Business Commons^™

Impact Measurement And Standards, Angeline Chua, Hao Liang, Wanyi Yang

Research Collection Lee Kong Chian School Of Business

Despite rapid economic growth and increasing interest in impact investment worldwide, less attention has been paid to the question of whether this growth is sustainable for people and the planet. In an ideal scenario, growth would happen within planetary and social boundaries. However, current financial value is often prioritised and achieved at cost to society and the environment. For example, small farmers in Indonesia have long practised slash-and-burn agriculture, and in recent decades large companies have industrialised the practice. The peatland blazes in Indonesia release smoke and large amounts of greenhouse gases, which impact both Indonesia itself, and neighbouring countries …

How A Supply Chain Stumble Changes A Company’S Policies And Progress 20 Years Later: A Case Study Of Gap Inc., Alexandra Futterman

CMC Senior Theses

Gap Inc. is the third-largest American retailer. Founded in 1969, Gap Inc. holds four brands, Gap, Banana Republic, Old Navy and Athleta. In the late 1990s and early 2000s Gap Inc. made headlines for child labor abuses along with many other large brands. After this negative attention, Gap Inc. began developing policies and practices to combat ethical supply chain issues. These policies included a Human Rights Policy, a Code of Vendor Conduct, working conditions standards, and even capacity building programs that boarded company reaches into communities they touch. In conjunction with the policies Gap Inc. has published several social responsibility …

Interlocking Directorates Among The S&P 500: Social Networks, Gender Diversity, And Corporate Governance, Eric P. Magistad

School of Business Student Theses and Dissertations

This multi-article investigation examines corporate board composition and the implications for regulatory penalties. Director diversity on key board committees and board interlocks influence board behaviors as they relate to regulatory risk. Directors bring experience and inter-industry ties to a board position and subsequently transfer and receive specific knowledge, practices, and contacts with other directors (Hillman & Haynes, 2010). Despite this exchange, firms may suffer regulatory oversight penalties because different directors perceive and respond to risk differently (Douglas & Wildavsky, 1983; Flynn et al., 1994). Leveraging the tenets of the cultural theory of risk perception (Douglas & Wildavsky, 1983) and of …

The Mediating Effect Of Strategic Posture On Corporate Governance And Environmental Reporting, Abdalla Shwairef, Azlan Amran, Mohammad Iranmanesh, Noor Hazlina Ahmad

Research outputs 2014 to 2021

The aim of this study is to explain how corporate governance affects environmental reporting through the mediating effect of strategic position. The data were collected from chief executive managers and chief financial managers of 197 large companies in Malaysia. The partial least squares technique was used to test the proposed relationships. The results show that managers’ strategic posture mediates the impact of four aspects of corporate governance, namely, board size, board independency, CSR committee presence, and institutional ownership on environmental reporting. These findings extend the literature on the relationship between corporate governance and environmental reporting by providing insight into the …

The “Value” Of A Public Benefit Corporation, Jill E. Fisch, Steven Davidoff Solomon

All Faculty Scholarship

We examine the “value” a PBC form provides for publicly-traded corporations. We analyze the structure of the PBC form and find that other than requiring a designated social purpose it does not differ significantly in siting control and direction with shareholders. We also examine the purpose statements in the charters of the most economically significant PBCs. We find that, independent of structural limitations on accountability, these purpose statements are, in most cases, too vague and aspirational to be legally significant, or even to serve as a reliable checks on PBC behavior. We theorize, and provide evidence, that without a legal …

Why We Need A Theory Of Stakeholder Governance - And Why This Is A Hard Problem, John Amis, Jay Barney, Joseph T. Mahoney, Heli Wang

Research Collection Lee Kong Chian School Of Business

Corporate governance is an important topic for both scholars and practicing managers. To date, most work on this subject has focused on how to resolve potential conflicts of interest between a firm’s senior managers and its shareholders in how firms create and distribute economic value. Work on using governance to resolve possible conflicts between senior managers and shareholders has largely developed separately from governance questions focused on the broader relationships between a firm and its multiple stakeholders.This is ironic since some of the earliest work on agency theory conceptualized a firm as “a nexus for a set of contracting relationships …

