The Impact of Mutuality on Ownership

Chapter 17 describes how the concept of mutuality extends well beyond that of mutually owned businesses. Mars itself is entirely owned by the Mars family. Many of the companies described in the book are stock corporations with external shareholders. One of the ways in which family firms can retain a focus on the common purpose of the business after the family has withdrawn or sold out to other shareholders is through ‘industrial foundations’ that confer a substantial fraction of the ownership of firms on foundations. These are particularly commonplace in Denmark and Germany, and some of the most successful companies in the world, such as the shipping company Maersk and the media firm Bertelsmann have these ownership forms. The principle of the Economics of Mutuality is about aligning the interests of diverse parties to a common purpose. This can be adopted in companies with any type of ownership but where it takes the form of, for example, mutuals or foundations, then it creates a commitment to the common purpose that may not be observed to the same degree elsewhere.

Climate change and organizational management: toward a new paradigm

PurposeThe purpose of this paper is to tackle the grand issue of climate change in a managerial perspective by proposing a new type of management.Design/methodology/approachClimate change has now been debated for many years, and in spite of different viewpoints, analyses and opinions, is a phenomenon that is accepted by all. There are thousands of studies on the nature of climate change and its consequences on the planet Earth and its inhabitants. However, there are few studies investigating the consequences of climate change on the founding tenets and practices of management. This paper aims to contribute to this facet of the issue. In the first part, it examines the main facts about climate change, their impact on businesses and proposes an adapted model of management for agriculture, industry, services and supply chains. In the second part, it advocates a shift in paradigm from the “maximization of profit” to the “maximization of well-being” as the foundation of a new managerial philosophy that can both address climate change and sustainability.FindingsCompanies and managers are in a much better position than politicians and consumers to find a solution to climate change problems for the very reason that they are not stupid in Cipolla's (2011) sense. Companies and managers do have the power to rewrite the rules of the game in order to get to a firm and management metamorphosis. Starting from a return to company ownership by and for the company itself (not just external shareholders), a switch in purpose from profit-seeking to people's well-being, fair remuneration of stakeholders, progress as a measure of success and long-term orientation are suggested as new tenets in management.Research limitations/implicationsAlthough this paper has several limitations (it may be too wide in scope, utopian, its ideas may sound unachievable and even sometimes naïve in their arguments), its starting point is very clear: the authors, as management scholars, must do something to try and stop the crash of economies and businesses in an ecological disaster. And its logic is very clear and straightforward as well: if people want things to change, then they have to change the foundations of management thinking, both in theory and in practice. The authors do not claim their solution is the only one or the best: avenues for future research aimed at providing better solutions are wide open from this point of view, and the authors genuinely encourage colleagues to continue in this direction and contribute to this work. What matters most, however, is to stop looking for precise answers to “wrong, well-defined, narrow problems” and to start looking for “approximate answers to important problems” (Brown et al., 2005) as the authors tried to do here.Practical implicationsDeveloping a new management operating model and foundations able to keep companies alive while not compromising mankind survival on planet Earth.Originality/valueThis paper addresses the Tourish (2020) challenge for purposeful research in management by providing some fresh ideas about the way companies and management principles and practices should change to prevent irreversible environmental damages.

Impact of Private Equity Trading Platforms on Firm Value and Corporate Governance

This study presents a theoretical model to analyze the effect of private equity trading platforms, which have recently experienced rapid growth, on the investment decisions of unlisted companies. As the value of unlisted companies has soared, demand for these stocks has increased. Accordingly, platforms for the brokerage of private stock transactions are being activated. We find that these platforms increase the liquidity in the unlisted stock market by easing regulations on trading of these stocks, further enhancing the firm values and corporate governance of the corresponding firms. In addition, a significant number of unlisted companies are family-owned, in which a manager is also a blockholder. Our study therefore constructs a framework based on a market microstructure model to analyze the impact of unlisted stock trading platforms. In the case of an unlisted firm, a potential dual agency problem exists where the manager, who is also a blockholder, invests less than the external shareholders’ profit-maximizing levels. We find that managers have the incentives to increase firms’ investment when the liquidity in the unlisted stock market improves with the growth of the private equity trading platform, implying that these platforms potentially enhance corporate governance of unlisted companies and promote their growth.

