The role of directors in Japanese companies is unique in a number of ways. One such characteristic is the dual nature of their role, which encompasses both monitoring and managing responsibilities. This paper considers their role in management. Empirical analysis with detailed data for each director studied reveals that directors take responsibility for performance, and that executive turnover is one of the main managerial incentive mechanisms. Abnormal turnover of a president does not cause further resignation among directors. Outside directors decrease the turnoverperformance sensitivity of presidents, suggesting their different role in corporate governance in Japan from that in the United States.
{"title":"Managerial Incentive Mechanisms and Turnover of Company Presidents and Directors in Japan","authors":"Naohito Abe","doi":"10.2139/ssrn.497663","DOIUrl":"https://doi.org/10.2139/ssrn.497663","url":null,"abstract":"The role of directors in Japanese companies is unique in a number of ways. One such characteristic is the dual nature of their role, which encompasses both monitoring and managing responsibilities. This paper considers their role in management. Empirical analysis with detailed data for each director studied reveals that directors take responsibility for performance, and that executive turnover is one of the main managerial incentive mechanisms. Abnormal turnover of a president does not cause further resignation among directors. Outside directors decrease the turnoverperformance sensitivity of presidents, suggesting their different role in corporate governance in Japan from that in the United States.","PeriodicalId":423843,"journal":{"name":"Corporate Law: Corporate Governance Law","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-07-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116670278","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}
Rafel Crespí-Cladera, Miguel García-Cestona, V. Salas-Fumás
This paper examines the governance of Spanish banks around two main issues. First, does poor economic performance activate governance interventions that favor the removal of executive directors and the merger of non-performing banks? And second, does the relationship between governance intervention and economic performance vary with the ownership form of the bank? We find a negative relationship between performance and governance intervention for banks, but the results change for each form of ownership and each type of intervention. Internal control mechanisms work for Independent Commercial banks, but Savings banks show weaker internal mechanisms of control and the only significant relationship between performance and governance intervention that appears is for mergers. The Spanish Savings banks, with a peculiar form of ownership that, in fact,implies a lack of ownership, give voice to several stakeholder groups with no clear allocation of property rights. Nevertheless, their economic performance is not generally affected. Product-market competition compensates for those weaker internal governance mechanisms and non-performing banks are not fully protected from disappearing.
{"title":"Governance Mechanisms in Spanish Banks: Does Ownership Matter?","authors":"Rafel Crespí-Cladera, Miguel García-Cestona, V. Salas-Fumás","doi":"10.2139/ssrn.380580","DOIUrl":"https://doi.org/10.2139/ssrn.380580","url":null,"abstract":"This paper examines the governance of Spanish banks around two main issues. First, does poor economic performance activate governance interventions that favor the removal of executive directors and the merger of non-performing banks? And second, does the relationship between governance intervention and economic performance vary with the ownership form of the bank? We find a negative relationship between performance and governance intervention for banks, but the results change for each form of ownership and each type of intervention. Internal control mechanisms work for Independent Commercial banks, but Savings banks show weaker internal mechanisms of control and the only significant relationship between performance and governance intervention that appears is for mergers. The Spanish Savings banks, with a peculiar form of ownership that, in fact,implies a lack of ownership, give voice to several stakeholder groups with no clear allocation of property rights. Nevertheless, their economic performance is not generally affected. Product-market competition compensates for those weaker internal governance mechanisms and non-performing banks are not fully protected from disappearing.","PeriodicalId":423843,"journal":{"name":"Corporate Law: Corporate Governance Law","volume":"36 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126749645","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 paper questions the bonding hypothesis on cross-listing - namely, the idea that firms may want to list on a foreign stock market with a view to renting that market's superior corporate governance system. All too often, cross-listing studies are oblivious to the special structure of the U.S. regulatory regime, which governs foreign issuers. This paper highlights these features and provides a comprehensive survey of the extant empirical evidence. A critical review of this evidence reveals that an opposite, "avoiding hypothesis" more aptly describes firms' cross-listing behavior with regard to corporate governance issues. If anything, more stringent regimes deter issuers, and there is evidence that insiders behave opportunistically with regard to the cross-listing decision.
