Research Question/IssueI study the expected liability cost of cross‐listing into the United States by examining the change in the structure of a Canadian firm's directors' and officers' liability insurance contract (D&O insurance) before and after cross‐listing on an exchange located in the United States (NYSE, NASDAQ, or OTC).Research Findings/InsightsResults show that neither the likelihood of having D&O liability insurance increases significantly only when the NASDAQ is the chosen as the cross‐listing venue nor the amount of coverage changes significantly after cross‐listing. With respect to choosing the NYSE as the cross‐listing venue, results show that coverage does not increase, but the premium does. As a result, the D&O insurance premium per dollar of coverage increases significantly only when the firm cross‐lists on the NYSE. A robust point estimate is that a Canadian firm's D&O liability insurance premium increases by 40%–60% when it becomes listed on a US market.Theoretical/Academic ImplicationsD&O insurers adjust their expected litigation costs as a function of where shares are traded not because of the severity of damages paid in the event of litigation, by mostly because of an increase in the frequency of such litigation.Practitioner/Policy ImplicationsIf D&O premium‐to‐coverage ratio allows one to measure a company's litigation risk, then there would be value to investors to have access to basic D&O insurance information such as the premium and the coverage.
{"title":"The Litigation Cost of Cross‐Listing Into the United States","authors":"M. Martin Boyer","doi":"10.1111/corg.12610","DOIUrl":"https://doi.org/10.1111/corg.12610","url":null,"abstract":"Research Question/IssueI study the expected liability cost of cross‐listing into the United States by examining the change in the structure of a Canadian firm's directors' and officers' liability insurance contract (D&O insurance) before and after cross‐listing on an exchange located in the United States (NYSE, NASDAQ, or OTC).Research Findings/InsightsResults show that neither the likelihood of having D&O liability insurance increases significantly only when the NASDAQ is the chosen as the cross‐listing venue nor the amount of coverage changes significantly after cross‐listing. With respect to choosing the NYSE as the cross‐listing venue, results show that coverage does not increase, but the premium does. As a result, the D&O insurance premium per dollar of coverage increases significantly only when the firm cross‐lists on the NYSE. A robust point estimate is that a Canadian firm's D&O liability insurance premium increases by 40%–60% when it becomes listed on a US market.Theoretical/Academic ImplicationsD&O insurers adjust their expected litigation costs as a function of where shares are traded not because of the severity of damages paid in the event of litigation, by mostly because of an increase in the frequency of such litigation.Practitioner/Policy ImplicationsIf D&O premium‐to‐coverage ratio allows one to measure a company's litigation risk, then there would be value to investors to have access to basic D&O insurance information such as the premium and the coverage.","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":null,"pages":null},"PeriodicalIF":5.3,"publicationDate":"2024-08-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141936014","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Research Question/IssueThe introduction of gender quotas on corporate boards can disrupt the status quo, resulting in externalities that affect women's advancement within the company. This study investigates whether boardroom quotas contribute to promoting women further up the corporate ladder and facilitate access to a broader spectrum of positions.Research Findings/InsightsUsing legislative changes in Germany as a natural experiment, we find that quotas increase female representation on affected boards. However, quotas may also have adverse effects on women's executive careers; they fall short of eliminating the glass ceiling and fail to level the playing field for women, both inside and outside the firm.Theoretical/Academic ImplicationsThe incentives provided by the quota to hire female candidates for a mandated board may hinder their prospects for advancement to executive roles. Drawing from institutional theory, we interpret this as evidence of decoupling—firms comply with the law but do not necessarily change their stance on gender diversity at the top. Additionally, when women accessing the board have backgrounds more closely aligned with executive positions (proxied by their affiliation with the capital side of the board), the negative effect on the non‐affected executive board is larger. This suggests a substitution effect, whereby women enter nonexecutive positions instead of pursuing executive careers.Practitioner/Policy ImplicationsPolicy design needs to consider the desired outcomes and unintended effects, carefully weighing the trade‐offs among them. Relying solely on quotas is insufficient to achieve gender equality in corporations.
