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Research Collection Lee Kong Chian School Of Business

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Articles 91 - 120 of 127

Full-Text Articles in Business Law, Public Responsibility, and Ethics

Communicating Corporate Social Responsibility In Singapore: Towards More Effective Media Relations, A. Pang, Angela Ka Ying Mak, Joanne M. H. Lee Jan 2015

Communicating Corporate Social Responsibility In Singapore: Towards More Effective Media Relations, A. Pang, Angela Ka Ying Mak, Joanne M. H. Lee

Research Collection Lee Kong Chian School Of Business

Organizations face several impediments when it comes to communicating their corporate social responsibility (CSR) engagement to the public via the media. This paper examines practitioners’ and journalists’ perception of CSR communication using the agenda-building model (Qiu Q, Cameron GT, Communicating health disparities: building a supportive media agenda. VDM Verlag, Saarbruecken, 2008) by examining news coverage of how practitioners and journalists understand CSR, what types of CSR stories get covered in the media, and how are CSR stories portrayed in the media. News coverage of Singapore’s mainstream publications, The Straits Times, The Business Times, and The New Paper, were analyzed. The …

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Substitutes Or Complements? A Configurational Examination Of Corporate Governance Mechanisms, Vilmos Misangyi, Abhijith G. Acharya Dec 2014

Substitutes Or Complements? A Configurational Examination Of Corporate Governance Mechanisms, Vilmos Misangyi, Abhijith G. Acharya

Research Collection Lee Kong Chian School Of Business

We conduct an exploratory qualitative comparative case analysis of the S&P 1500 firms with the aim of elaborating theory on how corporate governance mechanisms work together effectively. To do so, we integrate extant theory and research to specify the bundle of mechanisms that operate to mitigate the agency problem among publicly traded corporations and review what previous research has said about how these mechanisms combine. We then use the fuzzy-set approach to qualitative comparitive analysis (QCA) to explore the combinations of governance mechanisms that exist among the S&P 1500 firms that achieve high (and not-high) profitability. Our findings suggest that …

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Rethinking Governance In Management Research: From The Editors, Laszlo Tihanyi, Scott Graffin, Gerard George Dec 2014

Rethinking Governance In Management Research: From The Editors, Laszlo Tihanyi, Scott Graffin, Gerard George

Research Collection Lee Kong Chian School Of Business

In the field of management, the study of governance has primarily dealt with decision-making by boards of directors, chief executives, and senior managers. The corporate governance literature has generated important insights regarding incentive alignment, risk taking, and coordination challenges. Emerging trends, highlighted in this issue, raise new questions regarding managerial roles, organizational contexts, internal and social processes, and changes in governance over time. We encourage management scholars to rethink their approach to governance research by considering stakeholder engagement, the implications of big data, social impact, global dimensions, and comparative analysis of governance. A broadened conceptualization of governance may also deal …

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Organizations With Purpose: From The Editors, Elaine Hollensbe, Charles Wookey, Loughlin Hickey, Gerard George, Vincent Nichols Oct 2014

Organizations With Purpose: From The Editors, Elaine Hollensbe, Charles Wookey, Loughlin Hickey, Gerard George, Vincent Nichols

Research Collection Lee Kong Chian School Of Business

Trust in business is improving from its nadir in 2009, but still remains dishearteningly low. Recent surveys report that only one in four members of the general public trusts business leaders to correct issues, and only one in five trusts them to tell the truth and make ethical and moral decisions. The 2014 Edelman Trust Barometer, a 27-country survey with more than 33,000 respondents, finds that overall trust declined across countries and sectors, with CEOs ranking second lowest at 43% and government officials the lowest at 36% as credible spokespeople to win public trust (Edelman Berland, 2014). This public distrust …

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Firm Litigation Risk And The Insurance Value Of Corporate Social Performance, Ping-Sheng Koh, Cuili Qian, Heli Wang Oct 2014

Firm Litigation Risk And The Insurance Value Of Corporate Social Performance, Ping-Sheng Koh, Cuili Qian, Heli Wang