Share Repurchase As the Instrument of the Management of the Capital of the Company

The joint-stock company is a participant in the primary stock market, primarily as an issuer of shares and bonds. However, in the event of the repurchase of its shares, the joint-stock company may also act as a specific participant in the secondary market. When buying its own shares, the joint-stock company is turning into a specific type of investor and speculator in the stock market, and the shares it purchases form a redemption issue portfolio that requires proper management, as well as an investment portfolio. Share repurchases may have economic, “technical” and even political and social reasons. Repurchased shares may relate to a group of treasury shares or a group of quasi-treasury shares. The existence of quasi-treasury shares means that there is an opportunity in which it is not external shareholders who control the joint-stock company but the company's top management, which is no longer under the control of the shareholder group.

Short-term management earnings forecasts and earnings management through real activities manipulation

Purpose The purpose of this paper is to investigate the association between managers’ short-term, quarterly earnings forecast characteristics and earnings management through real activities manipulation. Design/methodology/approach Using a propensity-score matched sample from 2000 to 2015, the author examines whether, compared to non-issuers, firms issuing short-term earnings forecasts exhibit abnormal levels of earnings management through the manipulation of real activities such as acceleration of sales, changes in shipment schedules and delaying R&D and maintenance expenditures. Findings The finding of this study suggests that firms actually engage in less real activities manipulation when they provide short-term management earnings forecasts. This result does not support the practitioners’ criticism that providing short-term management earnings forecasts increases earnings management. Instead, it suggests that providing management earnings forecasts can reduce information asymmetry between managers and external shareholders, thereby constraining managers’ opportunistic behaviors. Originality/value Practitioners have expressed concerns that issuing earnings forecasts may foster managerial myopia, therefore, increasing earnings management. However, recent empirical study found evidence that management earnings forecast mitigates accrual-based earnings management, which is inconsistent with practitioners’ view. This study hence aims to provide timely evidence to this debate by examining the relation between management earnings forecasts and real activities manipulation.

Applications of good corporate governance relating to shareholders, commissioners, and directors of limited liability companies in Indonesia

This critical analysis seeks to explore the inclusivity and feasibility of the legal application of organizational governance principles related to limited liability companies (LLCs) in Indonesia, which are considered essential pillars of Indonesia’s economic stability. The investigators employed the non-probability purposive sampling to select 150 study participants from a population of 250 administrative panel members working in PT Bank Rakyat Indonesia and PT Bank Mandiri. Structured and semi-structured questionnaires were constructed and distributed online through emails. The subjects’ responses were coded manually, using the NVivo software for ease of analysis. The result showed that (1) 84.5% of participants believed that ineffective relationship building approaches, corruption, and inadequate information disclosure mechanisms among internal and external shareholders formed the main challenges to implementation of corporate governance principles in Indonesian LLCs, (2) 97.8% of the respondents believed the Indonesian Company Law (ICL) had achieved significant milestones in guiding the application of sound corporate governance principles by explicitly outlining the roles and responsibilities of stakeholders and providing sufficient protection for minority stakeholders, and (3) 78% of participants agreed that the ICL has introduced and reinforced critical rights and protections to shield shareholders from unfair regulations internally formulated by a company. In its findings, the investigation confirmed that poorly structured information sharing systems, fraud, and ineffective relationship building were the main factors that contributed to current inadequacies. 84.5% of the respondents believed that ineffective relationship building approaches, corruption, and inadequate information disclosure mechanisms among internal and external shareholders formed the main challenges, trends, and issues to the implementation of corporate governance principles in Indonesian LLCs. The study also confirmed that the implementation of GCG related legislations had reinforced the professional duties and obligations of stakeholders, alongside offering legal protections for minority business actors.