{"title":"Cross-Listing and Corporate Governance: Bonding or Avoiding?","authors":"A. Licht","doi":"10.2139/SSRN.382660","DOIUrl":"https://doi.org/10.2139/SSRN.382660","url":null,"abstract":"This paper questions the bonding hypothesis on cross-listing - namely, the idea that firms may want to list on a foreign stock market with a view to renting that market's superior corporate governance system. All too often, cross-listing studies are oblivious to the special structure of the U.S. regulatory regime, which governs foreign issuers. This paper highlights these features and provides a comprehensive survey of the extant empirical evidence. A critical review of this evidence reveals that an opposite, \"avoiding hypothesis\" more aptly describes firms' cross-listing behavior with regard to corporate governance issues. If anything, more stringent regimes deter issuers, and there is evidence that insiders behave opportunistically with regard to the cross-listing decision.","PeriodicalId":423843,"journal":{"name":"Corporate Law: Corporate Governance Law","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-04-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121024426","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 is an empirical study analysing the corporate finance and governance structure in Malaysia before and after the financial crisis of 1997, utilising the agency cost approach. The contribution of this paper is to link the corporate governance mechanism with the role of banks and corporate ownership structure peculiar to Malaysia, taking into account the institutional framework and historical background of the Malaysian financial system, such as government protection for the banking sector and the social dispersion of corporate ownership related to the Malay First policy. Copyright Blackwell Publishing Ltd 2003.
{"title":"Capital Structure and Investment Behaviour of Malaysian Firms in the 1990s: A Study of Corporate Governance Before the Crisis","authors":"M. Suto","doi":"10.1111/1467-8683.00299","DOIUrl":"https://doi.org/10.1111/1467-8683.00299","url":null,"abstract":"This is an empirical study analysing the corporate finance and governance structure in Malaysia before and after the financial crisis of 1997, utilising the agency cost approach. The contribution of this paper is to link the corporate governance mechanism with the role of banks and corporate ownership structure peculiar to Malaysia, taking into account the institutional framework and historical background of the Malaysian financial system, such as government protection for the banking sector and the social dispersion of corporate ownership related to the Malay First policy. Copyright Blackwell Publishing Ltd 2003.","PeriodicalId":423843,"journal":{"name":"Corporate Law: Corporate Governance Law","volume":"123 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":"124383656","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}
There has been substantial activity and discussion in the public and private sectors about corporate accountability and the quality of corporate disclosure. These issues have had substantial impact on many US companies, Japanese banks and European companies, particularly those that grew through mergers and acquisitions. Many companies have had to restate their financial statements. Service companies and technology companies now account for a substantial portion of the US economy and many modern economies. The growth of this type of entity (particularly by mergers and acquisitions) presents numerous public policy, legal, regulatory and accounting issues. Some of these companies have substantial intangible assets, the accounting for M&A and investments can be manipulated to affect reported assets and earnings. The exchange of securities and conflicts of interest inherent in such transactions can affect financial statements - all of these factors can distort strategic planning, legal analysis, performance analysis and credit analysis. Fraudulent conveyance has typically not been considered in detail in many real life transactions (processed by law firms, the SEC, accounting firms and banks), and in published materials on corporate transactions, even though fraudulent conveyance is the major means of unfair and illegal wealth transfer and fraud in corporate transactions. This paper highlights some of these issues, and illustrates the role and benefits of proper legal analysis in corporate transactions, and the convergence of corporate financial analysis and legal analysis and tax/accounting analysis. This paper also presents reasons for changes in the disclosure and accounting requirements for intangible assets, regulatory approval processes for M&A and recapitalizations, and accounting for mergers and acquisitions. All financial data is as of April 2000.
