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":"56 1","pages":""},"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":"114 1","pages":""},"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":"32 4","pages":"595-599"},"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":"27 1","pages":""},"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":"65 1","pages":""},"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}
This 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/Insights
The 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 Implications
By 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 Implications
The 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":"Loan Quynh Thi Nguyen, Luu Duc Toan Huynh","doi":"10.1111/corg.12580","DOIUrl":"10.1111/corg.12580","url":null,"abstract":"<div>\u0000 \u0000 \u0000 <section>\u0000 \u0000 <h3> Research Question/Issue</h3>\u0000 \u0000 <p>This study aimed to understand the impact of bank culture on liquidity creation by applying textual analysis to data from US bank holding companies.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Research Findings/Insights</h3>\u0000 \u0000 <p>The 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.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Theoretical/Academic Implications</h3>\u0000 \u0000 <p>By 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.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Practitioner/Policy Implications</h3>\u0000 \u0000 <p>The 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.</p>\u0000 </section>\u0000 </div>","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":"32 6","pages":"1087-1109"},"PeriodicalIF":4.6,"publicationDate":"2024-05-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/corg.12580","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":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Asif Saeed, Aitzaz Ahsan Alias Sarang, Asad Ali Rind
Research Question/IssueConsidering escalating environmental concerns and the important role of board members in shaping strategic corporate decisions, we investigate the relationship between co‐opted independent directors and firms' environmental performance.Research Findings/InsightsExamining US firms from 2002 to 2018, we document a significant negative relationship between co‐opted independent directors and firm environmental performance. Our findings show that while institutional ownership and CEO power exacerbate the negative association, strong corporate governance mitigates this negative impact of co‐opted independent directors on environmental performance. The cross‐sectional results show that the relationship is pronounced in firms with young CEOs, male CEOs, and low CEO compensation. Further, the relationship is also prevalent in boards with fewer meetings, high multiple directors, and higher compensation, indicating a monitoring compromise by independent co‐opted directors.Theoretical/Academic ImplicationsReasonable theoretical arguments are drawn from agency theory and the theory of friendly boards, and our statistical analysis supports the academic position of the theory of friendly boards. The negative effect of independent co‐opted directors on firm environmental performance challenges the role of independent directors in addressing agency issues in environmental efforts, hinting at a departure from conventional agency theory expectations.Practitioner/Policy ImplicationsTo improve environmental performance, firms should reconsider their board structures, acknowledging the potential drawbacks of co‐opted independent directors. Our findings challenge the Sarbanes–Oxley Act's (SOX) emphasis on increasing the number of outside directors, which assumes independent board members will rigorously oversee executives. Such legislation is greatly based on the premise that independent board members strictly monitor executives. However, our findings indicate that not all independent directors are strict monitors, as demonstrated by lower environmental performance when there are more co‐opted independent directors.
{"title":"Co‐opted Independent Directors and Firms' Environmental Performance","authors":"Asif Saeed, Aitzaz Ahsan Alias Sarang, Asad Ali Rind","doi":"10.1111/corg.12588","DOIUrl":"https://doi.org/10.1111/corg.12588","url":null,"abstract":"Research Question/IssueConsidering escalating environmental concerns and the important role of board members in shaping strategic corporate decisions, we investigate the relationship between co‐opted independent directors and firms' environmental performance.Research Findings/InsightsExamining US firms from 2002 to 2018, we document a significant negative relationship between co‐opted independent directors and firm environmental performance. Our findings show that while institutional ownership and CEO power exacerbate the negative association, strong corporate governance mitigates this negative impact of co‐opted independent directors on environmental performance. The cross‐sectional results show that the relationship is pronounced in firms with young CEOs, male CEOs, and low CEO compensation. Further, the relationship is also prevalent in boards with fewer meetings, high multiple directors, and higher compensation, indicating a monitoring compromise by independent co‐opted directors.Theoretical/Academic ImplicationsReasonable theoretical arguments are drawn from agency theory and the theory of friendly boards, and our statistical analysis supports the academic position of the theory of friendly boards. The negative effect of independent co‐opted directors on firm environmental performance challenges the role of independent directors in addressing agency issues in environmental efforts, hinting at a departure from conventional agency theory expectations.Practitioner/Policy ImplicationsTo improve environmental performance, firms should reconsider their board structures, acknowledging the potential drawbacks of co‐opted independent directors. Our findings challenge the Sarbanes–Oxley Act's (SOX) emphasis on increasing the number of outside directors, which assumes independent board members will rigorously oversee executives. Such legislation is greatly based on the premise that independent board members strictly monitor executives. However, our findings indicate that not all independent directors are strict monitors, as demonstrated by lower environmental performance when there are more co‐opted independent directors.","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":"21 1","pages":""},"PeriodicalIF":5.3,"publicationDate":"2024-05-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141194730","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}
In the biography, the author's information has been corrected below.
