scholarly journals Clean and Green – The Volkswagen Emissions Scandal: Failure of Corporate Governance?

2020 ◽  
Vol 15 (2) ◽  
pp. 33-39
Author(s):  
Stefan Poier ◽  
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Corporate Ethics ◽  
Management Ethics ◽  
Volkswagen Group ◽  
Board System

In 2014, a scandal involving fraud and power shook the Volkswagen Group with far-reaching consequences that are yet to be fully revealed. This article examines the Volkswagen emissions scandal in terms of corporate governance failure. After a chronological review of the events that led to this extraordinarily damaging revelation, the main differences between the American and the German board system are described. Although Germany’s two-tier board is often considered superior to the American board system, weaknesses in the area of corporate ethics and culture that led to the crisis in the Volkswagen case are identified. The particular constellation within the Volkswagen group and its ownership structure reveals failures in management ethics that led to a certain kind of behaviour among employees that was not explicitly mandated by the management but was, nevertheless, in its interest in regard to achieving company goals.

PENGARUH MEKANISME TATA KELOLA PERUSAHAAN TERHADAP KINERJA

2010 ◽  
Vol 6 (2) ◽  
pp. 125
Author(s):  
Eko Budi Santoso
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Agency Problem ◽  
Board Independence ◽  
Board Structure ◽  
Checks And Balances ◽  
Good Corporate Governance ◽  
Inverse Effect ◽  
Board System

Good Corporate Governance is a major issue dealing with agency problem. The purpose of this study is to analyse the development of good corporate governance in Indonesia. The result of the study show inverse effect between board structure and board independence towards performance. This difference indicates the need of good checks and balances mechanism. This study also explains the failure of two-tier board system as governance to sustain Indonesian companies during the crisis. Keywords:Corporate governance, ownership structure, board structure, board independence, two-tier board system.

The effect of the adoption of an alternative corporate governance system on firms’ performances

2016 ◽  
Vol 35 (4) ◽  
pp. 517-529 ◽  
Author(s):  
Carlo Bellavite Pellegrini ◽  
Bruno S. Sergi ◽  
Emiliano Sironi
Keyword(s):  
Corporate Governance ◽  
Propensity Score ◽  
Performance Outcomes ◽  
Corporate Law ◽  
Law Reform ◽  
Governance System ◽  
Content Type ◽  
Alternative System ◽  
The Impact ◽  
Board System

Purpose – Alternative corporate governance systems (CGSs) have attracted a significant bulk of research recently. While the connection between the adoption of an alternative system (one tier board or two tier board system) and firms’ performances has not been fully analysed yet, the purpose of this paper is to analyse whether companies which have turned into an alternative board system have eventually improved their performance over time. Design/methodology/approach – Using a sample of more than 15,000 Italian unlisted joint stock companies, the authors compare performance outcomes in 2009 of firms adopting alternative systems with performances of firms that maintained the system in force before the 2003 Corporate Law Reform (defined as “traditional”). Because of the choice of an alternative system (one tier or two tier board) instead of a traditional one is not random, the authors reduce selection bias implementing matching methods and comparing firms that are close in terms of propensity score measured in 2003 (the year before the new CGSs have been introduced by a corporate law reform). Findings – The authors do not find evidence of a significant improvement of performances in 2009 concerning those firms that have adopted a one tier or two tier board systems with respect to those which maintained a traditional one. Originality/value – The novelty of the study concerns the application of propensity score matching for the evaluation of the impact of the change of the CGS that is possible in presence of two conditions that are all verified in our setting: first, to have a country where corporate law allows for choosing among different systems; in this case Italy is a good laboratory, because it allows for the choice among three different systems; and second, to have the opportunity to evaluate the effect of the change in light of a relatively recent “pre-treatment” condition; this is made possible by the fact that before the 2003 Reform of corporate law all the companies had a traditional system.

