Business Law, Public Responsibility, and Ethics Commons^™

Transfer Of A Going Concern, Vincent Ooi

Research Collection Yong Pung How School Of Law

GST transfers of a going concern—overviewThe sale of a business is in substance the sale of a number of assets bundled together. Generally, GST would be charged on the transfer of each asset according to the rules applicable to that asset, i.e. standard-rate, zero-rate or exempt.However, where a business is transferred as a going concern (a “TOGC”), the transaction may be treated as an excluded transaction under the Goods and Services Tax (Excluded Transactions) Order. If so, the trans-action would be treated as neither a supply of goods nor a supply of services and therefore outside the scope of GST. …

Societal Trust And Corporate Tax Avoidance, Kiridaran Kanagaretnam, Jimmy Lee, Chee Yeow Lim, Gerald Lobo

Research Collection School Of Accountancy

Using aninternational sample of firms from 25 countries and a country-level index for societal trust, we document that societal trust is negatively associated with tax avoidance, even after controlling for other institutional determinants, such as home country legal institutions and tax system characteristics.We explore the effects of two country-level institutional characteristics—strength of lega linstitutions and capital market pressure—on the relation between societal trust and tax avoidance. We find that the relation between trust and tax avoidance is less pronounced when legal institutions in a country are stronger and is more pronounced when capital market pressure is stronger. Finally, we examine …

Unravelling Civil Conspiracy, Pey Woan Lee

Research Collection Yong Pung How School Of Law

This article seeks to understand civil conspiracy through the lens of its historical rationale. It identifies that purpose to be the protection of public interests as the tort was originally fashioned as an extension of criminal conspiracy to counter serious social ills. For lawful means conspiracy, this rationale is exemplified by the requirement for improper or illegitimate motive whilst “unlawful means” serves the same function in the context of unlawful means conspiracy. Counter-intuitively, understanding the tort in this way provides a means of restricting the tort and reigning in its “revolutionary” tendencies. Recognising the tort’s policy-based foundation would, it is …

Board Independence As A Panacea To Tunnelling? An Empirical Study Of Related Party Transactions In Hong Kong And Singapore, Christopher C. H. Chen, Wai Yee Wan, Wei Zhang

Research Collection Yong Pung How School Of Law

In this article, we examine a general question: is the legal transplantation of corporate governance rule effective in curtailing agency costs? Entering into the 21st century, we have seen reforms of corporate governance standards in the Far East since the Asian Financial Crisis in 1997, including in Hong Kong and Singapore. These reforms built on the Anglo-American model of corporate governance in the UK and US supported by broad academic literature of connecting better corporate governance with firm value and identifying the association of tunneling or wrongdoings with poor corporate governance practices. The idea is also to provide more checks-and-balances …

Zombie Board: Board Tenure And Firm Performance, Sterling Huang, Gilles Hilary

Research Collection School Of Accountancy

We show that board tenure exhibits an inverted U-shaped relation with firm value and accounting performance. The quality of corporate decisions, such as M&A, financial reporting quality, and CEO compensation, also has a quadratic relation with board tenure. Our results are consistent with the interpretation that directors’ on-the-job learning improves firm value up to a threshold, at which point entrenchment dominates and firm performance suffers. To address endogeneity concerns, we use a sample of firms in which an outside director suffered a sudden death, and find that sudden deaths that move board tenure away from (toward) the empirically observed optimum …

Reading Between The Lines: Not All Csr Is Good Csr, David K. Ding, Christo Ferreira, Udomsak Wongchoti

Research Collection Lee Kong Chian School Of Business

Purpose: This paper aims to investigate whether corporate social responsibility (CSR), as evidenced in annual financial reports, is associated with a firm’s financial performance in New Zealand. Design/methodology/approach: A word count approach of several key CSR indicators found in the audited financial reports of NZX50 constituent firms is used. Several variables are constructed that measure the presence of CSR within the annual report such as sustainability, responsibility, social, environment, diversity, employee and community, and eight other variables within the annual report that measure the penetration of stakeholder engagement. Control variables and alternative measures of CSR are also included. Descriptive statistics …

How Does Interpersonal Justice Affect Outside Directors’ Governance Behavior? A Cross-Cultural Comparison, Esther B. Del Brio, Rosa M. Hernandez-Maestro, Toru Yoshikawa

