Political Voice, Fiduciary Activism, and the Institutional Ownership of U.S. Corporations: The Role of Public and Noncorporate Pension Funds

1995 ◽  
Vol 38 (3) ◽  
pp. 415-435 ◽  
Author(s):  
James P. Hawley
Keyword(s):  
Corporate Governance ◽  
Institutional Ownership ◽  
Pension Funds ◽  
Market Mechanisms ◽  
Public And Private ◽  
Modern Corporation ◽  
Political Voice ◽  
And Control

This article examines the significance of the change from ownership of corporate equity (and debt) primarily by individuals to about half held by institutions. Most important among these are pension funds, of which public and noncorporate funds are the focus of the article. It is argued that public and noncorporate funds play an increasingly important role in corporate governance and policy. These “fiduciary activists” are central actors in the emergence of “relationship investing” resulting in the bypassing of market mechanisms in many important instances. The article examines a variety of recent examples of political voices of these institutions, concluding there is a partial, if messy, “remarriage” between the ownership and control of the modern corporation. This implies that U.S. corporations are in a significant sense neither merely “private” capitalist enterprises, nor public either, but an emerging entity containing public and private aspects along with an emerging “civil” ownership quality (i.e., by unions and other nonstate entities).

scholarly journals Downward wage rigidity in American technology firms

2018 ◽  
Vol 15 (4-1) ◽  
pp. 181-190
Author(s):  
Xiaoying Chen ◽  
Jasmine Yur-Austin
Keyword(s):  
Corporate Governance ◽  
Pay For Performance ◽  
Business Leaders ◽  
Wage Rigidity ◽  
Venture Capitalists ◽  
Technology Firms ◽  
Corporate Governance Mechanisms ◽  
And Control ◽  
Dot Com

This study reviews the role of various corporate governance mechanisms to pay for performance in American technology firms. Compared to traditional business leaders, CEOs in technology firms possess stronger power for negotiating with shareholders; such power theoretically lowers the chance of interest conflicts between management and control but may increase CEOs’ wage rigidity during business downturns, especially in firms with poor corporate governance. We evaluate ownership structure; board composition; and the existence of independent compensation committees throughout the dot-com bubble and bubble-burst periods. We aim to examine during the business downturn period whether these CEOs cut their compensation effectively or exercise their negotiation power to protect their own benefit. Our empirical results provide strong evidence that given poor firm performance, CEOs with weak corporate governance negotiate higher cash-based pay rather than reduce their compensations. However, we find that venture capitalists play an important role in monitoring CEOs and revising compensation.

6. Company Management and Governance

2020 ◽  
pp. 100-120
Author(s):  
Imogen Moore
Keyword(s):  
Corporate Governance ◽  
Institutional Investors ◽  
Executive Directors ◽  
Corporate Governance Code ◽  
Executive Remuneration ◽  
Questions And Answers ◽  
The Uk ◽  
And Control ◽  
The Relationship

The Concentrate Questions and Answers series offers the best preparation for tackling exam questions and coursework. Each book includes typical questions, suggested answers with commentary, illustrative diagrams, guidance on how to develop your answer, suggestions for further reading, and advice on exams and coursework. This chapter explores important issues in company management and corporate governance, starting by examining the role of directors and shareholders (and the relationship between them) and the separation of ‘ownership and control’. Since the early 1990s, the governance of listed companies has been dominated by self-regulatory codes (currently the UK Corporate Governance Code). This chapter examines how these codes operate and considers key themes in corporate governance, including the role of non-executive directors and auditors; the position of institutional investors; and executive remuneration.

scholarly journals Duality of roles and corporate governance in Greece

2009 ◽  
Vol 5 (1) ◽  
pp. 15-21 ◽  
Author(s):  
Themistokles Lazarides
Keyword(s):  
Corporate Governance ◽  
Good Practice ◽  
Balance Of Power ◽  
Ownership Concentration ◽  
Probit Regression ◽  
Power And Control ◽  
Organizational Stability ◽  
The Board Of Directors ◽  
And Control

