This paper studies how corporate investments are affected by financial transaction taxes levied on stock trading and explores alternative corporate governance mechanisms behind the effect.
Research Findings/Insights
Exploiting the 2012 French introduction of a financial transaction tax in a difference-in-differences design, I find an overall positive effect of the tax on corporate investments, namely, capital expenditure and R&D. I also find an improvement in investment sensitivity and an increase in likelihood and quality of acquisitions, particularly among firms for which the tax causes a significant shift from short-term to long-term ownership.
Theoretical/Academic Implications
The evidence suggests that a financial transaction tax could have a positive effect on corporate investments by inducing long-term ownership and alleviating short-termism. The paper therefore addresses one major concern that the tax would hamper investments by increasing costs of capital or harming other governance mechanisms such as exit threats.
Practitioner/Policy Implications
This study provides evidence on economic benefits of financial transaction taxes which are relevant to the debate on the tax introduction and design in many countries.
{"title":"Mostly Good Robin Hood: Impact of Financial Transaction Tax on Corporate Investment","authors":"Tan Do","doi":"10.1111/corg.70001","DOIUrl":"https://doi.org/10.1111/corg.70001","url":null,"abstract":"<div>\u0000 \u0000 \u0000 <section>\u0000 \u0000 <h3> Research Question/Issue</h3>\u0000 \u0000 <p>This paper studies how corporate investments are affected by financial transaction taxes levied on stock trading and explores alternative corporate governance mechanisms behind the effect.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Research Findings/Insights</h3>\u0000 \u0000 <p>Exploiting the 2012 French introduction of a financial transaction tax in a difference-in-differences design, I find an overall positive effect of the tax on corporate investments, namely, capital expenditure and R&D. I also find an improvement in investment sensitivity and an increase in likelihood and quality of acquisitions, particularly among firms for which the tax causes a significant shift from short-term to long-term ownership.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Theoretical/Academic Implications</h3>\u0000 \u0000 <p>The evidence suggests that a financial transaction tax could have a positive effect on corporate investments by inducing long-term ownership and alleviating short-termism. The paper therefore addresses one major concern that the tax would hamper investments by increasing costs of capital or harming other governance mechanisms such as exit threats.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Practitioner/Policy Implications</h3>\u0000 \u0000 <p>This study provides evidence on economic benefits of financial transaction taxes which are relevant to the debate on the tax introduction and design in many countries.</p>\u0000 </section>\u0000 </div>","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":"33 6","pages":"1682-1705"},"PeriodicalIF":5.5,"publicationDate":"2025-09-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/corg.70001","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145521496","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}
The paper investigates how social trust and tolerance affect board gender diversity levels in 67 countries.
Research Findings/Insights
We find robust evidence that countries in which people display trust toward strangers, people of other countries, and other religions have more gender-diverse boards. We also find that tolerance toward homosexuals, immigrants, and people of other religions and different races promotes gender-diverse boards.
Theoretical/Academic Implications
This paper relies on social trust, tolerance, and institutional theories. Trust and tolerance theories suggest that trusting others and displaying tolerance toward people who are different from oneself have many important social and economic consequences. We relate social trust and tolerance theories to governance and board gender diversity in a large cross-section of countries.
Practitioner/Policy Implications
Board gender diversity has both practical and policy implications. Our findings suggest that legislating comprehensive gender quotas may not be sufficient. More importantly, unlike cultural values, trust and tolerance can be more readily cultivated to promote policies and workplace practices.