Research Collection Lee Kong Chian School Of Business

This paper advances the risk management perspective that superior social performance enhances firm value by serving as an ex ante valuable insurance mechanism. We posit that good social performance is more valuable as an insurance mechanism for firms with higher litigation risks. Moreover, value generation of corporate social performance (CSP) depends on whether a firm has gained pragmatic legitimacy (i.e., a firm's financial health) and moral legitimacy (i.e., whether or not a firm operates in a socially contested industry) among its stakeholders. We find that the value of CSP as insurance against litigation risk is practically significant, adding 2 to …

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Contrasting Perspectives On China's Rare Earths Policies: Reframing The Debate Through A Stakeholder Lens, Leslie Hayes-Labruto, Simon J.D. Schillebeeckx, Mark Workman, Nilay Shah Dec 2013

Contrasting Perspectives On China's Rare Earths Policies: Reframing The Debate Through A Stakeholder Lens, Leslie Hayes-Labruto, Simon J.D. Schillebeeckx, Mark Workman, Nilay Shah

Research Collection Lee Kong Chian School Of Business

This article critically compares China's rare earth policy with perspectives upheld in the rest of the world (ROW). We introduce rare earth elements and their importance for energy and present how China and the ROW are framing the policy debate. We find strongly dissonant views with regards to motives for foreign direct investment, China's two-tiered pricing structure and its questionable innovation potential. Using the metaphor of "China Inc.", we compare the Chinese government to a socially responsible corporation that aims to balance the needs of its internal stakeholders with the demands from a resource-dependent world. We find that China's internal …

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Political Connection And Firm Value, James S. Ang, David K. Ding, Tiong Yang Thong Aug 2013

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 …

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A New Look At The Corporate Social-Financial Performance Relationship: The Moderating Roles Of Temporal And Inter-Domain Consistency In Corporate Social Performance, Heli Wang, Jaepil Choi Feb 2013

A New Look At The Corporate Social-Financial Performance Relationship: The Moderating Roles Of Temporal And Inter-Domain Consistency In Corporate Social Performance, Heli Wang, Jaepil Choi

Research Collection Lee Kong Chian School Of Business

The authors develop the argument that the establishment of good stakeholder relations is influenced not only by a firm’s having a high level of corporate social performance but also by its ability to deliver consistent social performance. Therefore, both level and consistency in corporate social performance should have significant financial implications. More specifically, the authors suggest that level and two types of consistency in corporate social performance—temporal consistency and interdomain consistency—interact positively to influence a firm’s financial performance. Using a sample of 622 firms and 2,365 firm-year observations based on the Kinder, Lydenberg, Domini, & Co. data, the authors found …

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Rules Or Consequences? The Role Of Ethical Mind-Sets In Moral Dynamics, Gert Cornelisson, Michael Ramsay Bashshur, Julian Rode, Marc Le Menestrel Feb 2013

Rules Or Consequences? The Role Of Ethical Mind-Sets In Moral Dynamics, Gert Cornelisson, Michael Ramsay Bashshur, Julian Rode, Marc Le Menestrel

Research Collection Lee Kong Chian School Of Business

Recent research on the dynamics of moral behavior has documented two contrasting phenomena—moral consistency and moral balancing. Moral balancing refers to the phenomenon whereby behaving ethically or unethically decreases the likelihood of engaging in the same type of behavior again later. Moral consistency describes the opposite pattern—engaging in ethical or unethical behavior increases the likelihood of engaging in the same type of behavior later on. The three studies reported here supported the hypothesis that individuals’ ethical mind-set (i.e., outcome-based vs. rule-based) moderates the impact of an initial ethical or unethical act on the likelihood of behaving ethically on a subsequent …

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Employee Surveillance And The Modern Workplace, Marko Pitesa Jun 2012

Employee Surveillance And The Modern Workplace, Marko Pitesa

Research Collection Lee Kong Chian School Of Business

Employee surveillance is rapidly becoming widespread in the modern workplace. The rise of information technologies is enabling the development of unprecedented methods of surveillance and employees as well as employers are now facing a need for a reassessment of the system of moral relations this phenomenon entails. This chapter provides an overview of the most widespread workplace surveillance methods and tries to identify the stakeholders and analyse the relations between them. Finally, the key findings of this ethical assessment are pointed out and guidelines for a morally responsible approach to workplace surveillance are proposed. The level of the analysis, in …

