The effects of demand,competitive, and technological uncertainty on board monitoring and institutional ownership of IPO firms

This paper considers industry-specific contingencies that may account for some of the inter-firm heterogeneity in the deployment of specific corporate governance mechanisms in IPO firms. We examine how differences in demand, competitive, and technological uncertainty in the industry influence the levels of IPO firm monitoring by board outsiders and institutional investors. We test our theory using a sample of U.S. firms that completed an IPO in 24 manufacturing industries. The results indicate that industry uncertainty is, indeed, significantly related to the use of corporate governance mechanisms. In particular, the empirical results indicate that industry effects on IPO firm board monitoring and institutional investor ownership are the strongest and most consistent for demand uncertainty and competitive uncertainty.

Is the German system of corporate governance converging towards the Anglo-American model?

This paper analyses whether the German corporate governance is converging towards Anglo-American practices. We summarise the extant empirical evidence on the various governance mechanisms that economic theory suggests ensure efficiency and describe recent legal developments. We find no clear signs of convergence in form, i.e. the main distinctive features of the German system have remained largely unaltered. However, changes occurred over the last decade (specially in the legal framework) suggest a certain convergence in function, i.e. some governance mechanisms have effectively incorporated aims and/or goals generally associated with the Anglo-American model.

Rivalry and strategic groups: what makes a company a rival?

Strategic group literature has generated a significant amount of research over recent decades. However, the rivalry implications of strategic group have remained unclear. This paper analyses rivalry and strategic groups in the house building industry in a small town from a cognitive approach. We consider rivalry as a subjective and directional phenomenon. Estimating rivalry as the direct identification of competitors we try to explain whether similarity affects rivalry and what factors make a company a “rival”. Results show that perceived rivalry is strongly related to size, past performance, subjective similarity and strategic group structure.

Public Organizational Birth and Death: Understanding the Exigencies of an African Political Environment

This research examines the application of theories of organizational birth and death in transitional and undemocratic political settings. Through the case study of the birth and death of the Ministry of Supplies and Marketing in Kenya, the author determines that theoretical explanations of organizational formation and demise do not necessarily fit a uniform profile. Under unstable and undemocratic environments, public organizations that are brought to life through decrees may also be unexpectedly vanished without following a logical and predictable cyclical sequence.

Autonomy and Regulation of State Agencies: Reinforcement,Indifference or Compensation?

This paper analyses the relationships between the autonomy and regulation of state agencies in Norway, Ireland and Flanders (Belgium). The empirical basis is provided by broad surveys of public sector organizations carried out in 2002–2004. Three hypotheses on these relationships are formulated and examined, indicating different patterns. The reinforcement hypothesis, stating a negative relationship does not get any support. On the other hand, the compensation hypothesis, stating a positive relationship gets some support. In general, however, the indifference hypothesis, stating low or no correlations seems to be the most adequate. The hypotheses are also linked to prevalent administrative doctrines, and the empirical findings indicate how relevant they are.

Activity-based diversification,corporate governance,and the market valuation of commercial banks in the Gulf Commercial Council

This article examines the effect on market valuation of both corporate governance and the diversity of activities conducted by GCC commercial banks. It shows evidence on the endogenous effect of corporate governance and the characteristics of the banking industry in determining the diversification level of a bank. Empirical findings show a bias in results using ordinary least squares regressions. When controlled for endogeneity, they indicate a negative (but weak) association between the diversification index and the market valuation—consistent with the agency-based hypothesis. Interestingly, foreign banks and corporate shareholders are effective monitors who invest in more diversified GCC banks with higher valuation multiples. Conversely, domestic corporate shareholders—related by a complex web of relationships—invest in less diversified banks with a lower market valuation. In addition, diversified commercial banks with either subsidiaries in developed countries or involvement in market-based activities have higher market valuation. The latter may be explained by the effect on performance of the recent bubble in the Arab stock market.

