Corporate Finance Commons^™

Mutual Fund Stewardship And The Empty Voting Problem, Jill E. Fisch

All Faculty Scholarship

When Roberta Karmel wrote the articles that are the subject of this symposium, she was skeptical of both the potential value of shareholder voting and the emerging involvement of institutional investors in corporate governance. In the ensuing years, both the increased role and engagement of institutional investors and the heightened importance of shareholder voting offer new reasons to take Professor Karmel’s concerns seriously. Institutional investors have taken on a broader range of issues ranging from diversity and political spending to climate change and human capital management, and their ability to influence corporate policy on these issues has become more significant. …

What Are The Four Traits Of Digitally Mature Organizations?, Clarence Goh, Gary Pan, Poh Sun Seow, Yuanto Kusnadi, Gek Choo Shirlena Tan

Research Collection School Of Accountancy

A study conducted by Deloitte Southeast Asia and the Singapore Management University said there are four traits that could identify digitally mature organisations based on how they manage the governance, risk, and compliance aspects of digital transformation.

What Is The Role Of Large Shareholders In Monitoring Corporate Performance?, Singapore Management University

Perspectives@SMU

Research in China suggests that increased stock liquidity provides large shareholders incentives to enhance monitoring activities and improve corporate governance

Lessons Learned: Chester B. Feldberg, Maryann Haggerty

Journal of Financial Crises

Chester B. Feldberg worked for the Federal Reserve Bank of New York (FRBNY) for 36 years in a variety of roles. In the aftermath of the Global Financial Crisis, he served as a trustee for the AIG Credit Trust Facility (2009-2011). The trust was established in early 2009 to hold the equity stock of American International Group Inc. (AIG) that the U.S. government had received as a result of the 2008 AIG bailout. The three trustees were responsible for voting the stock, ensuring satisfactory corporate governance at AIG, and eventually disposing of the stock.

When he was named as a …

Synthetic Governance, Byung Hyun Anh, Jill E. Fisch, Panos N. Patatoukas, Steven Davidoff Solomon

All Faculty Scholarship

Although securities regulation is distinct from corporate governance, the two fields have considerable substantive overlap. By increasing the transparency and efficiency of the capital markets, securities regulation can also enhance the capacity of those markets to discipline governance decisions. The importance of market discipline is heightened by the increasingly vocal debate over what constitutes “good” corporate governance.

Securities product innovation offers new tools to address this debate. The rise of index-based investing provides a market-based mechanism for selecting among governance options and evaluating their effects. Through the creation of bespoke governance index funds, asset managers can create indexes that correspond …

Private Company Lies, Elizabeth Pollman

All Faculty Scholarship

Rule 10b-5’s antifraud catch-all is one of the most consequential pieces of American administrative law and most highly developed areas of judicially-created federal law. Although the rule broadly prohibits securities fraud in both public and private company stock, the vast majority of jurisprudence, and the voluminous academic literature that accompanies it, has developed through a public company lens.

This Article illuminates how the explosive growth of private markets has left huge portions of U.S. capital markets with relatively light securities fraud scrutiny and enforcement. Some of the largest private companies by valuation grow in an environment of extreme information asymmetry …

Corporate Governance: Avoid The Groupthink Pitfall, Themin Suwardy

Research Collection School Of Accountancy

Consensus due to similar personal backgrounds, lack of diversity in views and failure to see things from others’ perspective can lead to bad decisions.

A One-Size-Fits-All Approach To Corporate Governance Codes And Compliance By Smaller Listed Firms: An Examination Of Companies Listed In Hong Kong And Singapore, Christopher C. H. Chen

Research Collection Yong Pung How School Of Law

This article examines the impact of a one-size-fits-all corporate governance code on smaller listed firms, which should have fewer resources to hire more qualified independent directors for their boards and board committees. After examining data from a sample of companies listed in Hong Kong and Singapore, we find some limited support for these resources-based arguments. While smaller firms do not necessarily have a lower proportion of board members who are independent directors, some evidence suggests that smaller firms do pay less to independent directors and that these directors have to serve on multiple board committees. Although many larger firms also …

The New Titans Of Wall Street: A Theoretical Framework For Passive Investors, Jill E. Fisch, Asaf Hamdani, Steven Davidoff Solomon

All Faculty Scholarship

Passive investors — ETFs and index funds — are the most important development in modern day capital markets, dictating trillions of dollars in capital flows and increasingly owning much of corporate America. Neither the business model of passive funds, nor the way that they engage with their portfolio companies, however, is well understood, and misperceptions of both have led some commentators to call for passive investors to be subject to increased regulation and even disenfranchisement. Specifically, this literature takes a narrow view both of the market in which passive investors compete to manage customer funds and of passive investors’ participation …

Startup Governance, Elizabeth Pollman

All Faculty Scholarship

Although previously considered rare, over three hundred startups have reached valuations over a billion dollars. Thousands of smaller startups aim to follow in their paths. Despite the enormous social and economic impact of venture-backed startups, their internal governance receives scant scholarly attention. Longstanding theories of corporate ownership and governance do not capture the special features of startups. They can grow large with ownership shared by diverse participants, and they face issues that do not fit the dominant principal-agent paradigm of public corporations or the classic narrative of controlling shareholders in closely held corporations.