{"title":"Lifting Women Up: Gender Quotas and the Advancement of Women on Corporate Boards","authors":"Anna Gibert, Alexandra Fedorets","doi":"10.1111/corg.12609","DOIUrl":"https://doi.org/10.1111/corg.12609","url":null,"abstract":"Research Question/IssueThe introduction of gender quotas on corporate boards can disrupt the status quo, resulting in externalities that affect women's advancement within the company. This study investigates whether boardroom quotas contribute to promoting women further up the corporate ladder and facilitate access to a broader spectrum of positions.Research Findings/InsightsUsing legislative changes in Germany as a natural experiment, we find that quotas increase female representation on affected boards. However, quotas may also have adverse effects on women's executive careers; they fall short of eliminating the glass ceiling and fail to level the playing field for women, both inside and outside the firm.Theoretical/Academic ImplicationsThe incentives provided by the quota to hire female candidates for a mandated board may hinder their prospects for advancement to executive roles. Drawing from institutional theory, we interpret this as evidence of decoupling—firms comply with the law but do not necessarily change their stance on gender diversity at the top. Additionally, when women accessing the board have backgrounds more closely aligned with executive positions (proxied by their affiliation with the capital side of the board), the negative effect on the non‐affected executive board is larger. This suggests a substitution effect, whereby women enter nonexecutive positions instead of pursuing executive careers.Practitioner/Policy ImplicationsPolicy design needs to consider the desired outcomes and unintended effects, carefully weighing the trade‐offs among them. Relying solely on quotas is insufficient to achieve gender equality in corporations.","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":null,"pages":null},"PeriodicalIF":5.3,"publicationDate":"2024-08-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141936015","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Ruth V. Aguilera, Kurt A. Desender, Monica LopezPuertas‐Lamy
Research Question/IssueThe prominent ownership position of the Big Three asset management firms (i.e., BlackRock, Vanguard, and State Street Global Advisors) in many leading companies around the world has sparked a lively debate regarding whether their concentration of power is beneficial or detrimental for corporate governance (CG). We conduct a comprehensive literature review of extant empirical research examining the link between the Big Three and CG dimensions.Research Findings/InsightsWe provide novel evidence on the Big Three's global positions and present a systematic review of empirical research on their impact on four key CG dimensions: board structure, financial reporting and disclosure, corporate social responsibility (CSR), and external CG mechanisms. Our analysis reveals nuanced influences varying across specific CG dimensions.Theoretical/Academic ImplicationsWe develop a conceptual framework which articulates the main arguments on the Big Three's stewardship role, building on two distinct characteristics that define them: their investment style and their portfolio size and coverage. Exploring the large passive funds' distinct incentives and the implications of substantial common ownership, our framework underscores varied motivations and new channels to shape CG. We develop an agenda for future research, building on the idea that the Big Three do not work in isolation, independently of other investors, governance agents, or the institutional environment.Practitioner/Policy ImplicationsUnderstanding the Big Three's influence on various CG dimensions provides novel insights on the broader debate about their influence and allows for targeted and effective policymaking.
