Financial Reporting,Private Disclosure and the Corporate Governance Role of Financial Institutions

This paper explores how large UK financial institutions (FIs) pursued a private corporate governance agenda with their portfolio companies. It also investigates the role of financial reporting in private and public corporate governance. The case financial institutions argued that the limited quality of public information, especially in financial reports, was a major constraint on their ability to act in fund management and corporate governance roles. However, the financial reporting cycle determined a private institutional and company meeting cycle and this created opportunities for private information collection and for governance influence by FIs. In addition, the perceived limitations of public governance mechanisms such as voting encouraged private governance approaches. As a result, the case financial institutions had the incentive and the means to improve the quality of their sources of corporate information and to obtain a competitive edge over other financial institutions and the market through their direct contact with companies. Despite the limitations of public information, the paper reveals how public disclosure in financial statements and the financial reporting cycle played a central role in corporate governance. Public sources of information were combined with private sources to create a financial institutional knowledge advantage. The institutions used this knowledge to diagnose problem areas in strategy, management quality, and the effectiveness of the board, and their impact on financial performance. The financial reporting cycle meant that the quasi insider financial institution had the access opportunity and the joint public/private insight to influence companies across a wide corporate governance agenda and in a range of corporate circumstances. The case institutions exploited these private access and knowledge advantages for investment purposes and for Cadbury style corporate governance purposes. Thus, the private governance process was critically dependent on the FI knowledge advantage, which in turn relied on both financial reports and private disclosure. This wide ranging governance behaviour by institutions corresponds to recommendations subsequently made by the Hampel report in 1998 concerning UK corporate governance. The paper ends by exploring how the private institutional and company meeting agenda can suggest new directions for financial reporting and public disclosure and how this can further improve public and private corporate governance.     

The Role of Financial Institutions in the Corporate Governance of Listed Chinese Companies*

This paper explores the role of Chinese financial institutions in the corporate governance of listed companies through interviews with both senior managers of financial institutions and board directors of listed companies. Our results show that, while most securities companies are passive investors, a good proportion of the active mutual funds help their portfolio companies prepare financial forecasts, standardize their operations, raise external funds, strengthen their company image in the capital markets, and sometimes intervene in corporate issues. This limited role can be attributed to a number of factors specific to the Chinese context including highly concentrated state ownership, an immature regulatory environment, inadequate transparency and disclosure of financial information, and weak corporate governance within financial institutions themselves. It could also be affected by several other factors that are considered to cause institutional passivity in developed countries such as conflicts of interest, monitoring costs and lack of expertise.     

Converging and Diverging Governance Mechanisms: The Role of (Dys)Function in Long‐term Inter‐organizational Relationships

This paper explores the dynamic interplay of formal/informal governance mechanisms, in terms of functional and dysfunctional consequences for both sides of the dyad, in long‐term inter‐organizational relationships. Using two longitudinal cases of UK defence sector procurement (warship commissioning) we move beyond notions of complementarity and substitution in governance towards a more nuanced view where the governance mix of inter‐organizational relationships can be convergent or divergent. Our findings, showing that relationships can exhibit functional and dysfunctional behaviour simultaneously, lead us to conclude that mismatches in governance mechanisms can be positive as well as negative. In building a context‐dependent understanding of governance we both summarize the (dys)functions associated with formal and informal governance mechanisms and explore their impact on relationship exchange performance over time.     

The Taiwan system of innovation in the tool machine industry: a case study

Recent evidence suggests that the Taiwan’s machine tool industry as a whole is prominent in the world, ranking sixth in output and fifth in exports. This paper explores the current status and features of Taiwan’s national systems of innovation (NSI) for its machine tool industry. It is suggested that five major elements of the NSI explain the extensive diffusion of new technologies in the industry, namely: industry clusters, educational system, bridging institutions, government policy, and global business environment. Further, the structural and institutional problems of the innovation system are identified. Future directions of technology development are also discussed.     

Financial Ownership,Diversification and Firm Profitability in Japan

The Japanese system of corporate governance andin particular the role played by banks andother financial institutions have been thesubject of considerable research andcontroversy in recent years. We estimate theimpact of equity ownership by financialinstitutions on firm performance in Japan for1986–1991, a period that precedes many of theproblems of the ensuing decade. We find thatwhile ownership by financial institutions isassociated with unprofitable diversification,such ownership is, on balance, positivelyassociated with firm profitability. Someimplications of these findings for Japan'sunique system of governance are discussed.     

