Perspective on comparative corporate governance: understanding corporate governance patterns

 The purpose of this study was to examine the perspective of international comparative research on corporate governance. The problems of stock ownership and corporate control in large corporations are the basis of any discussion on corporate governance. In large corporations of major capitalist countries, the subject of corporate control is changing from a single individual or family to the system of impersonal possession, depending on various factors of stock ownership between corporations and the interlocking directorship. These are the common bases that started the corporate governance problem. After these aspects are recognized, it is important to identify the difference in patterns of corporate governance in each country. First, I clarify the common direction of the development of “stock ownership and corporate control” seen in large corporations of major capitalist countries. Second, I look at the Anglo-American, Japanese, and South Korea patterns, and consider the differences or the distinctiveness of the classification by country in a concrete system of stock ownership and corporate control.     

The role and effect of controlling shareholders in corporate governance

This paper examines two potentially contradictory effects of the presence of controlling shareholders. Controlling shareholders have been shown to be beneficial, as they generally have a long-term interest in the firm and are willing and able to monitor the actions of senior managers closely and decrease agency costs between shareholders and management (agency costs of Type I). However, they are also in a position to expropriate the firm’s assets, especially when they are actively involved in management (agency costs of Type II). More specifically, this article reviews how regulatory and legislative bodies have tried to curb the consumption of private benefits by controlling shareholders while preserving the beneficial aspects of their long-term interest and their monitoring role, the effect controlling shareholders on the application and effectiveness of corporate governance best practices as well as on the executive and board member remuneration.     

Does accounting regulation enhance corporate governance? Evidence from the disclosure of share-based remuneration

Accounting for stock options and share-based remuneration is a controversial issue. The purpose of this study is to explore the impact of the mandatory adoption of IFRS 2 on accounting for share-based remuneration by Italian listed companies. The requirements under this standard could have relevant implications for corporate governance as IFRS 2 is expected to reduce the information asymmetry that may exist between corporate insiders and outsiders regarding such remuneration. Empirical evidence confirms that overall disclosure in annual reports concerning the costs of remuneration plans has increased following the adoption of IFRS 2, although some cases of lack of disclosure have also been found. We find that this change in accounting regulation has contributed towards revealing the ‘true’ cost of share-based remuneration to minority shareholders and other investors, together with some evidence of creative accounting surrounding the substance over form principle.     

The research frontier in corporate governance

In this paper we attempt to identify the research frontier in corporate governance using three different approaches: (1) what challenges does the financial crisis 2007–2009 pose for corporate governance research? We show that the financial crisis is a huge natural experiment which has exposed gaps in our knowledge of corporate governance and is likely to lead of a rethink of central concepts like shareholder value, debt governance, and management incentives (2) what do we know and what do we need to how about the impact of national institutions on corporate governance? (3) What research questions are raised by a focus on current corporate governance practices?     

The role of weighting in corporate governance ratings

This methodological paper highlights the differences and the resulting implications from the application of the three most commonly applied weighting index methods to measuring corporate governance quality at an aggregate level: the Dichotomous; the partial compliance (PC) unweighted; and the Experts’ methods. In particular, first, we demonstrate how each method is applied and provide the details needed for readers to replicate each method. Second, we employ these methods on a sample of companies and compare the corresponding scores by testing their differences statistically. Third, as an indicative example of the potential implications arising from the use of these measures, we test whether the relation between market value and corporate governance levels differs, depending on the method applied. We find that the three methods produce significantly different overall and relative (i.e., ranking order) scores and, consequently, the relation between market value and corporate governance levels differs, depending on the method applied. Thus, we contribute to the corporate governance literature by showing that weighting in corporate governance indices matters and we recommend simultaneous application of at least two methods (i.e., the PC unweighted and the Experts’ methods) for deriving robust findings.     

Voluntary disclosure of sustainability reports by Canadian universities

In contrast to corporate firms, voluntary sustainability reporting by universities is still in its infancy. Against this background, we have investigated which Canadian universities report their sustainability performance and what specifically is reported. Our study applies content analyses as a methodological approach to determine the relative importance of disclosure topics by using a university-specific catalogue of indicators. This unique study completely covers all sustainability reports published between 2011 and 2015 by Canadian universities and as such provides evidence and analyses of voluntary sustainability reporting by universities, which has been the subject of very little research to date. The findings show that sustainability reporting by Canadian universities diverges considerably and the range of aspects included is relatively narrow. Overall, the results show a clear focus on the environmental dimension and very weak coverage of the social dimension. The environmental orientation of many Canadian universities seems to be a result of their participation in the STARS program.     

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.     

