K. Islam, Mohammad Shamsus Sadekin, Md. Tahidur Rahman, Md. Arif Chowdhury
Although corporate social responsibility (CSR) is an extensively studied topic, its determinants in the field of Islamic banking are scarce. In Bangladesh, CSR plays a vital role in gaining customer loyalty and confidence. Therefore, this research aims to identify and analyze the influence of the Shariah Supervisory Board (SSB) and the Shariah Audit Committee (SAC) on CSR adoption in Islamic banks in Bangladesh. The study population is managers and second managers of 160 Islamic bank branches of different commercial banks in Dhaka, Bangladesh. The sampling technique used is convenience sampling where the first available primary data source was used for the research without additional requirements. The study developed a survey questionnaire from examining previous related studies in Islamic banking and CSR context. The final sample size in this research was n = 309, indicating the survey response rate was about 97%. The study used SPSS 23.0 software to interpret the statistical findings, and the findings revealed that support from the SSB and the presence of a strong and effective SAC has a strong correlation with CSR adoption and significantly influence CSR adoption in Islamic banks in Bangladesh. Finally, the study proposes several significant and crucial policy guidelines for Islamic bank branches to adopt CSR activities.
{"title":"The impact of Shariah supervisory board and Shariah audit committee on CSR adoption at Islamic banks","authors":"K. Islam, Mohammad Shamsus Sadekin, Md. Tahidur Rahman, Md. Arif Chowdhury","doi":"10.2139/ssrn.3822818","DOIUrl":"https://doi.org/10.2139/ssrn.3822818","url":null,"abstract":"Although corporate social responsibility (CSR) is an extensively studied topic, its determinants in the field of Islamic banking are scarce. In Bangladesh, CSR plays a vital role in gaining customer loyalty and confidence. Therefore, this research aims to identify and analyze the influence of the Shariah Supervisory Board (SSB) and the Shariah Audit Committee (SAC) on CSR adoption in Islamic banks in Bangladesh. The study population is managers and second managers of 160 Islamic bank branches of different commercial banks in Dhaka, Bangladesh. The sampling technique used is convenience sampling where the first available primary data source was used for the research without additional requirements. The study developed a survey questionnaire from examining previous related studies in Islamic banking and CSR context. The final sample size in this research was n = 309, indicating the survey response rate was about 97%. The study used SPSS 23.0 software to interpret the statistical findings, and the findings revealed that support from the SSB and the presence of a strong and effective SAC has a strong correlation with CSR adoption and significantly influence CSR adoption in Islamic banks in Bangladesh. Finally, the study proposes several significant and crucial policy guidelines for Islamic bank branches to adopt CSR activities.","PeriodicalId":256682,"journal":{"name":"CGN: Board Decision-Making (Topic)","volume":"412 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-03-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123544015","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}
S. F. Khatib, D. F. Abdullah, Ahmed A. Elamer, Ahmed A. Elamer, Raed Abueid
Going beyond the mere gender diversity in the boardroom, this systematic review comprehensively covers the research on board diversity of financial institutions. More specifically, we cover gender diversity, as well as other characteristics of diversity, such as nationality, age, tenure, experience, education, ethnicity, and religion. A systematic literature review was employed using Scopus and Web of Science databases, covering all publications until May 2020, which resulted in 91 studies from 66 top-ranked journals in accounting, finance and economic fields. We analyze them based on the journal, methodology, research construct questions, and theoretical perspectives. Our results highlight the substantial knowledge gaps and the inconsistent findings of prior studies on several aspects of the field, suggesting avenues for further studies in terms of research designs, settings, scope, and theories. We argue that there is a need to explore other board diversity attributes rather than focusing on the gender diversity of the boards of financial institutions to achieve sustainable development. Also, more work is outlined on topics related to board diversity of financial firms that receive limited attention from scholars, such as (but not limited to) environmental performance, capital structure, intellectual capital, innovation and earnings quality of financial institutions as well as the indirect effect of policy settings.
