Business Administration, Management, and Operations Commons^™

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.

Lawyers And Fools: Lawyer-Directors In Public Corporations, Lubomir P. Litov, Simone M. Sepe, Charles K. Whitehead

Cornell Law Faculty Publications

The accepted wisdom—that a lawyer who becomes a corporate director has a fool for a client—is outdated. The benefits of lawyer-directors in today’s world significantly outweigh the costs. Beyond monitoring, they help manage litigation and regulation, as well as structure compensation to align CEO and shareholder interests. The results have been an average 9.5% increase in firm value and an almost doubling in the percentage of public companies with lawyer-directors.

This Article is the first to analyze the rise of lawyer-directors. It makes a variety of other empirical contributions, each of which is statistically significant and large in magnitude. First, …

A Difficult Conversation: Corporate Directors On Race And Gender, Kimberly D. Krawiec, John M. Conley, Lissa L. Broome

Faculty Scholarship

This symposium essay summarizes our ongoing ethnographic research on corporate board diversity, discussing the central tension in our respondents’ views – their overwhelmingly enthusiastic support of board diversity coupled with an inability to articulate coherent accounts of board diversity benefits that might rationalize that enthusiasm. As their reactions make clear, frank dialogue about race and gender – even a seemingly benign discussion of diversity’s benefits – can be a difficult conversation.

Corporate Myths : Sourcing And Vendor Management In Asia Pacific, Singapore Management University

Perspectives@SMU

Sourcing and vendor management need the urgent attention of senior management. The current uptick in poor and corrupt sourcing practices and weak governance provide a compelling reason.

Decision Styles Of Corporate Leaders: Do Differences Make A Difference, Sherry Sanger

Student Scholarship

Ineffective decision making at the top rungs of organizations is a perennial concern, yet empirical research into the decision styles of corporate leaders is scant. Conceptually sound and psychometrically validated constructs for alternative decision styles of corporate leaders are rare. This study develops and validates a multi-dimensional measure of different decision styles used by corporate leaders. Structural equation modeling is used to examine if different decision styles are associated with different performance outcomes for strategic decisions related to new opportunities. The three dimensions of decision styles evidence convergent and discriminant validity in a sample of 100 Corporate Leaders. In addition, …

Say Pays! Shareholder Voice And Firm Performance, Vicente Cuñat, Mireia Gine, Maria Guadalupe

Upjohn Institute Working Papers

This paper estimates the effect of increasing shareholder “voice” in corporations through a new governance rule that provides shareholders with a regular vote on pay: Say on Pay. We apply a regression discontinuity design to Say on Pay shareholder proposals to deal with prior expectations and the endogeneity of internal governance rules. Adopting Say on Pay leads to large increases in market value (5.4 percent), firm profitability, and long-term performance. In contrast, we find small effects on the level and structure of pay. This suggests that Say on Pay operates as a regular confidence vote, increasing efficiency, and market value.

The Impact Of Ceo Duality On Firm Financial And Market Performance During The Period Of 2008 Through 2010 : A Period Of Financial Crisis, Samuel Eugene Ferrara

Legacy Theses & Dissertations (2009 - 2024)

ABSTRACT

Determinants Of Financial Restatement : Does The Ceo-Board Relationship And Ceo Compensation Influence The Risk Of Financial Restatement?, Kimberly A.M. Melinsky

Legacy Theses & Dissertations (2009 - 2024)

The cataclysmic business failures of the past decade clearly outline the necessity for effective governance research and policy. These failures have prompted prominent investors, politicians, and researchers to show an ever-increasing interest in corporate fraudulent activity and its relationship to executive compensation packages and the CEO-board relationship. Further research is needed to better understand these relationships, especially the relationship between governance mechanisms and their influence on financial restatement, an outcome of fraud. This study looks to answer that need by examining the CEO-board relationship, as well as CEO compensation components, the combined effects of CEO compensation and CEO-board relationship variables, …

The Danger Of Difference: Tensions In Directors’ View Of Corporate Board Diversity, Kimberly D. Krawiec, John M. Conley, Lissa L. Broome

Faculty Scholarship

This Article describes the results from fifty-seven interviews with corporate directors and a limited number of other persons (including institutional investors, search firm personnel, and the like) regarding their views on corporate board diversity. It highlights numerous tensions in these views. Most directors, for instance, proclaim that diverse boards are good, but very few directors can articulate their reasons for this belief. Some directors have suggested that diverse boards work better than non-diverse boards, but gave relatively few concrete examples of specific instances where a female or minority board member made a special contribution related to that director’s race or …