The impact of corporate governance on auditor choice: evidence from Germany

Statutory audits are only beneficial if the appropriate audit quality is both provided and perceived by the users of audited financial statements. On the one hand, Big 4 audit firms are commonly viewed as producing high quality audits. On the other hand, regulators complain about the high market share of Big 4 audit firms. In this context, it is of interest to examine the drivers of a Big 4 audit firm selection. Despite extensive prior research, there is still a lack of findings form Continental European countries and on the impact of corporate governance on auditor choice. This paper on hand is intended to fill the related research gap. Thus, our study identifies variables that determine the auditor choice of large German listed companies. Based on a sample of 432 firm-year observations for the period 2010–2014, our logistic regression analysis suggests that the corporate governance structure influences auditor choice significantly. Notably, the annual meeting frequency of the audit committee and the size of the supervisory board are positively associated with the engagement of a Big 4 audit firm. However, the meeting frequency of the supervisory board and the compliance to the German corporate governance code are negatively related to the choice of a Big 4 auditor. Additionally, the proportion of female supervisory board members does not exert a significant impact. The results remain stable when the DAX30 observations, for which statutory audits are exclusively performed by Big 4 audit firms, are excluded. The main contribution of our paper is, that it sheds light on the impact of corporate governance variables not analyzed by prior research, like supervisory board characteristics, deviations from a corporate governance code, or the female quota, in a Continental European setting, and that it mainly indicates a complementary relationship. Despite the peculiarities of the German setting, the two-tier corporate governance system and the low level of investor protection, the findings of our study are not only relevant for Germany, since many other Continental European countries are characterized by a similar environment. The study’s findings are of particular interest for regulators when addressing audit market structure problems.     

Regulatory intervention and the effect of changes in corporate governance on firm decisions and market reactions

This paper investigates whether Italian companies that cross-list in the United States between 1993 and 2005 show (1) a change in their internal policies as anticipated by the bonding hypothesis, (2) an increase in market value, or (3) an increase in the access to capital funds. We use the unique environment created by the 1998 Draghi reform which significantly improved the protection of Italian listed companies’ minority shareholders and we further examine the impact of legislated changes in corporate governance in Italy on the decision of Italian companies to cross-list in the United States. Our results indicate that following the Draghi reform (1) firms that cross-list in the United States modify their dividend and cash policies as anticipated by the bonding hypothesis. Contrary to prior research, (2) we do not find evidence that cross-listing serves to enhance shareholder value or (3) is used as a vehicle to more easily access capital funds either before or after the domestic corporate governance is improved. The results of this study provide evidence that country level legislative innovations intended to enhance a weak corporate governance system can be a valid and effective substitute to the bonding mechanism by providing an alternative signal of a firm’s quality.     

The impact of corporate sustainability performance on information asymmetry: the role of institutional differences

This paper empirically investigates whether corporate sustainability performance (CSP) affects information asymmetry (IA) for European firms listed in the STOXX Europe 600 from 2002 to 2013. We find a significantly negative effect of CSP on IA. By exploiting institutional differences between the European countries, we determine that the negative effect of CSP on IA is more pronounced in liberal market economies compared to coordinated market economies, thus pointing to a substitutive effect of CSP and economic coordination. Further, the impact is greater in countries with stricter disclosure requirements. In such countries, there is generally a greater appetite for company-specific information. However, disclosure requirements fulfil this need only partially because they concentrate on the corporate governance dimension of corporate sustainability. Hence, information on the social pillar especially matters to investors in a complementary manner and drives the overall effect. Our study contributes to the literature on the positive capital market effects of CSP by showing the proposed effect in European capital markets and the institutional determinants of its strength.     

Proprietary costs,governance and the segment disclosure decision

Focusing on the Spanish setting, characterized by high ownership concentration and a regulatory framework that traditionally has given more priority to the avoidance of proprietary and competition costs related to disclosure than to promoting transparency, this paper aims to identify the main factors influencing the segment reporting decision. In particular, we aim to test whether the strength of concentrated ownership structures together with the persistence of the pre-IAS reporting philosophy offsets the role of independent directors. If this is the case, it would be in spite of the new IAS/IFRS reporting standards based on relevance and transparency, and would also run counter to the improvements in the Spanish governance framework which strengthens the presence of independent non-executive directors. The empirical evidence suggests that, under the new IAS/IFRS reporting philosophy, proprietary costs may have lost relevance due to the introduction of mandatory segment information requirements. In addition, within an institutional context of high ownership concentration, independent directors play a significant role in raising the level of reported information. The context of the new IFRS 8 offers opportunities to observe how governance and proprietary costs affect the new ‘management approach’ to segment classification.     

跨国公司境外企业公司治理机制探析

境外企业如何治理是跨国公司跨国经营中遇到的一个新的课题。境外企业公司治理机制是否完善直接决定了跨国经营能否取得成功以及全球化战略是否能得以实现。本文从在华三资企业以及中国企业集团境外企业的治理角度出发,阐述了境外企业公司治理机制的内涵、绩效,对在华三资企业和中国企业集团境外企业这二种类型的公司治理机制进行了比较,并对如何建立境外企业完善的公司治理机制进行了一定的探讨。     

公司治理对资本选择的影响——理论和证据

结合中国制度,理论分析公司治理如何影响资本选择,提出研究假设.接着,使用中国非金融上市公司横截面数据,应用二阶段多元程序实证检验公司治理对资本选择的影响.研究发现.治理水平高的公司,其内部人机会主义行为受到限制,股权融资偏好在一定程度上受到抑制,债务水平提高.