Earnings Management and Investor Protection: An International Comparison

What makes organizations so similar? We contend that the engine of rationalization and bureaucratization has moved from the competitive marketplace to the state and the professions. Once a set of organizations emerges as a field, a paradox arises: rational actors make their organizations increasingly similar as they try to change them. We describe three isomorphic processes-coercive, mimetic, and normative—leading to this outcome. We then specify hypotheses about the impact of resource centralization and dependency, goal ambiguity and technical uncertainty, and professionalization and structuration on isomorphic change. Finally, we suggest implications for theories of organizations and social change.

The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields (Chinese Translation)

https://cws.journals.yorku.ca/index.php/cws/article/download/14795/13847

Men and Women of the Corporation

This paper investigates the effect of female representation on the board of directors on corporate response to stakeholders’ demands for increased public reporting about climate change-related risks. We rely on the Carbon Disclosure Project as a sustainability initiative supported by institutional investors. Greenhouse gas emissions measurement and its disclosure to investors can be thought of as a first step toward addressing climate change issues and reducing the firm’s carbon footprint. Based on a sample of publicly listed Canadian firms over the period 2008–2014, we find that the likelihood of voluntary climate change disclosure increases with women percentage on boards. We also find evidence that supports critical mass theory with regard to board gender diversity. These findings reinforce initiatives being undertaken around the world to promote gender diversity in corporate governance while demonstrating board effectiveness in stakeholder management.

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Board Gender Diversity and Corporate Response to Sustainability Initiatives: Evidence from the Carbon Disclosure Project

This study examines how family ownership affects the performance and capital structure of 613 Canadian firms from 1998 to 2005. In particular, we distinguish the effect of family ownership from the use of control-enhancing mechanisms. We find that freestanding family owned firms with a single share class have similar market performance than other firms based on Tobin’s q ratios, superior accounting performance based on ROA, and higher financial leverage based on debt-to-total assets. By contrast, family owned firms that use dual-class shares have valuations that are lower by 17% on average relative to widely held firms, despite having similar ROA and financial leverage.

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Family values: Ownership structure, performance and capital structure of Canadian firms.

We investigate the relationship between corporate governance quality and dividend policy in Canada Based on the agency theory predictions, we consider the effect of two conflicting hypotheses about the effect of corporate governance on dividend payouts: the outcome and substitution hypotheses The effectiveness of firm-level governance mechanisms is assessed through the Globe & Mail annual corporate governance index and four sub-categories scores (board composition, shareholding and compensation issues, shareholder rights issues and corporate governance disclosure policy) Using a sample of 714 firm-years listed on the Toronto Stock Exchange over the period 2002-2005, our results show that firms with stronger corporate governance have higher dividend payouts Among the four components of the corporate governance index, we document that board composition and shareholder rights’ policy are positively related to payout ratios We also find a positive association between firm size, the level of free cash flows and dividend payouts Finally, we document a negative relationship between firm risk, US cross-listing and dividend payouts Taken together our results are consistent with the outcome model of dividend policy

https://papers.ssrn.com/sol3/Delivery.cfm/jbfa_2192.pdf?abstractid=1639218&mirid=2

Corporate Governance and Dividend Policy: Shareholders’ Protection or Expropriation?

This study investigates the relationship between ownership structure and acquiring firm performance. A large proportion of Canadian public companies have controlling shareholders (families) that often exercise control over voting rights while holding a small fraction of the cash flow rights. This is achieved through the concurrent use of dual class voting shares and stock pyramids. Many suggest that these ownership structures involve larger agency costs than those imposed by dispersed ownership structures and that they distort corporate decisions with respect to investment choices such as acquisitions. We find that average acquiring firm announcement period abnormal returns for our sample of 327 Canadian transactions are positive over the 1998–2002 period. Cash deals, acquisitions of unlisted targets and cross-border deals have a positive impact on value creation. Governance mechanisms (outside block-holders, unrelated directors and small board size) also have a positive influence on the acquiring firm performance. Further, the positive abnormal returns are greater for family firms. We do not find that separation of ownership and control has a negative impact on performance. These results suggest that, contrary to other jurisdictions offering poor minority shareholder protection or poor corporate governance, separation of control and ownership is not viewed as leading to value destroying mergers and acquisitions, i.e., market participants do not perceive families as using M&A to obtain private benefits at the expense of minority shareholders. We do find a non-monotonic relationship between ownership level and acquiring firm abnormal returns. Ownership of a majority of the cash flow rights has a negative impact on announcement returns. This is consistent with the view that large shareholders may undertake less risky projects as their wealth invested in the firm increases.

Separation of Ownership from Control and Acquiring Firm Performance: The Case of Family Ownership in Canada

This paper examines the relationship between board of directors' effectiveness and voluntary climate change disclosures. Since risk management and reporting fall under the board's responsibility, we relate board effectiveness to the firm's decision to voluntarily respond to the Carbon Disclosure Project (CDP) annual questionnaire as well as the quality of disclosures about climate-change-related risks and strategies to mitigate them.

Our results show a positive association between board effectiveness and the firm's decision to answer the CDP questionnaire as well as its carbon disclosure quality. The paper contributes to the ongoing debate on the determinants of voluntary climate change disclosures. Our findings highlight the importance of the board of directors' role in enhancing the transparency and relevance of voluntary disclosures of climate change business impacts. Copyright © 2014 John Wiley & Sons, Ltd and ERP Environment

Board Effectiveness and the Voluntary Disclosure of Climate Change Information

This study investigates the joint effect of corporate ownership and board of directors' diversity configurations on the success of strategic merger and acquisition (M&A) decisions. Board diversity is defined as the extent to which its demographic diversity as measured by the culture, nationality, gender and experience of its directors complements its statutory diversity. A theoretical framework linking ownership, board diversity and M&A strategic decision making is proposed and tested. Based on a sample of 289 M&A decisions undertaken by Canadian firms over the period 2000–2007, demographic diversity is found to have a clear and non-linear effect on M&A performance while statutory diversity is of limited influence. Ownership is found to influence the effect of diversity, making the relation finer and more precise. This has practical implications. First, statutory diversity is not sufficient for well-performing boards. Also, ownership is an important factor. The most advocated board diversity aimed at insuring the board's independence is not valid across all ownership configurations. From a public policy perspective, results provide support for the principles-based approach in governance. Governance regimes should encourage the search for a balance between board diversity and the need for cohesion that best serves the firm's purpose and obligations.

/pdf/what-makes-better-boards-a-closer-look-at-diversity-and-4u3wp2mojc.pdf

Walid Ben-Amar

Papers

Board Gender Diversity and Corporate Response to Sustainability Initiatives: Evidence from the Carbon Disclosure Project

Corporate Governance and Dividend Policy: Shareholders’ Protection or Expropriation?

Separation of Ownership from Control and Acquiring Firm Performance: The Case of Family Ownership in Canada

Board Effectiveness and the Voluntary Disclosure of Climate Change Information

What Makes Better Boards? A Closer Look at Diversity and Ownership