研究问题/议题三大资产管理公司（即贝莱德（BlackRock）、先锋（Vanguard）和道富环球顾问公司（State Street Global Advisors））在全球许多领先公司中的显著所有权地位引发了一场关于其权力集中对公司治理（CG）是有利还是有害的激烈辩论。我们对现存的实证研究进行了全面的文献综述，考察了三巨头与公司治理各方面之间的联系。研究结果/见解我们提供了有关三巨头全球地位的新证据，并对其对公司治理四个关键方面（董事会结构、财务报告和信息披露、企业社会责任（CSR）和外部公司治理机制）的影响的实证研究进行了系统综述。理论/学术启示我们建立了一个概念框架，阐明了有关三巨头监管角色的主要论点，该框架建立在界定三巨头的两个明显特征之上：三巨头的投资风格及其投资组合规模和覆盖范围。我们的框架探讨了大型被动型基金的不同动机和实质性共同所有权的影响，强调了形成 CG 的不同动机和新渠道。我们提出了未来研究的议程，其基础是三巨头并不是孤立地、不受其他投资者、治理机构或制度环境影响地运作。
{"title":"From Universal Owners to Owners of the Universe? How the Big Three Are Reshaping Corporate Governance","authors":"Ruth V. Aguilera, Kurt A. Desender, Monica LopezPuertas‐Lamy","doi":"10.1111/corg.12611","DOIUrl":"https://doi.org/10.1111/corg.12611","url":null,"abstract":"Research Question/IssueThe prominent ownership position of the Big Three asset management firms (i.e., BlackRock, Vanguard, and State Street Global Advisors) in many leading companies around the world has sparked a lively debate regarding whether their concentration of power is beneficial or detrimental for corporate governance (CG). We conduct a comprehensive literature review of extant empirical research examining the link between the Big Three and CG dimensions.Research Findings/InsightsWe provide novel evidence on the Big Three's global positions and present a systematic review of empirical research on their impact on four key CG dimensions: board structure, financial reporting and disclosure, corporate social responsibility (CSR), and external CG mechanisms. Our analysis reveals nuanced influences varying across specific CG dimensions.Theoretical/Academic ImplicationsWe develop a conceptual framework which articulates the main arguments on the Big Three's stewardship role, building on two distinct characteristics that define them: their investment style and their portfolio size and coverage. Exploring the large passive funds' distinct incentives and the implications of substantial common ownership, our framework underscores varied motivations and new channels to shape CG. We develop an agenda for future research, building on the idea that the Big Three do not work in isolation, independently of other investors, governance agents, or the institutional environment.Practitioner/Policy ImplicationsUnderstanding the Big Three's influence on various CG dimensions provides novel insights on the broader debate about their influence and allows for targeted and effective policymaking.","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":null,"pages":null},"PeriodicalIF":5.3,"publicationDate":"2024-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141884394","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Research Question/IssueScholars and practitioners view boardroom dissent as central to the functioning of boards of directors. However, there is a lack of consensus on what dissent is, who is involved, when and where it happens, and whether it is a behavioral or cognitive phenomenon. This conceptual unclarity and related fragmentation of empirical results call for an integrative literature review to build a coherent agenda for future research.Research Findings/ResultsA content‐analysis of 73 articles published between 1997 and 2023 reveals three distinct research clusters that explore the empirical phenomenon: (1) dissent as expressed through voting, (2) dissent as diverging views, and (3) dissent as behavior in and around the boardroom. Three overarching challenges hamper the advancement of the field: (1) conceptual inconsistencies, (2) several methodological challenges, and (3) a need for further theorizing connected to boardroom dissent.Theoretical ImplicationsWe propose a novel working definition for boardroom dissent to inspire new work related to its constituent parts and to facilitate advancing its measurement. In combination with alternative methods, it stands to advance the boardroom dissent literature. Furthermore, there is a need for future research to integrate competing explanations theorizing how boardroom dissent relates to outcomes at different levels and to examine how boundary conditions constrain these relationships.Practitioner/Policy ImplicationsThe article provides new nuances to reflect on boardroom dissent and related behaviors. The review highlights that there is no one‐size‐fits‐all approach automatically resulting in positive outcomes.