This Article offers an original, comprehensive framework …

Dual-Class Shares In Singapore – Where Ideology Meets Pragmatism, Pey Woan Lee

Research Collection Yong Pung How School Of Law

This article seeks to understand the rationale for and potential implications of the introduction of dual class shares (DCS) in Singapore. It does so by first considering the theoretical as well as evidential arguments for and against the use of DCS, followed by a survey on the reception (or otherwise) of such structures in four common law jurisdictions with vibrant capital markets, viz., Canada, the United States, United Kingdom and Hong Kong. It observes that the chief argument cited by business founders to justify the use of DCS structures is the desire to enhance a firm’s long-term profitability by shielding …

Credit Risk And Corporate Governance, Olivier Mugisho Mudekereza

Theses and Dissertations

Is the executive’s compensation structure influenced by the credit rating assigned to his company? I analyze a panel of U.S. public firms using the random-effects and fixed-effects estimations. Compared to firms with lower credit risk, I find that firms facing higher probability of default provide more incentives for their CEOs.

Who Bleeds When The Wolves Bite? A Flesh-And-Blood Perspective On Hedge Fund Activism And Our Strange Corporate Governance System, Leo E. Strine Jr.

All Faculty Scholarship

This paper examines the effects of hedge fund activism and so-called wolf pack activity on the ordinary human beings—the human investors—who fund our capital markets but who, as indirect of owners of corporate equity, have only limited direct power to ensure that the capital they contribute is deployed to serve their welfare and in turn the broader social good.

Most human investors in fact depend much more on their labor than on their equity for their wealth and therefore care deeply about whether our corporate governance system creates incentives for corporations to create and sustain jobs for them. And because …

Audit Committees And Financial Reporting Quality In Singapore, Yuanto Kusnadi, Kwong Sin Leong, Themin Suwardy, Jiwei Wang

Research Collection School Of Accountancy

We examine three characteristics (independence, expertise, and overlapping membership) of audit committees and their impact on the financial reporting quality for Singapore-listed companies. The main finding is that financial reporting quality will be higher if audit committees have mixed expertise in accounting, finance, and/or supervisory. In addition, we do not find evidence that incremental independence of audit committees enhances financial reporting quality because audit committees already consist of a majority of independent directors. Finally, we fail to find any impact of overlapping membership on audit and remuneration committees on financial reporting quality. Overall, the results have policy implications on improving …

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 …

Shareholder Advocacy In Corporate Elections: Case Studies In Proxy Voting Websites For Retail Investors, Robin Miller

International Development, Community and Environment (IDCE)

One of the key rights shareholders retain is the right to vote on issues affecting the companies in which they invest. This voting right is seen as one of the primary means of exercising diligent corporate governance (Cole 2003, Fairfax 2009). Only 28 percent of individual investors vote in corporate elections compared with 91 percent of institutional investors. Informed voting decisions at corporate elections can be very information intensive, and theories of rational apathy and the free rider problem may explain a lack of participation from individual investors.

Many shareholders cannot attend annual corporate meetings, so they …

Cost Reduction Strategies & Corporate Governance: The Need For A Paradigm Shift In Public Sector Financial Management In Nigeria, Sunny Ekakitie-Emonena

Bullion

This study is on exposition of the imperatives of cost reduction strategies and corporate governance practices as it relates to financial malfeasance. The mechanics for a paradigm shift discussed include: cost reduction techniques, adoption of cost efficiency techniques and maintenance and reportage of accurate financial records, etc.; along with adoption of sound corporate governance policies of accountability, adherence to regulatory framework, and respect for stakeholders' interest. The study concludes by suggesting further initiatives to 'clean-up and reposition' the sector for growth & economic development. These include: effective justice system, stepping up the policy of cashless economy, entrenching protection programs for …

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.

Political Connection And Firm Value, James S. Ang, David K. Ding, Tiong Yang Thong

Research Collection Lee Kong Chian School Of Business

We study the effect of political connection (PC) on company value in an environment where low PC is due to better institutions and not confounded by favorable social/cultural factors. We find that in Singapore, the only country that fits this description, PC in general adds little to the value of a company. However, in industries that are subject to more stringent government regulations, PC appears to be somewhat important. Robustness checks show that alternative PC variables give rise to similar results, and the addition of control variables do not drastically change the findings. Politically connected firms have higher managerial ownership …

Shareholders And Social Welfare, William W. Bratton, Michael L. Wachter

All Faculty Scholarship

This article addresses the question whether (and how) the shareholders matter for social welfare. Answers to the question have changed over time. Observers in the mid-twentieth century believed that the socio-economic characteristics of real world shareholders were highly pertinent to social welfare inquiries. But they went on to conclude that there followed no justification for catering to shareholder interest, for shareholders occupied elite social strata. The answer changed during the twentieth century’s closing decades, when observers came to accord the shareholder interest a key structural role in the enhancement of economic efficiency even as they also deemed irrelevant the characteristics …