Research Collection Lee Kong Chian School of Business

We examine the impact of interpersonal justice among outside directors on the board and between a director and the CEO regarding the director’s monitoring and resource provision behaviors in different cultural contexts. We argue that directors from individualistic countries are more influenced by CEO interpersonal justice while directors from collectivistic countries are more affected by the board interpersonal justice. Our main effect results indicate that interpersonal justice with board members is positively related to both monitoring and resource provision by a director, while CEO interpersonal justice is related only to resource provision. Our results also show different effects on the …

Cross-Country Evidence On The Role Of Independent Media In Constraining Corporate Tax Aggressiveness, Kiridaran Kanagaretnam, Jimmy Lee, Chee Yeow Lim, Gerald J. Lobo

Research Collection School Of Accountancy

Using an international sample of firms from 32 countries, we study the relation between media independence and corporate tax aggressiveness. We measure media independence by the extent of private ownership and competition in the media industry. Using an indicator variable for tax aggressiveness when the firm’s corporate tax avoidance measure is within the top quartile of each country-industry combination, we find strong evidence that media independence is associated with a lower likelihood of tax aggressiveness, after controlling for other institutional determinants, including home-country tax system characteristics. We also find that the effect of media independence is more pronounced when the …

Managing The Risks Of Corporate Fraud: The Evidence From Hong Kong And Singapore, Wai Yee Wan, Christopher C. H. Chen, Chongwu Xia, Say Goo

Research Collection Yong Pung How School Of Law

Since the Asian financialcrisis of 1997, Hong Kong and Singapore have implemented reforms that promote independenceand monitoring competency of the boards of directors of their listed companies.However, with the advent of the financial crisis of 2007/2008, a wave of fraudcases prompts the question as to the effectiveness of these reforms. Analysing asample of 62 listed companies which are found to have committed fraud between2007 and 2014, and comparing against a matched sample of no-fraud companies, wefind that the fraud companies tend to either combine the roles of chairman andchief executive officer (or they are close family members) and have fewer …

Keeping Investors Onboard: A Corporate Social Responsibility Crisis Response Framework, Clarence Goh

Research Collection School Of Accountancy

There is evidence to suggest that managers use CSR reporting as a means to manage their firms’ CSR reputations. In this study, I jointly examine CSR reputation and CSR crisis response in the context of CSR crises, and how they can influence investor judgments and decision making. In particular, in the context of CSR crises, I build on situational crisis communication theory to develop a CSR crisis response framework which managers can use to examine and understand how specific types of CSR crises can influence their firm’s CSR reputations, which can in turn influence investor judgments and decision making. Following …

Is Corporate Social Responsibility An Agency Problem?, Hao Liang, Luc Renneboog

Research Collection Lee Kong Chian School Of Business

This chapter examines whether CSR investments occur mostly in firms with severe agency problems, which suggests that CSR is an agency issue. We demonstrate that this is not the case: CSR investments and performance are higher when dividends are high, leverage is high, cash flows and cash holdings are low, and when there is a high managerial pay-for-performance sensitivity. All these variables combined represent managerial discipline in terms of corporate investing. We also document that better legal protection of shareholder rights is positively related to CSR performance. This implies that when shareholders are more powerful relative to the management, the …

When Corporate Social Responsibility Motivates Employee Citizenship Behavior: The Sensitizing Role Of Task Significance, Madeline Ong, David M. Mayer, P. Tost Leigh, Ned Wellman

Research Collection Lee Kong Chian School Of Business

Scholars have proposed that organizations’ corporate social responsibility (CSR) efforts are often positively associated with employees’ organizational citizenship behaviors (OCB) and have invoked identity-based mechanisms to explain this relationship. Complementing these perspectives, we develop a CSR sensitivity framework that explains how task significance, a micro-level job characteristic, can sensitize employees to their organizations’ macro-level CSR efforts, thereby strengthening the association between CSR and OCB. Across three field studies, we find that CSR and task significance interact to predict OCB, such that an organization’s CSR is more positively associated with OCB among employees who report higher task significance than among those …

Heads Will Roll! Routes To Effective Trust Repair In The Aftermath Of A Ceo Transgression, Donald L. Ferrin, Cecily D. Cooper, Kurt T. Dirks, Peter H. Kim