{"title":"Boardroom Dissent: An Integrative Review and Future Research Agenda","authors":"Aira Eirola, Pieter‐Jan Bezemer, Stephan Reinhold","doi":"10.1111/corg.12607","DOIUrl":"https://doi.org/10.1111/corg.12607","url":null,"abstract":"Research Question/IssueScholars and practitioners view boardroom dissent as central to the functioning of boards of directors. However, there is a lack of consensus on what dissent is, who is involved, when and where it happens, and whether it is a behavioral or cognitive phenomenon. This conceptual unclarity and related fragmentation of empirical results call for an integrative literature review to build a coherent agenda for future research.Research Findings/ResultsA content‐analysis of 73 articles published between 1997 and 2023 reveals three distinct research clusters that explore the empirical phenomenon: (1) dissent as expressed through voting, (2) dissent as diverging views, and (3) dissent as behavior in and around the boardroom. Three overarching challenges hamper the advancement of the field: (1) conceptual inconsistencies, (2) several methodological challenges, and (3) a need for further theorizing connected to boardroom dissent.Theoretical ImplicationsWe propose a novel working definition for boardroom dissent to inspire new work related to its constituent parts and to facilitate advancing its measurement. In combination with alternative methods, it stands to advance the boardroom dissent literature. Furthermore, there is a need for future research to integrate competing explanations theorizing how boardroom dissent relates to outcomes at different levels and to examine how boundary conditions constrain these relationships.Practitioner/Policy ImplicationsThe article provides new nuances to reflect on boardroom dissent and related behaviors. The review highlights that there is no one‐size‐fits‐all approach automatically resulting in positive outcomes.","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":null,"pages":null},"PeriodicalIF":5.3,"publicationDate":"2024-07-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141872516","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Research Question/IssueMany mergers destroy shareholder value because managers waste corporate resources to pursue private benefits. This paper considers poor conditions in the acquirer industry as a novel external disciplining mechanism that mitigates agency problems in takeovers.Research Findings/InsightsUsing textual analysis, we build a new measure of industry conditions based on acquirer peers' 10‐K statements. We link this measure to acquirer announcement abnormal returns and find that more negative industry conditions are associated with higher abnormal returns.Theoretical/Academic ImplicationsOur results suggest that poor industry conditions impose discipline on managers who then tend to focus on deals that create value for acquirer shareholders.Practitioner/Policy ImplicationsShareholders can rely on better alignment of interests with their managers during poorer industry conditions.
{"title":"Poor Industry Conditions as an External Disciplining Mechanism in Takeovers","authors":"Jana P. Fidrmuc, Tereza Tykvová","doi":"10.1111/corg.12601","DOIUrl":"https://doi.org/10.1111/corg.12601","url":null,"abstract":"Research Question/IssueMany mergers destroy shareholder value because managers waste corporate resources to pursue private benefits. This paper considers poor conditions in the acquirer industry as a novel external disciplining mechanism that mitigates agency problems in takeovers.Research Findings/InsightsUsing textual analysis, we build a new measure of industry conditions based on acquirer peers' 10‐K statements. We link this measure to acquirer announcement abnormal returns and find that more negative industry conditions are associated with higher abnormal returns.Theoretical/Academic ImplicationsOur results suggest that poor industry conditions impose discipline on managers who then tend to focus on deals that create value for acquirer shareholders.Practitioner/Policy ImplicationsShareholders can rely on better alignment of interests with their managers during poorer industry conditions.","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":null,"pages":null},"PeriodicalIF":5.3,"publicationDate":"2024-07-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141775094","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Ruth V. Aguilera, Ryan Federo, Raquel Justo, Adrian Luis Merida, Bartolomé Pascual‐Fuster
Research Question/IssueScholarly interest in business groups (BGs) has grown considerably over the years, as they emerged as important players in the global economy. Yet, there exist ample differences in the corporate governance, strategies, and performance of BG‐affiliated firms. Given that BGs differ substantially across national institutional contexts, previous studies provide inconclusive arguments and empirical evidence regarding the complex relationship between corporate governance and firm performance within BGs.Research Findings/InsightsOur review of 301 articles published in highly ranked journals between 1986 and 2023 establishes a mechanism‐based framework to explain the effect of BG affiliation, ownership structure, and corporate governance practices on firm performance. We also reveal that many relationships between these factors vary cross‐nationally and over time, contingent on the national institutional strength where BGs are domiciled and operate.Theoretical/Academic ImplicationsWe develop a mechanism‐based framework to unpack the relationship between corporate governance and firm performance within BGs and discuss previous studies' findings across different institutional settings. We find that some mechanisms are generally applicable to BGs in many contexts, whereas others only hold in particular institutional conditions. We then offer several research avenues for further scholarly attention.Practitioner/Policy ImplicationsManagers and policy makers should consider cross‐national differences to fully understand BGs. Ultimately, our review demonstrates that there is no one‐size‐fits‐all approach to BGs because their roles, functioning, and outcomes differ across institutional settings.
