scholarly journals Family Control and Corporate Innovation in Stakeholder-Oriented Corporate Governance

2021 ◽  
Vol 13 (9) ◽  
pp. 5044
Author(s):  
Hideaki Sakawa ◽  
Naoki Watanabel
Keyword(s):  
Corporate Governance ◽  
Research And Development ◽  
Innovation Activity ◽  
Board Members ◽  
Publicly Traded ◽  
Family Control ◽  
Corporate Innovation ◽  
Main Bank ◽  
Publicly Traded Firms

This study investigates the effects of family control on corporate innovation activity in publicly traded firms in Japan under stakeholder-oriented corporate governance. In a sample of 14,991 firm-year observations in publicly traded firms in Japan during the period 2007 to 2016, we tested whether family owners or board members are enhancing research and development investments. While theoretical perspectives of principal–principal conflicts generally assume a negative relationship between family control and research and development intensity, we find a positive relationship, which supports the stewardship theory perspective. Additionally, we find that main bank ownership positively moderates the relationship between family control and research and development, suggesting that the main bank could affect the decision-making of family board members in the long-term. This result is supported by the close relationships between the main bank and client firms. Furthermore, our study reveals that the shareholder orientation of foreign shareholders suppresses family board members’ long-term orientation. We conclude that the exploitation presumed by principal–principal conflict perspectives has not been thoroughly investigated in Japan’s stakeholder-oriented corporate governance system.

Will Disclosure of Friendship Ties between Directors and CEOs Yield Perverse Effects?

2014 ◽  
Vol 89 (4) ◽  
pp. 1545-1563 ◽  
Author(s):  
Jacob M. Rose ◽  
Anna M. Rose ◽  
Carolyn Strand Norman ◽  
Cheri R. Mazza
Keyword(s):  
Corporate Governance ◽  
Research And Development ◽  
Board Members ◽  
Public Disclosure ◽  
Short Term ◽  
Ceo Bonuses

ABSTRACT: Our paper examines three related questions: Will directors who have friendship ties with the CEO manage earnings to benefit the CEO in the short term while potentially sacrificing the welfare of the company in the long term? Will public disclosure of friendship ties mitigate or exacerbate such behavior, and will disclosure of friendship ties influence investors' perceptions of director decisions? We conduct an experiment involving 56 active and experienced corporate directors from U.S. firms and a second experiment with M.B.A. students. We find that friendship ties caused directors to be more willing to approve reductions to research and development (R&D) expenses that cause earnings to rise enough to meet the CEO's minimum bonus target more often than when the directors and CEO were not friends. However, disclosing friendship ties resulted in even greater reductions in R&D expenses and higher CEO bonuses than not disclosing friendship ties. In a second experiment, we find that shareholders were more likely to agree with directors' decisions to approve cuts to R&D when friendship ties were disclosed. These findings have potentially important implications for corporate governance because they suggest that friendship ties between the CEO and board members can impair the directors' independence and objectivity, and that disclosure of the relationships can worsen this effect.

scholarly journals Founders Versus Descendants: Evidence Of The Taiwanese Publicly Traded Firms

2011 ◽  
Vol 1 (7) ◽  
Author(s):  
M. Monica Her ◽  
Thomas G. E. Williams
Keyword(s):  
Growth Potential ◽  
Board Members ◽  
Power Struggle ◽  
Minority Shareholders ◽  
Publicly Traded ◽  
Board Size ◽  
Family Control ◽  
Monitoring Mechanism ◽  
The Board Of Directors ◽  
Publicly Traded Firms

This study investigates the performance of founder-controlled firms vis--vis firms controlled by founders descendants and relatives among Taiwanese publicly traded firms. After adjusting for size, age, growth potential, financial leverage, and industry effects, we find that the Taiwanese descendant-controlled firms underperform the matching founder-controlled firms. In searching for the potential reasons, we find that the average board size for the descendant-controlled firms is significantly larger than that of the founder-controlled firms. In addition, the ratios of family-related supervisors and board members of the descendant-controlled firms are significantly higher than those of the matching founder-controlled firms. While the significantly larger board size suggests a potential power struggle between the controlling family and the non-family related board members, the stronger family domination in the board of directors and supervisors for the descendant-controlled firms provides room for entrenchment and tunneling. In light of the absence of large outside blockholders and relatively weaker legal protections, the minority shareholders of Taiwanese firms are dependent upon internal monitoring mechanisms to protect them from the expropriation of the controlling families. However, our results indicate that family control has undermined the internal monitoring mechanism of the Taiwanese descendant-controlled firms.