Network governance in the heritage ecology

This article examines an AHRC ‘Co-Design and Co-Production’ project focussed on the decision-making processes within the ‘heritage ecology’. The project involved three UK universities and a range of heritage institutions and community organisations. The project set out to empower community organisations through an emphasis upon deliberative democracy. Heritage is conceptualised as public value because it is used to define identity and belonging in civil society. Network governance theory is used to characterise the operational capabilities and the decision-making environment in the heritage ecology. The article argues that the public value of heritage is realised through network governance when ‘human elements’, such as emotional value are authentically and legitimately represented in deliberative processes.     

The impact of institutional changes on corporate governance mechanisms in transition economies

We examine how institutional changes affect corporate governance in transition economies. We develop a transition model that specifies three stages of the transition process including the early, intermediate, and late. We develop a framework for assessing the effectiveness of widely recognized corporate governance mechanisms (CGMs) in and across these stages. Our general proposition is that as transition economies move from early, to intermediate, to late stages, effective CGMs tend to be those that are based on state administrative control power, social networks and private orders, and market forces and formal institutions, respectively. Our study has contributions and implications regarding the transition economies and the impacts of institutions on corporate governance.     

Whistle-blowing regulation in different corporate governance systems: an analysis of the regulation approaches from the view of path dependence theory

The research question of this paper is, if and why countries need different legal approaches to whistle-blowing regulation. The paper specifically explores whether regulation approaches from other countries are suitable to regulate whistle-blowing in the German corporate governance system. First, it is clarified which factors influence the choice of the desired action—that is, “internal whistle-blowing”—and it is demonstrated that the underlying corporate governance system has a potential influence on these factors. Next, it is shown that the consistency of systems is responsible for the lack of success of some legal approaches of the whistle-blowing regulation in special corporate governance systems, whereas in other systems they can be very successful. Finally, the paper presents the requirements for whistle-blowing regulation that does not damage the consistency of the underlying corporate governance system. The findings support path dependence theory, which claims that legal approaches of one country cannot be transferred to other countries. Moreover, whistle-blowing literature is expanded by the fact that the underlying corporate governance system of a country influences the power and loyalty of the employee. It suggests new avenues for whistle-blowing research as well as for the potential convergence of corporate governance regulation. The findings offer insights for policy makers interested in the development of legal proposals for whistle-blowing regulation in their countries. Moreover, it provides a new perspective to enable managers of multinational firms to design whistle-blowing systems within different corporate governance systems.     

The Institutional Trust Paradox in Bangladesh

This paper maps institutional trust in Bangladesh and analyzes to what extent citizens perceive public institutions to be trustworthy. According to a number of expert evaluations, public and political institutions in Bangladesh do not stand out as very trustworthy. Yet, despite such expert evaluations, recent survey data indicate that popular trust is quite high in certain major institutions such as the parliament and the central government. Since it is misplaced, the high level of popular institutional trust presents a paradox. It implies some kind of blind or naive trust, which may be dysfunctional for the emergence of a democratic governance system.     

Territorial Politics,Devolution and Spatial Planning in the UK: Results,Prospects, Lessons

This article critically analyses the debates which have unfolded in the aftermath of the Scottish independence referendum of 18 September 2014 concerning the constitutional arrangements of the UK as a plurinational state and the internal governmental structure of England. The debates unfolding in the UK reflect and illustrate two central themes in planning, territorial development and public policy. First, they highlight the contested distribution of power across multiple layers of government in states with an inherited centralized pattern of governance that are now facing strengthening regionalist and nationalist claims. Second, they illustrate the linked growth in the demand for new governance and strategic planning arrangements in large metropolitan areas with fragmented administrative and institutional boundaries. The article first discusses what the outcome of the Scottish referendum (and its aftermath) means for planning in Scotland. It then turns to the debates on devolution in the rest of UK which were stoked in the wake of the referendum, looking at the planning implications of further devolution in Northern Ireland and Wales, and at the possible consequences of the various options currently being aired to solve the ‘English question’. Finally, ongoing debates on decentralization to regions and city-regions in England are briefly considered.     