Covid-19 And Japanese Shareholder Activism: Brief Respite For Japan's Self-Healing Concrete, Toru Yoshikawa, Gavin Chua

Research Collection Lee Kong Chian School Of Business

Extrapolating from modern international understanding of corporate Japan’s distinct form of managerial capitalism, we elaborate on the growing momentum of shareholder activism in Japan leading up to the COVID-19 health crisis, so as to inform the subsequent discussion on the relevant primary considerations that belie the future direction of shareholder activism in Japan post-COVID-19. On an initial logical extrapolation, it appears probable that COVID-19 could mark the peak of Japanese activism. However, it is crucial to acknowledge that the success of Japan’s managerial capitalism have also declined, which poses a question on to which direction Japanese corporate governance may be …

Uber, Jeffrey S. Harrison, Bryant Holden, Kelli Mckenna, Scott Mcquiddy, Alex Wiles

Robins Case Network

Uber focuses primarily on the ride-hailing industry, which puts the company in direct competition with regular taxis. The company is like a lot of tech-driven, fast growing entrepreneurial firms in that it still struggles for profitability. Also, the popularity of this new form of transportation has put the company and its close competitors, such as Lyft, in the spotlight of government lawmakers and regulators. If they classify Uber drivers as employees rather than independent contractors, it could dramatically alter the Uber business model. This case is written in the aftermath of the ouster of one of the company’s co-founders as …

Political Ideology Of The Board And Ceo Dismissal Following Financial Misconduct, Uisung Park, Warren Boeker, David Gomulya

Research Collection Lee Kong Chian School Of Business

Why do some boards refuse to take serious action against CEOs who have committed financial misconduct? Past work has directed attention to the antecedents of misconduct while largely overlooking this question. The relatively few studies to examine it have typically revolved around the capacity of boards to take action, or their relationships to their CEOs. This study instead examines how the beliefs and values held by board members can influence their actions following financial misconduct. Focusing on political ideology, we argue and find that politically conservative boards are more likely to respond by dismissing the CEO than are liberal boards. …

How Do Board Ties Affect The Adoption Of New Practices? The Effects Of Managerial Interest And Hierarchical Power, Toru Yoshikawa, Jung Wook Shim, Chang Hyun Kim, Anja Tuschke

Research Collection Lee Kong Chian School Of Business

Research Question/Issues: Most extant literature implicitly equates obtaining information through board interlocks to acting on the information. We investigate triggers that help to translate the information into action. In addition to exposure to the information by board interlocks, we suggest that the self-interest of the individuals who create these ties and hierarchical power of interlinked firms determines the likelihood of taking actions of adopting new practices. Research Findings/Insights: Using the action of adopting two distinctive governance practices, stock option pays or board reform, we find that sent ties and received ties affect the adoption decisions differently. Whereas sent ties reflect …

Public Governance, Corporate Governance, And Firm Innovation: An Examination Of State-Owned Enterprises, Nan Jia, Kenneth G. Huang, Cyndi Man Zhang

Research Collection Lee Kong Chian School Of Business

We examine how corporate and public governance shape an important type moral hazard in innovation which is that agents pursuing the quantity of innovation at the expense of the novelty. We theorize that both better corporate governance tools that regulate agents (including better alignment of agents’ private incentives and stronger monitoring), and higher-quality public governance that regulates the principals of state-owned enterprises (SOEs) reduce this moral hazard. Furthermore, we argue that higher-quality political governance enhances the functioning of better corporate governance tools in further reducing this moral hazard in innovation, thus creating interdependence. We test our theory in the context …

Corporate Governance Deviance, Ruth V. Aguilera, William Q. Judge, Siri A. Terjesen

Management Faculty Publications

We develop the concept of corporate governance deviance and seek to understand why, when, and how a firm adopts governance practices that do not conform to the dominant governance logic. Drawing on institutional theory, coupled with both the entrepreneurship and corporate governance literature, we advance a middle-range theory of the antecedents of corporate governance deviance that considers both the institutional context and firm-level agency. Specifically, we highlight the centrality of a firm's entrepreneurial identity as it interacts with the national governance logic to jointly create corporate governance discretion (i.e., the latitude of accessible governance practices) within the firm. We argue …