{"title":"Do Social Trust and Tolerance Affect Board Gender Diversity? An International Evidence","authors":"Fatemeh Kordi, Min Maung","doi":"10.1111/corg.70004","DOIUrl":"https://doi.org/10.1111/corg.70004","url":null,"abstract":"<div>\u0000 \u0000 \u0000 <section>\u0000 \u0000 <h3> Research question/Issue</h3>\u0000 \u0000 <p>The paper investigates how social trust and tolerance affect board gender diversity levels in 67 countries.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Research Findings/Insights</h3>\u0000 \u0000 <p>We find robust evidence that countries in which people display trust toward strangers, people of other countries, and other religions have more gender-diverse boards. We also find that tolerance toward homosexuals, immigrants, and people of other religions and different races promotes gender-diverse boards.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Theoretical/Academic Implications</h3>\u0000 \u0000 <p>This paper relies on social trust, tolerance, and institutional theories. Trust and tolerance theories suggest that trusting others and displaying tolerance toward people who are different from oneself have many important social and economic consequences. We relate social trust and tolerance theories to governance and board gender diversity in a large cross-section of countries.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Practitioner/Policy Implications</h3>\u0000 \u0000 <p>Board gender diversity has both practical and policy implications. Our findings suggest that legislating comprehensive gender quotas may not be sufficient. More importantly, unlike cultural values, trust and tolerance can be more readily cultivated to promote policies and workplace practices.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> JEL Classification</h3>\u0000 \u0000 <p>G38, G41, J18, L25, M14, Z13</p>\u0000 </section>\u0000 </div>","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":"33 6","pages":"1706-1744"},"PeriodicalIF":5.5,"publicationDate":"2025-09-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/corg.70004","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145521355","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}
To strengthen the protection of minority shareholders, in 2016, the China Securities Regulatory Commission authorized the China Securities Investor Services Center (CSISC), a non-profit institution with official backing, to buy and hold 100 shares of listed firms in pilot regions. By exercising shareholder rights, the CSISC plays a governance role as a regulatory minority shareholder. This study examines whether CSISC shareholding has a spillover effect in the bond market and whether this effect varies across firms with different levels of information asymmetry, insider expropriation, shareholder–creditor agency conflicts, and trustee reputation.
Research Findings/Insights
Employing a difference-in-differences analysis on bonds issued by listed firms between 2015 and 2017, we find that CSISC shareholding is associated with lower bond yield spreads. Cross-sectional tests suggest that CSISC shareholding reduces bond yield spreads by mitigating information asymmetry, curbing insider expropriation, and alleviating shareholder–creditor agency conflicts. We also find that trustee reputation moderates the relationship between CSISC shareholding and bond yield spreads. Furthermore, CSISC shareholding influences the nonpricing terms of bonds, and the difference in bond yield spreads between the treatment and control groups diminishes following the nationwide implementation of CSISC shareholding.
Theoretical/Academic Implications
This study contributes to the growing literature on the economic consequences of CSISC shareholding by uncovering its spillover governance effect on bondholder protection. It also extends the research on the role of government regulation in safeguarding bondholder interests.
Practitioner/Policy Implications
Our study has important policy implications for investor protection in other emerging markets. Given the unique characteristics of China's bond market, directly replicating this mechanism may not yield similarly favorable outcomes elsewhere. Nevertheless, regulators in other emerging markets could draw on China's experience and consider implementing novel investor protection mechanisms tailored to their specific market conditions.
{"title":"Does Regulator as a Minority Shareholder Affect Bond Yield Spreads? A Quasi-Natural Experiment","authors":"Haipeng Yu, Xiaoke Cheng, Caiyue Ouyang, Wenxia Ge, Xiaoqi Guo","doi":"10.1111/corg.70000","DOIUrl":"https://doi.org/10.1111/corg.70000","url":null,"abstract":"<div>\u0000 \u0000 \u0000 <section>\u0000 \u0000 <h3> Research Question/Issue</h3>\u0000 \u0000 <p>To strengthen the protection of minority shareholders, in 2016, the China Securities Regulatory Commission authorized the China Securities Investor Services Center (CSISC), a non-profit institution with official backing, to buy and hold 100 shares of listed firms in pilot regions. By exercising shareholder rights, the CSISC plays a governance role as a regulatory minority shareholder. This study examines whether CSISC shareholding has a spillover effect in the bond market and whether this effect varies across firms with different levels of information asymmetry, insider expropriation, shareholder–creditor agency conflicts, and trustee reputation.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Research Findings/Insights</h3>\u0000 \u0000 <p>Employing a difference-in-differences analysis on bonds issued by listed firms between 2015 and 2017, we find that CSISC shareholding is associated with lower bond yield spreads. Cross-sectional tests suggest that CSISC shareholding reduces bond yield spreads by mitigating information asymmetry, curbing insider expropriation, and alleviating shareholder–creditor agency conflicts. We also find that trustee reputation moderates the relationship between CSISC shareholding and bond yield spreads. Furthermore, CSISC shareholding influences the nonpricing terms of bonds, and the difference in bond yield spreads between the treatment and control groups diminishes following the nationwide implementation of CSISC shareholding.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Theoretical/Academic Implications</h3>\u0000 \u0000 <p>This study contributes to the growing literature on the economic consequences of CSISC shareholding by uncovering its spillover governance effect on bondholder protection. It also extends the research on the role of government regulation in safeguarding bondholder interests.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Practitioner/Policy Implications</h3>\u0000 \u0000 <p>Our study has important policy implications for investor protection in other emerging markets. Given the unique characteristics of China's bond market, directly replicating this mechanism may not yield similarly favorable outcomes elsewhere. Nevertheless, regulators in other emerging markets could draw on China's experience and consider implementing novel investor protection mechanisms tailored to their specific market conditions.</p>\u0000 </section>\u0000 </div>","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":"33 6","pages":"1660-1681"},"PeriodicalIF":5.5,"publicationDate":"2025-08-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/corg.70000","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145522414","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}
This study examines how auditors incorporate CEO-to-employee pay ratios into their risk assessments and pricing decisions. Drawing on equity fairness theory, tournament incentives theory, and efficient contracting theory, we also investigate how specific firm characteristics influence the relationship between pay ratios and audit fees.