Family Control, Socioemotional Wealth and Earnings Management in Publicly Traded Firms

2014 ◽  
Vol 133 (3) ◽  
pp. 453-469 ◽  
Author(s):  
Geoffrey Martin ◽  
Joanna Tochman Campbell ◽  
Luis Gomez-Mejia
Keyword(s):  
Earnings Management ◽  
Publicly Traded ◽  
Socioemotional Wealth ◽  
Family Control ◽  
Publicly Traded Firms

Protecting Long-term Commitment

2018 ◽  
Author(s):  
Kevin Levillain ◽  
Simon Parker ◽  
Rory Ridley-Duff ◽  
Blanche Segrestin ◽  
Jeroen Veldman ◽  
...  
Keyword(s):  
Corporate Governance ◽  
Board Members ◽  
Multiple Time ◽  
Credible Commitment ◽  
Open Model ◽  
Time Horizons ◽  
Modern Corporation ◽  
Organizational Structuring ◽  
Multiple Constituencies

Growing attention is being paid to the benefits of considering the long-term interests of multiple constituencies in corporate governance. A theory of the corporation where fiduciary duties of directors point to the legal entity and not to its shareholders goes beyond a pure prioritization of shareholders’ interests. However, the notion that board members mediate the interests of all constituencies fails to account for a ‘positive’ conception of corporate purpose and underlying asymmetries in allocations of rights between stakeholders. Addressing corporate governance as a fundamentally ‘open’ model for organizational structuring, we engage with a variety of legal mechanisms that can be used to implement and protect a positive purpose for the modern corporation and to protect the conditions of credible commitment to manage the company for the interest of corporate constituencies, to commit the corporation to a social or environmental purpose and to take into account multiple time-horizons.

The Exploratory Mindset and Corporate Innovation

2020 ◽  
pp. 1-43
Author(s):  
Zhaozhao He ◽  
David Hirshleifer
Keyword(s):  
Research And Development ◽  
Chief Executive Officer ◽  
Stock Prices ◽  
Operating Performance ◽  
Chief Executive ◽  
Market Reactions ◽  
Managerial Incentive ◽  
Corporate Innovation ◽  
Long Run

Abstract We propose that chief executive officer (CEO) exploratory mindset (inherent desire to search for novel ideas and long-term orientation) promotes innovation. Firms with CEOs with PhD degrees (PhD CEOs) produce more exploratory patents with greater novelty, generality, and originality. PhD CEOs engage less in managing earnings and stock prices, invest more in research and development (R&D) and alliances, generate higher long-term value of patents, and experience more positive market reactions to R&D alliances. Their firms achieve superior long-run operating performance. They tend to be hired by research-intensive firms with poor financial performance. Evidence from managerial incentive shocks and turnovers suggests that these effects do not derive solely from CEO–firm matching.

scholarly journals The Impact of Corporate Governance on Stock Price and Trade Volume

2016 ◽  
Vol 6 (2) ◽  
pp. 27 ◽  
Author(s):  
Wafaa Salah Mohamed ◽  
May M. Elewa
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Stock Prices ◽  
Stock Price ◽  
Trading Volume ◽  
Stock Exchange ◽  
Trade Volume ◽  
Publicly Traded ◽  
Publicly Traded Firms ◽  
The Impact

The purpose of this paper is to investigate whether corporate governance is associated with stock prices and trade volume for 62 publicly traded firms on the Egyptian Stock Exchange during 2007-2014. The authors hypothesize that firms with strong corporate governance have a significant impact on stock prices and trade volume. To examine the associations, a multiple regression analysis is used. Consistent with the first hypothesis, this study finds firms with strong corporate governance have a significant impact on stock prices while has no significant impact on trade volume. Findings indicate that quality of corporate governance can affect firms' stock price while trading volume is not affected by the strength of corporate governance. The results suggest that Egyptian firms should improve their corporate governance as it has a significant effect on firms’ value. Also, providing diverse sources of financial information other than the financial statements and to ensure the presence of high-quality financial reporting and strong investor protection. This study is carried on non-financial firms only. This research is important to regulators and standard setters as it shows the information that affects investors’ decisions and the importance of its disclosure. It pays attention of standard setters for setting a corporate governance framework for improving the level of disclosures of publicly traded firms in Egypt.

scholarly journals Effects of Corporate Profitability and Growth on the Shareholding Strategies of Banks: Evidence from Japan