{"title":"Corporate Governance, Credit Risk and Legal Reasoning - the Case of Encompass Services Inc.","authors":"Michael C. I. Nwogugu","doi":"10.2139/ssrn.359680","DOIUrl":"https://doi.org/10.2139/ssrn.359680","url":null,"abstract":"There has been substantial activity and discussion in the public and private sectors about corporate accountability and the quality of corporate disclosure. These issues have had substantial impact on many US companies, Japanese banks and European companies, particularly those that grew through mergers and acquisitions. Many companies have had to restate their financial statements. Service companies and technology companies now account for a substantial portion of the US economy and many modern economies. The growth of this type of entity (particularly by mergers and acquisitions) presents numerous public policy, legal, regulatory and accounting issues. Some of these companies have substantial intangible assets, the accounting for M&A and investments can be manipulated to affect reported assets and earnings. The exchange of securities and conflicts of interest inherent in such transactions can affect financial statements - all of these factors can distort strategic planning, legal analysis, performance analysis and credit analysis. Fraudulent conveyance has typically not been considered in detail in many real life transactions (processed by law firms, the SEC, accounting firms and banks), and in published materials on corporate transactions, even though fraudulent conveyance is the major means of unfair and illegal wealth transfer and fraud in corporate transactions. This paper highlights some of these issues, and illustrates the role and benefits of proper legal analysis in corporate transactions, and the convergence of corporate financial analysis and legal analysis and tax/accounting analysis. This paper also presents reasons for changes in the disclosure and accounting requirements for intangible assets, regulatory approval processes for M&A and recapitalizations, and accounting for mergers and acquisitions. All financial data is as of April 2000.","PeriodicalId":423843,"journal":{"name":"Corporate Law: Corporate Governance Law","volume":"56 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-03-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122966884","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 recent work, we presented evidence indicating that staggered boards have adverse effects on target shareholders. John Wilcox, the Vice-Chair of Georgeson, recently published a critique of our work, urging shareholders to support staggered boards. We respond in this article to Wilcox's critique and explain why it does not weaken in any way our analysis of staggered boards.The study criticized by Wilcox, "The Powerful Antitakeover Force of Staggered Boards: Theory, Evidence, and Policy," 54 Stanford Law Review 887-951 (2002), is available at http://ssrn.com/abstract=304388. In a separate reply, "The Powerful Antitakeover Force of Staggered Boards: Further Findings and a Reply to Symposium Participants," 55 Stanford Law Review 885-917 (2002), which is available at http://ssrn.com/abstract=360840, we respond to several other responses to our original study and present additional evidence that confirms its conclusions.
在最近的工作中，我们提出了证据表明交错董事会对目标股东有不利影响。乔治森副董事长约翰•威尔科克斯(John Wilcox)最近发表了一篇批评我们工作的文章，敦促股东支持分阶段董事会。我们在本文中回应了威尔考克斯的批评，并解释了为什么它不会以任何方式削弱我们对交错董事会的分析。Wilcox批评的研究，“交错董事会的强大反收购力量:理论，证据和政策”，54 Stanford Law Review 887-951(2002)，可在http://ssrn.com/abstract=304388上找到。在另一份单独的回复中，“分层董事会的强大反收购力量:进一步的发现和对研讨会参与者的回复”，55斯坦福法律评论885-917(2002)，可在http://ssrn.com/abstract=360840上找到，我们回应了对我们原始研究的其他几个回应，并提供了证实其结论的额外证据。
{"title":"The Trouble with Staggered Boards: A Reply to Georgeson's John Wilcox","authors":"L. Bebchuk, John C. Coates, IV, Guhan Subramanian","doi":"10.2139/SSRN.384980","DOIUrl":"https://doi.org/10.2139/SSRN.384980","url":null,"abstract":"In recent work, we presented evidence indicating that staggered boards have adverse effects on target shareholders. John Wilcox, the Vice-Chair of Georgeson, recently published a critique of our work, urging shareholders to support staggered boards. We respond in this article to Wilcox's critique and explain why it does not weaken in any way our analysis of staggered boards.The study criticized by Wilcox, \"The Powerful Antitakeover Force of Staggered Boards: Theory, Evidence, and Policy,\" 54 Stanford Law Review 887-951 (2002), is available at http://ssrn.com/abstract=304388. In a separate reply, \"The Powerful Antitakeover Force of Staggered Boards: Further Findings and a Reply to Symposium Participants,\" 55 Stanford Law Review 885-917 (2002), which is available at http://ssrn.com/abstract=360840, we respond to several other responses to our original study and present additional evidence that confirms its conclusions.","PeriodicalId":423843,"journal":{"name":"Corporate Law: Corporate Governance Law","volume":"5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-03-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129151605","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 July 16, 2002 preliminary report of the American Bar Association Task Force on Corporate Responsibility recommends a variety of reforms in corporate governance through changes in listing standards, rules of professional conduct for lawyers and other practices. Recommendations in the report relating to corporate governance are: - A substantial majority of the members of a board of directors should be independent. - Corporate governance committees should consist entirely of independent directors, and be responsible for identifying and contacting potential independent directors. They also should recommend a corporate code of ethics and conduct, including a means for corporate employees and agents to advise independent directors of information about material violations of law and breaches of duty to the corporation. - Corporate audit committees should consist entirely of independent directors. They should be authorized to recommend or take action to hire or remove outside auditors, engage independent accounting or legal advisers, and establish policies governing matters