Research Findings/Insights
Using a dataset of Russell 3000 US firms from 2017 to 2022, we find that higher CEO-to-employee pay ratios are significantly associated with increased audit fees, even after controlling for the individual compensation components. Our cross-sectional analyses reveal three key findings. First, reputation risk emerges as the primary channel through which pay ratios affect audit pricing, with the relationship being stronger for firms subject to greater stakeholder scrutiny. Second, stronger governance mechanisms amplify this relationship, reflecting increased audit rigor demanded by well-monitored firms with high pay disparities. Third, firm complexity also intensifies the relationship between pay ratios and audit fees, indicating that auditors perceive heightened risks in complex firms with high pay disparities that extend beyond what is explained by efficient contracting theory.
Theoretical/Academic Implications
Our study advances the understanding of audit fee determinants by demonstrating how CEO-to-employee pay ratios signal distinct risks to auditors beyond traditional compensation measures. Additionally, we contribute to corporate governance research by highlighting internal pay equity as a critical yet often overlooked aspect that shapes a company's risk profile and audit outcomes.
Practitioner/Policy Implications
The findings offer valuable insights for companies on managing stakeholder perceptions and controlling audit costs through informed compensation policies. They also provide guidance for auditors in refining their risk assessment procedures. For regulators and policymakers, our results support the continued disclosure of pay ratios by demonstrating their relevance to key stakeholders' decision-making processes.
{"title":"CEO-to-Employee Pay Ratio and Audit Pricing","authors":"Pauline Wu, Zhifang Zhang","doi":"10.1111/corg.12663","DOIUrl":"https://doi.org/10.1111/corg.12663","url":null,"abstract":"<div>\u0000 \u0000 \u0000 <section>\u0000 \u0000 <h3> Research Question/Issue</h3>\u0000 \u0000 <p>This study examines how auditors incorporate CEO-to-employee pay ratios into their risk assessments and pricing decisions. Drawing on equity fairness theory, tournament incentives theory, and efficient contracting theory, we also investigate how specific firm characteristics influence the relationship between pay ratios and audit fees.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Research Findings/Insights</h3>\u0000 \u0000 <p>Using a dataset of Russell 3000 US firms from 2017 to 2022, we find that higher CEO-to-employee pay ratios are significantly associated with increased audit fees, even after controlling for the individual compensation components. Our cross-sectional analyses reveal three key findings. First, reputation risk emerges as the primary channel through which pay ratios affect audit pricing, with the relationship being stronger for firms subject to greater stakeholder scrutiny. Second, stronger governance mechanisms amplify this relationship, reflecting increased audit rigor demanded by well-monitored firms with high pay disparities. Third, firm complexity also intensifies the relationship between pay ratios and audit fees, indicating that auditors perceive heightened risks in complex firms with high pay disparities that extend beyond what is explained by efficient contracting theory.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Theoretical/Academic Implications</h3>\u0000 \u0000 <p>Our study advances the understanding of audit fee determinants by demonstrating how CEO-to-employee pay ratios signal distinct risks to auditors beyond traditional compensation measures. Additionally, we contribute to corporate governance research by highlighting internal pay equity as a critical yet often overlooked aspect that shapes a company's risk profile and audit outcomes.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Practitioner/Policy Implications</h3>\u0000 \u0000 <p>The findings offer valuable insights for companies on managing stakeholder perceptions and controlling audit costs through informed compensation policies. They also provide guidance for auditors in refining their risk assessment procedures. For regulators and policymakers, our results support the continued disclosure of pay ratios by demonstrating their relevance to key stakeholders' decision-making processes.</p>\u0000 </section>\u0000 </div>","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":"33 6","pages":"1629-1658"},"PeriodicalIF":5.5,"publicationDate":"2025-07-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/corg.12663","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145522150","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}
We examine how controlling shareholders' personal tax burdens, specifically inheritance and gift tax obligations, affect firm-level financial decisions. Using a unique setting in South Korea, we investigate whether and how firms adjust their dividend policies in response to shareholder-level liquidity pressures.
