The Mortgage and Financial Crises: The Role of Credit Risk Management and Corporate Governance

This paper discusses the role of risk management and corporate governance as causal factors in the onset of the financial crisis. The boom and bust in the housing market precipitated serious strains in financial markets. These strains resulted in the onset of the financial crisis in August 2007 with the collapse of the asset-backed commercial paper market. This collapse occurred because the solvency of a number of large financial firms was threatened by huge losses in complex structured financial securities. Why did these firms have such high concentrations in mortgage-related securities? Given the information available to firms at the time, these high concentrations in mortgage-related securities violated basic principles of modern risk management. We argue that this failure to apply well-understood risk management principles was a result of principal-agent problems internal to the firms and to breakdowns of corporate governance systems designed to overcome these principal-agent problems.     

Enterprise Risk Management Program Quality: Determinants,Value Relevance,and the Financial Crisis

This paper investigates factors associated with high‐quality Enterprise Risk Management (ERM) programs in financial services firms, and whether ERM quality enhances performance and signals credibility to the financial markets. ERM, developed with the assistance of the accounting profession, provides a framework and plan to integrate management of all sources of risk. Challenged by measurement difficulties common to research on management control systems, prior ERM studies present mixed findings. Using ERM quality ratings of financial companies by Standard & Poor's, we find that higher ERM quality is associated with greater complexity, less resource constraint, and better corporate governance. Controlling for such characteristics, we find that higher ERM quality is associated with improved accounting performance. Results show a market reaction to signals of enhanced management control from initial ERM quality ratings and rating revisions, and a stronger response to earnings surprises for firms with higher ERM quality. Focusing on the recent global financial crisis, our analysis suggests that there is no relation between ERM quality and market performance prior to and during the market collapse. However, returns of higher ERM quality companies are higher during the market rebound. Overall, results reveal that firm performance and value are enhanced by high‐quality controls that integrate risk management efforts across the firm, enabling better oversight of managers' risk‐taking behavior and aligning that behavior with the strategic direction of the company.     

Human resource management, corporate governance structure and corporate performance in Korea: a comparative analysis of Japan, US and Korea

This paper investigates the influences of human resource management (HRM) and corporate governance structure on the corporate performance in Korean firms. Prior to the Asian economic crisis, large Korean firms mostly followed the Japanese style HRM paradigm where the practice of lifetime employment is guaranteed. However, in the aftermath of the crisis, they have pursued structural downsizing and changed their paradigm more towards the US HRM paradigm where inter-firm mobility becomes prominent in the flexible labor market. The empirical evidence introduced in this paper affirms the argument that the first step towards a HRM paradigm shift in Korea should be the establishment of an efficient corporate governance structure. This implies that a simple switch from the Japanese HRM paradigm to the US model may not improve corporate performance unless the change is accompanied by a solution to the problems posed by the minority controlling structure of Korean companies. The implications of this study for guiding policy in developing countries having labor market rigidities and underdeveloped corporate governance is clear. Corporate governance systems may provide an appropriate starting point for the development of any policies aimed at building an efficient human resource management system and a flexible labor market.     

金融危机后国际公司治理改革的动向及启示

公司治理的失效是导致金融危机的原因之一。国际社会在金融危机后的公司治理改革,重点应放在提高董事会的责任、加强风险控制和改善薪酬制度等方面。从近年来公司治理改革的发展趋势看,维护监管与灵活性的平衡已经成为新一轮公司治理改革的出发点。越来越多的国家实行公司治理规范的"服从或解释"规则。在给予公司充分的治理选择权的条件下,通过提高透明度,加强市场约束和问责性。     

探讨上市公司之财务独立董事

现代企业中所有权与经营权的日益分离引发了股东大会、董事会、高层管理当局、监事会、各职能部门之间的一系列委托--代理关系,致使公司治理成为全球性的问题,独立董事制度作为完善公司治理的机制而相应产生.文章以委托代理理论为基础,以财务独立董事为探讨对象,提出应转变财务独立董事在公司内仅仅起监督作用的看法,倡导上市公司应充分发挥财务独立董事的专业知识,重视财务独立董事在参与企业战略、重大项目规划等方面的重要作用.     

公司治理与银行监管有效性

近年来随着世界范围内金融危机的不断发生，世界各国越来越重视对金融风险的防范和管理，公司治理问题也得到了广泛的关注。良好的公司治理对银行有效监管的重要之处在于良好的公司治理可以增加对银行利益相关者的激励，是银行监管达到令人满意状态的关键因素，也是有效银行监管的一个先决条件。本文在介绍公司治理内涵和治理机制的基础上，分析了银行公司治理和银行监管有效性的关系，提出了增强监管有效性的银行公司治理的建议。     

产品市场竞争动态与公司财务保守行为:实证研究述评

得益于产业组织理论与资本结构理论的交叉渗透,企业融资管理更加强调财务灵活性,即须基于产品市场竞争动态、公司战略、公司治理结构以及资本市场环境等因素进行综合权衡,财务保守由此作为一种能够适应企业当前情况及未来投资机会的投融资战略选择行为,而在当代资本结构研究中颇受关注。文章基于资本市场时机、行业竞争、公司治理结构及债务契约分析等四个视角对产品市场竞争与公司财务保守行为关系的经验研究予以述评。     