The Power Of One: Effects Of Ceo Duality On Compensation Committee Quality And Ceo Compensation, Cindy K. Harris, Carol C. Cirka, Eric Farris

Business and Economics Faculty Publications

This paper contributes to the corporate governance literature by focusing on how Chief Executive Officer (“CEO”) duality and compensation committee quality are related to CEO compensation in the period since passage of the Sarbanes Oxley Act (“SOX”). Unlike research prior to SOX that focused chiefly on committee members’ independence, we measure compensation committee quality in two ways. We consider the average number of board directorships held by compensation committee members as well as the proportion of committee members with prior or current CEO duality experience. We introduce the latter variable as a new measure of quality as it has not …

Creditor Rights And R&D Expenditures, Bruce Seifert, Halit Gonenc

Finance Faculty Publications

Manuscript Type: Empirical

Research Question?Issue: This study examines the impact of creditor rights on R&D intensity (R&D/total assets). We argue that managers in countries with strong creditor rights have more incentives to reduce cash flow risk and therefore limit expenditures on R&D more than managers located in countries with weak creditor rights.

Research Findings/Insights: Using a sample of over 21,000 firms from 41 countries, our research is one of the first to document that strong creditor rights are indeed associated with reduced R&D intensity. This negative relationship is observed in market‐based countries, but not in bank‐based countries. Moreover, the results …

What Are The Correlates Of Interdisciplinary Research Impact? The Case Of Corporate Governance Research, William Q. Judge, Thomas Weber, Maureen I. Muller-Kahle

Management Faculty Publications

We explore the concept of interdisciplinary research impact and better understand what factors might be associated with it. Using the field of corporate governance research as a case study and linking our research impact concept to a novel measure of scholarly citation rates, we seek to understand why some corporate governance scholars are cited more than others. We first developed a comprehensive ranking of the top-100 scholars cited for their research in corporate governance and then compared that "high-impact" group with scholars who had published governance research that was not yet cited. We hypothesized that indicators from the social network …

Three Essays On Opacity, Corporate Governance, And Credit Ratings, Yiwen Gu

Graduate Theses and Dissertations

In the first essay, utilizing a more recent and expanded 20-year sample 1991-2010 of dual-rated bonds issued, I confirm Morgan's (2002) finding that banks are relatively more opaque than nonbanks. The likelihood of a rating split is higher, and the magnitude of the rating gap is larger, for banks than nonnbanks. Moreover, rating agency disagreements are more significant for banks with relatively higher loan and trading securities holdings and maintain lower capital, and for banks engaged in mortgage securitization. Importantly, I find that rating agency disagreements reflect market proxies of information uncertainty. Further, opacity makes external financing more costly. Equity …

Chairmanship: The Effective Chair-Ceo Relationship: Insight From The Boardroom, Elise Walton

Ira M. Millstein Center for Global Markets and Corporate Ownership

This paper examines the role of the corporate Chair in the context of one of the most important relationships the Chair has – his or her relationship with the company’sCEO. To approach the topic, the Chairmen’s Forum sponsored a research effort to interview experienced Chairs,CEOs and stakeholders. After the Forum agreed on the project, a research plan was designed and approved by the sponsors. Key interview questions and interview candidates were reviewed and approved. The main areas of the interview included: background experience with the two roles; successful situations and what worked; challenges and what didn’t work; how a relationship …

Corporate Governance And The 2008-09 Financial Crisis, Martin Conyon, William Q. Judge, Michael Useem

Management Faculty Publications

The financial crisis of the late 2000s resulted in enormous costs to the economies of many countries and the fortunes of millions of families, and it challenged a host of our conceptions and theories of corporate governance. The governing boards of many financial-services firms seemed unable to prevent the risky and ill-fated decisions that jeopardized their firms, devastated their investors, and helped precipitate a financial meltdown that morphed into global recession. Company boards were also directly responsible through their compensation committees and consultant advisors for a sharp rise in executive compensation during the 2000s that may have contributed to undue …

What Level Of Analysis Is Most Salient For A Global Theory Of Corporate Governance?, William Q. Judge

Management Faculty Publications

W e have five rigorous and relevant new comparative corporate governance studies in this issue. Each of these studies contributes to our journal’s overarching mission of moving toward a rigorous and relevant theory of corporate governance that can be meaningfully applied throughout the world. In this editorial, I would like to focus on the multiple levels of analysis involved with arriving at a global theory.