Research Findings/Insights
Using hand-collected data on inheritance and gift events affecting controlling shareholders, we find that firms significantly increase dividend payouts following such events. The magnitude of the increase is positively related to the size of the tax burden. Cross-sectional analyses show that the dividend response is stronger in firms with high potential for expropriation, while the response is mitigated in firms with strong board independence and analyst monitoring. In addition, we document significant economic consequences. Increased payouts are associated with reductions in capital investment and employment and are followed by negative stock market reactions to dividend announcements.
Theoretical/Academic Implications
Our findings show that shareholder-specific tax shocks can propagate through corporate governance channels and lead to firm-level financial decisions. This expands the literature on shareholder taxation by identifying a novel mechanism through which tax burdens shape corporate outcomes.
Practitioner/Policy Implications
Our study provides new insights for tax policymakers. By documenting unintended corporate consequences of inheritance and gift taxation, we inform ongoing policy debates regarding intergenerational tax design, particularly in countries with concentrated ownership and limited succession relief.
{"title":"Passing the Shareholders' Tax Burden to the Corporation: Evidence From Inheritance and Gift Tax","authors":"Hyun Jong Na, Tyler Taejin Jung","doi":"10.1111/corg.12661","DOIUrl":"https://doi.org/10.1111/corg.12661","url":null,"abstract":"<div>\u0000 \u0000 \u0000 <section>\u0000 \u0000 <h3> Research Question/Issue</h3>\u0000 \u0000 <p>We examine how controlling shareholders' personal tax burdens, specifically inheritance and gift tax obligations, affect firm-level financial decisions. Using a unique setting in South Korea, we investigate whether and how firms adjust their dividend policies in response to shareholder-level liquidity pressures.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Research Findings/Insights</h3>\u0000 \u0000 <p>Using hand-collected data on inheritance and gift events affecting controlling shareholders, we find that firms significantly increase dividend payouts following such events. The magnitude of the increase is positively related to the size of the tax burden. Cross-sectional analyses show that the dividend response is stronger in firms with high potential for expropriation, while the response is mitigated in firms with strong board independence and analyst monitoring. In addition, we document significant economic consequences. Increased payouts are associated with reductions in capital investment and employment and are followed by negative stock market reactions to dividend announcements.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Theoretical/Academic Implications</h3>\u0000 \u0000 <p>Our findings show that shareholder-specific tax shocks can propagate through corporate governance channels and lead to firm-level financial decisions. This expands the literature on shareholder taxation by identifying a novel mechanism through which tax burdens shape corporate outcomes.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Practitioner/Policy Implications</h3>\u0000 \u0000 <p>Our study provides new insights for tax policymakers. By documenting unintended corporate consequences of inheritance and gift taxation, we inform ongoing policy debates regarding intergenerational tax design, particularly in countries with concentrated ownership and limited succession relief.</p>\u0000 </section>\u0000 </div>","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":"33 6","pages":"1567-1597"},"PeriodicalIF":5.5,"publicationDate":"2025-07-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/corg.12661","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145522151","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}
What does it mean for a board director to be financially literate? Despite widespread agreement that financial competence is vital for corporate oversight, governance researchers have mostly focused on financial expertise at the board level. This approach to monitoring overlooks the potential contributions of directors who have the basic financial capability necessary to fulfill their individual legal duties.