Research Collection Lee Kong Chian School Of Business

CEO transgressions are a common storyline in today's business press. Such incidents result in the need to repair trust for both the CEO and the organisation that the CEO leads. Existing empirical research on trust repair has focused primarily on interpersonal trust, resulting in a body of knowledge that provides many insights to the errant CEO but few insights for those who aim to repair trust in the organisation. Since organisations also need to regain the trust of stakeholders after a CEO transgression, research on organisational trust repair is clearly warranted. Organisations have options for trust repair that are not …

Motives Of Corporate Political Donations: Industry Regulation, Subjective Judgement And The Origins Of Pragmatic And Ideological Corporations, Nicholas M. Harrigan

Research Collection School of Social Sciences

What motivates corporate political action? Are corporations motivated by their own narrow economic self-interest; are they committed to pursuing larger class interests; or are corporations instruments for status groups to pursue their own agendas? Sociologists have been divided over this question for much of the last century. This paper introduces a novel case - that of Australia - and an extensive dataset of over 1,500 corporations and 7,500 directors. The paper attempts to understand the motives of corporate political action by examining patterns of corporate political donations. Using statistical modelling, supported by qualitative evidence, the paper argues that, in the …

Business Vehicles, Vincent Ooi

Research Collection Yong Pung How School Of Law

When one or more individuals decide to start a business, they can select an appropriate business vehicle from a range of options. There are many commercial and legal reasons which may help to determine that choice.Aside from tax considerations, other major issues to consider include:• the limitation of liability if a company or limited liability partnership is used;• the expectations of suppliers and customers;• the ease of administration, including closing down, of an unincorporated business, and• the requirement to publish information such as profits and remuneration in the case of companies

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 …

Does Ethical Orientation Matter? Determinants Of Public Reaction To Csr Communication, Kyujin Shim, Myojung Chung, Young Kim

Research Collection Lee Kong Chian School Of Business

Employing an experiment study (N = 256), this study examines how individuals ethical orientation (deontology vs. consequentialism) and CSR message frame (normative vs. strategic) influence corporate hypocrisy perception and negative communication intentions toward a given company. Findings demonstrate that deontological ethical orientation and strategic CSR frame induce stronger corporate hypocrisy perception and negative communication intention than do consequential ethical orientation and normative CSR frame. In addition, deontological ethical orientation moderated the effects of CSR frames on negative communication intention toward the company. Implications for both public relations scholarship and practices are discussed.

When Feeling Good Feels "Wrong": Avoiding Hedonic Consumption When It Reflects Immoral Character, Stephanie C. Lin, Taly Reich, Tamar A. Kreps

Research Collection Lee Kong Chian School Of Business

In contrast to traditional mood repair motivations, we find that people desire to experience negative emotions in response to moral violations. Therefore, people avoid hedonic consumption after negatively valenced moral content, and feel uncomfortable when negatively valenced moral content is followed by hedonic frivolous content in social media contexts

Male Immorality: An Evolutionary Account Of Sex Differences In Unethical Negotiation Behavior, Margaret Lee, Marko Pitesa, Madan Pillutla, Stefan Thau

Research Collection Lee Kong Chian School Of Business

Past research finds that men negotiate more unethically than women, others report comparable rates of unethical negotiation behaviors. Based on evolutionary psychology, we predict conditions under which sex differences in unethical negotiation behavior are more versus less pronounced. We theorize that greater levels of unethical behavior among men occur as a consequence of greater male intrasexual competition for mates. This suggests that more male unethical negotiation behavior should primarily emerge in situations associated with intrasexual competition. Using a two-wave survey design, Study 1 found a positive relationship between mating motivation and unethical negotiation behavior for male, but not female employees. …

Communication Or Action? Strategies Fostering Ethical Organizational Conduct And Relational Outcomes, Soojin Kim, Arunima Krishna

Research Collection Lee Kong Chian School of Business

This study investigated the relationships between two public relations strategies, bridging and buffering, and their impact on ethical organizational conduct and relational outcomes. Bridging is a relationship-centric, action-based strategy for problem-solving while buffering is an organization-centric, messaging-based strategy for impression management. In explaining the impact of these two strategies on organizational outcomes, this study examined the role of ethical organizational conduct as a mediator between bridging, buffering, and two relational outcomes. Based on a survey of 105 organizations in Korea, a positive association between bridging strategy and ethical organizational conduct was found, along with paths to relational improvement and conflict …