这篇系统性综述超越了董事会的性别多样性，全面涵盖了对金融机构董事会多样性的研究。更具体地说，我们涵盖了性别多样性，以及其他多样性的特征，如国籍、年龄、任期、经验、教育、种族和宗教。使用Scopus和Web of Science数据库进行系统文献综述，涵盖截至2020年5月的所有出版物，共纳入会计、金融和经济领域66种顶级期刊的91项研究。本文从期刊、研究方法、研究结构问题和理论视角等方面进行分析。我们的研究结果突出了该领域若干方面的大量知识缺口和先前研究的不一致发现，为研究设计、设置、范围和理论方面的进一步研究提供了途径。我们认为，为了实现可持续发展，有必要探索其他董事会多样性属性，而不是关注金融机构董事会的性别多样性。此外，本文还概述了与学者关注有限的金融公司董事会多样性相关的主题，如(但不限于)金融机构的环境绩效、资本结构、智力资本、创新和盈余质量以及政策设置的间接影响。
{"title":"Nudging Toward Diversity in the Boardroom: A Systematic Literature Review of Board Diversity of Financial Institutions","authors":"S. F. Khatib, D. F. Abdullah, Ahmed A. Elamer, Ahmed A. Elamer, Raed Abueid","doi":"10.2139/ssrn.3706162","DOIUrl":"https://doi.org/10.2139/ssrn.3706162","url":null,"abstract":"Going beyond the mere gender diversity in the boardroom, this systematic review comprehensively covers the research on board diversity of financial institutions. More specifically, we cover gender diversity, as well as other characteristics of diversity, such as nationality, age, tenure, experience, education, ethnicity, and religion. A systematic literature review was employed using Scopus and Web of Science databases, covering all publications until May 2020, which resulted in 91 studies from 66 top-ranked journals in accounting, finance and economic fields. We analyze them based on the journal, methodology, research construct questions, and theoretical perspectives. Our results highlight the substantial knowledge gaps and the inconsistent findings of prior studies on several aspects of the field, suggesting avenues for further studies in terms of research designs, settings, scope, and theories. We argue that there is a need to explore other board diversity attributes rather than focusing on the gender diversity of the boards of financial institutions to achieve sustainable development. Also, more work is outlined on topics related to board diversity of financial firms that receive limited attention from scholars, such as (but not limited to) environmental performance, capital structure, intellectual capital, innovation and earnings quality of financial institutions as well as the indirect effect of policy settings.","PeriodicalId":256682,"journal":{"name":"CGN: Board Decision-Making (Topic)","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-10-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130825383","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}
Recently, activist investors have been reaching settlements with boards more often than they have been challenging boards in a proxy fight. In this paper, I provide a theoretical framework to study the economics of these settlements. The activist can demand that his proposal be implemented right away ("action settlement") or demand a number of board seats ("board settlement"), which also gives the activist access to better information. I find that the information that will be conveyed by the incumbent's response is a critical strategic determinant of the activist's settlement demand. Compared to action settlement, the incumbent's rejection of board settlement reflects more of its private information, increasing the activist's credibility to run a proxy fight upon rejection. As a result, consistent with the empirical evidence in literature, demanding board settlement leads to a higher likelihood of reaching a settlement, the likelihood of board (action) settlement increases (decreases) with information asymmetry, and the average ex-post shareholder value upon reaching board settlement is lower than upon reaching action settlement. By contrast, the ex-ante value created by demanding board settlement can be higher. Moreover, even though value-destroying projects are typically not implemented following settlements, the existence of settlements may nevertheless destroy shareholder value due to the free-rider problem, and strikingly, making activism more costly may actually alleviate this free-rider problem. Finally, obtaining fewer seats can increase the activist's "real" control within the board.
