Corporate Governance-An International Review最新文献

Research Question/Issue

For a long time, retail investors have been deemed ineffective governors because of rational apathy. This study examines a central theoretical question: Absent any enhancements of their governance capability, is it sufficient to exogenously raise their exit costs—thereby increasing their willingness to voice—to activate retail investors' monitoring function and improve major corporate decisions (e.g., M&A)?

Research Findings/Insights

Exploiting a 2012 dividend tax reform in China targeted solely at individual investors as a quasi-natural experiment, we find that this policy—by strengthening retail investors' willingness to govern through a lock-in effect—significantly improves the M&A performance of affected firms. Mechanism tests indicate that the improvement stems from retail investors, once exit is impeded, more actively constraining managerial agency behavior.

Theoretical/Academic Implications

Our core theoretical contribution is to advance a new paradigm of cost-driven governance, which offers a constraint-based pathway—distinct from traditional empowerment approaches—to activate the governance role of retail investors. We provide evidence that rational apathy is not an inherent attribute of retail investors but an endogenous choice under a specific cost structure, which can be steered and reshaped through institutional design.

Practitioner/Policy Implications

This study offers regulators a new policy perspective: Beyond direct empowerment, regulators can adjust investors' exit–voice cost trade-off through carefully crafted institutional designs (e.g., differentiated tax regimes). This reveals that taxation can serve as a potentially cost-effective corporate governance tool to mobilize the vast retail investor base to play a more constructive role in corporate governance.

Research Question/Issue

ESG greenwashing carries significant risks and negative consequences. From a shareholding structure perspective, this paper tries to test the relationship between the coexistence of multiple large shareholders and ESG greenwashing.

Research Findings/Insights

We find that multiple large shareholders are associated with ESG greenwashing. On the one hand, multiple large shareholders can lead to the short-termism of firms' management, which boosts ESG greenwashing. On the other hand, multiple large shareholders cause the increased agency problems of firms, which also leads to ESG greenwashing. Furthermore, we find that the promoting effect is more apparent among nonhighly polluting firms and firms that are not audited by Big 4 accounting firms.

Theoretical/Academic Implications

At the level of firms' equity structure, this paper enriches the study of the antecedents and influences of ESG greenwashing. That is, the coexistence of multiple large shareholders of a firm may boost ESG greenwashing. Besides, there are different voices in the academic community about the multiple large shareholders, and this paper expands the shareholder studies in corporate governance theory.

Practitioner/Policy Implications

This paper proposes that the introduction of multiple large shareholders may produce side effects of ESG governance, and collusion among shareholders to greenwash needs to be guarded against. Therefore, the related authorities may need to set up a more stringent ESG audit process.

Research Question/Issue

This study investigates the impact of managerial stock option pay on firm risk-taking behaviors in a weak institutional context, a critical question that has been overlooked by the literature. Specifically, we build on the comparative corporate governance perspective that emphasizes the implications of large shareholders' expropriation threat in weak institutions to develop predictions about their impact on the stock option's incentive alignment effect. We further explore the boundary conditions of such a relationship.

Research Findings/Insights

Based on a sample of Chinese listed firms between 2006 and 2016, we find that a high level of large shareholders' expropriation threat weakens the effect of stock option value on firm risk-taking. We also find that such an adverse impact of large shareholders on the effect of stock option value is mitigated by the institutional factors that strengthen the protection of the interests of minority shareholders.

Theoretical Implications

Our results underscore the importance of integrating the potential expropriation risk due to large shareholders and the institutional contexts into understanding the effectiveness of incentive-alignment governance practices such as stock option pay in the context with weak institutions (e.g., China).

Practitioner/Policy Implications

Our findings offer insights for policy makers to better design the regulatory and institutional frameworks to increase the effectiveness of corporate governance practices. It also shows that firms in the context of weak institutions need to be more cognizant when adopting certain corporate governance practices (i.e., stock option pay for the incentive-alignment purpose).

Research Question/Issue

This study investigates the role of CEO social capital, director networks, and anchor investor participation in influencing the short- and long-term performance outcomes of initial public offerings (IPOs) in the Hong Kong stock market.

Research Findings/Insights

Studying a sample of 1155 IPOs listed in Hong Kong from 2004 to 2019, we find that highly connected CEOs and boards significantly enhance short-term IPO performance as measured by demand multiples. We find that anchor investors' participations strengthen the positive performance of the IPO firms. We show that the positive effects of CEO and board networks are beyond the short-term outcomes and significantly contribute to enhanced operating performance, higher market-adjusted returns, and higher survival rates post listing. These results are robust to endogeneity concerns and shed further light on the value of social capital and anchor investors' participation for IPO firms.

Theoretical/Academic Implications

This study advances corporate governance research by highlighting the critical role of social capital in IPO success, particularly for a well-regulated market outside the United States and Europe. It extends the literature on board and executive networks by demonstrating their complementary relationship with institutional investors, such as anchor investors, in enhancing both short- and long-term IPO outcomes.

Practitioner/Policy Implications

The findings underscore the importance of leveraging CEO and board networks alongside unique institutional (i.e., anchor) investors to boost IPO success. Policymakers and stock exchange regulators can draw on these insights to design regulatory frameworks that foster stakeholder collaboration, reduce information asymmetry, and promote better governance practices in IPO markets.