In pursuit of a new 'enterprise' and 'entrepreneurship' paradigm for learning: creative destruction, new values, new ways of doing things and new combinations of knowledge

The paper argues for a new approach to the study of entrepreneurship and a new paradigm as a basis for entrepreneurship education. It also argues that such an approach is unlikely to come from university business schools. It needs an organisational revolution which, however, can be managed within a university as a whole. The paper is divided into two parts. The first explores the political imperative in Europe for development of the ‘enterprise culture’ and attributes this mainly to pressures for greater international competitiveness. The educational response is then examined and, with the help of a number of recent surveys, some of the key issues pertaining to the development of entrepreneurship education in higher education institutions in the UK and Europe are reviewed. The second part attempts to address the imperative at a more conceptual level. The pursuit of entrepreneurial behaviour is seen as a function of the degree of uncertainty and complexity in the task and broader environment and/or the desire of an individual, in pursuit of an opportunity or problem solution, to create it. It is argued that the key trigger for the growing interest in entrepreneurship is globalization. The way in which this has impacted on the role of the state, the organization of business activity and public services and on individuals to create greater uncertainty and complexity in the environment is explored. This leads to a conclusion that a wide range of stakeholders are being confronted with the need for entrepreneurial behaviour, for example, priests, doctors, teachers, policemen, pensioners and community workers and, indeed, potentially everyone in the community. Entrepreneurship is therefore not solely the prerogative of business. It follows that the traditional focus of entrepreneurship education on business, and new venture management in particular, provides an inadequate basis for response to societal needs. Moreover, the pervasive ideology of the ‘heroic’ entrepreneur can be seen as a dysfunctional when viewed against the needs of a wider community. The wider notion of ‘enterprise’ is therefore introduced as a means of moving away from the hitherto narrow paradigm. How this relates to the development of the individual and the design of enterprising organizations is explored. The paper explores the challenge of this broader context by reference to a number of issues central to the globalization debate including: culture, market liberalization, forms of governance and democracy. It then links these with the ontological and epistemological challenge to education. It concludes with discussion as to how this relates to the traditional concept of a university and argues that universities as a whole are in a much better position to respond to the challenge than are business schools.     

Effective Regulation and Support to Economic Growth: Are These Aims Mutually Exclusive in the Regulation of the UK’s Nuclear Industry?

This paper is a reflection on the UK governments’ latest regulatory intervention affecting all non-financial institutions, including the Office of Nuclear Regulation (ONR). The intervention forms part of the government’s response to the economic downturn experienced in the UK and requires regulators to take into account not only their responsibilities for maintaining safety, but also the impact of their actions on economic growth. While this may be a valid proposition for some organisations, the paper suggests that the unique characteristics of the nuclear industry should exempt its regulator from these government provisions. The paper identifies existing and historic regulatory and governance weaknesses that would suggest regulatory intervention should be reviewed but not from a need to enhance economic growth. Rather a need exists to redesign the regulatory process so that the industry’s hazards and risks arising are mitigated. An inherent conflict of interest is also identified that compounds historic governance problems where publicly-funded, government-appointed regulators attempt to regulate publicly-funded, government-appointed third-party organisations. While in neoliberal terms this may not be seen as an issue, I examine notable, generic, regulatory incidents where managerial and regulatory action failed to resolve resource allocation issues between the need to improve levels of economic growth or safety.     

全球公司治理运动的兴起

本文分析了改善公司治理机制的目标,介绍了全球公司治理运动发源地英国的公司治理准则,指出公司治理机制与亚洲经济增长机制之间的关系并回顾了全球公司治理热潮。最后,文章对如何改善中国公司治理机制提出若干建议。     

Middle Eastern Public Management: A Cultural Approach To Developmental Administration

This study takes a comparative approach in studying public management in the Middle East. It argues that the Middle East region, despite its rich culture and long history of administration, has demonstrated a great difficulty in maintaining viable, efficient, and effective public institutions. It contends that administrative culture in most Middle Eastern bureaucracies is incompatible with the culture of the masses and does not match the peoples’ expectations. Due to this inherent incompatibility, most Middle Easterners perceive their public institutions as corrupt and oppressive entities that only serve their political masters and try to preserve themselves. The article explores the core Islamic values that have to be part of the administrative culture in the Middle East in order to bring about an overhaul of public institutions in the area.     