Giddens’ structuration theory and its implications for management accounting research

The purpose of this essay is to briefly review the pillars and the rationale of Giddens’ theory of structuration, and offer a snapshot of the impact of these ideas on research in management accounting. Conceptualised as a way of making sense of social life, structuration theory represents a sensitizing device for researchers, which has be drawn upon “in a selective way in thinking about research questions or interpreting findings” (Giddens, Modernity and self-identity: Self and society in the late modern age, 1991). In the following pages the duality of structure, the modalities of structuration, the concept of double positioning, the theory of the subject as well as concepts such as ontological security, routines or trust will be reviewed as essential elements of a vocabulary originally framed within Giddens’ The constitution of society (1984). The essay ends sketching the work of Macintosh and Scapens (Management accounting and control systems—an organisational and behavioural approach, 1990), who broke new ground to interpret management accounting systems in light of structuration theory terms and concepts, as well as some of the more recent works in accounting that have built on Giddens’ latest ideas on the The Consequences of Modernity (1990).

Crises and Natural Disasters: a Review of Two Schools of Study Drawing on Australian Wildfire Experience

The connection between “schools” of study focusing on crises and on natural disasters is explored. After considering the rise of separate schools, the article notes significant attempts to integrate them and suggests that, while natural disasters and other big crises have much in common, there are still some important differences that need to be taken into account in designing relevant management systems. Drawing particularly on Australian wildfire experience, the article then looks more briefly at the question of political leadership in disaster situations, and at serious problems that often occur in the reporting of those situations.

The effects of board size and ‘busy’ directors on the market value of Italian companies

This paper presents evidence that corporate governance quality measured by (1) the board size and (2) the fraction of directors that serve on more corporate boards, influences the market value of firms. The analysis is based in Italy, a country that is characterized by family and concentrated ownership, low legal protection of investors and pyramidal firm structures. Our empirical results suggest that the level of ‘busy-ness’ of corporate directors as a measure of board effectiveness has a significant influence on firm’s market performance. By contrast, we find limited evidence that board size has a substantial impact on the market valuation, except in small and medium enterprises and in some specific industry sectors.

Does one hat fit all? The case of corporate leadership structure

Recent corporate scandals have led to renewed campaigns for governance reforms, including calls for the separation of CEO and chairman positions. This paper argues that this trend ignores the possibility that differences in firm characteristics determine the appropriateness of separating or combining the two positions. I propose and test hypotheses on the determinants of leadership structure using a sample of 1,883 firms. I find that organizational complexity, CEO reputation, and managerial ownership increase the probability of CEO duality. I also find that whether CEO duality benefits or hurts the firm is contingent on firm and CEO characteristics. These results suggest that firms do consider the costs and benefits of alternative leadership structures, and that requiring all firms to separate CEO and chairman duties may be counterproductive.

Investigating modular organizations

This paper explores a new organizational form—modular organization—through a case-study approach. The aim is to isolate the specific properties that set this form apart from other known organizational forms. The case studies examined focus on the manufacturing process of small, medium and large companies in different industries, and provide a clear picture of modular organization. The analysis shows that modular organizations are an innovation per se and not the mere outcome of modular products. Modular organizations leverage decomposition by employing small units within a larger organization. Each unit is responsible for a specific domain, it is quasi-independent and makes autonomous decisions on various business issues. Modular organizations deal with suppliers directly, and are characterized by a flat structure. Companies based on modular organization can improve their efficiency in the high-tech and mature markets, and fully exploit their resources.

The Public Sector’s Use of Agencies: A Dynamic Rather than Static Scene

It is an occupational hazard in the study of organizations that we tend to view them as static arrangements, as though what is observed and reported today tells us all we need to know about them. But organizations are dynamic rather than static phenomena, being constantly affected by adjustments to meet the effects of fading past arrangements or approaching new arrangements. Simple “snapshots” taken at a particular moment in history are never likely to reveal all the relevant nuances. This article comments on this problem as it affects non-departmental public bodies often described loosely as “agencies”, by (a) drawing attention to some relevant theoretical contributions to the political science and organization theory literature, and (b) giving some examples of changes in the style of agency formation and operation over the years, mostly drawn from the Australian public sector.