Research Question/Issue

Blockchain technology promises to revolutionize governance through strong commitments, trustlessness, and transparency. This paper examines how these promises have failed to materialize in practice.

Research Findings/Insights

Drawing on case evidence from major blockchains, including Bitcoin and Ethereum, I argue that blockchains have evolved into technocracies where developers, foundations, and companies exercise disproportionate control. Rather than being exceptional, blockchain governance suffers from the same coordination problems, collective action failures, and centralization tendencies that plague traditional governance systems.

Theoretical/Academic Implications

The paper concludes that while blockchains offer valuable experiments in governance design, their alleged advantages over traditional institutions remain largely mythical.

Practitioner/Policy Implications

Blockchain organizations should acknowledge their reliance on off-chain coordination and informal authority. Investors must understand that blockchain governance depends on trusting technical elites, while regulators should recognize that decentralization claims often mask concentrated power structures requiring traditional oversight.

Manuscript Type

Empirical.

Research Question/Issue

This study investigates the unintended effect of the accountability system for the illegal operation or investment of Chinese state-owned enterprises (SOEs) (the accountability system) on stock price crash risk.

Research Findings/Insights

Employing the staggered difference-in-differences method, we find that the accountability system plays an unintended regulatory and deterrent role, leading to an increase in stock price crash risk. This effect is particularly pronounced for SOEs that have more powerful CEOs, operate in a weaker information environment, and receive less prepolicy attention from local governments. Our mechanism analysis suggests that the accountability system affects crash risk through the information environment. Further analyses indicate that the accountability system may increase stock price synchronicity. Our findings remain consistent across tests utilizing different specifications and alternative measures.

Theoretical/Academic Implications

This is one of the few studies to investigate the deterrent effects of the accountability system on managerial past misconduct in an emerging market, offering a more comprehensive understanding and evaluation of the net effects of this SOE reform. While the literature primarily examines the reform's governance effects on firms, our study focuses on its net effects as captured by SOE-related crash risk, which has garnered significant attention from securities regulators and investors as the third moment of stock returns. Our study thus addresses an underexplored aspect of SOE reform.

Practitioner/Policy Implications

This research provides a new perspective on the economic consequences of a novel SOE regulatory reform in a typical emerging market. It contributes to SOE governance and policy formulation, offering valuable insights into SOE regulation and the protection of state-owned assets in other emerging economies.

Research Question/Issue

This study aims to examine the impact of independent directors' industry-specific CEO experience on environmental innovation and subsequent firm performance and value in US firms.

Research Findings/Insights

Drawing key insights from the management, corporate governance, and innovation literature, this study provides new empirical evidence that independent directors with CEO experience in industries similar to the appointing firm tend to promote value-enhancing environmental innovation strategies. Our findings reveal that while the presence of industry-specific CEO directors on the board may reduce environmental innovation, this reduction aligns with industry norms and contributes to improved firm performance and value. Furthermore, this effect is more pronounced in states with weak environmental regulation, where environmental initiatives are discretionary rather than mandatory. Finally, we ruled out alternative explanations for our results, which remained robust across various specifications and tests.

Theoretical/Academic Implications

We provide robust evidence that independent directors' industry-specific CEO experience affects environmental innovation at the firm level, thus adding and further expanding the literature on the corporate outcomes of the board of directors' human capital. Second, we provide evidence on the impact of environmental innovation initiated by firms with industry-aligned CEO expertise on their boards on firm value and performance. Third, our study answers the current call for research on any neglected individual-level factors that could possibly shape a firm's focus towards environmental innovation. Fourth, our sample period is long enough to capture potential changes in external conditions that may have influenced firm behavior and outcomes. Thus, we go beyond prior studies and control for several factors likely to affect a firm's environmental innovation.

Practitioner/Policy Implications

We demonstrate that independent directors with industry-specific CEO experience contribute to firm profitability and value by guiding firms towards industry-consistent, higher value-added, and performance-enhancing green innovation levels. These results have important implications for corporate decision-making in firm environmental innovation and beyond.

Research Question/Issue

This study examines how the initiation of coverage by environmental, social, and governance (ESG) rating agencies and the intensity of such coverage impact firms' stock price crash risk, particularly in the context of varying levels of information opacity.

Research Findings/Insights

Exploiting the staggered coverage of US firms by multiple third-party ESG rating agencies, we discover a significant negative association between the initiation and intensity of coverage by ESG rating agencies and firms' stock price crash risk. Utilizing the expansion of firm coverage by Refinitiv Asset4 in 2017 as an exogenous shock, this study provides evidence consistent with a causal relationship between ESG rating agency coverage and the reduction of stock price crash risk. This effect is more pronounced for firms with lower levels of analyst coverage, diminished voluntary disclosure, and poorer earning quality. Additionally, we find that the presence of commercial ties between ESG rating agencies and the firms they rate attenuates the effectiveness of ESG coverage in reducing stock price crash risk.

Theoretical Implications

This study contributes to the literature on information asymmetry by demonstrating that independent ESG rating agencies serve as critical informational intermediaries. It highlights how enhanced ESG information can help mitigate risks associated with information opacity, thereby influencing financial market outcomes.

Practitioner Implications

The findings suggest that investors should consider the coverage and credibility of ESG rating agencies when evaluating firms, particularly those with less transparency.

Moreover, the results underline the importance for rating agencies of maintaining independence from the firms they rate to preserve their informational role and effectiveness in the market.