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Why Corporate Social Responsibility Will Emerge As A Driver Of Effective And Compelling Differentiation For Chinese Brands, Joseph Baladi Jan 2012

Why Corporate Social Responsibility Will Emerge As A Driver Of Effective And Compelling Differentiation For Chinese Brands, Joseph Baladi

Research Collection Lee Kong Chian School Of Business

Although the responsibility and role of business within society have evolved over the past two decades, they remain issues that retain conceptual dimensions. This means that instead of consensus over form and function, both are surrounded by a persistent cloud of disagreement and confusion. Too many people remain unsure about what they represent, the importance they play and the impact they have (or should have) on business as well as society. For one thing, different interpretations of what defines business responsibility to society exist. These range from concern over business’ environmental impact and contribution to climate change, to sustainability practices, …

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Examining The Chinese Approach To Crisis Management: Cover-Ups, Saving Face, And Taking The “Upper Level Line”, Lan Ye, Augustine Pang Oct 2011

Examining The Chinese Approach To Crisis Management: Cover-Ups, Saving Face, And Taking The “Upper Level Line”, Lan Ye, Augustine Pang

Research Collection Lee Kong Chian School Of Business

In 2008, the Sanlu Group, a former giant in the Chinese dairy industry and a quintessential Chinese organization, was confronted with the melamine-contaminated milk crisis. Its products were blamed for causing at least six babies' deaths and damaging the kidneys of about 294,000 babies. Sanlu was criticized for its crisis handling, which resulted in its collapse several months later. Using the contingency theory of strategic conflict management and Coombs' typology of crisis communication strategies, this study explored Sanlu's crisis management as a mirror to understanding the Chinese approach to crisis management. Findings showed that influenced by political, social, and cultural …

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Obtaining Intangible And Tangible Benefits From Corporate Social Responsibility, Wei Nurn Chong, Gilbert Tan Sep 2010

Obtaining Intangible And Tangible Benefits From Corporate Social Responsibility, Wei Nurn Chong, Gilbert Tan

Research Collection Lee Kong Chian School Of Business

The relationship between corporate social responsibility (CSR) and corporate financial performance has been heavily studied in past research. However, little theory has been developed on how CSR may lead to greater corporate financial performance. In this paper, the authors attempt to fill this theoretical gap by explaining how CSR leads to the tangible benefits of attracting better employees, reduced turnover rate, greater efficiency, and reduced operating costs, via the intangible benefits of firm reputation, organizational commitment, and learning. Thereafter, managerial implications and further research opportunities are discussed.

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Corporate Valuation Around The World: The Effects Of Governance, Growth, And Openness, Choong Tze Chua, Cheol S. Eun, Sandy Lai Jul 2010

Corporate Valuation Around The World: The Effects Of Governance, Growth, And Openness, Choong Tze Chua, Cheol S. Eun, Sandy Lai

Research Collection Lee Kong Chian School Of Business

The purpose of this paper is to provide a comprehensive analysis of corporate valuation around the world. Specifically, we (i) document and compare corporate valuation around the world, and (ii) identify the key factors that drive cross-country differences in valuation. In doing so, we utilize the country-level Tobin's q (CTQ), computed as the ratio of the aggregate market value to book value of all assets held by all public firms domiciled in a country, which amounts to the Tobin's q for the [`]market portfolio' of the country. The key findings of the paper are: First, CTQ varies greatly across countries, …

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Firm-Specific Knowledge Resources And Competitive Advantage: The Roles Of Economic- And Relationship-Based Employee Governance Mechanisms, Heli Wang, Jinyu He, Joseph T. Mahoney Dec 2009

Firm-Specific Knowledge Resources And Competitive Advantage: The Roles Of Economic- And Relationship-Based Employee Governance Mechanisms, Heli Wang, Jinyu He, Joseph T. Mahoney