Research Findings/Insights
This study employs a three-round Delphi study of 35 expert panelists drawn from a pool of directors, governance educators, and accounting professionals. The findings establish a baseline definition and concept inventory for director financial literacy (DFL) that distinguishes financial literacy from financial expertise and identifies 24 core concepts that directors must understand to fulfill their duties of care and diligence. Results indicate that this baseline allows a director to form an independent view of the firm's finances, thereby enhancing boardroom participation and supporting collective oversight.
Theoretical/Academic Implications
The study reconciles governance scholarship with legal accountability by highlighting how financial literacy is an individual-level competence that offers insight into agency theory's problem of adverse selection. It contributes to multilevel theorizing in corporate governance research by aligning group-based monitoring constructs with the legal requirement that each director must form an independent view. The framework establishes a foundation for measuring director competence and addressing the levels-of-analysis challenge endemic to governance research.
Practitioner/Policy Implications
DFL is necessary—but not always sufficient—for directors to fulfill their legal duties. This study provides a foundational framework to guide regulatory benchmarking, director training, and board recruitment.
{"title":"Director Financial Literacy: Defining a Baseline Competence for Board Oversight and Legal Accountability","authors":"Jackie Bettington, Gavin Nicholson","doi":"10.1111/corg.12662","DOIUrl":"https://doi.org/10.1111/corg.12662","url":null,"abstract":"<div>\u0000 \u0000 \u0000 <section>\u0000 \u0000 <h3> Research Question/Issue</h3>\u0000 \u0000 <p>What does it mean for a board director to be financially literate? Despite widespread agreement that financial competence is vital for corporate oversight, governance researchers have mostly focused on financial expertise at the board level. This approach to monitoring overlooks the potential contributions of directors who have the basic financial capability necessary to fulfill their individual legal duties.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Research Findings/Insights</h3>\u0000 \u0000 <p>This study employs a three-round Delphi study of 35 expert panelists drawn from a pool of directors, governance educators, and accounting professionals. The findings establish a baseline definition and concept inventory for director financial literacy (DFL) that distinguishes financial literacy from financial expertise and identifies 24 core concepts that directors must understand to fulfill their duties of care and diligence. Results indicate that this baseline allows a director to form an independent view of the firm's finances, thereby enhancing boardroom participation and supporting collective oversight.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Theoretical/Academic Implications</h3>\u0000 \u0000 <p>The study reconciles governance scholarship with legal accountability by highlighting how financial literacy is an individual-level competence that offers insight into agency theory's problem of adverse selection. It contributes to multilevel theorizing in corporate governance research by aligning group-based monitoring constructs with the legal requirement that each director must form an independent view. The framework establishes a foundation for measuring director competence and addressing the levels-of-analysis challenge endemic to governance research.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Practitioner/Policy Implications</h3>\u0000 \u0000 <p>DFL is necessary—but not always sufficient—for directors to fulfill their legal duties. This study provides a foundational framework to guide regulatory benchmarking, director training, and board recruitment.</p>\u0000 </section>\u0000 </div>","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":"33 6","pages":"1598-1628"},"PeriodicalIF":5.5,"publicationDate":"2025-07-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/corg.12662","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145522211","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}
We construct specific indicators of retail investor–corporate environmental, social, and governance (ESG) information interactions and examine their influence on corporate green mergers and acquisitions (M&As). Using data on Chinese listed firms from 2011 to 2019, we shed new light on retail investor activism in sustainable development.
Research Findings/Insights
Retail investor–corporate ESG information interactions positively influence corporate green M&As. This link is mediated by increased ESG-related inquiry letters from regulators and by hiring executives with environmental expertise. Government green subsidies can effectively transform the impetus for corporate green M&As derived from retail investor–corporate ESG information interactions. Our subsample analyses indicate that the aforementioned relationship is more pronounced when the interactions are dominated by negative tones and there is less pressure on executives to perform in the short term. Finally, we find that retail investor–corporate ESG information interactions facilitate genuine green transformation rather than just being green for the sake of being green, with reduced greenwashing after green M&A transactions.
Theoretical/Academic Implications
In the corporate governance literature, retail investors in less developed capital markets are often depicted as passive recipients of information. However, this portrayal overlooks the changing role of retail investors in the digital age and fails to adequately explore how their unique preferences influence corporate strategic decisions. We elucidate the positive role of an emergent sense of responsible investment among retail investors.
