State-Corporate Relationships in an Era of Shifting Regime: The Case of Corporate Law Reform in Israel

Different aspects of the relationship between state and economy have traditionally been examined, yet corporate governance and specifically corporate law have received less attention. This article focuses on the legislation of the new corporate law in Israel at the end of the 1990s, which took place during regime transformation from an interventionist state to a regulatory state. The article makes specific reference to three disputes: the lifting of the corporate veil, the separation of the positions of chairman of the board and chief executive officer, and the obligation of private firms to disclose financial reports. This article suggests that despite the transformation of the regime, state actors have continuously been involved via corporate law in the governance of corporations and their relationship with the environment. However, corporate law enables corporations to constrain state power and the state's influence on property rights.     

To Regulate Or Not To Regulate? Early Evidence on the Means Used Around the World to Promote Gender Diversity in the Boardroom

Despite the growing public concern in recent years about the place of women in business, gender diversity in corporate governance has made little progress. As a consequence, the issue has captured the worldwide attention of policymakers. Several countries are currently adopting or considering the adoption of laws or regulations to promote gender diversity on corporate boards. The purpose of this paper is to compare the effectiveness of using legislative or regulatory means to increase female representation instead of allowing firms to voluntarily fix their own non‐legally binding targets. We find that the relation between gender diversity and performance is positive in countries using the voluntary approach while it is negative in countries using the regulatory approach. We conclude that public policy aimed at increasing the number of women on corporate boards should be introduced gradually and voluntarily rather than quickly and coercively to avoid sub‐optimal board composition.     

Perspectives on Corporate Control: Implications for CEO Compensation

This study examines the influence on CEO paypractices of four corporate control perspectives:managerial control, class hegemony, external control,and efficient market. The results indicate the influence of both market and extra-market controls on thedetermination of CEO pay levels and criteria.Implications for the governance of firms and the studyof corporate control are drawn.     

The Re-Emerging Role of the State in Contemporary Russia

I examine ownership structure of Russian firms during the 1998?C2006 period, where a greater emphasis is placed on motivations behind increased government ownership in the latter years, when oligarchs?? opportunistic influence on the firm diminished as state ownership correspondingly increased. As this phenomenon is also correlated with improved corporate growth during the period, I argue that state participation in corporate governance acted as an effective substitute mechanism to constrain wealth-tunnelling behaviour of corporate insiders and local bureaucrats in a country defined by a weak property rights system.     

Corporate Quotas and Symbolic Politics in Advanced Democracies

ABSTRACT

This article identifies trends in the adoption and implementation of quotas for corporate boards, an underresearched topic in political science. Corporate quotas—like legislative quotas—constitute the “fast track” to gender equality but appear more commonly in advanced democracies. These corporate quotas fall into three categories: laws covering all companies; laws covering state-owned companies only; and nonbinding (voluntary) measures in corporate governance codes. Despite on-paper differences, these corporate quotas are largely toothless. First generation corporate quotas, like first generation legislative quotas, operate symbolically. By raising the specter of stringent legislation in the long run, corporate quotas induce firms into voluntary compliance in the short run.     

Do public relations professionals understand corporate governance issues well enough to advise companies on stakeholder relationship management?

The King Reports on Governance for South Africa are internationally respected for proposing integrated reporting in a triple bottom-line business context to improve corporate governance. The most recent report, King III, views stakeholder relationship management as a key tenet of corporate governance. This raises the question whether public relations professionals (PRPs) understand the principles of corporate governance well-enough to inform and guide organizations on the management of stakeholder relationships. The views of senior PRPs at selected top performing companies were elicited on their practice of stakeholder relationship management in line with corporate governance principles. It was found that their knowledge on corporate governance was limited, although they recognized its importance. They propose six role functions for managing stakeholder relationships on a strategic or managerial level; these role functions are aligned with the King III principles on stakeholder relationships. The following three were of particular importance: developing a corporate strategy, giving advice to senior management and managing crisis communication. Different terminologies were used to build relations with stakeholders and different approaches were used to profile stakeholders. It is recommended that organizations leverage their public relations functions on strategic and managerial levels in support of their corporate governance efforts. In turn, PRPs are encouraged to ensure a deep knowledge on corporate governance issues when counseling senior management on building stakeholder relationships.     

How unions affect shareholder wealth in firms announcing layoffs

We investigate whether investor anticipation of future performance differs between union and nonunion firms following corporate layoff announcements. Using event-study methodology and multivariate regression analysis, we find that the stock market reaction to layoff announcements is negatively related to nonunion firms and positively related to union firms.     