Did Board Configuration Matter? The Case Of Us Subprime Lenders, Maureen I. Muller-Kahle, Krista B. Lewellyn

Management Faculty Publications

Research Question/Issue: The origins of the global financial crisis have been attributed to the combination of a housing price bubble and innovative financial instruments, as well as the lack of restraint by corporate executives and boards to engage in excessive risk-taking. The rise in subprime lending between 1997 and 2005 played a crucial role in inflating the housing price bubble. We take a unique dataset of US financial institutions heavily engaged in subprime lending and ask the following research question: Did board configuration play a role in determining whether a financial institution specialized in subprime lending?

Research Findings/Insights: We use …

Power In The Corporate Boardroom : Development Of Board Power And Ceo Power Indexes, David Gavin

Legacy Theses & Dissertations (2009 - 2024)

This study focused on the development of two new measures: one of board of director power and one of CEO power. The first goal was to develop a new measure of board power. While there have been many studies on the individual elements of board power, the empirical results have been inconsistent and mixed. The underlying position of this paper is that no single element adequately explains the relationship between board power and outcome variables such as firm financial performance. In this study, the new board power measure was composed of multiple elements and an index was created.

Thomas Kuhn And Corporate Governance Research, William Q. Judge

Management Faculty Publications

Back in the dark ages (i.e., 1980s) when I was pursuing my doctoral degree at the University of North Carolina at Chapel Hill, I read Thomas Kuhn’s (1962) book on how science evolves over time. That book had a big influence on my thinking then, and it continues to influence me. Indeed, that book seems especially pertinent to this particular issue for reasons which I will explain later on in this essay.

[Introduction To] Stakeholders, Robert A. Phillips, R. Edward Freeman

Bookshelf

This landmark book takes a retrospective look at the most important and influential works in the study of stakeholders since Freeman’s 1984 publication, Strategic Management: A Stakeholder Approach. 2009 marked the 25th anniversary of this watershed in organizational scholarship, so now is an excellent time for Phillips and Freeman to revisit this topical and exciting subject.

From the tremendous upsurge in the literature, the editors have carefully selected ground-breaking works on topics including corporate governance, stakeholder-agency theory, management models, ethical theory and stakeholder orientation. This invaluable volume will shape the thinking of scholars and academics for the next 25 years.

Asian Corporate Governance Or Corporate Governance In Asia?, Shaomin Li, Anil Nair

Management Faculty Publications

Corporate governance has become an important issue for Chinese and Indian firms as they increasingly interact with regulators and investors from developed markets. For instance, tapping into global capital markets to raise funds to finance their domestic and international growth requires firms from China and India to demonstrate strong corporate governance credentials, so that investors do not discount their stock (LaPorta, Lopez-de-Silanes, Shleifer, & Vishny, 2000). The swift action of Chinese and Indian authorities in response to recent corporate scandals – such as the one at Satyam Computers – reveals that even governments in emerging countries such as China and …

The Impact Of Corporate Governance On The Choice Of Transfer Pricing Methods In China, Xue Han

Lingnan Theses

Recent scandals involving related party transactions (RPTs) have attracted researchers’ and governments’ attention. Because imperfections exist in the legislation of RPTs, business groups might abuse transfer pricing of such transactions for certain purposes. These purposes include earnings management of listed companies that seek to attract investors and profit shifting from subsidiaries to parent companies. This study investigates the impact of corporate governance on the choice of transfer pricing methods in China.

I classify transfer pricing methods into two major groups (i.e., market-based and cost-based methods). I hypothesize that companies with weak corporate governance are more likely to use cost-based pricing …

The Association Between Corporate Governance And Audit Fees, Cindy K. Harris

Business and Economics Faculty Publications

The Sarbanes-Oxley Act of 2002 (“SOX”) established not only corporate governance reform but also legislated significant changes to the practice of auditing publicly held corporations. Rules implemented by the Securities and Exchange Commission (“SEC”) further reinforced stronger corporate governance standards. The effect of these reforms on the cost of public audits is indisputable: the initial rise in audit fees was dramatic as corporations complied with the new provisions. This paper examines the relationship between corporate governance characteristics and audit fees for a random sample of 100 publicly traded corporations drawn from the 2005 Fortune 500 list. The data is obtained …