Political Influence and Bureaucratic Autonomy

The establishment of autonomous public bodies during the past two decades has created a highly fragmented public sector. Using a dataset with more than 200 Dutch public sector organisations, this article examines three related sets of questions: to what extent a relationship exists between formal and de facto autonomy; the level of influence that interested parties exert upon those organizations; whether a relationship exists between levels of formal and de facto autonomy and the level of influence exercised by these parties. We find that formal autonomy does not reinforce de facto autonomy; organizations with less autonomy report higher levels of political influence when policy autonomy is concerned; and that organizations with more autonomy report higher societal influence on their financial autonomy.

Citizen Support for Hospital Privatization: A Hierarchical Cross-National Analysis

The movement for a new public management (NPM) holds that citizens will put aside partisan and ideological differences to support more efficient service delivery. Focusing on hospital privatization, a multi-national sample is utilized to investigate this assertion. Generalized hierarchical linear modeling (GHLM) is employed as the method of statistical analysis. The findings with regard to privatizing hospitals reveal that citizens develop their policy position by reference to a combination of symbolic political variables, service demand, self-interest, information levels, and political efficacy. The results cast doubt on the assertion that partisan differences will be set aside as citizens consider privatization reforms.

Managerial dominance and audit committee independence in Spanish corporate governance

The purpose of this paper is to analyse whether the independence of audit committees is affected by the degree of control exerted by managers over the board of directors. Results from a sample of 75 listed Spanish companies show that the majority of firms that voluntarily adopted an audit committee between 1998 and 2001, made an effort to guarantee their independence from management. The degree of independence is shown to be determined by the proportion of inside directors on the board, the same person holding both the CEO and board chairperson positions, and the level of management ownership. These findings may have political implications because existing regulations do not limit the presence of inside directors on audit committees. The presence of inside directors may compromise effectiveness, turning audit committees into instruments of management to provide the appearance of monitoring.

Using Economic Freedom Indexes as Policy Indicators: An Intercontinental Example

We use time-series cross-section analysis to provide empirical validation for the existence of a specific American ethos and a specific European ethos with respect to economic policy. In our innovation, economic policy is proxied by “economic freedom” from the Fraser Institute database and constitutional “political institutions” are proxied by variables from the Database of Political Institutions (from the World Bank). Our results suggest that, once we control for political and institutional differences, the United States and Europe still pursue different economic policies.

Politics−Bureaucracy Relationship in Bangladesh: Consequences for the Public Service Commission

The paper attempts to analyze the consequences of political pressure placed on the Public Service Commission (PSC) of Bangladesh. Through extensive literature review and empirical research, the authors conclude that the independence, efficiency and effectiveness of the PSC largely depend on the politics–administration relationship. Furthermore, this relationship is affected by regime types and it regulates the optimum functioning or malfunctioning of the institution.

Risk Management in Public–Private Partnership Contracts

Public–private partnerships (PPPs) allow private companies to build, own and operate public projects such as schools and hospitals on behalf of the public sector. PPP contracts commonly require the private agent to take responsibilities for the performance of the asset over a long term, at least for a significant part of its useful life, so that efficiencies arising from long-term investment and asset management can be realized. However, the evidence is finely balanced on the effectiveness of such initiatives in obtaining the intended goals. This brings to the fore the challenge of designing and implementing innovative partnership plans to manage public services more effectively. More emphasis needs to be placed on strategies for the transfer of risk for the successful conclusion of PPP contracts.

Government Governance (GG) and Inter-Ministerial Policy Coordination (IMPC) in Eastern and Central Europe and Central Asia

This paper focuses on the function of Inter-ministerial Policy Coordination (IMPC) and its critical role in governance. Following a definitional section, the authors give an overview of public sector governance in Eastern and Central Europe and Central Asia and discuss the application of governance principles to Inter-Ministerial Policy Coordination in these regions. They conclude with specific examples from the Republic of Macedonia and Central Asia.