上市证券公司投资银行业风险及其防范

随着证券市场的发展及行业竞争的加剧,投资银行业面临的风险越来越大。如何有效地控制风险,是上市证券公司投行业生存和发展的关键问题。针对当前投行业中存在的主要风险,本文认为:最关键的是要持续完善法人治理结构、内部控制构架及以净资本为核心的风险控制指标体系;优化投行业务流程;探求新的风险管理手段和技术创新;完善有关法律法规,加大对违规违法行为的处罚力度。只有这样,才能有效地控制投行业务风险。     

委托-代理之区间化研究

公司治理问题有两类:一类是代理型公司治理问题,面对的是股东与经理之间的关系;另一类是剥夺型公司治理问题,涉及到大股东与小股东之间的利益关系.现代公司主要的特征是所有权与经营权相分离,产生了委托--代理关系.经过对传统的委托代理模型的分析认为:传统的委托--代理模型存在着假设条件--期望效用函数和股东财富最大化的不合理性,不具有可操作性.由此提出了龙格现象,设计了委托--代理区间化模型,并相应地提出了减小契约效力角,使委托人与代理人目标趋于一致,增加公司价值的两种方法:经理股票期权激励和加强独立董事建设.     

现金持有对家族企业市场竞争力的影响——基于CEO来源的视角

当前我国家族企业已陆续进入代际传承的重要阶段,企业CEO也出现了由一代、二代或外部经理人这三种不同来源的安排。不同来源的CEO从现金持有的交易动机、预防动机和代理动机出发,会选择不同的现金持有战略,从而影响企业的市场竞争力。文章以2010-2014年沪深两市A股上市家族企业为研究对象,研究现金持有水平与企业市场竞争力之间的一般关系,并根据家族企业的特殊性和差异性,推断家族企业现金持有是否同样具有竞争优势,还进一步研究家族企业不同CEO来源对现金持有竞争优势的影响。研究发现,家族企业的现金持有能够增强企业的市场竞争力,即家族企业存在现金持有的竞争优势。而且家族企业CEO的不同来源会对企业现金持有的竞争优势产生较大影响,具体说,家族创始人CEO由于维护社会情感财富和代际传承等原因,可能会损害企业现金持有的竞争优势,降低家族企业现金持有价值;家族二代CEO出于二次创业的动力,反而会加强企业现金持有的竞争优势;外部经理人担任CEO为了个人声誉和薪酬,也会显著加强企业现金持有的竞争优势。文章从家族企业这一特殊样本出发,丰富了家族企业现金持有竞争优势的研究,并从家族企业代际传承的视角,独特地研究了不同CEO来源对家族企业现金持有竞争优势的重要影响,同时也扩展了代际传承经济后果的研究。     

Restructuring of financial institutions and the corporate sector in Korea

This paper explores causes of the Korean currency crisis which started in November 1997. This paper also presents restructuring proposals and introduces the progress made so far. The urgency for quick restructuring and the necessity of the injection of money from both the government and foreign investors are emphasized. Restructuring of financial and corporate sectors should be pursued simultaneously. In the financial sector, the restructuring of banks should take precedence over other financial institutions. The key task in terms of bank restructuring involves the resolution of bad loans, recapitalization and the expedited reorganization of nonviable banks. Corporate reform is also important. Banks should play a central role in corporate workouts, especially in lowering excessive corporate debt and triggering corporate restructuring based on core competence. Transparency of corporate management, internationally accepted accounting practices, fuller disclosure requirements and stronger monitoring by minority shareholders are prerequisites for effective market discipline. Reform of ownership and governance structure are also important in enhancing managerial accountability of corporates as well as financial institutions.     

A review of earnings management in China and its implications

This paper discusses the motivations behind the earnings management of listed firms in China and provides evidence on earnings management using various accounting measures. The literature shows that earnings management occurs most often before the issue of securities or when a firm is facing the risk of being delisted. While non‐core income was widely used to measure earnings management in China, as it is easily detected, researchers are now focusing on accrual‐based models. We explore the underlying causes of earnings management in China, and conclude that the two main causes are the concentrated ownership structure and the strong political and economic connections between government and the listed companies. We review the impact of corporate governance mechanisms and government supervision on earnings management in China.     

