Manuscript Type. Empirical. Research Question/Issue. We combine the value‐creation and value‐protection views of the board of directors to study the impact of board independence (BI) on the value of the firm at the time of its initial public offering (IPO). Research Findings/Insights. We conduct our analysis on a sample of 969 firms that went public in France, Germany, and Italy between 1995 and 2011. We show that BI is a critical factor in the valuation of IPO firms. Our results support both the value‐creation and value‐protection roles of the board of directors. The relative importance of the two roles of the board varies over time, with value‐creation (value‐protection) dominating in IPOs of young (mature) companies. Theoretical/Academic Implications. Our theoretical framework combines the agency and resource‐dependence theories. The impact of BI on IPO valuation depends on the importance of the value‐creation and value‐protection roles played by the board. The change in the relative importance of the two roles determines a U‐shaped relationship between BI and firm age. Corporate governance is particularly important for young and innovative firms (where the resource‐dependence theory applies, and governance acts as a value‐creation device), as well as for mature firms and for companies where ownership and control are separated (where the agency theory applies, and governance serves as a value‐protection mechanism for minority shareholders). Practitioner/Policy Implications. We show that corporate governance is a significant factor affecting the valuation of an IPO company. The importance of BI varies substantially with the knowledge intensity of the industry, the separation between ownership and control, and the age of the listing company.
{"title":"Board Independence, Ownership Structure and the Valuation of IPOs in Continental Europe","authors":"F. Bertoni, M. Meoli, S. Vismara","doi":"10.1111/corg.12051","DOIUrl":"https://doi.org/10.1111/corg.12051","url":null,"abstract":"Manuscript Type. Empirical. Research Question/Issue. We combine the value‐creation and value‐protection views of the board of directors to study the impact of board independence (BI) on the value of the firm at the time of its initial public offering (IPO). Research Findings/Insights. We conduct our analysis on a sample of 969 firms that went public in France, Germany, and Italy between 1995 and 2011. We show that BI is a critical factor in the valuation of IPO firms. Our results support both the value‐creation and value‐protection roles of the board of directors. The relative importance of the two roles of the board varies over time, with value‐creation (value‐protection) dominating in IPOs of young (mature) companies. Theoretical/Academic Implications. Our theoretical framework combines the agency and resource‐dependence theories. The impact of BI on IPO valuation depends on the importance of the value‐creation and value‐protection roles played by the board. The change in the relative importance of the two roles determines a U‐shaped relationship between BI and firm age. Corporate governance is particularly important for young and innovative firms (where the resource‐dependence theory applies, and governance acts as a value‐creation device), as well as for mature firms and for companies where ownership and control are separated (where the agency theory applies, and governance serves as a value‐protection mechanism for minority shareholders). Practitioner/Policy Implications. We show that corporate governance is a significant factor affecting the valuation of an IPO company. The importance of BI varies substantially with the knowledge intensity of the industry, the separation between ownership and control, and the age of the listing company.","PeriodicalId":116909,"journal":{"name":"Wiley-Blackwell: Corporate Governance: An International Review","volume":"33 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127991346","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2009-05-01DOI: 10.1111/j.1467-8683.2009.00743.x
Stephen P. Ferris, Kenneth A. Kim, Gregory Noronha
Manuscript Type: Review Research Question: This review essay examines the mechanisms by which crosslisting of a firm’s shares on a foreign stock exchange and its subsequent exposure to an international capital market can induce changes in corporate governance. We also review reasons why a firm might elect to use crosslisting to improve investor perception of the quality of its governance. Research Findings/Results: After a review of the existing literature, we conclude that there is substantial support for legal bonding in the decision to crosslist, with lesser evidence consistent with reputational bonding. We also conclude that firm growth opportunities and the need for external capital are critical factors in a decision to crosslist. Theoretical Implications: This study synthesizes the extensive empirical work done on crosslisting and consequent changes in corporate governance structures. It also highlights a number of areas that require further research including more direct testing of governance changes following crosslisting, the effect of crosslisting on corporate equity ownership structures, and the investment/new securities issuance behavior of firms subsequent to crosslisting. This research will help to chart the path of future academic study by scholars of international corporate governance. Practical Implications: This review of the empirical evidence will contribute to the identification of a set of best practices that can lead to improved governance for firms worldwide. Furthermore, the discussion of what remains unexamined by governance researchers will help to shape the contours of future policy and legislative debate.