The effects of governing board configuration on profound organizational change in hospitals

This study extends the literature on governing boards and organizational change by examining how governing board configurations have influenced profound organizational change in U.S. hospitals, and the conditions under which such change occurs. Hospitals governed by boards that more closely resembled a corporate governance model were more likely to experience positive changes such as diversification and merger and less likely to undergo negative changes such as closure. Organizational performance influenced change, but largely independent of governance configurations. Only in the case of closure did we find that governance configuration operated jointly with organizational performance.     

Behavioral Determinants of Nonprofit Board Performance

There is an increased awareness that the performance of boards (good governance) is not only determined by structural determinants but by behavioral determinants as well. These behavioral determinants might be particularly important for public and nonprofit governance, where the role of the board is more diffuse and heterogeneous than in corporate governance. Here we investigate how social dynamics within boards in secondary education influence their performance. We follow a concise model that includes cognitive conflict, the use of expertise, effort norms, and social cohesion as determinants of board task performance. A survey among all secondary schools in the Netherlands serves as the empirical underpinning for this process‐oriented model of good governance. We show that the behavioral determinants have different effects on the control task and advice task of boards. Also, we find that cognitive conflicts in supervisory boards do not lead to less but rather to more social cohesion within boards. Building on these findings, we suggest a revised model of the behavioral determinants of nonprofit board performance.     

Good management,sound finances,and social responsibility: Two decades of U.S. corporate insider perspectives on reputation and the bottom line

This research sought to expand practitioner and scholarly understanding of the relationship between corporate reputation and the bottom line. An analysis of 706 firms over a 21-year timeframe revealed three attributes of reputation – management quality, financial soundness, and social responsibility – made consistently positive contributions to several measures of firm financial performance. Perceptions of corporate reputation were gathered exclusively from U.S. executives, directors, and financial analysts, referred to herein as corporate insiders.     

Das deutsche System der Corporate Governance zwischen Persistenz und Konvergenz

We discuss the development of German corporate governance in light of the hostile takeover of Mannesmann by Vodafone. The paper criticizes the stability hypothesis of Thomas Heinze in KZFSS 4/2001 and demonstrates the deep changes within German corporate governance, which we describe as hybrid convergence. Given trade-offs between corporate growth and profitability, the preferences of German management have changed towards greater emphasis on shareholder returns. This change is evident in the implementation of new profitability targets, end of cross-subsidization and concentration on core competences. Through incremental changes throughout the 1990s, the importance of market mechanisms has increased and been internalized within corporations. German corporate governance is moving toward a U.S. market model through hybrid processes of institutional layering and conversion.     

New insights in reproducing transnational corporate elites: the labour market intermediation of executive search in the pursuit of global talent in Singapore

In this article, I provide new theoretical and empirical insights into the reproduction of transnational corporate elites through the process of people moving between firms’ internal labour markets rather than from expatriation. Theoretically, the article advances understandings of the reproduction of transnational corporate elites by drawing on a pioneering engagement with global talent, transnational elites and labour market intermediary discourses. I generate these new theoretical insights through an original case study of how global executive search firms in Singapore create pipelines for the recruitment of transnational corporate elites between firms’ internal labour markets. The findings also highlight the vital role of Singapore's neoliberal labour market practices, as well as its foreign talent programme to ‘win the war for talent'. By situating this research on the agency of executive search in reproducing Singapore's transnational corporate elite, the article's key contribution is to decentre North American and Western perspectives on the reproduction of knowledge on transnational corporate elites.     

The Adoption of the Corporate Governance Model by Nonprofit Organizations

This article examines the circumstances under which nonprofit organizations adopt corporate governance practices. In the study reported here, the authors found that adoption of corporate governance practices depends primarily on the presence of a supportive institutional (that is, value) context as well as available resources to support governance restructuring. These findings strongly suggest that the adoption of structures and practices from the for-profit sector is neither a feasible nor even a desirable solution to problems facing many nonprofit organizations.     

Bending but Not Breaking?: Foreign Investor Pressure and Dividend Payouts by Japanese Firms

This article examines the global diffusion of shareholder‐oriented governance practices, using the case of dividend payouts by Japanese firms. While Japanese firms previously retained profits for rainy days or new ventures, their dividend payouts began to increase in the 1990s, rapidly catching up with the levels prevailing in the United States. Following prior research, we focus on the role of foreign investors in this process but provide a more nuanced account of their influence, using panel data on 2,036 publicly traded Japanese firms from 1990 to 2005. First, we show that pressure from foreign investors increased dividends by Japanese firms not only directly but also indirectly, by extending the cognitive boundaries of organizational fields of Japanese firms beyond their local peers and toward their global competitors. Second, we show that although Japanese firms that remained deeply embedded in the traditional, stakeholder‐oriented governance system resisted shareholder‐oriented governance practices, even such firms yielded under pressure from both foreign and domestic investors. We conclude with theoretical implications of our findings for the literature on the global diffusion of shareholder value and its broader political and social consequences.     