PENGARUH KONSENTRASI KEPEMILIKAN DAN KOMPETENSI DEWAN KOMISARIS PADA KONSERVATISMA AKUNTANSI

Tujuan penelitian ini untuk menguji pengaruh konsentrasi kepemilikan dan kompetensi dewan komisaris pada konservatisme akuntansi. Konsentrasi kepemilikan diproksikan dengan kepemilikan substansial oleh pemegang saham internal dan kepemilikan oleh pemegang saham eksternal. Kompetensi dewan komisaris di proksikan dengan kompetensi spesifik perusahaan. Populasi adalah seluruh perusahaan manufaktur yang terdaftar di Bursa Efek Indonesia periode 2013 dan 2014. Sampel ditentukan berdasarkan metoda probability sampling dengan teknik stratified random sampling. Jumlah sampel yang dianalisis sebanyak 120 amatan. Data yang dianalisis adalah data sekunder, dikutip dari laporan tahunan perusahaan sampel. Teknik regresi linear berganda digunakan untuk menganalisis data. Hasil penelitian menunjukkan bahwa konsentrasi kepemilikan pada pemegang saham internal berpengaruh negatif pada tingkat konservatisma akuntansi. Konsentrasi kepemilikan pada pihak eksternal berpengaruh negatif pada tingkat konservatisma akuntansi. Kompetensi spesifik perusahaan anggota dewan komisaris, kompetensi dibidang akuntansi/keuangan anggota dewan komisaris dan kompetensi tata kelola perusahaan tidak berpengaruh pada konservatisme akuntansi.The purpose of this study is to examine the effect of concentration of ownership and the competence of the commissioners on accounting conservatism. Concentration of ownership is proxied by substantial ownership by internal shareholders and ownership by external shareholders. The competence of the board of commissioners in proxied by the company's specific competence, competence commissioners in accounting or finance and competence in corporate governance. Accounting conservatism measured by accrual models. The population is all companies listed on the Indonesian Stock Exchange in 2013 and 2014. The sample period is determined based on probability sampling method with stratified random sampling technique. The number of samples analyzed a total of 120 observations. The analyzed data is secondary data, taken from the company's annual report samples. Multiple linear regression techniques were used to analyze the data. The results showed that the concentration of ownership on internal shareholders negative effect on the level of accounting conservatism. The concentration ofexternal ownership have negative effect on the level of accounting conservatism. The company-specific competencies commissioners, competence in the field of accounting / finance commissioners and competence of corporate governance has no effect on accounting conservatism

Valuing Subscription-Based Businesses Using Publicly Disclosed Customer Data

The growth of subscription-based commerce has changed the types of data that firms report to external shareholders. More than ever, companies are discussing and disclosing information on the number of customers acquired and lost, customer lifetime value, and other data. This has fueled an increasing interest in linking the value of a firm's customers to the overall value of the firm, with the term “customer-based corporate valuation” being used to describe such efforts. Although several researchers in the fields of marketing and accounting have explored this idea, their underlying models of customer acquisition and retention do not adequately reflect the empirical realities associated with these behaviors, and the associated valuation models do not meet the standards of finance professionals. The authors develop a framework for valuing subscription-based firms that addresses both issues, and they apply it to data from DISH Network and Sirius XM Holdings.

Structure of Board of Directors and Company’s Performance

The formation of shareholders or a board of directors’ structure is considered one of the important issues of corporate governance that impact on the motivation of managers. We shall consider that the impact of a board of directors’ ownership structure on the performance and productivity of corporate governance is a multidimensional and complicated issue. For this reason, we can expect all kinds of conflicts and contradictions of interests among people and groups, including conflicts of interest among owners and managers, shareholders and creditors, real and legal shareholders, internal and external shareholders etc. In this regard, there is extensive research about the impact of a board of directors’ ownership and managers on the performance and the value of a company within different countries and researchers have achieved different results and conflicts. Regarding a lot of research in this field, this research by using a descriptive-analytical method has studied the impact of a board of directors’ structure and features on the performance of corporate governance within companies listed on the Tehran stock exchange. The results indicate that there is a positive and significant relationship between CEO duality and a company’s performance, also there is no significant relationship between a board of directors’ adherence and a company’s performance.

Corporate Governance And Directors’ Remuneration In Selected ASEAN Countries

This paper briefly discusses the corporate governance and directors’ remuneration as being practiced by five different ASEAN countries i.e. Singapore, Malaysia, Indonesia, Philippines, and Thailand. Governance is about how an entity is being directed and controlled, while corporate governance is about a system, procedure or mechanism of balancing between directing and controlling business entities’ internal matters and the demand of their external shareholders and stakeholders. The paper summarizes the development of corporate governance and directors’ remuneration in these countries. An attempt has also been made to highlight issues regarding the need of disclosure of individual director’s remuneration, the need of shareholders’ approval on directors’ remuneration, the need of shareholders’ approval on stock based incentive plan, approval of directors’ remuneration by a committee at board level, the separation of role of the Chairmen of Board of Directors and Chief Executive Officers, and the recommended maximum length of period offered to directors. It later focuses on the progress made by these countries in further uplifting their corporate governance practices. The paper also examines some arising pertinent and puts forth some recommendations on how the future direction of the development of corporate governance in ASEAN countries with respect to directors’ remuneration shall take shape.