Business Commons^™

Socially Responsible Firms, Allen Ferrell, Hao Liang, Luc Renneboog

Research Collection Lee Kong Chian School Of Business

In the corporate finance tradition, starting with Berle and Means (1932), corporations should generally be run to maximize shareholder value. The agency view of corporate social responsibility (CSR) considers CSR an agency problem and a waste of corporate resources. Given our identification strategy by means of an instrumental variable approach, we find that well-governed firms that suffer less from agency concerns (less cash abundance, positive pay-for-performance, small control wedge, strong minority protection) engage more in CSR. We also find that a positive relation exists between CSR and value and that CSR attenuates the negative relation between managerial entrenchment and value.

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 …

Research Insights About Risk Governance: Implications From A Review Of Erm Research, Therese R. Viscelli, Mark S. Beasley, Dana R. Hermanson

Faculty and Research Publications

In recent years, expectations for increased risk governance have been placed explicitly on boards of directors. In response, boards are being held responsible for not only understanding and approving management’s risk management processes, but they are also being held responsible for assessing the risks identified by those processes as part of overseeing management’s pursuit of value. These increasing responsibilities have led a number of organizations to adopt enterprise risk management (ERM) as a holistic approach to risk management that extends beyond traditional silo-based risk management techniques. As boards, often through their audit committee, consider management’s implementation of ERM as part …

Does It Pay To Be Different? Relative Csr And Its Impact On Firm Value, David K. Ding, Christo Ferreira, Udomsak Wongchoti

Research Collection Lee Kong Chian School Of Business

Conventional aggregation of Corporate Social Responsibility (CSR) raw scores and its interpreted impact on firm value have provided mixed evidence in the literature. We show that the value impact of CSR activities relies heavily on the industry-specific relative position of the firm. Only firms that distinguish themselves over their peers are associated with increased firm value. This finding is robust and holds for both responsible and irresponsible behaviors. Information concerns and portfolio construction can allude to a possible CSR clientele, suggesting the existence of an optimal CSR level. Our peer-effect results are robust to unobserved heterogeneity along the lines of …

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 …

Socially Responsible Firms, Allen Ferrell, Hao Liang, Luc Renneboog

Research Collection Lee Kong Chian School Of Business

In the corporate finance tradition starting with Berle & Means (1923), corporations should generally be run so as to maximize shareholder value. The agency view of corporate social responsibility (CSR) considers CSR as an agency problem and a waste of corporate resources. Given our identification strategy by means of an IV approach, we find that well-governed firms who suffer less from agency concerns (less cash abundance, positive pay-for-performance, small control wedge, strong minority protection) engage more in CSR. We also find a positive relation between CSR and value and that CSR attenuates the negative relation between managerial entrenchment and value.

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 …

Research Brief: "Military Ceos", Institute For Veterans And Military Families At Syracuse University

Institute for Veterans and Military Families

This study found that firms run by CEOs who have served in the military have lower investment and Research and Development (R&D) expenditures. In practice, firms and organizations should consider hiring chief executive officers (CEOs) with military experience if they are looking for “change agents” who will create an ethical, effective, and team-oriented organizational culture. In policy, the Department of Defense (DoD), Department of Labor (DoL), and the Department of Veterans Affairs (VA) might partner to ensure that material on business leadership, human resource management in the civilian sector, and business ethics are integrated into program offerings, including TAP. Suggestions …

Gender Diversity Of Boardrooms And Firm Financial Performance, Perihan Iren

All Works

© 2016, Virtus Interpress. All rights reserved. The impact of boardroom diversity on firm financial performance has attracted growing research interest in recent years. However, due to the lack of readily available datasets for other parts of the world, most of the evidence is based on the US data. The purpose of this study is to examine the relationship between gender diversity in the boardrooms and firm financial performance in a region, where it has never been studied before. Using a sample of 60 firms listed in Abu Dhabi and Dubai Stock Exchanges, first the impact of gender diverse boards …

Bridge Or Buffer: Two Ideas Of Effective Corporate Governance And Public Engagement, Soojin Kim, Jeong-Nam Kim

Research Collection Lee Kong Chian School Of Business

This study identifies organizational factors that influence corporate governance and formulation of public relations strategies for public engagement. This study explores intertwined relationships between public relations strategies and organizational factors. A total of 22 qualitative interviews were conducted with a diverse pool of communication consultants. Results show that the two public relations strategies, bridging and buffering, are frequently observed and linked with key factors such as size, organizational culture, environment specificity, and strategic orientation. Implications for future public relations and corporate governance research are discussed.