Practitioner/Policy Implications
This study offers valuable insights for policymakers, aiding their endeavors to leverage the positive impact of retail investors. Moreover, our findings highlight a synergistic connection between government green subsidies and the effectiveness of retail investor–corporate ESG information interactions, providing crucial guidance for policymakers in refining institutional frameworks and retail investors to enhance their involvement in corporate governance.
{"title":"Retail Investor–Corporate ESG Information Interactions and Corporate Green Mergers and Acquisitions","authors":"Junchao Li, Mengjie Zhao, Guangqian Ren","doi":"10.1111/corg.12660","DOIUrl":"https://doi.org/10.1111/corg.12660","url":null,"abstract":"<div>\u0000 \u0000 \u0000 <section>\u0000 \u0000 <h3> Research Question/Issue</h3>\u0000 \u0000 <p>We construct specific indicators of retail investor–corporate environmental, social, and governance (ESG) information interactions and examine their influence on corporate green mergers and acquisitions (M&As). Using data on Chinese listed firms from 2011 to 2019, we shed new light on retail investor activism in sustainable development.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Research Findings/Insights</h3>\u0000 \u0000 <p>Retail investor–corporate ESG information interactions positively influence corporate green M&As. This link is mediated by increased ESG-related inquiry letters from regulators and by hiring executives with environmental expertise. Government green subsidies can effectively transform the impetus for corporate green M&As derived from retail investor–corporate ESG information interactions. Our subsample analyses indicate that the aforementioned relationship is more pronounced when the interactions are dominated by negative tones and there is less pressure on executives to perform in the short term. Finally, we find that retail investor–corporate ESG information interactions facilitate genuine green transformation rather than just being green for the sake of being green, with reduced greenwashing after green M&A transactions.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Theoretical/Academic Implications</h3>\u0000 \u0000 <p>In the corporate governance literature, retail investors in less developed capital markets are often depicted as passive recipients of information. However, this portrayal overlooks the changing role of retail investors in the digital age and fails to adequately explore how their unique preferences influence corporate strategic decisions. We elucidate the positive role of an emergent sense of responsible investment among retail investors.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Practitioner/Policy Implications</h3>\u0000 \u0000 <p>This study offers valuable insights for policymakers, aiding their endeavors to leverage the positive impact of retail investors. Moreover, our findings highlight a synergistic connection between government green subsidies and the effectiveness of retail investor–corporate ESG information interactions, providing crucial guidance for policymakers in refining institutional frameworks and retail investors to enhance their involvement in corporate governance.</p>\u0000 </section>\u0000 </div>","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":"33 6","pages":"1548-1566"},"PeriodicalIF":5.5,"publicationDate":"2025-07-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145521489","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}
Common ownership research has rapidly expanded across multiple disciplines—economics, finance, law, accounting, and others. Limited attention, however, has been paid to the implications of shareholders investing in multiple competing firms for corporate governance. The purpose of this review is to integrate the literature on common ownership with a particular focus on corporate governance inferences.
Research Findings/Insights
This review focuses on the implications of common ownership for corporate governance and the shareholder value maximization paradigm, and specific governance facets such as shareholder activism, managerial accountability and executive compensation, board of directors, and stakeholder governance.
Theoretical/Academic Implications
Common ownership scholars debate whether common ownership reduces competition in order to increase industry profitability or promotes better governance that could reduce negative externalities imposed by portfolio companies on society at large. This review identifies points of contention in analyzing and assessing the impact of common ownership, synthesizes the implications for the field of corporate governance, and provides a roadmap of questions for future empirical and theoretical research.
Practitioner/Policy Implications
Increasing concerns by regulatory agencies regarding the impact of common ownership—shareholders concurrently investing in rival firms—on competitive actions and incentives to compete have largely ignored the implications of common ownership for corporate governance. In the context of common ownership, how does shareholder primacy embedded in governance reforms affect the pursuit of firm-specific competitive advantage and competition for essential stakeholders and, subsequently, the long-term viability, resilience, and competitiveness of the firm?