{"title":"The Corporate Governance of Business Groups Around the World: A Review and Agenda for Future Research","authors":"Ruth V. Aguilera, Ryan Federo, Raquel Justo, Adrian Luis Merida, Bartolomé Pascual‐Fuster","doi":"10.1111/corg.12603","DOIUrl":"https://doi.org/10.1111/corg.12603","url":null,"abstract":"Research Question/IssueScholarly interest in business groups (BGs) has grown considerably over the years, as they emerged as important players in the global economy. Yet, there exist ample differences in the corporate governance, strategies, and performance of BG‐affiliated firms. Given that BGs differ substantially across national institutional contexts, previous studies provide inconclusive arguments and empirical evidence regarding the complex relationship between corporate governance and firm performance within BGs.Research Findings/InsightsOur review of 301 articles published in highly ranked journals between 1986 and 2023 establishes a mechanism‐based framework to explain the effect of BG affiliation, ownership structure, and corporate governance practices on firm performance. We also reveal that many relationships between these factors vary cross‐nationally and over time, contingent on the national institutional strength where BGs are domiciled and operate.Theoretical/Academic ImplicationsWe develop a mechanism‐based framework to unpack the relationship between corporate governance and firm performance within BGs and discuss previous studies' findings across different institutional settings. We find that some mechanisms are generally applicable to BGs in many contexts, whereas others only hold in particular institutional conditions. We then offer several research avenues for further scholarly attention.Practitioner/Policy ImplicationsManagers and policy makers should consider cross‐national differences to fully understand BGs. Ultimately, our review demonstrates that there is no one‐size‐fits‐all approach to BGs because their roles, functioning, and outcomes differ across institutional settings.","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":null,"pages":null},"PeriodicalIF":5.3,"publicationDate":"2024-07-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141744081","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Recent Evidence and Insights on Corporate Governance From Around the Globe","authors":"Konstantinos Stathopoulos, Till Talaulicar","doi":"10.1111/corg.12606","DOIUrl":"10.1111/corg.12606","url":null,"abstract":"","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":null,"pages":null},"PeriodicalIF":4.6,"publicationDate":"2024-07-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141572490","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Jeongho Choi, Andres Velez‐Calle, Farok J. Contractor
Research Question/IssueWhat contract provisions and clauses should be emphasized in international joint venture (IJV) contracts to mitigate the challenges arising from the host country's institutional environment? This study examines how the institutional environment of the host country influences the design of IJV contracts and their governance.Research Findings/InsightsWe analyzed 23 contract provisions and clauses across 390 IJVs established between 2000 and 2016. Our findings indicate that control clauses detailing legal remedies and safeguards are used more frequently in host countries with more flexible and less formalized legal systems. Additionally, management structure clauses specifying internal governance mechanisms are more often used when contract enforcement in the court of a host country takes longer. Furthermore, host countries that lack abilities to control corruption increase the use of management structure clauses in IJV contract agreements.Theoretical/Academic ImplicationsBy delving into the IJV contract structure, this study enhances our understanding of the role of a host country's institutional environment in the use of different types of IJV contract provisions/clauses.Practitioner/Policy ImplicationsAlliance negotiators and practitioners should be aware of the contract clauses that are particularly essential in specific foreign legal environments. Management structure clauses should be incorporated more often when the foreign nation is prone to corruption, government favoritism, and inefficient legal processes. The greater use of control clauses is necessary when the host country controls corruption well and the legal system is less formalized.