{"title":"The Effect of Crosslisting on Corporate Governance: A Review of the International Evidence","authors":"Stephen P. Ferris, Kenneth A. Kim, Gregory Noronha","doi":"10.1111/j.1467-8683.2009.00743.x","DOIUrl":"https://doi.org/10.1111/j.1467-8683.2009.00743.x","url":null,"abstract":"Manuscript Type: Review Research Question: This review essay examines the mechanisms by which crosslisting of a firm’s shares on a foreign stock exchange and its subsequent exposure to an international capital market can induce changes in corporate governance. We also review reasons why a firm might elect to use crosslisting to improve investor perception of the quality of its governance. Research Findings/Results: After a review of the existing literature, we conclude that there is substantial support for legal bonding in the decision to crosslist, with lesser evidence consistent with reputational bonding. We also conclude that firm growth opportunities and the need for external capital are critical factors in a decision to crosslist. Theoretical Implications: This study synthesizes the extensive empirical work done on crosslisting and consequent changes in corporate governance structures. It also highlights a number of areas that require further research including more direct testing of governance changes following crosslisting, the effect of crosslisting on corporate equity ownership structures, and the investment/new securities issuance behavior of firms subsequent to crosslisting. This research will help to chart the path of future academic study by scholars of international corporate governance. Practical Implications: This review of the empirical evidence will contribute to the identification of a set of best practices that can lead to improved governance for firms worldwide. Furthermore, the discussion of what remains unexamined by governance researchers will help to shape the contours of future policy and legislative debate.","PeriodicalId":116909,"journal":{"name":"Wiley-Blackwell: Corporate Governance: An International Review","volume":"36 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127090514","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2009-03-01DOI: 10.1111/j.1467-8683.2009.00729.x
Assem Safieddine
Manuscript Type: Empirical Research Question/Issue: This paper takes a theory building approach to highlighting variations of agency theory in the unique and complex context of Islamic banks, mainly stemming from the need to comply with Sharia and the separation of cash flow and control rights for a category of investors. Research Findings/Results: The paper provides insights that agency structures in the context of Islamic banking might give rise to trade-offs between Sharia compliance and mechanisms protecting investors’ rights. Alternative models of idiosyncratic governance might be effective in balancing the two cornerstones of the agency dynamic. In practice, the paper finds that most of the surveyed Islamic banks appear to recognize the value of governance and institute some basic mechanisms. Nonetheless, some governance flaws relating to audit, control, and transparency are observed, a situation further exacerbated by the fact that investment account holders are not represented on the board, and are not granted control or monitoring rights. This leads to a discussion on the tradeoff between the costs and benefits of such a practice. Theoretical Implications: This study contributes to the agency theory literature by providing theoretical propositions highlighting challenges to this theory whereby mechanisms with the purpose of mitigating agency problems might lead to a divergence from Islamic principles of Sharia. Practical Implications: The paper motivates Islamic banks to improve governance practices currently in place. It alerts policy makers to the need to tailor the regulations to safeguard the interests of all investors without violating the principles of Sharia.
{"title":"Islamic Financial Institutions and Corporate Governance: New Insights for Agency Theory","authors":"Assem Safieddine","doi":"10.1111/j.1467-8683.2009.00729.x","DOIUrl":"https://doi.org/10.1111/j.1467-8683.2009.00729.x","url":null,"abstract":"Manuscript Type: Empirical Research Question/Issue: This paper takes a theory building approach to highlighting variations of agency theory in the unique and complex context of Islamic banks, mainly stemming from the need to comply with Sharia and the separation of cash flow and control rights for a category of investors. Research Findings/Results: The paper provides insights that agency structures in the context of Islamic banking might give rise to trade-offs between Sharia compliance and mechanisms protecting investors’ rights. Alternative models of idiosyncratic governance might be effective in balancing the two cornerstones of the agency dynamic. In practice, the paper finds that most of the surveyed Islamic banks appear to recognize the value of governance and institute some basic mechanisms. Nonetheless, some governance flaws relating to audit, control, and transparency are observed, a situation further exacerbated by the fact that investment account holders are not represented on the board, and are not granted control or monitoring rights. This leads to a discussion on the tradeoff between the costs and benefits of such a practice. Theoretical Implications: This study contributes to the agency theory literature by providing theoretical propositions highlighting challenges to this theory whereby mechanisms with the purpose of mitigating agency problems might lead to a divergence from Islamic principles of Sharia. Practical Implications: The paper motivates Islamic banks to improve governance practices currently in place. It alerts policy makers to the need to tailor the regulations to safeguard the interests of all investors without violating the principles of Sharia.","PeriodicalId":116909,"journal":{"name":"Wiley-Blackwell: Corporate Governance: An International Review","volume":"28 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117988714","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2008-07-01DOI: 10.1111/j.1467-8683.2008.00693.x
