad Economica, La Vanguardia, and Diario Financiero (Chile). He has also contributed several book chapter on enterpreneurship and strategy. He received a B.Com. degree from the University of Madras, an MBA from IESE Business School, and a Ph.D. from the Darden Graduate School of Business, University of Virginia. Sankaran Venkataraman (Venkat) is the MasterCard Professor of Business Administration at the Darden Graduate School of Business Adminstration, University of Virginia, where he teaches MBA and executive level courses in strategy and entrepreneurship. He also serves as the Director of Research of the Batten Institute and is the Editor of the Journal of Business Venturing. He consults with Fortune 500 firms as well as several small companies. He is advisor to firms, universities and government organizations. He is a speaker for and advisor to the Entrepreneurial Forum, a program of the International Trade Administration of the U.S. Department of Commerce aimed at promoting trade through entrepreneurship around the world. He received his M.A. in Economics from the Birla Institute of Technology and Science, Pilani, India; his MBA from the Indian Institute of Management (Calcutta); and his Ph.D. from the University of Minnesota.     

The construction of qualitative research articles: a conversation with Eileen Fischer

Eileen Fischer, Professor of Marketing and Anne & Max Tanenbaum Chair in Entrepreneurship and Family Enterprise at the Schulich School of Business at York University, has published research on entrepreneurs, consumers, and markets in several leading management and marketing journals. Professor Fischer has served on the editorial review boards of Consumption Markets & Culture; Entrepreneurship: Theory and Practice; Family Business Review; Journal of Business Venturing; and Journal of Small Business Management and is a current co-editor of the Journal of Consumer Research. In preparation for this conversation, the interviewers invited questions about the construction of qualitative research articles from multiple junior scholars in the field of consumer culture theory (CCT). This invitation yielded dozens of questions that were whittled down to the final questions you see here.     

适应现代公司治理结构的内部财务监管体系

我国上市公司法人治理结构存在着股权结构不合理,董事会缺乏独立性、监事会缺乏权威性等诸多问题,直接影响着企业的内部财务监管体系的建立。只有在股东大会、董事会和总经理的委托代理链条上分别设置财务总监、审计委员会和内部审计机构,才能真正建立起适应现代公司治理结构的内部财务监管体系,充分发挥其监督,评价和服务职能,更好地为公司内部管理和决策服务。     

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).     

增值税费用特性--来自中国情境下的经验证据

通过增值税、营业税的对比研究,表明增值税与营业税同样显著地影响企业盈余,也同样是税务筹划关注的重要税种,但因增值税未纳入利润表,给企业管理层提供了隐秘的税务筹划机会。建议将增值税费用化处理并纳入利润表,既有利于“营改增”后的税收监管,还能约束企业管理层的税务筹划,更真实地反映企业盈余。研究还发现,公司治理结构中董事长、总经理的职位若由同一人担任,可显著影响增值税的现金流动,这应是完善公司治理的方向。     

Can business ethics enhance corporate governance? Evidence from a survey of UK insurance executives

This paper seeks to explore the implementation of corporate ethical culture and policies as an adjunct to formal forms of corporate governance. The insurance industry utilises a variety of external governance structures, but is almost unique in that stock companies (which are exposed to an external market for corporate control) and mutual companies (which are owned by a subset of their customers) are in active competition. A questionnaire survey of senior executives in U.K. insurance companies was undertaken to explore the implementation of ethical policies and codes, to investigate ethical attitudes, and to analyze the extent to which these policies and attitudes varied among companies. The results suggest that ethical policies have a higher profile and ethical attitudes and behaviour are more positive in mutual as opposed to stock insurance companies. These findings support the contention that a strong corporate ethical culture may be utilised to enhance formal corporate governance instruments. Stephen Diacon and Christine Ennew both work in the School of Management and Finance at the University of Nottingham, United Kingdom. Dr. Diacon is Senior Lecturer in Insurance Studies and Director of the University of Nottingham Insurance Centre. Dr. Ennew is Reader in Marketing and Associate Editor of International Journal of Bank Marketing.