Duality of the role of President of the Board of Directors (BoD) and CEO has been regarded as a good practice of corporate governance. These two roles are the ones with the most power an authority within the corporation. The paper depicts the formulating factors of duality of roles in Greece. Literature has linked duality with performance, organizational stability, ownership concentration and balance of power and control within the firm. The paper, using a Probit regression analysis, examines whether these relationships are valid in Greece. Statistical – econometric analysis has shown that financial performance is not related with concentration of power and control. The same conclusion is can be drawn for ownership concentration. There is a trend of change but this trend hasn’t the same dynamic or driving factors as the ones that are reported by Kirkbride and Letza (2002) and Muth and Donaldson (1998). The hypothesis posed by Heracleous (2001) and Baliga, 6oyer and Rao (1996) are more likely to be true in the case of Greece. Overall, duality in Greece is affected by the historical development of the firm, its organizational scheme and even more by the balance of power and control within the firm.

scholarly journals Editorial: Scholarly communications and corporate governance research

2019 ◽  
Vol 17 (1) ◽  
pp. 162-164
Author(s):  
Alexander Kostyuk
Keyword(s):  
Corporate Governance ◽  
American Economic Review ◽  
Theory And Practice ◽  
Final Approval ◽  
Critical Commentary ◽  
Scholarly Communications ◽  
The Mean ◽  
And Control ◽  
To Receive

The role of scholarly conferences as a method of scholarly communications cannot be overestimated. Thus, Torgler and Piatti (2013) found that in 1974, only 19 per cent of papers published in American Economic Review had been presented at one or more conferences, workshops or seminars, for critical commentary prior to publication. On average, the number of presentations was 0.24 per paper. Twenty-five years later, 73 percent of the papers accepted for publication have been previously presented, and the mean number of pre-publication presentations was 4.73. Personal editorial and reviewing experience give a right to conclude that papers previously presented at the conferences have more serious scholarly content, solid empirical fundamentals and relevance. Scholarly journal reviewers are more favourable about such papers and it takes less time to receive the final approval of the reviewers for further publishing. Discussing the papers in an open manner at the conferences is welcome both by the authors of the papers as well as the commenting scholars adding more enthusiasm for further research. International conference "New Challenges in Corporate Governance: Theory and Practice"1 took place in Naples on October 3-4, 2019.2 About 80 experts from America, Europe, Asia, Africa and Oceania gathered at the conference venue to discuss relevant issues of corporate governance, ownership and control, share their most recent research and come up with the solutions of the existing corporate governance research.

scholarly journals Informal Institutions in the Corporate Governance System in Russia

2016 ◽  
Vol 19 (4) ◽  
Author(s):  
Monika Fiedorczuk
Keyword(s):  
Corporate Governance ◽  
Dominant Role ◽  
Informal Institutions ◽  
Point Of View ◽  
Minority Shareholders ◽  
Governance System ◽  
Market Mechanisms ◽  
Role Of The State ◽  
Corporate Governance System

The corporate governance system in Russia, having evolved through years, can be characterized by the following features: the dominant role of the concentrated ownership structure, corporate supervision relying on a combination of ownership function and company management, the significant role of the state as the owner, and the fairly marginal relevance of external market mechanisms. Those features result partly from particular legal solutions and partly from the unwritten, informal customs or patterns of behaviour of the so-called informal institutions.The article’s main thrust is to analyse selected informal institutions which were considered the most significant from the Russian corporate governance system point of view. These are, among others: the tendency not to obey the rights of minority shareholders, informal relationships of enterprises with authorities of various levels, and corruption. The author assumes that informal institutions decide upon the specificity of the corporate governance system in Russia and its particular elements, and upon the efficient functioning of supervisory mechanisms.

scholarly journals Editorial: An empirical contribution to corporate governance issues

2020 ◽  
Vol 17 (3) ◽  
pp. 4-6
Author(s):  
Áron Perényi ◽  
Simone Terzani
Keyword(s):  
Corporate Governance ◽  
Empirical Evidence ◽  
Financial Institutions ◽  
Business Management ◽  
Corporate Ownership ◽  
And Control ◽  
Empirical Contribution

The new issue of Corporate Ownership and Control journal is composed by 15 articles focussing on a variety of topics in the field. Five papers present empirical evidence from banks and financial institutions, three focus on firm finances, four on governance and responsibility and a further three on the role of technology in terms of contextualising various business management activities.

scholarly journals Governance and control of externalized water service management: Comparing solutions adopted in Italy and Sweden.