Solving The Puzzle Of Corporate Governance Of State-Owned Enterprises: The Path Of Temasek Model In Singapore And Lessons For China, Christopher C. H. Chen

Research Collection Yong Pung How School Of Law

The purpose of this Article is to examine the corporate governance of state-owned enterprises (SOEs) in the Asian context by empirically surveying the influence of Temasek Holdings, Singapore’s sovereign wealth fund, on its portfolio of government-linked companies in Singapore. Overall, the Temasek model seems to be a promising one. This Article shows that the top listed government-linked companies in which Temasek has a stake have greater board independence than the other top listed companies in Singapore. This illustrates that a high quality of corporate governance could be aligned with public interests associated with SOEs. While this research offers hope for …

Female Board Representation And Corporate Acquisition Intensity, Guoli Chen, Craig Crossland, Sterling Huang

Research Collection School Of Accountancy

This study examines the impact of female board representation on firm-level strategic behavior within the domain of mergers and acquisitions (M&A). We build on social identity theory to predict that greater female representation on a firm's board will be negatively associated with both the number of acquisitions the firm engages in and, conditional on doing a deal, acquisition size. Using a comprehensive, multi-year sample of U.S. public firms, we find strong support for our hypotheses. We demonstrate the robustness of our findings through the use of a difference-in-differences analysis on a sub-sample of firms that experienced exogenous changes in board …

The Stewardship Of Trust In The Global Value Chain, Kishanthi Parella

Scholarly Articles

Global governance has not yet caught up with the globalization of business. As a result, our headlines provide daily accounts of the extent and consequences of these "governance gaps." The ability of corporations to evade state control also contributes to an unusual, even frightening, phenomenon: corporations are governing like states. Some governance functions traditionally delivered by state actors are now increasingly undertaken by transnational corporations. One area that is experiencing this substitution is dispute resolution of human rights. Corporations and other business enterprises, individually or collectively, are creating a variety of grievance mechanisms to address human rights and other conflicts …

The Impact Of Corporate Governance On Stock Price And Trade Volume, Wafaa Salah, May Elewa

Business Administration

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 the quality of corporate governance can affect firms' stock …

Corporate Governance And Environmental Disclosure In The Indonesian Mining Industry, Terri Trireksani, Hadrian Geri Djajadikerta

Research outputs 2014 to 2021

Sustainability and corporate governance issues are now considered to be important and integral aspects of company performance. Both have established themselves as well-studied topics in the organisational and accountability areas. While there has been a growing interest to study the relationship between these two areas, research publication in this topic is still mainly focused on the Western societies. This study focuses on the corporate governance and sustainability disclosure practices in one of the emerging economies, Indonesia, and assesses the relationships between corporate governance variables and the extent of environmental disclosures made by the mining companies listed in the Indonesia Stock …

Modern-Day Monitorships, Veronica Root

Faculty Scholarship

When a sexual abuse scandal rocked Penn State, when Apple was found to have engaged in anticompetitive behavior, and when servicers like Bank of America improperly foreclosed upon hundreds of thousands of homeowners, each organization entered into a "Modern-Day Monitorship”. Modern-day monitorships are utilized in an array of contexts to assist in widely varying re­mediation efforts. This is because they provide outsiders with a unique source of information about the efficacy of the tarnished organization's efforts to resolve misconduct. Yet, despite their use in high profile and serious matters of organi­zational wrongdoing, they are not an outgrowth of careful study …

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 …

Misalignment: Corporate Risk-Taking And Public Duty, Steven L. Schwarcz

Faculty Scholarship

This article argues for a “public governance duty” to help manage excessive risk-taking by systemically important firms. Although governments worldwide, including the United States, have issued an array of regulations to attempt to curb that risk-taking by aligning managerial and investor interests, those regulations implicitly assume that investors would oppose excessively risky business ventures. That leaves a critical misalignment: because much of the harm from a systemically important firm’s failure would be externalized onto the public, including ordinary citizens impacted by an economic collapse, such a firm can engage in risk-taking ventures with positive expected value to its investors but …

The Effect Of Board Independence On Information Asymmetry, Beng Wee Goh, Jimmy Lee, Jeffrey Ng, Kevin Ow Yong

Research Collection School Of Accountancy

Boards have an important role in ensuring that investors’ interests are protected. Our paper first examines whether the independence of a firm's board affects information asymmetry among investors. We provide evidence that greater board independence leads to lower information asymmetry. Next, we provide evidence that more voluntary disclosure and greater analyst coverage are two underlying mechanisms via which greater board independence reduces information asymmetry. Of the two mechanisms, we find that analyst coverage is more significant in influencing how board independence affects information asymmetry. Overall, our paper contributes to a better understanding of the effect of board independence on information …