When Elites Forget Their Duties: The Double-Edged Sword Of Prestigious Directors On Boards, Jana Oehmichen, Daniel Braun, Michael Wolff, Toru Yoshikawa

Research Collection Lee Kong Chian School of Business

Previous research indicates that the performance effect of prestigious directors is ambiguous. Our study addresses this issue by integrating the theoretical lens of board capital and the institutional perspective. We argue that prestigious directors can bring benefits as well as costs. We claim that the emergence of these costs depends on the institutional context, specifically the institutional characteristics of the country's corporate elite circle which is characterized by the elite cohesion and the elite exclusiveness. Our empirical results with a 15-country sample covering the period of 2005 to 2014 provide evidence for the overall existence of a positive performance effect …

How Corporate Governance Is Made: The Case Of The Golden Leash, Matthew D. Cain, Jill E. Fisch, Sean J. Griffith, Steven Davidoff Solomon

Steven Davidoff Solomon

This Article presents a case study of a corporate governance innovation—the incentive compensation arrangement for activist-nominated director candidates colloquially known as the “golden leash.” Golden leash compensation arrangements are a potentially valuable tool for activist shareholders in election contests. In response to their use, several issuers adopted bylaw provisions banning incentive compensation arrangements. Investors, in turn, viewed director adoption of golden leash bylaws as problematic and successfully pressured issuers to repeal them. The study demonstrates how corporate governance provisions are developed and deployed, the sequential response of issuers and investors, and the central role played by governance intermediaries—activist investors, institutional …

The Evolution Of Ownership Structure In Japanese Firms (1962-2012), Jungwook Shim, Toru Yoshikawa

Research Collection Lee Kong Chian School Of Business

In this chapter, we investigate the evolution of ownership structure and corporate governance in Japanese firms based on the entire population of listed firms from 1962 to 2012.

Hedge Fund Activism, Poison Pills, And The Jurisprudence Of Threat, William W. Bratton

All Faculty Scholarship

This chapter reviews the single high profile case in which twentieth century antitakeover law has come to bear on management defense against a twenty-first century activist challenge—the Delaware Court of Chancery’s decision to sustain a low-threshold poison pill deployed against an activist in Third Point LLC v. Ruprecht. The decision implicated an important policy question: whether a twentieth century doctrine keyed to hostile takeovers and control transfers appropriately can be brought to bear in a twenty-first century governance context in which the challenger eschews control transfer and instead makes aggressive use of the shareholder franchise. Resolution of the question …

Leveraging Foreign Institutional Logic In The Adoption Of Stock Option Pay Among Japanese Firms, Xuesong Geng, Toru Yoshikawa, Asli M. Colpan

Research Collection Lee Kong Chian School Of Business

We investigate why Japanese firms have adopted executive stock option pay, which was developed with shareholder-oriented institutional logic that was inconsistent with Japanese stakeholder-oriented institutional logic. We argue that Japanese managers have self-serving incentives to leverage stock ownership of foreign investors and their associated institutional logic to legitimize the adoption of stock option pay. Our empirical analyses with a large sample of Japanese firms between 1997 and 2007 show that when managers have elite education, high pay inequality with ordinary employees, and when firms experience poor sales growth, foreign ownership is more likely associated with the adoption of stock option …

How Corporate Governance Is Made: The Case Of The Golden Leash, Matthew D. Cain, Jill E. Fisch, Sean J. Griffith, Steven Davidoff Solomon

All Faculty Scholarship

This Article presents a case study of a corporate governance innovation—the incentive compensation arrangement for activist-nominated director candidates colloquially known as the “golden leash.” Golden leash compensation arrangements are a potentially valuable tool for activist shareholders in election contests. In response to their use, several issuers adopted bylaw provisions banning incentive compensation arrangements. Investors, in turn, viewed director adoption of golden leash bylaws as problematic and successfully pressured issuers to repeal them.