{"title":"Activist Settlements","authors":"A. A. Corum","doi":"10.2139/ssrn.3082886","DOIUrl":"https://doi.org/10.2139/ssrn.3082886","url":null,"abstract":"Recently, activist investors have been reaching settlements with boards more often than they have been challenging boards in a proxy fight. In this paper, I provide a theoretical framework to study the economics of these settlements. The activist can demand that his proposal be implemented right away (\"action settlement\") or demand a number of board seats (\"board settlement\"), which also gives the activist access to better information. I find that the information that will be conveyed by the incumbent's response is a critical strategic determinant of the activist's settlement demand. Compared to action settlement, the incumbent's rejection of board settlement reflects more of its private information, increasing the activist's credibility to run a proxy fight upon rejection. As a result, consistent with the empirical evidence in literature, demanding board settlement leads to a higher likelihood of reaching a settlement, the likelihood of board (action) settlement increases (decreases) with information asymmetry, and the average ex-post shareholder value upon reaching board settlement is lower than upon reaching action settlement. By contrast, the ex-ante value created by demanding board settlement can be higher. Moreover, even though value-destroying projects are typically not implemented following settlements, the existence of settlements may nevertheless destroy shareholder value due to the free-rider problem, and strikingly, making activism more costly may actually alleviate this free-rider problem. Finally, obtaining fewer seats can increase the activist's \"real\" control within the board.","PeriodicalId":256682,"journal":{"name":"CGN: Board Decision-Making (Topic)","volume":"15 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-05-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125464919","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}
The Board should be composed of an appropriate balance of expertise, knowledge and experience needed to lead during the pandemic, as well as review the company's overall situation afterwards, discuss lessons learnt, including how the business was disrupted, and how to minimize business and governance exposure in case of future occurrences.
{"title":"COVID-19 Pandemic: Emerging Board and Governance Considerations","authors":"Society for Corporate Governance Nigeria","doi":"10.2139/ssrn.3598568","DOIUrl":"https://doi.org/10.2139/ssrn.3598568","url":null,"abstract":"The Board should be composed of an appropriate balance of expertise, knowledge and experience needed to lead during the pandemic, as well as review the company's overall situation afterwards, discuss lessons learnt, including how the business was disrupted, and how to minimize business and governance exposure in case of future occurrences.","PeriodicalId":256682,"journal":{"name":"CGN: Board Decision-Making (Topic)","volume":"20 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-05-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125630325","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}
This Article charts the decline of the two leading twentieth-century paradigms of corporate governance: the agency-cost theory, which produced the limited “monitoring board,” and the “separate realms” theory, which deferred consideration of all matters other than profit to government regulation. Repeated stock market crashes and hedge fund activism have exposed the limits of the agency-cost theory. A global pandemic and financial crisis, investor demands for corporate social responsibility and stewardship, and corporations’ own participation in the political process have made separate realms thinking nearly irrelevant. We argue that, while much of corporate law theory remains constrained by these twin paradigms, the practice of board governance has largely moved beyond them. The economic shock of the COVID-19 pandemic, in particular, has sent public company boards into high gear, forcing them to look beyond stock prices, to engage the firm’s full capacity for information gathering and synthesis, and to actively command the firm’s systems of internal and external communication. Even before a global pandemic placed heightened demands on corporate boards, the trend toward information-based governance was well underway, catalyzed by new legal requirements, industry best practices, committee charters, fiduciary duties, and investor demands for more active board governance. It has been observable in audit committees’ increased participation in financial reporting, the expanding application of boards’ knowledge about the firm to strategic advising and to executive compensation decisions, and boards’ greater role in decision-making about risk management, legal compliance, and ESG matters. To capture the board’s investment in data gathering, deliberation, and reporting processes as constitutive of the firm’s status, and the board’s strategic management and authoritative deployment of knowledge and communication, we label this new board governance “informational governance.” Informational governance includes a robust role for corporate boards in communicative action—the active creation and deployment of the firm’s self-knowledge—recognizing an important, value-creating role for boards that has long been discouraged by the “monitoring board” conceit. Focusing on informational governance helps sharpen our understanding of the board’s role in corporate strategy, an overlooked subject in the corporate law literature, but one that has assumed new importance in the postpandemic era. We identify some areas in which the law is likely to evolve as this new, technologically-enhanced, information-rich paradigm continues to cohere.