{"title":"Common Ownership Research: Implications for Corporate Governance","authors":"Maria Goranova","doi":"10.1111/corg.12657","DOIUrl":"https://doi.org/10.1111/corg.12657","url":null,"abstract":"<div>\u0000 \u0000 \u0000 <section>\u0000 \u0000 <h3> Research Question/Issue</h3>\u0000 \u0000 <p>Common ownership research has rapidly expanded across multiple disciplines—economics, finance, law, accounting, and others. Limited attention, however, has been paid to the implications of shareholders investing in multiple competing firms for corporate governance. The purpose of this review is to integrate the literature on common ownership with a particular focus on corporate governance inferences.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Research Findings/Insights</h3>\u0000 \u0000 <p>This review focuses on the implications of common ownership for corporate governance and the shareholder value maximization paradigm, and specific governance facets such as shareholder activism, managerial accountability and executive compensation, board of directors, and stakeholder governance.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Theoretical/Academic Implications</h3>\u0000 \u0000 <p><i>Common ownership</i> scholars debate whether common ownership reduces competition in order to increase industry profitability or promotes better governance that could reduce negative externalities imposed by portfolio companies on society at large. This review identifies points of contention in analyzing and assessing the impact of common ownership, synthesizes the implications for the field of corporate governance, and provides a roadmap of questions for future empirical and theoretical research.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Practitioner/Policy Implications</h3>\u0000 \u0000 <p>Increasing concerns by regulatory agencies regarding the impact of common ownership—shareholders concurrently investing in rival firms—on competitive actions and incentives to compete have largely ignored the implications of common ownership for corporate governance. In the context of common ownership, how does shareholder primacy embedded in governance reforms affect the pursuit of firm-specific competitive advantage and competition for essential stakeholders and, subsequently, the long-term viability, resilience, and competitiveness of the firm?</p>\u0000 </section>\u0000 </div>","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":"33 6","pages":"1516-1547"},"PeriodicalIF":5.5,"publicationDate":"2025-06-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145521429","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}
How objective are corporations' disclosures of their board members' skills? Specifically, how changeable are characterizations of directors as possessing leadership skill in reaction to external pressure?
Research Insights
We mail letters to a quasi-randomly selected half of publicly listed US companies, inquiring whether they have sufficient leadership skill on their boards, and analyze subsequent changes in leadership mentions in proxy filings. Company- and director-level regressions across the population of US corporations do not show a treatment effect.
Theoretical/Academic Implications
Our study uses an innovative experimental design that can be adapted to other research contexts. Our analysis yields valuable insights for the literature on director skill disclosure. We find that companies assign legitimacy value to director leadership skill yet vary widely in whether, where, when, and how they disclose this skill in proxy statements. We also find that, irrespective of our treatment, some companies add leadership mentions symbolically, to otherwise unchanged contents. The incidence of these symbolic additions does not significantly differ between the nudged and control groups. This suggests that future research attempting an intervention with a similar design might influence companies' disclosure of director leadership skill if the nudging stakeholder has sufficient authority and communicates through a direct, impactful channel that elicits meaningful disclosure adjustments.
Practitioner/Policy Implications
Practitioners involved in the proxy voting process, particularly at proxy advisory and asset management firms, may want to tread with caution when using word-count analyses of proxy filings, specifically when counting leadership mentions. Policymakers may consider clarifying thresholds for disclosure of ambiguous attributes such as “leadership.”
{"title":"Leadership Skills in Corporate Director Biographies: Substance or Impression Management?","authors":"Emilia Bunea, Maxim Elias, David Stolin","doi":"10.1111/corg.12659","DOIUrl":"https://doi.org/10.1111/corg.12659","url":null,"abstract":"<div>\u0000 \u0000 \u0000 <section>\u0000 \u0000 <h3> Research Issue</h3>\u0000 \u0000 <p>How objective are corporations' disclosures of their board members' skills? Specifically, how changeable are characterizations of directors as possessing leadership skill in reaction to external pressure?</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Research Insights</h3>\u0000 \u0000 <p>We mail letters to a quasi-randomly selected half of publicly listed US companies, inquiring whether they have sufficient leadership skill on their boards, and analyze subsequent changes in leadership mentions in proxy filings. Company- and director-level regressions across the population of US corporations do not show a treatment effect.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Theoretical/Academic Implications</h3>\u0000 \u0000 <p>Our study uses an innovative experimental design that can be adapted to other research contexts. Our analysis yields valuable insights for the literature on director skill disclosure. We find that companies assign legitimacy value to director leadership skill yet vary widely in whether, where, when, and how they disclose this skill in proxy statements. We also find that, irrespective of our treatment, some companies add leadership mentions symbolically, to otherwise unchanged contents. The incidence of these symbolic additions does not significantly differ between the nudged and control groups. This suggests that future research attempting an intervention with a similar design might influence companies' disclosure of director leadership skill if the nudging stakeholder has sufficient authority and communicates through a direct, impactful channel that elicits meaningful disclosure adjustments.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Practitioner/Policy Implications</h3>\u0000 \u0000 <p>Practitioners involved in the proxy voting process, particularly at proxy advisory and asset management firms, may want to tread with caution when using word-count analyses of proxy filings, specifically when counting leadership mentions. Policymakers may consider clarifying thresholds for disclosure of ambiguous attributes such as “leadership.”</p>\u0000 </section>\u0000 </div>","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":"34 1","pages":"41-70"},"PeriodicalIF":5.5,"publicationDate":"2025-06-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/corg.12659","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145931033","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}
Jakob Arnoldi, Miriam Flickinger, Sarah B. Sørensen, Jacek Piosik
Research Question/Issue
This study investigates the effects of independent outside directors on the performance of new venture firms. We also study several factors moderating the relationship between the percentage of independent directors on boards and the new ventures' performance.