Yangmin Kim, Albert A. Cannella
Our study informs practicing managers, because we describe how and why most research and public discussion has emphasized the role of directors as monitors of managers and this has significantly downplayed the role of directors in providing advice, counsel, and other resources to their organizations. We provide a strong logic for seeking directors with specific types of social capital (internal or external) under specific contexts. We argue that: 1) social capital can be divided into internal and external dimensions according to its locus and function; 2) both internal and external social capital are associated with board composition through director selection, although the causal logic differs considerably; 3) the influences of social capital on director selection vary according to the context; and 4) both internal social capital and external social capital generate unique resources that are important to board effectiveness. We take steps toward a theory of director selection, explaining how social capital at the individual-level influences director selection and at the group level influences board effectiveness. At the individual level, social capital is defined as the interpersonal linkages that director candidates have to others, both inside and outside the firm. At the group level, board social capital is an asset that includes both relations of directors and potential resources arising from the relations. Our study evaluates the role of social capital in new director selection, board composition, and board effectiveness.
{"title":"Toward a Social Capital Theory of Director Selection","authors":"Yangmin Kim, Albert A. Cannella","doi":"10.1111/j.1467-8683.2008.00693.x","DOIUrl":"https://doi.org/10.1111/j.1467-8683.2008.00693.x","url":null,"abstract":"Our study informs practicing managers, because we describe how and why most research and public discussion has emphasized the role of directors as monitors of managers and this has significantly downplayed the role of directors in providing advice, counsel, and other resources to their organizations. We provide a strong logic for seeking directors with specific types of social capital (internal or external) under specific contexts. We argue that: 1) social capital can be divided into internal and external dimensions according to its locus and function; 2) both internal and external social capital are associated with board composition through director selection, although the causal logic differs considerably; 3) the influences of social capital on director selection vary according to the context; and 4) both internal social capital and external social capital generate unique resources that are important to board effectiveness. We take steps toward a theory of director selection, explaining how social capital at the individual-level influences director selection and at the group level influences board effectiveness. At the individual level, social capital is defined as the interpersonal linkages that director candidates have to others, both inside and outside the firm. At the group level, board social capital is an asset that includes both relations of directors and potential resources arising from the relations. Our study evaluates the role of social capital in new director selection, board composition, and board effectiveness.","PeriodicalId":116909,"journal":{"name":"Wiley-Blackwell: Corporate Governance: An International Review","volume":"11 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2008-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128208126","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2005-05-01DOI: 10.1111/J.1467-8683.2005.00437.X
Katsuyuki Kubo
The purpose of this paper is to analyse whether companies'"way to pay their director" matters or not. Firstly, we fail to find a positive relationship between the performance-pay sensitivity and company performance. Thus, these results do not support our hypothesis that those companies that intensify the performance-pay sensitivity are more likely to improve their performance. In addition, this research fails to find a positive relationship between the change of pay policy and performance. These results are consistent with previous studies that directors' pay is not designed to motivate directors to work toward shareholders' value. Copyright Blackwell Publishing Ltd 2005.
{"title":"Executive Compensation Policy and Company Performance in Japan","authors":"Katsuyuki Kubo","doi":"10.1111/J.1467-8683.2005.00437.X","DOIUrl":"https://doi.org/10.1111/J.1467-8683.2005.00437.X","url":null,"abstract":"The purpose of this paper is to analyse whether companies'\"way to pay their director\" matters or not. Firstly, we fail to find a positive relationship between the performance-pay sensitivity and company performance. Thus, these results do not support our hypothesis that those companies that intensify the performance-pay sensitivity are more likely to improve their performance. In addition, this research fails to find a positive relationship between the change of pay policy and performance. These results are consistent with previous studies that directors' pay is not designed to motivate directors to work toward shareholders' value. Copyright Blackwell Publishing Ltd 2005.","PeriodicalId":116909,"journal":{"name":"Wiley-Blackwell: Corporate Governance: An International Review","volume":"77 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2005-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134059457","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2004-01-01DOI: 10.1111/J.1467-8683.2004.00336.X
Ariyoshi Okumura
No abstract available.