{"title":"International Joint Venture Governance Mechanisms: The Role of Institutional Environment on Contract Design","authors":"Jeongho Choi, Andres Velez‐Calle, Farok J. Contractor","doi":"10.1111/corg.12605","DOIUrl":"https://doi.org/10.1111/corg.12605","url":null,"abstract":"Research Question/IssueWhat contract provisions and clauses should be emphasized in international joint venture (IJV) contracts to mitigate the challenges arising from the host country's institutional environment? This study examines how the institutional environment of the host country influences the design of IJV contracts and their governance.Research Findings/InsightsWe analyzed 23 contract provisions and clauses across 390 IJVs established between 2000 and 2016. Our findings indicate that control clauses detailing legal remedies and safeguards are used more frequently in host countries with more flexible and less formalized legal systems. Additionally, management structure clauses specifying internal governance mechanisms are more often used when contract enforcement in the court of a host country takes longer. Furthermore, host countries that lack abilities to control corruption increase the use of management structure clauses in IJV contract agreements.Theoretical/Academic ImplicationsBy delving into the IJV contract structure, this study enhances our understanding of the role of a host country's institutional environment in the use of different types of IJV contract provisions/clauses.Practitioner/Policy ImplicationsAlliance negotiators and practitioners should be aware of the contract clauses that are particularly essential in specific foreign legal environments. Management structure clauses should be incorporated more often when the foreign nation is prone to corruption, government favoritism, and inefficient legal processes. The greater use of control clauses is necessary when the host country controls corruption well and the legal system is less formalized.","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":null,"pages":null},"PeriodicalIF":5.3,"publicationDate":"2024-07-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141551610","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Amine Khayati, James Tompkins, David Bray, Jack Clampit
Research Question/IssueWhen firms make major bank loan agreements, stock prices, on average, react positively. This creates an incentive for executives to time both stock trading and the dating of option grants relative to the announcement of such agreements.Research Findings/InsightsWe find evidence that both CEOs and CFOs time bank loan agreement announcements after option grant dates, significantly increase the stock purchased prior to (and the stock sold after) the announcement. Our results support management strategically timing of the bank loan agreement announcement as opposed to influencing the compensation committee to time the option grant date for the benefit of management. While these findings complement prior research on the proven CEOs opportunistic behavior around corporate events, they offer a new conspicuous evidence of CFOs opportunistic behavior.Theoretical/Academic ImplicationsThis study contributes to the literature on opportunistic managerial behavior around corporate events by examining the stock option grants, exercises, and stock trades surrounding a major bank loan agreement and the relational interplay between the CEOs and CFOs. While concurrently testing and confirming the expected CEOs opportunistic behavior, the study augments the literature with strong evidence of CFOs opportunistic behavior coinciding with the announcement of bank loan agreements.Practitioner/Policy ImplicationsOur results are of value to the board of directors when formulating executive pay and in support of the heightened regulatory requirements on the executive compensation disclosure. Overall, our evidence calls out the Security and Exchange Commission laxity in monitoring loan‐related disclosures and lends support to the SEC (2006) amended disclosure rules on CFO compensation. Complete and timely disclosures are useful to investors and analysts to assess managerial expectations and mitigate aggressive timing of corporate events.