Research Findings/Insights
Using a large-scale sample of 5183 Danish new ventures active in 2015–2020, we find support for our hypothesis that the percentage of independent directors has an inverted U-shaped effect on new venture performance. The results also show that firm-level factors, that is, founder equity and venture age, cushion and amplify this nonlinear effect.
Theoretical/Academic Implications
Drawing on resource dependence theory as an exchange theory, we propose that increasing the proportion of independent directors yields linearly increasing gains (i.e., resource-provisioning benefits) but also induces costs of sacrificing managerial control, which accelerate nonlinearly. Our findings show that a smaller proportion of independent directors benefits new ventures, but as their proportion grows, the performance gains become smaller, eventually leading to negative marginal effects.
Practitioner/Policy Implications
Practitioners will find our findings of interest because, contrary to the recommendations of policymakers and many prior studies, they show that having a high proportion of independent directors on the boards of new ventures does not always improve new venture performance. Founders of new ventures should be aware of the trade-off between the benefits of obtaining additional resources and the costs of sacrificing managerial control.
{"title":"The Performance Effects of Independent Directors: A Large-Scale Study of Danish New Ventures","authors":"Jakob Arnoldi, Miriam Flickinger, Sarah B. Sørensen, Jacek Piosik","doi":"10.1111/corg.12655","DOIUrl":"https://doi.org/10.1111/corg.12655","url":null,"abstract":"<div>\u0000 \u0000 \u0000 <section>\u0000 \u0000 <h3> Research Question/Issue</h3>\u0000 \u0000 <p>This study investigates the effects of independent outside directors on the performance of new venture firms. We also study several factors moderating the relationship between the percentage of independent directors on boards and the new ventures' performance.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Research Findings/Insights</h3>\u0000 \u0000 <p>Using a large-scale sample of 5183 Danish new ventures active in 2015–2020, we find support for our hypothesis that the percentage of independent directors has an inverted U-shaped effect on new venture performance. The results also show that firm-level factors, that is, founder equity and venture age, cushion and amplify this nonlinear effect.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Theoretical/Academic Implications</h3>\u0000 \u0000 <p>Drawing on resource dependence theory as an exchange theory, we propose that increasing the proportion of independent directors yields linearly increasing gains (i.e., resource-provisioning benefits) but also induces costs of sacrificing managerial control, which accelerate nonlinearly. Our findings show that a smaller proportion of independent directors benefits new ventures, but as their proportion grows, the performance gains become smaller, eventually leading to negative marginal effects.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Practitioner/Policy Implications</h3>\u0000 \u0000 <p>Practitioners will find our findings of interest because, contrary to the recommendations of policymakers and many prior studies, they show that having a high proportion of independent directors on the boards of new ventures does not always improve new venture performance. Founders of new ventures should be aware of the trade-off between the benefits of obtaining additional resources and the costs of sacrificing managerial control.</p>\u0000 </section>\u0000 </div>","PeriodicalId":48209,"journal":{"name":"Corporate Governance-An International Review","volume":"33 6","pages":"1472-1487"},"PeriodicalIF":5.5,"publicationDate":"2025-05-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/corg.12655","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145521976","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}
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