that could affect the independence of outside auditors. - Corporate compensation committees should consist entirely of independent directors, and should recommend or take action on compensation for senior executive officers or engaging independent executive compensation and legal advisers as necessary or appropriate. - All material transactions between the corporation and a director or executive officer should be reviewed and approved by a committee of independent directors, taking into account fairness, the rationale for the transaction, and appropriate public disclosure. - The board of directors should adopt procedures for routine executive session meetings between corporate officers responsible for implementing internal controls and the corporate governance committee or the audit committee, or both. The report also recommends that public companies consider designating a lead independent director or an independent board chair, establishing policies to set board meeting agendas, considering policies to set term limits or rotate service on board committees, maintaining director training programs, and adopting procedures to evaluate the effectiveness of meetings, information flow, diversity of experience among directors and contributions of individual directors. The report proposes that a number of changes in the ABA Model Rules of Professional Conduct be considered by the ABA Standing Committee on Ethics and Professional Responsibility. The changes the task force proposes to the ABA Model Rules would: - Require lawyers who know or reasonably should know of misconduct by corporate officers, employees or agents to disclose the misconduct to higher corporate authorities, in some cases directly to the board of directors. - Broaden permission for lawyers to disclose information about corporate conduct that has resulted in or is reasonably certain to result in substantial injury to the
{"title":"Preliminary Report of the American Bar Association Task Force on Corporate Responsibility","authors":"Lawrence A. Hamermesh","doi":"10.2139/SSRN.321701","DOIUrl":"https://doi.org/10.2139/SSRN.321701","url":null,"abstract":"The July 16, 2002 preliminary report of the American Bar Association Task Force on Corporate Responsibility recommends a variety of reforms in corporate governance through changes in listing standards, rules of professional conduct for lawyers and other practices. Recommendations in the report relating to corporate governance are: - A substantial majority of the members of a board of directors should be independent. - Corporate governance committees should consist entirely of independent directors, and be responsible for identifying and contacting potential independent directors. They also should recommend a corporate code of ethics and conduct, including a means for corporate employees and agents to advise independent directors of information about material violations of law and breaches of duty to the corporation. - Corporate audit committees should consist entirely of independent directors. They should be authorized to recommend or take action to hire or remove outside auditors, engage independent accounting or legal advisers, and establish policies governing matters that could affect the independence of outside auditors. - Corporate compensation committees should consist entirely of independent directors, and should recommend or take action on compensation for senior executive officers or engaging independent executive compensation and legal advisers as necessary or appropriate. - All material transactions between the corporation and a director or executive officer should be reviewed and approved by a committee of independent directors, taking into account fairness, the rationale for the transaction, and appropriate public disclosure. - The board of directors should adopt procedures for routine executive session meetings between corporate officers responsible for implementing internal controls and the corporate governance committee or the audit committee, or both. The report also recommends that public companies consider designating a lead independent director or an independent board chair, establishing policies to set board meeting agendas, considering policies to set term limits or rotate service on board committees, maintaining director training programs, and adopting procedures to evaluate the effectiveness of meetings, information flow, diversity of experience among directors and contributions of individual directors. The report proposes that a number of changes in the ABA Model Rules of Professional Conduct be considered by the ABA Standing Committee on Ethics and Professional Responsibility. The changes the task force proposes to the ABA Model Rules would: - Require lawyers who know or reasonably should know of misconduct by corporate officers, employees or agents to disclose the misconduct to higher corporate authorities, in some cases directly to the board of directors. - Broaden permission for lawyers to disclose information about corporate conduct that has resulted in or is reasonably certain to result in substantial injury to the ","PeriodicalId":423843,"journal":{"name":"Corporate Law: Corporate Governance Law","volume":"7 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-01-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115952319","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}
Business corporations seek profit. That is, after subtracting cost, they maximize net revenue. Spillovers (both costs and benefits) involve trade-offs governing boards should make. Spillovers, especially when coupled with clumsy applications of discounted present value, distort a business' perception of profit. Today, businesses are buffeted by the old risks of recession and the new risks of terrorism. If modern society is to survive, then the seeds of terrorism and their fruit of tremendous loss must be contained. Accordingly, governing boards must propel businesses towards a paradigm of genuine profit. Governing boards must insist that their businesses prospect for positive feedback loops and implement a sustainable profit stream. In short, governing boards must insist that business be entrepreneurial.
