Corporate governance and MNE strategies in emerging economies

We explore factors of convergence and divergence in corporate governance of emerging and developed market economies, focussing on the role of firm internationalisation. In particular, foreign investments by emerging economy firms led to upgrade of their governance capabilities. These firms also became advocates for home-country policy reforms that mandated the development of similar capabilities for local firms. We present a broad overview of the literature and propose an approach that considers the evolution of corporate governance, both at the national level and the firm level, with MNEs from both emerging market economies and developed economies as active actors in this process.     

Managing multi-business firms: A comparison between Korean chaebols and diversified U.S. firms

We identify and examine the efficacy of organizational mechanisms through which diversified firms are effectively managed without loss of control. Building on the resource based view of business groups, we argue that business groups in emerging markets use these mechanisms more often and derive more benefits from the use of these mechanisms than the diversified U.S. firms. Empirical results based on samples from Korea and the U.S. show that structural mechanisms such as strategic control and contingency arrangements, do not affect divisional performance, whereas socio-cultural mechanisms, such as shared values and corporate-level training, have significant effect on divisional performance. We also find that Korean chaebols have leveraged socio-cultural mechanisms better than large U.S. firms, and thus, have an advantage in continuing to diversify.     

Unraveling a puzzle: the case of value line timeliness rank upgrades

We examine a sample of Value Line’s timeliness rank upgrades that occur immediately following earnings announcements and find that pre-event price momentum has significant incremental explanatory power for post-event drift, after controlling for the level of earnings surprise. Therefore, the stock price drift following Value Line’s timeliness upgrades cannot be viewed as driven only by the post-earnings announcement drift phenomenon. Instead, these findings indicate that, among other factors, Value Line has been exploiting the price momentum effect for decades. Black (Financ. Anal. J. 29:10–14, 1973) clearly stated that it does indeed do this, but his assertion has not yet been verified as an explanation of the puzzling drift that follows Value Line rank upgrades.