The Model Business Corporation Act At Sixty: Shareholders And Their Influence, Lisa Fairfax

All Faculty Scholarship

In the sixty years since the Committee on Corporate Laws (Committee) promulgated the Model Business Corporation Act (MBCA), there have been significant changes in corporate law and corporate governance. One such change has been an increase in shareholder activism aimed at enhancing shareholders’ voting power and influence over corporate affairs. Such increased shareholder activism (along with its potential for increase in shareholder power) has sparked considerable debate. Advocates of increasing shareholder power insist that augmenting shareholders’ voting rights and influence over corporate affairs is vital not only for ensuring board and managerial accountability, but also for curbing fraud and other …

Corporate Governance And Earnings Management Before Share Repurchase Announcements In Singapore, Jian Ming Chua

Dissertations and Theses Collection (Open Access)

Share repurchase in Singapore was legalized in 1998. It is well known that investors view share repurchase as good news. This study is based on share repurchase announcements from 2006 to 2009. The mean Cumulative Market-Adjusted Returns (CAR) for the period [0, +1] and [-1, +1] are significant at 1.25% and 1.33% respectively. In Singapore, there are positive abnormal returns following share repurchase announcements in support of the ―free cash flow‖ hypothesis. By using the Singapore Corporate Governance Index as a proxy, the weakly governed companies exhibit the strongest, positive and significant CAR of 2.62% for the period [0, +1]. …

The Italian Chamber Of Lords Sits On Listed Company Boards. An Empirical Analysis Of Italian Listed Company Boards From 1998 To 2006 - Presentation (Powerpoint Format), Paolo Santella, Carlo Drago, Andrea Polo

Paolo Santella

No abstract provided.

The Italian Chamber Of Lords Sits On Listed Company Boards. An Empirical Analysis Of Italian Listed Company Boards From 1998 To 2006 - Presentation (Powerpoint Format), Paolo Santella, Carlo Drago, Andrea Polo

Carlo Drago

No abstract provided.

The Italian Chamber Of Lords Sits On Listed Company Boards. An Empirical Analysis Of Italian Listed Company Boards From 1998 To 2006 - Presentation (Powerpoint Format), Paolo Santella, Carlo Drago, Andrea Polo

Paolo Santella

No abstract provided.

The Italian Chamber Of Lords Sits On Listed Company Boards. An Empirical Analysis Of Italian Listed Company Boards From 1998 To 2006 - Presentation (Powerpoint Format), Paolo Santella, Carlo Drago, Andrea Polo

Carlo Drago

No abstract provided.

The Italian Chamber Of Lords Sits On Listed Company Boards. An Empirical Analysis Of Italian Listed Company Boards From 1998 To 2006 - Presentation (Powerpoint Format), Paolo Santella, Carlo Drago, Andrea Polo

Carlo Drago

No abstract provided.

Governance In The Ruins, David A. Skeel Jr.

All Faculty Scholarship

What gets an economy up and running after a catastrophic war or a period of oppressive rule? While there are nearly as many answers to these questions as experts, one of the most prominent for the past century has been law. Nearly every page of Law and Capitalism, a remarkable new book by Curtis Milhaupt and Katharina Pistor, stands in implicit or explicit dissent from the prevailing view. Milhaupt and Pistor’s countermodel begins a matrix consisting of two axes. The first contrasts a purely protective regime on one end, with a pervasively “coordinative” approach on the other. The second axis …

Japanese Corporate Governance: Structural Change And Financial Performance, Asli M. Colpan, Toru Yoshikawa, Takashi Hikino, Hiroaki Miyoshi

Research Collection Lee Kong Chian School Of Business

This paper analyzes institutional and legal changes related to corporate governance and their impact on financial performance in Japan since the second half of the 1990s. We attempt to address two issues systematically: (1) how much the governance reforms of Japanese firms transformed the conventional system of alliance capitalism and managerial control; and (2) what economic outcomes those governance changes have yielded. As the Commercial Code and other legal and institutional frameworks were revised, Japanese firms experienced shifts in terms of stock ownership, corporate control and managerial organizations. Our empirical results show that the influence of new ownership composition and …

Hedge Funds In Corporate Governance And Corporate Control, Marcel Kahan, Edward B. Rock

All Faculty Scholarship

Hedge funds have become critical players in both corporate governance and corporate control. In this article, we document and examine the nature of hedge fund activism, how and why it differs from activism by traditional institutional investors, and its implications for corporate governance and regulatory reform. We argue that hedge fund activism differs from activism by traditional institutions in several ways: it is directed at significant changes in individual companies (rather than small, systemic changes), it entails higher costs, and it is strategic and ex ante (rather than intermittent and ex post). The reasons for these differences may lie in …