{"title":"Boards in Information Governance","authors":"Faith Stevelman, Sarah C. Haan","doi":"10.2139/ssrn.3593623","DOIUrl":"https://doi.org/10.2139/ssrn.3593623","url":null,"abstract":"This Article charts the decline of the two leading twentieth-century paradigms of corporate governance: the agency-cost theory, which produced the limited “monitoring board,” and the “separate realms” theory, which deferred consideration of all matters other than profit to government regulation. Repeated stock market crashes and hedge fund activism have exposed the limits of the agency-cost theory. A global pandemic and financial crisis, investor demands for corporate social responsibility and stewardship, and corporations’ own participation in the political process have made separate realms thinking nearly irrelevant. We argue that, while much of corporate law theory remains constrained by these twin paradigms, the practice of board governance has largely moved beyond them. The economic shock of the COVID-19 pandemic, in particular, has sent public company boards into high gear, forcing them to look beyond stock prices, to engage the firm’s full capacity for information gathering and synthesis, and to actively command the firm’s systems of internal and external communication. Even before a global pandemic placed heightened demands on corporate boards, the trend toward information-based governance was well underway, catalyzed by new legal requirements, industry best practices, committee charters, fiduciary duties, and investor demands for more active board governance. It has been observable in audit committees’ increased participation in financial reporting, the expanding application of boards’ knowledge about the firm to strategic advising and to executive compensation decisions, and boards’ greater role in decision-making about risk management, legal compliance, and ESG matters. To capture the board’s investment in data gathering, deliberation, and reporting processes as constitutive of the firm’s status, and the board’s strategic management and authoritative deployment of knowledge and communication, we label this new board governance “informational governance.” Informational governance includes a robust role for corporate boards in communicative action—the active creation and deployment of the firm’s self-knowledge—recognizing an important, value-creating role for boards that has long been discouraged by the “monitoring board” conceit. Focusing on informational governance helps sharpen our understanding of the board’s role in corporate strategy, an overlooked subject in the corporate law literature, but one that has assumed new importance in the postpandemic era. We identify some areas in which the law is likely to evolve as this new, technologically-enhanced, information-rich paradigm continues to cohere.","PeriodicalId":256682,"journal":{"name":"CGN: Board Decision-Making (Topic)","volume":"59 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-05-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116174286","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}
Boards are key to unlocking substantive action by firms on sustainability. We clarify their potential role and show how and why they are failing to deliver on that role and what can be done about it. We start by highlighting the importance of board engagement as a driver of sustainability and then report research evidence of limited board attention to the topic. This is short-sighted given the significance of sustainability but also as a matter of good corporate governance. Nonetheless, recent survey research provides encouraging evidence to suggest that many boards have the right aspirations when it comes to sustainability—they are convinced it is a strategic necessity. Often, however, they do not have what is required in terms of the people, knowledge and tools to turn those aspirations into meaningful action. Our in-depth interviews with board directors examined the obstacles to board attention to sustainability from inside the boardroom, including the characteristics of board members themselves. We identified five board sustainability archetypes: The Deniers, The Hard-headed, The Well-Meaning, The Complacent, and The True Believers. We characterize each archetype and explain how they can be identified by executives or consultants working with the board or by board members themselves. We offer recommendations for how to respond to the different archetypes and how more generally boards can advance the sustainability agenda.
{"title":"Turning Board Sustainability Aspirations into Action","authors":"N. Smith, Ron Soonieus","doi":"10.2139/ssrn.3536342","DOIUrl":"https://doi.org/10.2139/ssrn.3536342","url":null,"abstract":"Boards are key to unlocking substantive action by firms on sustainability. We clarify their potential role and show how and why they are failing to deliver on that role and what can be done about it. We start by highlighting the importance of board engagement as a driver of sustainability and then report research evidence of limited board attention to the topic. This is short-sighted given the significance of sustainability but also as a matter of good corporate governance. Nonetheless, recent survey research provides encouraging evidence to suggest that many boards have the right aspirations when it comes to sustainability—they are convinced it is a strategic necessity. Often, however, they do not have what is required in terms of the people, knowledge and tools to turn those aspirations into meaningful action. Our in-depth interviews with board directors examined the obstacles to board attention to sustainability from inside the boardroom, including the characteristics of board members themselves. We identified five board sustainability archetypes: The Deniers, The Hard-headed, The Well-Meaning, The Complacent, and The True Believers. We characterize each archetype and explain how they can be identified by executives or consultants working with the board or by board members themselves. We offer recommendations for how to respond to the different archetypes and how more generally boards can advance the sustainability agenda.","PeriodicalId":256682,"journal":{"name":"CGN: Board Decision-Making (Topic)","volume":"38 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-02-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133570197","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}
Boards are crucial to shareholder wealth. Yet little is known about how shareholder oversight affects director incentives. Using exogenous shocks to institutional investor portfolios, we find that institutional investor distraction weakens board oversight. Distracted institutions are less likely to discipline ineffective directors with negative votes. Consequently, independent directors face weaker monitoring incentives and exhibit poor board performance; ineffective independent directors are also more frequently appointed. Moreover, we find that the adverse effects of investor distraction on various corporate governance outcomes are stronger among firms with problematic directors. Our findings suggest that institutional investor monitoring creates important director incentives to monitor.