The study demonstrates how corporate governance provisions are developed and deployed, the sequential response of issuers and investors, and the central role played by governance intermediaries—activist investors, institutional …

Institutional Change Versus Resilience: A Study Of An Incorporation Of Independent Directors In Singapore Banks, Lai Si Tsui-Auch, Toru Yoshikawa

Research Collection Lee Kong Chian School Of Business

We examine how Anglo-American capital market logic penetrated into Singapore where relational logic tends to guide business activities and illustrate how domestic banks reacted to this imported logic in the corporate governance field. We argue that the banks’ ability to accommodate competing logics was enhanced by state agencies’ willingness to modify Anglo-American standards to fit the local context. Given the resulting institutional ambiguities in rules, local banks, while incorporating higher outside representation on their boards, reinterpreted the meaning of independence and emphasized the resource provision role rather than the monitoring function of outside directors. The resultant institutional change has been …

Stewardship In The Interests Of Systemic Stakeholders: Re-Conceptualizing The Means And Ends Of Anglo-American Corporate Governance In The Wake Of The Global Financial Crisis, Zhong Xing Tan

Journal of Business & Technology Law

No abstract provided.

Shareholder Influence Over Director Nomination Via Proxy Access: Implications For Agency Conflict And Stakeholder Value, Joanna Tochman Campbell, T. Colin Campbell, David G. Sirmon, Leonard Bierman, Chris S. Tuggle

Department of Management: Faculty Publications

Corporate governance research indicates that corporate boards of directors may be overly beholden to management, which can be detrimental to firm value creation. Drawing upon agency theory and the governance law literature, we examine the effects of a new SEC rule designed to lessen managerial power by increasing large, long-term shareholders’ influence in the director nomination process. We predict and find support for a positive overall market reaction to the rule’s announcement as well as a greater reaction for firms with characteristics that suggest compromised board independence or greater CEO control. Moreover, we examine the implications of greater shareholder voice …

The Effects Of The Environment And Corporate Governance On Illegal Cartel Activity, David Kunsch

Electronic Thesis and Dissertation Repository

Illegal corporate activity, including the price fixing activity of two or more firms through cartels, costs the global economy billions of dollars a year, yet its causes are neither well studied nor well understood in organizational literature. This thesis explores possible external and internal antecedents of illegal cartel activity through the management lenses of resource dependency theory and agency theory and the criminological theory of anomie in the examination of the research question “Why do corporations engage in illegal activity?” I posit that illegal international cartel activity is influenced by the environment in which the organization finds itself, moderated by …

Shareholder Eugenics In The Public Corporation, Edward B. Rock

All Faculty Scholarship

In a world of active, empowered shareholders, the match between shareholders and public corporations can potentially affect firm value. This article examines the extent to which publicly held corporations can shape their shareholder base. Two sorts of approaches are available: direct/recruitment strategies; and shaping or socialization strategies. Direct/recruitment strategies through which “good” shareholders are attracted to the firm include: going public; targeted placement of shares; traditional investor relations; the exploitation of clientele effects; and de-recruitment. “Shaping” or “socialization” strategies in which shareholders of a “bad” or unknown type are transformed into shareholders of the “good” type include: choice of domicile; …

Corporate Governance: Principles And Issues, Donald Nordberg

Donald Nordberg

This paper is the first chapter of a book published by Sage Publications examining the principles considered in contesting theories of the field, and then the issues facing boards of directors in dealing with matters within the board, between boards and owners, between different types of owners, and then with the wider public. Taking a global outlook, the book also explores the role and limitations of transparency as a method of accountability before returning to the many unresolved questions in a field with an unsettled and perhaps unsettling future. This first chapter sets the stage with discussion of Lehman Brothers …

The Impact Of Firm Strategy And Foreign Ownership On Executive Bonus Compensation In Japanese Firms, Toru Yoshikawa, Abdul A. Rasheed, Esther B. Del Brio