没有摘要。
{"title":"A Japanese View on Corporate Governance","authors":"Ariyoshi Okumura","doi":"10.1111/J.1467-8683.2004.00336.X","DOIUrl":"https://doi.org/10.1111/J.1467-8683.2004.00336.X","url":null,"abstract":"No abstract available.","PeriodicalId":116909,"journal":{"name":"Wiley-Blackwell: Corporate Governance: An International Review","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2004-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130252442","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Guest Editorial: Developments in International Corporate Governance and the Impact of Recent Events","authors":"I. Demirag, J. Solomon","doi":"10.1111/1467-8683.00297","DOIUrl":"https://doi.org/10.1111/1467-8683.00297","url":null,"abstract":"No abstract available.","PeriodicalId":116909,"journal":{"name":"Wiley-Blackwell: Corporate Governance: An International Review","volume":"427 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-09-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133678324","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In the United States, the remuneration packages of top executives are characterised by a strong emphasis on pay-for-performance and by a highly lucrative "upside". There is much discussion of the possibility that executive pay practices will globalise in accordance with this pattern. This paper assesses whether such convergence is likely to occur. It does so by considering market-oriented dynamics that could constitute a "global compensation imperative". It also takes into account possible obstacles to the Americanisation of executive pay, such as legal regulation, "soft law" and "culture". The paper concludes with a brief series of normative observations. Copyright Blackwell Publishing Ltd 2003.
{"title":"Will Executive Pay Globalise Along American Lines?","authors":"B. Cheffins","doi":"10.1111/1467-8683.00298","DOIUrl":"https://doi.org/10.1111/1467-8683.00298","url":null,"abstract":"In the United States, the remuneration packages of top executives are characterised by a strong emphasis on pay-for-performance and by a highly lucrative \"upside\". There is much discussion of the possibility that executive pay practices will globalise in accordance with this pattern. This paper assesses whether such convergence is likely to occur. It does so by considering market-oriented dynamics that could constitute a \"global compensation imperative\". It also takes into account possible obstacles to the Americanisation of executive pay, such as legal regulation, \"soft law\" and \"culture\". The paper concludes with a brief series of normative observations. Copyright Blackwell Publishing Ltd 2003.","PeriodicalId":116909,"journal":{"name":"Wiley-Blackwell: Corporate Governance: An International Review","volume":"44 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-03-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124550834","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Editorial: Institutional Investors and the Growth of Global Influence","authors":"Chris Mallin","doi":"10.1111/1467-8683.00269","DOIUrl":"https://doi.org/10.1111/1467-8683.00269","url":null,"abstract":"No Abstract Available","PeriodicalId":116909,"journal":{"name":"Wiley-Blackwell: Corporate Governance: An International Review","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2002-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121467084","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Transaction Byte Analysis (TBA) is introduced as a basis to ground corporate governance in the science of information and control described as cybernetics. TBA provides fundamental criteria for evaluating the governance integrity of any type of organisation because all individuals possess physiological and neurological limits to receive, store, manipulate and transmit information measured in bytes. Cybernetics laws of requisite variety in com"munication channels, decision-making centres and control agents provide strategies for overcoming human variations and their limitations in managing complexity. The paper identifies the cybernetic advantages of compound boards and concludes that a unitary board cannot reliably govern complex firms. Copyright Blackwell Publishers Ltd 2002.
{"title":"The Science of Corporate Governance","authors":"S. Turnbull","doi":"10.2139/ssrn.316939","DOIUrl":"https://doi.org/10.2139/ssrn.316939","url":null,"abstract":"Transaction Byte Analysis (TBA) is introduced as a basis to ground corporate governance in the science of information and control described as cybernetics. TBA provides fundamental criteria for evaluating the governance integrity of any type of organisation because all individuals possess physiological and neurological limits to receive, store, manipulate and transmit information measured in bytes. Cybernetics laws of requisite variety in com\"munication channels, decision-making centres and control agents provide strategies for overcoming human variations and their limitations in managing complexity. The paper identifies the cybernetic advantages of compound boards and concludes that a unitary board cannot reliably govern complex firms. Copyright Blackwell Publishers Ltd 2002.","PeriodicalId":116909,"journal":{"name":"Wiley-Blackwell: Corporate Governance: An International Review","volume":"29 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2001-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121569839","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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