{"title":"Monitoring the Monitor: Distracted Institutional Investors and Board Governance","authors":"Claire Liu, A. Low, Ronald W. Masulis, Le Zhang","doi":"10.2139/ssrn.2934755","DOIUrl":"https://doi.org/10.2139/ssrn.2934755","url":null,"abstract":"\u0000 Boards are crucial to shareholder wealth. Yet little is known about how shareholder oversight affects director incentives. Using exogenous shocks to institutional investor portfolios, we find that institutional investor distraction weakens board oversight. Distracted institutions are less likely to discipline ineffective directors with negative votes. Consequently, independent directors face weaker monitoring incentives and exhibit poor board performance; ineffective independent directors are also more frequently appointed. Moreover, we find that the adverse effects of investor distraction on various corporate governance outcomes are stronger among firms with problematic directors. Our findings suggest that institutional investor monitoring creates important director incentives to monitor.","PeriodicalId":256682,"journal":{"name":"CGN: Board Decision-Making (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-11-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128608513","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 June 2019 the Risk Coalition published a consultation document of their principles and guidance for board risk committees and risk functions in the UK financial services sector. This draft document entitled "Effective Risk Oversight in a Changing World" was open for public comment until 20th September 2019 and the Risk Coalition plans to issue the final version of the guidance in December 2019. The Risk Coalition aspires to improve risk governance and risk management in the UK financial services sector by providing clear and authoritative principle-based guidance. This guidance sets out to (a) develop a common understanding of the purpose and remit of board risk committees and risk functions, (b) raise expectations and promote good practice of risk oversight in UK financial services, and (c) provide a benchmark against which board risk committees and risk functions can be objectively assessed. This submission provides comments to address the risk oversight issue from two distinct perspectives: 1. General Observations This section addresses the following issues in the context of risk oversight: (a) the requirement for holistic risk oversight, and (b) delivering a holistic risk oversight framework 2. Response to Specific Questions This section provides feedback in relation to the specific consultation questions outlined by the Risk Coalition in the consultation document. Post-mortem investigations into the causes of ongoing corporate fiascos and financial scandals continue to identify both failures in corporate governance and poor risk management as major contributors. I welcome the initiative to provide clear and authoritative principles-based guidance in the area of risk governance, risk oversight, and risk management. Improved risk oversight can have a very important role to play in helping to better safeguard stakeholder interests going forward. The comments included in this submission are therefore intended to be a constructive attempt to contribute to the further improvement of the consultation document prior to being finalised.