Research Collection Lee Kong Chian School Of Business

Building on information-processing perspectives and the Japanese contextual factors, this study investigates the relationships between firm strategy and executive bonus pay as well as the moderating role of foreign ownership on the strategy–compensation relationship in Japanese firms. We focus on R&D investment and product diversification as strategy variables and investigate their direct effects on executive bonus pay. Further, we examine the moderating effects of foreign ownership on the strategy–pay sensitivity. The results, based on a sample of the 148 largest industrial firms in Japan for the 1990–1997 period, show that both R&D investment and product diversification are positively related to …

La Riforma Del Controllo Contabile Delle Societa’ In Italia: “Schede Di Lettura” Del Decreto Legislativo 39/2010 In Tema Di Svolgimento Della Revisione Legale Dei Conti, Claudio Sottoriva

Claudio Sottoriva

Il contributo offre una prima lettura delle novità apportate dal Decreto Legislativo n. 39/2010 attuativo della Direttiva 2006/43/CE, relativa alle revisioni legali dei conti annuali e dei conti consolidati. La disciplina dello svolgimento della attività di revisione legale dei conti trova quindi ora riferimenti normativi nelle norme del Codice Civile e in alcune norme speciali (principalmente nel T.U.F.) nonché per quanto non diversamente disciplinato nel Decreto 39/2010. La disciplina è destinata a trovare completamento con l'emanazione di specifici regolamenti attuativi del Decreto da parte del Ministero dell'Economia e delle finanze nonché da altre Autorità (Consob, Banca d'Italia, etc.). L'analisi consente …

Review Essay: Disagreeing About The Climate, Donald Nordberg

Donald Nordberg

This paper is an early draft of a review essay that subsequently appeared in the journal Business and Society in 2010. The science concerning climate change is clear, both sides of the argument agree. What they don't agree about is what that clarity means. Each side considers the matter settled, and their points of view unsettle each attempt to make public policy. Mike Hulme, director of the Tyndall Centre for Climate Change Research at the University of East Anglia, thinks the reasons for the persistent differences lies in the complex ways we see and use climate change as a totem …

Firm Capability, Corporate Governance, And Firm Competitive Behavior: A Multi-Dimensional Framework, Jinyu He, Joseph T. Mahoney, Heli Wang

Research Collection Lee Kong Chian School Of Business

In this paper, we propose two possible remedies for corporate governance research. First, when examining the effects of corporate governance, researchers may want to simultaneously consider the role of firm resources and capabilities. Second, linking corporate governance with firm-level competitive behaviour rather than with firm-level performance may enable researchers to detect more nuances about the effects of corporate governance. We base our propositions on the notion that 'capability' and 'motivation' are the two fundamental drivers of firm competitive behaviour. Firm resources/capabilities, which correspond to the capability driver, define the potential level of a firm's competitive activity. Further, corporate governance, by …

Change And Continuity In Japanese Corporate Governance, Toru Yoshikawa, Jean Mcguire

Research Collection Lee Kong Chian School Of Business

Previous studies on Japanese corporate governance were largely based on the agency theory framework, and can be seen as attempts to understand the unique monitoring mechanisms in the Japanese context. This paper briefly reviews prior research and then discusses the recent changes in the environment that have been affecting Japanese corporate governance. Our central argument is that there is both change and continuity in Japanese Corporate Governance. We also present emerging research from an institutional theory perspective. In this line of research, corporate governance is treated as part of a nation’s institutional framework and hence, researchers need to understand unique …

The Implications Of Debt Heterogeneity For R&D Investment And Firm Performance, Parthiban David, Jonathan P. O'Brien, Toru Yoshikawa

Research Collection Lee Kong Chian School Of Business

An assumption in prior research is that debt is homogeneous and provides inappropriate governance for R&D investments. We argue that debt is heterogeneous: although transactional debt does indeed impose strict contractual constraints that provide inappropriate governance for R&D investments, relational debt has very different characteristics that provide more appropriate governance. Using a sample of Japanese firms, we find that firms that align their debt structures with their R&D investments perform better than those that are misaligned. Furthermore, firms tend to align their debt structure with R&D investments, but only after deregulation permits relatively free access to various types of debt.