The Effectiveness Of Insider Trading Regulation: International Evidence, Art Durnev, Amrita S. Nain

Finance Faculty Publications

There is a long standing debate in the finance and law literatures about the need for insider trading regulation. Some scholars and practitioners argue that insider trading restrictions should be revoked because insider trading allows private information to be quickly incorporated into stock prices, thereby leading to more informationally efficient stock prices (Carlton and Fischel (1983); Dye (1984)). For example, Milton Friedman, laureate of the Nobel Memorial Prize in Economics, said: “You want more insider trading, not less. You want to give the people most likely to have knowledge about deficiencies of the company an incentive to make the public …

Board/Ceo Engagement: Bridging The Governance Gap, Brian L. Newton

Student Scholarship

The role that leaders perform in governing nonprofit organizations has confounded practitioners and scholars since the time of the early settlers, when the functions of governance were first separated. Is governance the role of the board, management, or both? Today, little has changed. Public and private nonprofit organizations, almost all of which are governed by boards of lay citizens and by professional executives, continue to define the gap between what the board's role is and what the chief executive officer's (CEO) role is. Organizations such as BoardSource (formerly the National Center for Nonprofit Boards), The Aspen Institute, the Independent Sector, …

Board/Ceo Engagement: Bridging The Governance Gap, Brian L. Newton

Student Scholarship

The role that leaders perform in governing nonprofit organizations has confounded practitioners and scholars since the time of the early settlers, when the functions of governance were first separated. Is governance the role of the board, management, or both? Today, little has changed. Public and private nonprofit organizations, almost all of which are governed by boards of lay citizens and by professional executives, continue to define the gap between what the board's role is and what the chief executive officer's (CEO) role is. Organizations such as BoardSource (formerly the National Center for Nonprofit Boards), The Aspen Institute, the Independent Sector, …

Corporate Governance In The Era Of Sarbanes-Oxley: Regulation, Governance, And Performance, Larry W. Ettner

Student Scholarship

The results of governance research are mixed concerning the financial consequences of externally induced regulations. The debate hinges on the assumption that adoption of regulation is an exogenous factor in determining performance. Drawing on basic insights from institutional theory and innovation studies, I argue that response to regulation is in fact a mediator of the relationship between 'quality of governance' and financial performance. Focusing on the adoption of Sarbanes-Oxley (Sarbox) regulation by publicly traded companies, I hypothesize that governance quality is likely to affect financial success by influencing organizational responses to Sarbox. Using multiple year data from two large datasets, …

The Impact Of Enterprise Risk Management On The Internal Audit Function, Mark S. Beasley, Richard Clune, Dana Hermanson

Faculty Articles

This exploratory study provides evidence about factors associated with the overall impact of enterprise risk management (ERM) on the internal audit function’s activities. Based on responses from 122 organizations in several countries, we find that ERM has the greatest impact on internal audit’s activities when (a) the organization’s ERM process is more completely in place, (b) the CFO and audit committee have called for greater internal audit activity related to ERM, (c) the chief audit executive’s (CAE) tenure is longer, (d) the organization is in the banking industry or is an educational institution, and (e) the internal audit function has …

Corporate Governance In The Era Of Sarbanes-Oxley: Governance Types And Trust Dynamics, Larry W. Ettner

Student Scholarship

This research focused on corporate independent directors and senior executive officers: their perceptions of Sarbanes-Oxley; their roles and responsibilities as officers and directors; how board relationships have transformed as a result of Sarbanes-Oxley; and how the CEO-board and board member-board member trust dynamics impact the management of the board. Implicit in Sarbanes-Oxley is agency theory and the responsibility of independent directors to monitor and control management. The central findings are that independent directors and executive officers are culturally adapting to the new institutional environment of Sarbanes-Oxley, and their new relationship is characterized by "creative tension" whereby distinct and separate roles …

On The Nature Of Corporations, Lynn A. Stout

Cornell Law Faculty Publications

Legal experts traditionally distinguish corporations from unincorporated business forms by focusing on corporate characteristics like limited shareholder liability, centralized management, perpetual life, and free transferability of shares. While such approaches have value, this essay argues that the nature of the corporation can be better understood by focusing on a fifth, often-overlooked, characteristic of corporations: their capacity to "lock in" equity investors' initial capital contributions by making it far more difficult for those investors to subsequently withdraw assets from the firm. Like a tar pit, a corporation is much easier for equity investors to get into, than to get out of. …