公司治理、宏观经济环境与财务失败预警研究——离散时间风险模型的应用

已有的财务失败预警模型大多只考虑财务信息的作用,忽视了公司治理状况、宏观经济环境等非财务因素对财务失败的影响。本文综合利用财务信息、公司治理信息和宏观经济信息,采用生存分析中的离散时间风险模型构建我国上市公司的财务失败动态预警模型,并实证检验和比较离散时间风险模型与logistic模型、probit模型的预警能力。研究结果显示,公司治理信息和宏观经济信息对财务失败具有显著的预警作用,在模型中纳入这些非财务信息有助于提高模型的预测效果。研究结果也表明,离散时间风险模型的样本内判别能力和样本外预测能力都高于logistic模型和probit模型。     

Does Information Asymmetry Matter to Equity Pricing? Evidence from Firms’ Geographic Location*

The scarcity of suitable proxies for asymmetric information has impeded empirical research from providing reliable evidence on whether information risk shapes equity pricing. In reexamining this unresolved question, we rely on firms’ geographic distance from financial centers to gauge information asymmetry. We provide strong, robust evidence supporting the prediction that equity financing is cheaper for firms nearer central locations, implying that investors rationally require more compensation when information asymmetry is worse. The equity pricing role of geographic proximity is economically large, with our coefficient estimates translating into firms located within 100 kilometers of the city center of the nearest of six major financial centers, or in their metropolitan statistical areas, enjoying equity financing costs that are seven basis points lower. Our inferences are insensitive to measuring both the cost of equity capital and distance in several ways, controlling for corporate governance quality, and addressing endogeneity. Collectively, our analysis suggests that investors discount the price that they pay for their securities to reflect the greater information asymmetry that ensues when firms are far from major financial centers.     

The Financial Crisis: Miss-Diagnosis and Reactionary Responses

This paper divides the current financial crisis into three phases and describes the policy responses to each. In Phase I policy makers misdiagnosed it as a traditional liquidity crisis. Phase II was a triage period as policy makers addressed the significant solvency problems that became apparent in the country’s largest financial institutions. Phase III was the pronounced slowdown in the real U.S. economy during which the Federal Reserve expanded its balance sheet by purchasing long term Treasuries and newly issued mortgage backed securities from GSEs. This paper describes the financial market conditions that characterized each of the three phases, describes the policy responses, and finally, attempts to sort out what we have learned and not learned from this crisis and how to handle it so far.     

Origins of the financial crisis and requirements for reform

This paper examines the causes of the global financial crisis (focusing in particular on why residential mortgage-backed securities and credit default swaps exploded from around 2004) and the policy reform agenda. Arbitrage opportunities in capital rules and the tax system were available, and changes in regulations affecting the leverage of international banks (IBs) played a key role in allowing these opportunities to be exploited on a greater scale. Changes to the Basel rules also actively contributed to the sharp rise in toxic securities. The policy agenda focuses on the need to deal with toxic assets, and for broader reforms to incentive structures, not only of capital rules, but also of corporate governance and banking structures. Specific policy reform recommendations are made. Recent numbers on the capital needs of banks suggest that we are not very far into the process of dealing with the crisis, and lack of transparency in this respect is a major issue in Europe. The longer-run reform process too is not focusing on the ideal building blocks.     

公司治理与财务困境关系研究综述

财务困境也称财务危机或财务困难,是公司治理中应注意避免发生的问题。从理论的角度分析公司治理与财务困境的关系,并从股权结构、董事会特征、经理层激励等方面回顾国内外学者对公司治理与财务困境关系的研究,发现公司治理结构对财务困境有着显著影响。     

An overview of Asian equity markets

This study overviews the development of 11 Asian equity markets, namely, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Philippines, Singapore, Taiwan, and Thailand. Prior to the onset of the global financial crisis, the Asian stock exchanges were generally bullish, underpinned particularly by China's robust economic performance. Innovations in financial products and services have been growing in importance, as stock exchanges in these countries have been making a concerted effort to introduce new features and best practices, with the objectives of raising market efficiency, enhancing service quality, and generally bringing operations up to par with international standards. But the potential to realize or support market efficiency can only be possible within an adequate legal framework, a sound market infrastructure, and appropriate corporate governance mechanisms. Thus, many challenges are still to be overcome in the region.     

企业集团公司治理研究初探

企业集团是界于企业和市场之间的一种经济组织形式,它把市场协调和组织协调有机地结合在一起,避免了市场与企业的同时失败。本文通过比较美日两种较为典型的公司治理模式,并通过理清公司治理与公司管理的关系,来分析企业集团公司治理的若干问题。认为企业集团治理的本质特征在于对子公司的治理,并得出以下结论:企业集团管理正在向治理转化,该转化提高了集团的整体效率。     

Causes for business failures: Understanding the 1997 Korean crisis

This paper explains why the Korean business sector is in such bad shape based on the hypothesis that it is partly due to bad management and partly due to bad systems and policies. Bad management of business firms, especially the large ones belonging to chaebols, was a crucial element in fermenting the crisis. This stems from the deeper problem of the lack of an effective corporate governance mechanism. There did not exist effective mechanisms with which inefficient managers could be punished. Thus, when large firms went on prolonged investment binges, nothing could have prevented them. The grave ill effects of financial controls long used by the government, were another crucial elements that instigated the current crisis. The policy, whose essence was to create economic rents through interest rate controls and allocate those rents to designated areas, had produced many ill effects. The policies, among others, made borrowers overly dependent on debts and lenders extremely burdened with non-recoverable loans, making both very vulnerable to bad shocks. If Korea can reform her government-dominated economic system toward a more market-dependent one, she will emerge from the current crisis much stronger.