2020 ◽  
Vol 12 (9) ◽  
pp. 83
Author(s):  
Kazuhiko Kobori
Keyword(s):  
Corporate Governance ◽  
Regression Analysis ◽  
Financial Institution ◽  
Growth Potential ◽  
Client Firm ◽  
Main Bank ◽  
Product Creation ◽  
Corporate Profits ◽  
Operating Company

This study scrutinised whether the profitability indexes of firms and the costs associated with product creation as reflections of growth potential affect the percentage of shareholding that Japanese banks acquire from Japanese client companies. To this end, multiple regression analysis was conducted on a sample of 302 firms on which 2,231 observations were made over the fiscal years 2006 to 2015. The findings indicated that the principle of shareholding alone does not drive banks to secure shares in client companies. Instead, the standard that prompts share acquisition is whether management is efficiently operating company business. The implication of this study is that a bank’s shareholding strategy requires client companies to implement management with an awareness of corporate governance, whose significance lies in advancing the realisation of returns from corporate activities by lenders and/or shareholders. In other words, banks are motivated to hold shares when client companies are highly profitable and efficient. Even under these conditions, a bank carries on serving as the financial institution with which a client company is primarily affiliated. As a main bank, a given financial institution seems to consider the pursuit of long-term corporate profits through the research and development of a client firm. However, whether banks will continue to seek such profits from client companies is doubtful.

Corporate Governance and Family-owned Companies

2018 ◽  
Author(s):  
Prem Sikka
Keyword(s):  
Corporate Governance ◽  
Agency Theory ◽  
Ownership Structure ◽  
Agency Problems ◽  
Board Members ◽  
Socially Responsible ◽  
Shareholder Capitalism ◽  
And Control

It is often claimed that the ownership structure and the close involvement of family members alleviates agency problems and gives them a long-term orientation compared to a corporation with dispersed shareholding and control. Through a case study relating to the demise of BHS, one of the biggest UK retailers, the chapter probes these claims. BHS was an epitome of shareholder capitalism. It was owned and controlled by Sir Philip Green and his family. The control enabled the Green family to extract large amounts of cash from BHS through dividends and complex intragroup transactions, with virtually no questions from board members, regulators or auditors. The flawed corporate governance of BHS inflicted considerable hardship on other stakeholders. The demise of BHS should encourage reflections on the claims (agency theory) that an alignment of the interests of shareholders and directors somehow leads to better governance and socially responsible management.

Corporate Governance, the Craft Brew Alliance, and A-B

2020 ◽  
pp. 299-326
Author(s):  
Neil Maltby
Keyword(s):  
Corporate Governance ◽  
Publicly Traded ◽  
Craft Beer ◽  
Public Market ◽  
Governance Challenges ◽  
Publicly Traded Firms ◽  
Market Expectations ◽  
Equity Policy ◽  
Over Time

The Craft Brew Alliance (CBA) resulted from the merger of two well-known craft brewers: Redhook Ale Brewery Inc and Widmer Brothers Brewing Co. The CBA was listed on the NASDAQ and the largest shareholder was Anheuser-Busch (A-B). This shareholder relationship violated the Brewers Association equity policy. At the heart of the dispute was the vision of the craft beer movement and disagreement about how brewers should be owned and governed. This chapter examines the corporate governance of one “craft” beer company and analyzes how, over time, this firm’s governance put it at odds with the culture of the industry in which it operated. The ultimate goal of this chapter is to understand the corporate governance challenges of publicly traded firms operating in craft culture, as such firms operate at a crossroads of artisanal tradition and public market expectations.

Some implications of voucher privatization for corporate governance

1998 ◽  
Vol 7 (1) ◽  
Author(s):  
Marie Bohatá
Keyword(s):  
Corporate Governance ◽  
World Economy ◽  
Board Members ◽  
Voucher Scheme ◽  
Publicly Traded ◽  
The Czech Republic ◽  
Face To Face ◽  
Economies In Transition ◽  
State Enterprises ◽  
Structured Questionnaire

This article focuses on the way Czech joint stock companies are governed and monitored. At first, it analyses implications of voucher privatisation for corporate governance and then explains the main features of its model applied in the Czech Republic (CR). It summarises results of an empirical research and a survey among 77 board members of large companies operating in the CR. The survey, which used face to face interviews based on a structured questionnaire, was accomplished in spring 1997. In the CR, the transformation of former state enterprises is characterised by their privatisation, as well as their search for a place in a globalise world economy. The emphasis placed on privatisation in the CR was unique compared to other economies in transition. The voucher scheme, which became a massive privatisation method, led to the emergence of a large number of publicly traded joint stock companies.

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