Research Collection Lee Kong Chian School Of Business

The resource-based view of the firm emphasizes the role of firm-specific resources, especially firm-specific knowledge resources, in helping a firm to achieve sustainable competitive advantage. However, the deployment of firm-specific knowledge often requires key employees to make specialized human capital investments that are not easily redeployable to other settings. Thus, in the absence of effective safeguards and trust building devices, employees with foresight may be reluctant to make such specialized investments. This study explores both economic- and relationship-based governance mechanisms that might mitigate this underinvestment problem. Effective use of these governance mechanisms enables a firm to obtain greater performance from …

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Chinese Philanthropy In Southeast Asia: Between Continuity And Change, Thomas Menkhoff Jan 2009

Chinese Philanthropy In Southeast Asia: Between Continuity And Change, Thomas Menkhoff

Research Collection Lee Kong Chian School Of Business

What makes ethnic Chinese philanthropy tick? Thomas Menkhoff looks at what drives prominent Chinese business leaders to give back to society and offers a glimpse of the changing face of ethnic philanthropy.

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Change And Continuity In Japanese Corporate Governance, Toru Yoshikawa, Jean Mcguire Mar 2008

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 …

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Too Little Or Too Much? Untangling The Relationship Between Corporate Philanthropy And Corporate Financial Performance, Heli Wang, Jaepil Choi, Jiatao Li Jan 2008

Too Little Or Too Much? Untangling The Relationship Between Corporate Philanthropy And Corporate Financial Performance, Heli Wang, Jaepil Choi, Jiatao Li

Research Collection Lee Kong Chian School Of Business

What is the relationship between corporate philanthropy and corporate financial performance? Some scholars argue that corporate philanthropy facilitates stakeholder cooperation and helps secure access to critical resources controlled by those stakeholders, suggesting that corporate philanthropy should be positively associated with corporate financial performance. In contrast, other scholars take a negative stance, suggesting that corporate philanthropy diverts valuable corporate resources and tends to inhibit corporate financial performance. Existing empirical studies have not found conclusive evidence on the corporate philanthropy-financial performance relationship. Integrating and extending existing perspectives, this study develops the argument that the relationship between corporate philanthropy and financial performance is …

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Including Corporate Social Responsibility, Environmental Sustainaibility, And Ethics In Calibrating Mba Job Preferences, David B. Montgomery, Catherine A. Ramus Dec 2007

Including Corporate Social Responsibility, Environmental Sustainaibility, And Ethics In Calibrating Mba Job Preferences, David B. Montgomery, Catherine A. Ramus

Research Collection Lee Kong Chian School Of Business

It has long been understood by organizations and academics that the people make the place (Schneider, 1987). A quality workforce is an important source of competitive advantage, and organizational and financial success for firms (Capelli, 2000; Chapman, Uggerslev, Carroll, Piasentin, & Jones, 2005; Huselid, 1995; Pfeffer, 1994, 1998; Teece, 1998). Attracting talent is difficult for business organizations, and may become increasingly so in the years to come, as demographic and economic factors create a war for talent (Chapman, et al., 2005; Johnson, 2000; Michaels, Handfield-Jones, & Axelrod, 2001). Particularly salient in this war for talent is the ability to attract …

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Japanese Corporate Governance: Structural Change And Financial Performance, Asli M. Colpan, Toru Yoshikawa, Takashi Hikino, Hiroaki Miyoshi Dec 2007

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 …

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The Promise Of A Managerial Values Approach To Corporate Philanthropy, Jaepil Choi, Heli Wang Nov 2007

The Promise Of A Managerial Values Approach To Corporate Philanthropy, Jaepil Choi, Heli Wang

Research Collection Lee Kong Chian School Of Business

This article presents an alternative rationale for corporate philanthropy based on managerial values of benevolence and integrity. On the one hand, top managers with benevolence and integrity values are more likely to spread their intrinsic concern for others into the wider society in the form of corporate philanthropy. On the other hand, top managers high in benevolence and integrity are likely to contribute to improved managerial credibility and trusting firm-stakeholder relationships, thereby improving corporate financial performance. Therefore, the article makes the argument that both corporate philanthropy and corporate financial performance can better be interpreted as resulting from managers’ benevolence and …