A Director’S Duty Of Loyalty And The Relevance Of The Company’S Scope Of Business: Cheng Wai Tao V Poon Ka Man Jason, Pearlie M. C. Koh

Research Collection Yong Pung How School Of Law

The Hong Kong Court of Final Appeal has utilised a ‘scope of business’ inquiry to delineate the boundaries of the no-conflict rule for the company director. Such an inquiry is directed at discerning the realistic ability of the company to exploit any particular business opportunity and a strict capacity approach is eschewed, at least where the no-conflict rule is concerned. The decision is premised on a bifurcation between the no-conflict and no-profit rules, suggesting that the tests to determine breach of these fiduciary rules are not necessarily the same, thus permitting a more nuanced consideration of directorial breaches.

Social Capital Of Directors And Corporate Governance: A Social Network Analysis, Zihan Niu, Christopher C. H. Chen

Research Collection Yong Pung How School Of Law

This Article examines how a director’s social capital might affect his or her behavior, the board’s performance, and corporate governance, as well as the potential normative implications of the director’s social network. We argue that the quality of board performance could be improved where the social network closure within the board is high and there are many non-redundant contacts beyond the board. Network closure can improve trust and collaboration within a board, while external contacts may benefit a company with more diverse sources of information. Moreover, different network positioning leads to the inequality of social capital for directors. With more …

Organisational Citizenship Behaviors Of Directors: An Integrated Framework Of Director Role-Identity And Boardroom Structure, Toru Yoshikawa, Helen Wei Hu

Research Collection Lee Kong Chian School Of Business

While directors’ task boundaries are usually ambiguous, some of their activities or behaviors clearly constitute their formal duties, whereas others are usually perceived as organizational citizenship behavior (OCB). Applying identity theory, we present a theoretical model that demonstrates one of the key drivers for directors to engage in OCB with a focus on their role identity. We argue that an individual director’s role identity is one of the key factors that motivate directors to engage in OCB. Furthermore, we propose that two board-level contingencies, board capital, and informal board hierarchy order, can moderate the effect of directors’ role-identity salience on …

Chinese Company Shareholders Revolt Against Communist Control, Singapore Management University

Perspectives@SMU

Shareholders of low-profile Chinese property developer Tianjin Realty Development recently made news by voting to keep party politics out of the Shanghai-listed company's organisational structure. Such action has never been heard of before at any State-Owned Enterprise (SOE) in the history of China's economic modernisation.

The Eu, Free Trade, And Populism, Singapore Management University

Perspectives@SMU

“Free and fair” trade is crucial for world prosperity but more must be done to convince those who have lost out in globalisation

On The Foundations Of Corporate Social Responsibility, Hao Liang, Luc Renneboog

Research Collection Lee Kong Chian School Of Business

A firm’s corporate social responsibility (CSR) practice and its country’s legal origin are strongly correlated. This relation is valid for various CSR ratings coming from several large datasets that comprise more than 23,000 large companies from 114 countries. We find that CSR is more strongly and consistently related to legal origins than to “doing good by doing well”-factors, and most firm and country characteristics such as ownership concentration, political institutions, and degree of globalization. In particular, companies from common law countries have lower level of CSR than companies from civil law countries, and Scandinavian civil law firms assume highest level …

The Board Will Now Vote, Singapore Management University

Research@SMU: Connecting the Dots

Well-structured corporate governance frameworks are necessary to ensure that companies adhere to ethics and best practices, says Professor Toru Yoshikawa.

See the papers:

• Convergence of corporate governance: Critical review and future directions
• The effects of CEO trustworthiness on directors' monitoring and resource provision

The Importance Of Being An Ethical Company, Singapore Management University

Research@SMU: Connecting the Dots

Firms must fine-tune their corporate governance mechanisms to prevent unethical behaviour and take quick action once they are found, says Professor Cheng Qiang.

See the papers:

• Is the decline in the information content of earnings following restatements short-lived?
• CEO contractual protection and managerial short-termism

Guiding Economic Growth Through National Action Plans: Protect, Respect And Remedy, Singapore Management University

Research@SMU: Connecting the Dots

A unique United Nations-commissioned academic research collaboration has issued recommendations on the prevention and mitigation of business-related human rights abuses in the Global South.

See the CALS-SMU reports to UN

See the book: Business and human rights in Southeast Asia: Risk and the regulatory turn

See the paper: A domestic solution for cross border human rights harm: Singapore’s haze pollution law

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.