Italian corporate foundations and the challenge of multiple stakeholder interests

This article investigates corporate foundations, a specific expression of corporate philanthropy that is narrowly considered in the literature. We aim to verify whether the interests of the founder firm are significant antecedents of the model, activities, and issues addressed by the related foundation. Data were collected through a survey of seventy Italian corporate foundations, representing 59.8 percent of the total number of such foundations based in Italy. The analysis identified three clusters of corporate foundations—granter, expert, and edifier. Research demonstrates that through these clusters, the interests pursued by founder firms have a significant influence on integration between firms and corporate foundations and on the foundations' activities.     

Institutions matter: The case of Vietnam

The paper investigates institutional reforms in Vietnam and their impact on the economic performance of firms. Using the provincial competitiveness index 2006 (PCI06) and firm-level data in Vietnam in 2005, the results show that provincial competitiveness is economically and statistically significant in explaining cross-province differences in firm performance. We find that a 1% point improvement in government practice could increase the daily value-added of an average firm by an amount equivalent to nearly three times per capita GDP per day. The results show that an improvement in providing market information, more secure land tenure and labor training assistance has a positive effect on firm performance. By contrast, weaknesses in the judiciary system and administrative reforms impede growth of non-state firms. The findings indicate that governance is an important obstacle to the development of the non-state sector in Vietnam.     

Baoren Baoguo: Zhongguo Xinwenshi De Lingyizhong Dufa [To Serve the Nation: Journalists as Prisms of Chinese Press History] edited by CHIN-CHUAN LEE

Social networking sites (SNS) have become an important vehicle for corporate communication. However, there has been little research on how East Asian firms use international SNSs to communicate with global stakeholders. This study compares the communication strategies of Chinese and Japanese companies on Facebook and Twitter and analyzes the public responses and complaints on these corporate SNSs. The results revealed that in addition to the traditional strategies of corporate ability (CA) and corporate social responsibility (CSR), Chinese and Japanese firms adopted the human interest (HI) strategy. The results showed that the Chinese companies in the study sample had a stronger preference for the CSR and interactive strategies, and they responded faster to online complaints compared with the Japanese firms, which were more likely to adopt the strategy of transferring in handling complaints. Moreover, “inviting participation into events” and “seeking specific feedback” were two types of interactive messages that received the highest numbers of responses from the public on Facebook, whereas “promoting sales” showed the highest engagement on Twitter. This study is the first to compare the effectiveness of different corporate response strategies for specific complaint topics on social media. Thus, it contributes to the literature on stakeholder–company interactions.     

Transformation des deutschen Unternehmenskontroll-Systems?

This study contributes empirically to the corporate governance debate that has been revived since Mannesmann was taken over by Vodafone Airtouch. Whereas the German corporate governance system has long been described as a network arrangement of mutually interlinked large companies and banks, its British counterpart is a market for corporate control. Against this background, Mannesmann can be either regarded as an anomaly that contradicts previous evidence, or as an indicator of a major systemic shift. Examination of these two hypotheses on the micro and meso level reveals that the German corporate governance-system is in a hybrid state: while most large German companies are seemingly not affected by institutional changes since the mid 1990s, a few, highly internationalized corporations can be said to be exposed to conditions similar to that of the British market for corporate control. In 1999 Mannesmann was one of them. Thus, there has been a segmentation of large German companies with respect to corporate governance on the aggregate level. However, an active market for corporate control — such as the British one — is not in sight.     

Governance and Enterprise Restructuring: The Case of Macedonia

This paper is a case study of the Republic of Macedonia (Southeast Europe), which focuses on examining governance and enterprise restructuring. Governance and enterprise restructuring is already defined indicator in EBRD’s studies and transition reports, measuring the effective corporate governance and corporate control exercised through domestic financial institutions and markets, fostering market-driven restructuring. As of the beginning of the transition process, governance and enterprise restructuring remains in the center, as essential pillar, that moves forward the society towards developed market economy. The data used in this article are analyzed with an econometric regression model, which as employed in this study examines the interrelationships between governance and enterprise restructuring and set of policies that influence the governance patterns.