Natasha Burns is a professor of finance at The University of Texas at San Antonio. She was awarded her PhD in finance from The Ohio State University. Her research interests include the effect of incentives, law, and culture in corporate finance. Her research appears in the Journal of Corporate Finance, Journal of Banking and Finance, Journal of Financial Economics, Journal of Financial and Quantitative Analysis, The Financial Review, and the Quarterly Journal of Finance. She is an associate editor of The Financial Review, is on the Editorial Board of Corporate Governance: An International Review, and was a visiting economist at the Securities and Exchange Commission.
{"title":"Correction to: CEO Turnover: Cross-Country Effects\u0000 Burns, N., K. Minnick, and L. Starks. 2023. CEO Turnover: Cross-Country Effects. Corporate Governance: An International Review 31, no. 6: 820–844. https://doi.org/10.1111/corg.12506","authors":"","doi":"10.1111/corg.12586","DOIUrl":"10.1111/corg.12586","url":null,"abstract":"<p>In the biography, the author's information has been corrected below.</p><p><b>Natasha Burns</b> is a professor of finance at The University of Texas at San Antonio. She was awarded her PhD in finance from The Ohio State University. Her research interests include the effect of incentives, law, and culture in corporate finance. Her research appears in the <i>Journal of Corporate Finance, Journal of Banking and Finance</i>, <i>Journal of Financial Economics</i>, <i>Journal of Financial and Quantitative Analysis</i>, <i>The Financial Review</i>, and the <i>Quarterly Journal of Finance</i>. She is an associate editor of <i>The Financial Review</i>, is on the Editorial Board of <i>Corporate Governance: An International Review</i>, and was a visiting economist at the Securities and Exchange Commission.</p><p>The authors apologize for the error.</p>","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":"32 4","pages":"756"},"PeriodicalIF":4.6,"publicationDate":"2024-05-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/corg.12586","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141194725","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Research Question/IssueThe escalation of online transactions recently has driven the digitalization trend, which features both emerging opportunities and associated risks, across businesses. This study examines the impact of cybersecurity risk on the adoption of clawback policies among US listed firms during the 2008–2018 period.Research Findings/InsightUsing fixed‐effect estimators, I reveal that clawback adoptions are more likely when cybersecurity risk is on the rise. This effect is transmitted via three channels of multiple business objectives, manager's quiet life, and corporate culture. Furthermore, this effect is diminished among firms with a greater proportion of nonindependent co‐opted directors on board.Theoretical/Academic ImplicationsAlthough clawback policies are often linked to corporate misreporting, this study broadens the conventional research direction by addressing the decision‐making of clawback policy adoption from the data security perspective. The finding of this study implies an extension of clawback endorsement beyond the corporate reporting purpose in the digitalized era.Practical/Policy ImplicationsThis study's findings suggest that firms value the preventive property of clawback policies on corporate misconduct and that firms factor cybersecurity risk into clawback adoption decision‐making. Given that clawback policies extensively tie CEOs' wealth with corporate integrity, early adoptions of this recoupment scheme can be essential to resolving the contemporary cybersecurity problems of the adopted firms.