Does audit committee substitute or complement other corporate governance mechanisms

2017 ◽  
Vol 32 (7) ◽  
pp. 658-681 ◽  
Author(s):  
Yousef Hassan ◽  
Rafiq Hijazi ◽  
Kamal Naser
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Audit Committee ◽  
Negative Relationship ◽  
Governance Mechanisms ◽  
Governance System ◽  
African Countries ◽  
Content Type ◽  
Board Characteristics ◽  
Corporate Governance Mechanisms

Purpose The purpose of this paper is to examine the relation between audit committee (AC) and a set of other corporate governance mechanisms in one of the emerging economies, United Arab of Emirates (UAE). In particular, the current study examines whether an effective AC can serve as a substitute or as a complement mechanism to board characteristics and ownership structure of Emirati listed non-financial companies. Design/methodology/approach Using substitution and complementary theories, a panel data from 48 nonfinancial companies listed on the UAE Stock Exchanges [Abu Dhabi Stock Exchange and Dubai Financial Market] during the period between 2011 and 2013 were used in the current study. A composite measure of four proxies has been used to measure the AC effectiveness, namely, AC size, independence, financial expertise and diligence. To test the hypotheses formulated for the study, a logistic regression model was used to identify the influence of a set of board characteristics and ownership structure variables on the effectiveness of the AC after controlling for firm size, auditor type, industry type and profitability. Findings While AC effectiveness appeared to be positively associated with board size and board independence, it is negatively associated with CEO duality. This points to a complementary governance relation. On the other hand, the negative relationship between AC effectiveness and each of institutional and government ownership suggests substitutive relations. Research limitations/implications The main shortcoming of the current study is that it examines the influence of a certain set of corporate governance factors on the effectiveness of AC. Other corporate governance mechanisms may, however, contribute to the effectiveness of AC. The findings of the study can be used by companies’ managements and regulators in the UAE to improve the corporate governance system. Originality/value To the best of researchers’ knowledge, this study provides the first evidence about the interaction among multiple governance mechanisms required by the code of corporate governance issued by the UAE Ministry of Economy in 2009. The current paper is expected to add to the limited AC literature in Middle East and North African countries in general and Arab World in particular.

The adoption of CSR practices in Egypt: internal efficiency or external legitimation?

2018 ◽  
Vol 9 (5) ◽  
pp. 642-665 ◽  
Author(s):  
Dina El-Bassiouny ◽  
Peter Letmathe
Keyword(s):  
Corporate Governance ◽  
Sample Size ◽  
Business Environment ◽  
Western World ◽  
Corporate Ethics ◽  
Corporate Accountability ◽  
Governance Mechanisms ◽  
Content Type ◽  
Corporate Governance Mechanisms ◽  
Internal Efficiency

Purpose This study aims to focus on the factors triggering the adoption of corporate social responsibility (CSR) practices in a developing country context. The authors examine whether the adoption of CSR practices is triggered more by internal efficiency forces or external legitimation forces. As early adoptions of new systems are more likely driven by efficiency motives, the authors argue that CSR practices in developing countries at nascent stages are more likely adopted for efficiency rather than legitimation reasons. Design/methodology/approach A cross-sectional sampling design was used to collect data on the CSR practices of top listed Egyptian firms and multinationals operating in Egypt. The sample size is selected based on a purposive criterion sampling method. The final sample size consists of 110 companies operating in Egypt, which includes 54 local and 56 multinational companies. To examine the relationship between the explanatory variables of the study and CSR, multiple regression analysis was used. Findings Using data from 110 top listed local companies and multinational firms operating in Egypt, the results show a significant influence of internal corporate governance on CSR. Yet, the effects of external factors, specifically legal regulations and stakeholder pressures, on CSR are perceived to be insignificant. This finding contrasts studies from industrialized countries in the Western world where firms are often motivated to invest in CSR by external forces. Practical implications The results indicate that the adoption of CSR practices in large firms in Egypt is driven more by internal efficiency gains rather than external legitimacy pressures. The study thus presses the need for the effective enforcement of governmental laws and regulations to strengthen external institutional pressures and demands for socially responsible behavior. Social implications The results of the study indicate a perceived absence of stakeholder pressure for CSR practices. As such, raising awareness for corporate accountability amongst Egyptian consumers, employees and the general public would increase corporate incentives to improve their social and environmental performance. In addition, the concept of CSR must be cultivated in the organizational culture where high value is placed on corporate ethics and managerial values. Originality/value This study provides insights about the predominant drivers of CSR in Egypt on two different levels; the organizational and the business environment. Salient links between CSR, internal corporate governance mechanisms and external drivers such as external stakeholder and legal pressures are explored. The results of the study also emphasize the importance of internal corporate governance mechanisms and how it is perceived to be the main driver of CSR in Egypt as opposed to external influences.

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