{"title":"CEO and CFO Stock Options and Trading Activity Around Bank Loans","authors":"Amine Khayati, James Tompkins, David Bray, Jack Clampit","doi":"10.1111/corg.12592","DOIUrl":"https://doi.org/10.1111/corg.12592","url":null,"abstract":"Research Question/IssueWhen firms make major bank loan agreements, stock prices, on average, react positively. This creates an incentive for executives to time both stock trading and the dating of option grants relative to the announcement of such agreements.Research Findings/InsightsWe find evidence that both CEOs and CFOs time bank loan agreement announcements after option grant dates, significantly increase the stock purchased prior to (and the stock sold after) the announcement. Our results support management strategically timing of the bank loan agreement announcement as opposed to influencing the compensation committee to time the option grant date for the benefit of management. While these findings complement prior research on the proven CEOs opportunistic behavior around corporate events, they offer a new conspicuous evidence of CFOs opportunistic behavior.Theoretical/Academic ImplicationsThis study contributes to the literature on opportunistic managerial behavior around corporate events by examining the stock option grants, exercises, and stock trades surrounding a major bank loan agreement and the relational interplay between the CEOs and CFOs. While concurrently testing and confirming the expected CEOs opportunistic behavior, the study augments the literature with strong evidence of CFOs opportunistic behavior coinciding with the announcement of bank loan agreements.Practitioner/Policy ImplicationsOur results are of value to the board of directors when formulating executive pay and in support of the heightened regulatory requirements on the executive compensation disclosure. Overall, our evidence calls out the Security and Exchange Commission laxity in monitoring loan‐related disclosures and lends support to the SEC (2006) amended disclosure rules on CFO compensation. Complete and timely disclosures are useful to investors and analysts to assess managerial expectations and mitigate aggressive timing of corporate events.","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":null,"pages":null},"PeriodicalIF":5.3,"publicationDate":"2024-05-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141194825","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Research Question/IssueThis study aimed to understand the impact of bank culture on liquidity creation by applying textual analysis to data from US bank holding companies.Research Findings/InsightsThe results indicated a substantial connection between bank culture and liquidity creation. Control and collaborative cultures negatively impacted liquidity creation, whereas a competing culture had a positive effect. The negative impacts were stronger in more diversified, experienced, and profitable banks and weaker in larger banks. In complete culture banks, liquidity creation decreased with increased experience and profitability but increased with size. The influence of culture on the different aspects of liquidity creation was similar across the board for overall liquidity generation.Theoretical/Academic ImplicationsBy introducing a new bank culture index, this study offers a unique contribution to the academic understanding of the interplay between organizational culture and financial performance, particularly liquidity creation.Practitioner/Policy ImplicationsThe insights from this study are valuable for bank managers and regulators as they highlight the aspects of bank culture that can be leveraged or adjusted to optimize liquidity creation, thereby informing strategies and policy decisions.
{"title":"Bank Culture and Bank Liquidity Creation","authors":"Luu Duc Toan Huynh, Loan Quynh Thi Nguyen","doi":"10.1111/corg.12580","DOIUrl":"https://doi.org/10.1111/corg.12580","url":null,"abstract":"Research Question/IssueThis study aimed to understand the impact of bank culture on liquidity creation by applying textual analysis to data from US bank holding companies.Research Findings/InsightsThe results indicated a substantial connection between bank culture and liquidity creation. Control and collaborative cultures negatively impacted liquidity creation, whereas a competing culture had a positive effect. The negative impacts were stronger in more diversified, experienced, and profitable banks and weaker in larger banks. In complete culture banks, liquidity creation decreased with increased experience and profitability but increased with size. The influence of culture on the different aspects of liquidity creation was similar across the board for overall liquidity generation.Theoretical/Academic ImplicationsBy introducing a new bank culture index, this study offers a unique contribution to the academic understanding of the interplay between organizational culture and financial performance, particularly liquidity creation.Practitioner/Policy ImplicationsThe insights from this study are valuable for bank managers and regulators as they highlight the aspects of bank culture that can be leveraged or adjusted to optimize liquidity creation, thereby informing strategies and policy decisions.","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":null,"pages":null},"PeriodicalIF":5.3,"publicationDate":"2024-05-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141194737","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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