{"title":"Effective Risk Oversight in a Changing World: Principles and Guidance for Board Risk Committees and Risk Functions in the UK Financial Services Sector (Response to the Risk Coalition Consultation)","authors":"Sean Lyons","doi":"10.2139/ssrn.3460587","DOIUrl":"https://doi.org/10.2139/ssrn.3460587","url":null,"abstract":"In June 2019 the Risk Coalition published a consultation document of their principles and guidance for board risk committees and risk functions in the UK financial services sector. This draft document entitled \"Effective Risk Oversight in a Changing World\" was open for public comment until 20th September 2019 and the Risk Coalition plans to issue the final version of the guidance in December 2019. The Risk Coalition aspires to improve risk governance and risk management in the UK financial services sector by providing clear and authoritative principle-based guidance. This guidance sets out to (a) develop a common understanding of the purpose and remit of board risk committees and risk functions, (b) raise expectations and promote good practice of risk oversight in UK financial services, and (c) provide a benchmark against which board risk committees and risk functions can be objectively assessed. \u0000 \u0000This submission provides comments to address the risk oversight issue from two distinct perspectives: \u0000 \u00001. General Observations \u0000 \u0000This section addresses the following issues in the context of risk oversight: (a) the requirement for holistic risk oversight, and (b) delivering a holistic risk oversight framework \u0000 \u00002. Response to Specific Questions \u0000 \u0000This section provides feedback in relation to the specific consultation questions outlined by the Risk Coalition in the consultation document. \u0000 \u0000Post-mortem investigations into the causes of ongoing corporate fiascos and financial scandals continue to identify both failures in corporate governance and poor risk management as major contributors. I welcome the initiative to provide clear and authoritative principles-based guidance in the area of risk governance, risk oversight, and risk management. Improved risk oversight can have a very important role to play in helping to better safeguard stakeholder interests going forward. The comments included in this submission are therefore intended to be a constructive attempt to contribute to the further improvement of the consultation document prior to being finalised.","PeriodicalId":256682,"journal":{"name":"CGN: Board Decision-Making (Topic)","volume":"131 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115895281","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}
A. Andrikopoulos, Andreeas Georgakopoulos, A. Merika, A. Merikas
PurposeThis paper aims to explore the effect of interlocking directorates on agency conflicts and corporate performance in the shipping industry.Design/methodology/approachThe authors use social network analysis to discover central nodes in the network of personal and corporate connections in an international sample of 110 listed shipping companies.FindingsAssessing network structure, the authors find that the network of corporate leaders is denser than the network of shipping companies. The network of shipping companies is populated with many isolated nodes; the network of shipping executives and directors is populated with many cohesive groups in which the longest distance between two corporate leaders is two companies. The authors find that interlocking corporate leadership can help resolve agency conflicts in the shipping industry, bearing a negative effect on the magnitude of agency costs. The extent of leadership overlaps is associated with board size, financial leverage and profitability. The relationship between profits and interlocks is bidirectional, implying that interlocking directorates bear a positive effect on asset returns.Originality/valueThe authors map the relational structures in the social networks of companies and company leaders in the shipping industry and discover the cross-sectional determinants of interlocks in the shipping industry. The finding about the effect of interlocks on profitability and agency costs bears policy implications for the design of corporate governance in the shipping industry.
{"title":"Corporate Governance in the Shipping Industry: Board Interlocks and Agency Conflicts","authors":"A. Andrikopoulos, Andreeas Georgakopoulos, A. Merika, A. Merikas","doi":"10.1108/CG-07-2018-0224","DOIUrl":"https://doi.org/10.1108/CG-07-2018-0224","url":null,"abstract":"PurposeThis paper aims to explore the effect of interlocking directorates on agency conflicts and corporate performance in the shipping industry.Design/methodology/approachThe authors use social network analysis to discover central nodes in the network of personal and corporate connections in an international sample of 110 listed shipping companies.FindingsAssessing network structure, the authors find that the network of corporate leaders is denser than the network of shipping companies. The network of shipping companies is populated with many isolated nodes; the network of shipping executives and directors is populated with many cohesive groups in which the longest distance between two corporate leaders is two companies. The authors find that interlocking corporate leadership can help resolve agency conflicts in the shipping industry, bearing a negative effect on the magnitude of agency costs. The extent of leadership overlaps is associated with board size, financial leverage and profitability. The relationship between profits and interlocks is bidirectional, implying that interlocking directorates bear a positive effect on asset returns.Originality/valueThe authors map the relational structures in the social networks of companies and company leaders in the shipping industry and discover the cross-sectional determinants of interlocks in the shipping industry. The finding about the effect of interlocks on profitability and agency costs bears policy implications for the design of corporate governance in the shipping industry.","PeriodicalId":256682,"journal":{"name":"CGN: Board Decision-Making (Topic)","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-08-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124024021","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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