{"title":"Governing for Genuine Profit","authors":"Michael J. O'Hara, J.D., Ph.D.","doi":"10.2139/ssrn.380080","DOIUrl":"https://doi.org/10.2139/ssrn.380080","url":null,"abstract":"Business corporations seek profit. That is, after subtracting cost, they maximize net revenue. Spillovers (both costs and benefits) involve trade-offs governing boards should make. Spillovers, especially when coupled with clumsy applications of discounted present value, distort a business' perception of profit. Today, businesses are buffeted by the old risks of recession and the new risks of terrorism. If modern society is to survive, then the seeds of terrorism and their fruit of tremendous loss must be contained. Accordingly, governing boards must propel businesses towards a paradigm of genuine profit. Governing boards must insist that their businesses prospect for positive feedback loops and implement a sustainable profit stream. In short, governing boards must insist that business be entrepreneurial.","PeriodicalId":423843,"journal":{"name":"Corporate Law: Corporate Governance Law","volume":"50 6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116911176","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 study examines associations between measures of stock exchange disclosure and market liquidity at the 50 member stock exchanges of the World Federation of Exchanges. We focus on stock exchange disclosure systems (rather than actual company disclosures) because this approach links stock exchange and government policy with desired outcomes related to market quality factors, such as liquidity. We find strong support for the hypothesis that strength of disclosure system (disclosure rules, monitoring and enforcement, and information dissemination) is positively associated with market liquidity, after controlling for stock exchange size, legal system and several other proxies for extent of market development and the information environment.
{"title":"Stock Exchange Disclosure and Market Liquidity: An Analysis of 50 International Exchanges","authors":"C. Frost, Elizabeth A. Gordon, A. Hayes","doi":"10.2139/ssrn.355361","DOIUrl":"https://doi.org/10.2139/ssrn.355361","url":null,"abstract":"This study examines associations between measures of stock exchange disclosure and market liquidity at the 50 member stock exchanges of the World Federation of Exchanges. We focus on stock exchange disclosure systems (rather than actual company disclosures) because this approach links stock exchange and government policy with desired outcomes related to market quality factors, such as liquidity. We find strong support for the hypothesis that strength of disclosure system (disclosure rules, monitoring and enforcement, and information dissemination) is positively associated with market liquidity, after controlling for stock exchange size, legal system and several other proxies for extent of market development and the information environment.","PeriodicalId":423843,"journal":{"name":"Corporate Law: Corporate Governance Law","volume":"45 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2002-10-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124299729","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}
We examine the profitability of insider trading in Hong Kong between 1993 and 1997. On average, firms in Hong Kong have very concentrated ownership and insiders trade more actively and account for larger fractions of total turnover of their firms' shares than do US insiders. Inside sellers in Hong Kong earn negligible rents; however, inside buyers earn statistically and economically significant positive mean abnormal returns. Inside buyers' abnormal returns are especially large for firms in consolidated industries. We argue that such firms are less transparent than firms that operate in more focused businesses and, consequently, that shares of these firms are more likely to provide opportunities for insiders to trade based on privileged information.
{"title":"Insider Trading in Hong Kong: Concentrated Ownership Versus the Legal Environment","authors":"E. C. Chang, Jun-rong Zhu, J. Pinegar","doi":"10.2139/ssrn.336702","DOIUrl":"https://doi.org/10.2139/ssrn.336702","url":null,"abstract":"We examine the profitability of insider trading in Hong Kong between 1993 and 1997. On average, firms in Hong Kong have very concentrated ownership and insiders trade more actively and account for larger fractions of total turnover of their firms' shares than do US insiders. Inside sellers in Hong Kong earn negligible rents; however, inside buyers earn statistically and economically significant positive mean abnormal returns. Inside buyers' abnormal returns are especially large for firms in consolidated industries. We argue that such firms are less transparent than firms that operate in more focused businesses and, consequently, that shares of these firms are more likely to provide opportunities for insiders to trade based on privileged information.","PeriodicalId":423843,"journal":{"name":"Corporate Law: Corporate Governance Law","volume":"179 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2002-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123011108","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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