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Corporate Governance Reform As Institutional Innovation: The Case Of Japan, Toru Yoshikawa, Lai Si Tsui-Auch, Jean Mcguire Nov 2007

Corporate Governance Reform As Institutional Innovation: The Case Of Japan, Toru Yoshikawa, Lai Si Tsui-Auch, Jean Mcguire

Research Collection Lee Kong Chian School Of Business

To address the convergence-divergence debate in corporate governance, we conduct a multiple-case, multiple-level study to analyze the diffusion of governance innovation in Japan. We argue that Japanese systems of corporate governance neither fully converge to, nor completely diverge from, the Anglo-American model. Rather, Sony-the pioneer of corporate governance reforms-and its followers selectively adopted features from this model, decoupled them from the original context, and tailored them to fit to their own situations to generate governance innovation. However, we find that the spread of innovation across firms and institutional levels is far from linear and straightforward, and that other well-regarded firms …

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Perceptions Of Corporate Social Responsibility: An Empirical Study In Singapore; Strategic Management Policy, Gilbert Yip Wei Tan, Rajah Vellan Komaran Jul 2006

Perceptions Of Corporate Social Responsibility: An Empirical Study In Singapore; Strategic Management Policy, Gilbert Yip Wei Tan, Rajah Vellan Komaran

Research Collection Lee Kong Chian School Of Business

In Singapore, there is no doubt that there have been efforts by various local and foreign corporations to incorporate some CSR principles in their operations. Indeed, there was a national initiative modeled after the tripartite approach to industrial relations where national economic and industrial issues are collectively resolved by the government, employers and employees. Against the backdrop of this national initiative and the effort by some corporations to incorporate CSR principles, not much is really known about the state of affairs in Singapore.

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Strategic Investments In Japanese Corporations: Do Foreign Portfolio Owners Foster Underinvestment Or Appropriate Investment?, Parthiban David, Toru Yoshikawa, Murali D. R. Chari, Abdul A. Rasheed Jun 2006

Strategic Investments In Japanese Corporations: Do Foreign Portfolio Owners Foster Underinvestment Or Appropriate Investment?, Parthiban David, Toru Yoshikawa, Murali D. R. Chari, Abdul A. Rasheed

Research Collection Lee Kong Chian School Of Business

This paper investigates the effect of foreign ownership on strategic investments in Japanese corporations. Foreign owners are typically portfolio investors who frequently buy and sell shares and hold diversified portfolios of small stakes in many firms. Prior research has presented two conflicting perspectives on the role of such investors: (a) their frequent trading leads to pressure for short-term returns that fosters underinvestment; (b) their active trading fosters appropriate investments. We investigated the relationship between foreign ownership and strategic investments using dynamic panel data analysis of a sample of 146 Japanese manufacturing firms from 1991 to 1997. We found that foreign …

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Substitution Or Symbolic Effects? A Reexamination Of Corporate Governance And Firm Performance, Xuesong Geng, Dean Hennessy, Kimberly Bates Jun 2006

Substitution Or Symbolic Effects? A Reexamination Of Corporate Governance And Firm Performance, Xuesong Geng, Dean Hennessy, Kimberly Bates

Research Collection Lee Kong Chian School Of Business

In this paper, we use a sample of large Canadian corporations to test the substitution hypothesis and the symbolic hypothesis. We find that the positive effect of board independence on firm performance declines as managerial ownership increases. This effect becomes non-positive when highly concentrated managerial ownership makes independent board more symbolic than effective.