{"title":"Better Prevention Than Cure: Cybersecurity Risk and Clawback Provision","authors":"Huy Viet Hoang","doi":"10.1111/corg.12590","DOIUrl":"https://doi.org/10.1111/corg.12590","url":null,"abstract":"Research Question/IssueThe escalation of online transactions recently has driven the digitalization trend, which features both emerging opportunities and associated risks, across businesses. This study examines the impact of cybersecurity risk on the adoption of clawback policies among US listed firms during the 2008–2018 period.Research Findings/InsightUsing fixed‐effect estimators, I reveal that clawback adoptions are more likely when cybersecurity risk is on the rise. This effect is transmitted via three channels of multiple business objectives, manager's quiet life, and corporate culture. Furthermore, this effect is diminished among firms with a greater proportion of nonindependent co‐opted directors on board.Theoretical/Academic ImplicationsAlthough clawback policies are often linked to corporate misreporting, this study broadens the conventional research direction by addressing the decision‐making of clawback policy adoption from the data security perspective. The finding of this study implies an extension of clawback endorsement beyond the corporate reporting purpose in the digitalized era.Practical/Policy ImplicationsThis study's findings suggest that firms value the preventive property of clawback policies on corporate misconduct and that firms factor cybersecurity risk into clawback adoption decision‐making. Given that clawback policies extensively tie CEOs' wealth with corporate integrity, early adoptions of this recoupment scheme can be essential to resolving the contemporary cybersecurity problems of the adopted firms.","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":"24 1","pages":""},"PeriodicalIF":5.3,"publicationDate":"2024-05-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141194736","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}
Mohammad Abweny, Godfred Adjapong Afrifa, Abdullah Iqbal
Research Question/IssueThe study examines whether CSR‐focused governance mechanisms (CSR committees, standalone CSR reports, and CSR contracting) operate as complements or substitutes for each other in mitigating CSR decoupling.Research Findings/InsightsThe study finds that CSR‐focused governance mechanisms diminish CSR decoupling and enhance CSR credibility in UK firms. In addition, the simultaneous presence of CSR committees and standalone CSR reports has a complementary effect in mitigating CSR decoupling. Conversely, the combinations of CSR committees and CSR contracting as well as standalone CSR reports and CSR contracting exhibit a substitute relationship. These impacts remain consistent when categorizing CSR decoupling into underreporting and overreporting. During the financial crisis of 2008–2009, the complementary relationship between CSR committees and CSR reports remained consistent, although the substitution between CSR committees and CSR contracting, and CSR reports and CSR contracting, is only observed after the crisis.Theoretical/Academic ImplicationsThe study innovatively contributes to the agency theory literature by adopting a bundle corporate governance approach while focusing on specific CSR governance mechanisms to address agency issues. It empirically shows that complementary combinations of CSR‐focused governance mechanisms signify a marginal benefit in reducing CSR decoupling, leading to a reduction in agency costs.Practitioner/Policy ImplicationsThe study offers several implications. First, it helps firms create ideal combinations of different CSR‐focused governance mechanisms that provide superior marginal benefits. Second, firms' stakeholders, especially the investors, could identify the usefulness of adopting CSR‐focused governance mechanisms in CSR reporting. Finally, it could also attract regulators' attention toward the weaker aspects of the existing corporate governance code regarding CSR.
{"title":"The Complementarity and Substitution Effects of CSR‐Focused Governance Mechanisms on CSR Decoupling","authors":"Mohammad Abweny, Godfred Adjapong Afrifa, Abdullah Iqbal","doi":"10.1111/corg.12591","DOIUrl":"https://doi.org/10.1111/corg.12591","url":null,"abstract":"Research Question/IssueThe study examines whether CSR‐focused governance mechanisms (CSR committees, standalone CSR reports, and CSR contracting) operate as complements or substitutes for each other in mitigating CSR decoupling.Research Findings/InsightsThe study finds that CSR‐focused governance mechanisms diminish CSR decoupling and enhance CSR credibility in UK firms. In addition, the simultaneous presence of CSR committees and standalone CSR reports has a complementary effect in mitigating CSR decoupling. Conversely, the combinations of CSR committees and CSR contracting as well as standalone CSR reports and CSR contracting exhibit a substitute relationship. These impacts remain consistent when categorizing CSR decoupling into underreporting and overreporting. During the financial crisis of 2008–2009, the complementary relationship between CSR committees and CSR reports remained consistent, although the substitution between CSR committees and CSR contracting, and CSR reports and CSR contracting, is only observed after the crisis.Theoretical/Academic ImplicationsThe study innovatively contributes to the agency theory literature by adopting a bundle corporate governance approach while focusing on specific CSR governance mechanisms to address agency issues. It empirically shows that complementary combinations of CSR‐focused governance mechanisms signify a marginal benefit in reducing CSR decoupling, leading to a reduction in agency costs.Practitioner/Policy ImplicationsThe study offers several implications. First, it helps firms create ideal combinations of different CSR‐focused governance mechanisms that provide superior marginal benefits. Second, firms' stakeholders, especially the investors, could identify the usefulness of adopting CSR‐focused governance mechanisms in CSR reporting. Finally, it could also attract regulators' attention toward the weaker aspects of the existing corporate governance code regarding CSR.","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":"18 1","pages":""},"PeriodicalIF":5.3,"publicationDate":"2024-05-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141194732","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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