城市突发公共卫生事件的循证治理机制研究

城市突发公共卫生事件的治理是城市公共管理、城市治理体系和治理能力现代化建设的重要工作之一。在分析我国现有突发公共卫生事件治理体系及存在问题的基础上,构建了循证治理的理论框架,并从循证治理的证据、公共价值和领导力三要素出发,总结突发公共卫生事件的循证治理过程,包括循证防控期、循证预警期、循证控制期和事后循证重建期四个过程,围绕循证治理过程中证据的生产、传播和应用,总结突发公共卫生事件的循证治理机制。以2019年新型冠状病毒肺炎(COVID-19)疫情的早期治理过程为案例,对疫情防控过程中证据的生产、传播和使用过程进行实证研究。研究结果表明,COVID-19疫情的早期证据质量被高估,决策者的公共价值导向和决策者的领导力还有待提升。最后从构建循证治理的证据平台角度出发,提出优化突发公共卫生事件循证治理的若干政策建议。     

Making corporate governance count: the fusion of ethics and economic rationality

Corporate governance codes extensively appeal to ethical standards of conduct. Rather than being articulated alongside economic axioms, ethical and moral precepts are intertwined within neo-classical economic argumentation across corporate governance standards. This paper explores the fusion between ethics and modern economic rationality and reflects on the scientisation of economics and ethics in academic discourse. The argument is then made that the enlistment of ethics within the epistemologically privileged posture of economics characterises corporate governance codes. The UK Combined Corporate Governance Code of 2006 is analysed to draw out the paper’s contention.

Ceremonies of Governance: Perspectives on the Role of the Audit Committee

The widespread establishment of auditcommittees in large UK companies cannot be explainedby evidence of their effectiveness as a mechanism ofcorporate governance, since such evidence is sparse.In this paper, participants' accounts of auditcommittee activity are explored, using conceptsdeveloped in actor-network theory. The paper suggeststhat a possible explanation for the popularity ofaudit committees may be found in their ceremonialfunction, which, through a comforting display ofconcern for corporate governance standards, validatescompany legitimacy and enables access to resources forsurvival and growth.The paper briefly reviews the literature on auditcommittee effectiveness, noting its limitations, anddescribes a qualitative study of audit committeeactivity through the perceptions of participants –audit committee chairs and members, finance directors,internal and external auditors. The actor-networkconcept of `translation' is used to frame theseperceptions, highlighting the ceremonial components ofaudit committee meetings and the performance ofquestioning. It is argued that, aside from anysubstantive audit committee activity, this ceremonialperformance plays an important part in offeringcomfort and reassurance to investors and lenders.     

Executive Stock Options in Germany: The Diffusion or Translation of US-Style Corporate Governance?

Equity-based pay in the form of executive shareoptions (ESOs) is a controversial part of thetypical, US-style governance package, and ESOsin Germany are the focus of this paper. Aconventional view would see ESOs as a US-styleorganizational innovation diffusingglobally in general, and to Germany inparticular.As an alternative to innovation diffusion,however, a translation perspective wouldsuggest that the diffusion of apparentlysimilar governance devices around the worldhides the actual adoption of differentpractices.US/German comparative case studies arepresented as an empirical contribution thatgenerally shows a pattern so far consistentwith this translation view. In addition,intriguing and contrasting results are shownfor UK/German comparisons in the sense thatactual UK ESO plans are discovered to be moredistant from the US standard than German ones.     

Rethinking Administrative Capacity Development: The Arab States

Administrative capacity is imperative for effective performance of governance. Although results of administrative capacity are recognizable and demonstrable, there is no consensus on what basic elements such capacity is made of; nor do we know for sure how to develop, measure, or sustain administrative capacity. Development of administrative capacity requires unbundling it, and assessing each of its components independently, in order to define their individual and mutual effects on the collective capacity of the system. This analysis explores and defines some constant and variable components of administrative capacity, with a particular reference to the Arab states. Rethinking the question of capacity, and constructing a functional strategy for its improvement, includes critical processes of internal management and contextual effects on the structure and function of the management system.     

Corporate Governance in Russia:: towards a European, US, or Russian Model?

This article analyzes Russia’s emerging corporate governance system taking into account both foreign and domestic influences. It discusses influences on Russia’s corporate governance from other countries, particularly the US, Germany, and France. Aspects of Russian culture and traditions are then examined to see how they might influence the country’s evolving corporate governance system. Although Russia will continue to be influenced by international standards and systems of other countries, the article concludes that Russian corporate governance will evolve into its own unique model reflecting the country’s traditions, values, and culture. Implications for Western investors are discussed.