2011 ◽  
Vol 8 (3) ◽  
pp. 188-195
Author(s):  
Daniela Argento ◽  
Giuseppe Grossi ◽  
Anna Thomasson
Keyword(s):  
Corporate Governance ◽  
Comparative Analysis ◽  
Private Sector ◽  
Service Management ◽  
Water Services ◽  
Public And Private ◽  
Water Service ◽  
Public And Private Sector ◽  
And Control

In this paper the challenges imposed on corporate governance of water services in Italy and Sweden are analyzed and compared. From the comparative analysis we notice that with externalization of services ore stakeholders become involved in the provision of the services. These stakeholders have common as well as divergent interests and the challenges thus become to find an alignment of interest among stakeholders in order to secure a sustainable provision of the services. The comparative analysis indicates that such lignment is especially difficult when stakeholders have heterogenous background (public and private sector).

Impact of corporate governance on capital structure: mediating role of cost of capital

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Aisha Javaid ◽  
Mian Sajid Nazir ◽  
Kaneez Fatima
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Cost Of Capital ◽  
Stock Exchange ◽  
Institutional Ownership ◽  
Managerial Ownership ◽  
Content Type ◽  
Mediating Role ◽  
The Relationship

PurposeThis paper contributes to the existing literature by extending the empirical work on the relationship between corporate governance and capital structure by analyzing the mediating role of cost of capital in the non-financial firms listed on the Pakistan Stock Exchange (PSX).Design/methodology/approachThe sample for this study includes non-financial firms listed on the Pakistan Stock Exchange (formerly Karachi Stock Exchange) for the period of 2004–2016. Based on 1800 firm-year observations, three approaches of panel data analysis are applied for the step-wise analysis of the underlying study. Firstly, Pooled OLS is applied. Secondly, fixed and random effect panel regression followed by the Hausman test to check the unobservable individual heterogeneity of the data. Hausman test indicates that the fixed-effects model is the most appropriate model for the sample panel data.FindingsThe study's findings are that board size, board composition, CEO/Chair duality, institutional ownership and managerial ownership have statistically significant direct effect on the firm's financing decisions. However, CEO/Chair duality, institutional ownership and managerial ownership have significant indirect effect on firm's capital structure decisions. The interesting finding of the paper is on the evidence of mediating role of cost of capital in the nexus of corporate governance and capital structure. Moreover, some conventional determinants of capital structure, including the firm's size, asset structure of the firm, profitability, business risk and growth, are found as determinants of capital structure decisions of the firms.Research limitations/implicationsThere are a few limitations to our study which could be addressed by upcoming research. We did not include all the four mechanisms of corporate governance including board structure, audit structure, compensation structure and ownership structure. However, we used only five important attributes including board size, board composition and CEO/Chair duality form board structure, managerial ownership and institutional ownership form ownership structure of corporate governance as our explanatory variables to examine their impact on the capital structure choices of the firms. Future studies may fill this research gap by involving some other attributes of corporate governance and analyzing their effectiveness and impact on value relevant capital structure decisions. Further, due to limited time and resources, we only tested the mediating role of cost of capital, hence, future researchers can analyze the mediating and moderating roles of different variables which may influence the relationship between corporate governance and capital structure choices of the firms.Practical implicationsThe study has many valuable guidelines and practical implications for the financial managers of the corporations. Our results will facilitate the policymakers in setting their corporate governance policies and practices and making the value relevant capital structure decisions in compliance with the implications of corporate governance mechanism. In addition, our study provides the empirical evidence in accordance with the argument that good governance practices, particularly the voluntary disclosures by the firm may reduce the information asymmetry which, ultimately, reduces the agency cost and the cost of capital for the firm. However, while deciding the financial policy of the corporations, managers can use our findings in order to assess the effectiveness of corporate governance practices employed by the firm in achieving the optimal capital structure at which the weighted average cost of capital is at its minimum level.Originality/valueThis paper contributes to the literature by investigating the mediating role of the cost of capital in the relationship between corporate governance and capital structure decisions of the firms. This paper provides empirical evidence that corporate governance indirectly affects capital structure decisions through the mediating role of cost of capital.

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