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Too Little Or Too Much? Reexamining The Relationship Between Corporate Charitable Giving And Corporate Financial Performance, Heli Wang, Jaepil Choi, Jiatao Li Aug 2005

Too Little Or Too Much? Reexamining The Relationship Between Corporate Charitable Giving And Corporate Financial Performance, Heli Wang, Jaepil Choi, Jiatao Li

Research Collection Lee Kong Chian School Of Business

How do corporate charitable contributions affect corporate financial performance? Instrumental stakeholder theory posits that corporate giving can lead to high levels of corporate financial performance through improved stakeholder relations. In contrast, agency theory suggests that corporate giving diverts valuable corporate resources and inhibits corporate financial performance. Extant empirical studies that have examined the relationship found inconclusive results. We depart from and extend the existing literature in two main aspects. First, building upon the instrumental stakeholder argument and agency perspective, we develop the argument that there is an inverse U-shaped relationship between corporate charitable giving and corporate financial performance. Second, we …

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The Impact Of Ownership Structure On Wage Intensity In Japanese Corporations, Toru Yoshikawa, Phillip H. Phan, Parthiban David Apr 2005

The Impact Of Ownership Structure On Wage Intensity In Japanese Corporations, Toru Yoshikawa, Phillip H. Phan, Parthiban David

Research Collection Lee Kong Chian School Of Business

The authors studied the effect of ownership structure on human capital investments as indicated by wage intensity, defined as the ratio of expenditure on employee wages to sales, in a sample of 996 Japanese manufacturing firms during their economic recession of 1998-2002. They found that domestic shareholders, with interests beyond financial considerations, enhance wage intensity, especially when performance is low, and thereby safeguard human capital investments. Foreign shareholders with sole interest in financial returns have an opposite effect; they reduce wage intensity when firm performance is low.

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The Effects Of Ownership And Capital Structure On Board Composition And Strategic Diversification In Japanese Corporations, Toru Yoshikawa, Phillip H. Phan Mar 2005

The Effects Of Ownership And Capital Structure On Board Composition And Strategic Diversification In Japanese Corporations, Toru Yoshikawa, Phillip H. Phan

Research Collection Lee Kong Chian School Of Business

The board of directors plays an important role in solving the agency problem between shareholders and management. This paper investigates the relationships between ownership and board structure with the diversification strategy of large Japanese firms. The results show that corporate nominee directors are associated with lower levels of product diversification of their investee firms. This suggests that nominee directors in large Japanese corporations see themselves representing specific interests and therefore investors should pay attention to board composition in order to assess the level of protection they can expect to receive. Even without any apparent agency problem with management, there remains …

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Ownership Structure, Investment Behaviour And Firm Performance In Japanese Manufacturing Industries, Eric Gedajlovic, Toru Yoshikawa, Motomi Hashimoto Jan 2005

Ownership Structure, Investment Behaviour And Firm Performance In Japanese Manufacturing Industries, Eric Gedajlovic, Toru Yoshikawa, Motomi Hashimoto

Research Collection Lee Kong Chian School Of Business

Using data spanning the 1996-98 fiscal years of 247 of Japan's largest manufacturers, we empirically evaluate the extent to which a firm's investment behaviour and financial performance are influenced by its ownership structure. To do so, we examine six distinct categories of Japanese shareholders: foreign investors, investment funds, pension funds, banks and insurance companies, affiliated companies and insiders. Our findings strongly indicate that the relationship between the equity stakes of a particular category of investor and a firm' s financial performance and investment behaviour is considerably more complex than is depicted in simple principal-agent representations. Such a result emphasizes the …

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The Relationship Between Governance Structure And Risk Management Approaches In Japanese Venture Capital Firms, Toru Yoshikawa, Phillip H. Phan, Jonathan Linton Nov 2004

The Relationship Between Governance Structure And Risk Management Approaches In Japanese Venture Capital Firms, Toru Yoshikawa, Phillip H. Phan, Jonathan Linton

Research Collection Lee Kong Chian School Of Business

This paper attempts to understand what drives Japanese venture capital (JVC) fund managers to select either active managerial monitoring or portfolio diversification to manage their firms' investment risks [J. Bus. Venturing 4 (1989) 231]. Unlike U.S. venture capitalists that use active managerial monitoring to gain private information in order to maximize returns [J. Finance 50 (1995) 301], JVCs have traditionally used portfolio diversification to attenuate investment risks [Hamada, Y., 2001. Nihon no Bencha Kyapitaru no Genkyo (Current State of Japanese Venture Capital), Nihon Bencha Gakkai VC Seminar, May 7]. We found that performance pay is positively related to active monitoring …

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