Showing papers on "Corporate governance published in 1986"

The Economics of Public Utility Regulation

Abstract: The Economics of Public Utility Regulation surveys the large literature on the regulation of public utilities and provides industry studies with specific applications of the more general theories. The industries covered Include telecommunications, electricity, gas, and water. The authors explain the economic concepts involved And present a rich framework for understanding the institutional and administrative context of the regulatory process. Michael Crew and Paul Kleindorfer consolidated their reputations as experts in the field of regulated public utilities in 1979, when their book Public Utility Economics was published. Since then, theoretical concepts for dealing with utilities have been significantly extended, and utilities themselves have been dramatically transformed. This new book presents an indispensible update. The opening section introduces the basic welfare foundations, including a neoclassical treatment of efficiency and equity and a development of the principles of the new institutional economics. These concepts are then employed to examine the problems of natural monopoly and regulation. The material on welfare-optimal pricing puts special emphasis on the peak-load pricing problem, which is shown to be pervasive in public utilities of all varieties. Both deterministic models and stochastic models of peak-load pricing are examined. Alternative governance structures for natural monopoly are evaluated in some detail, with the U.S. system of privately owned regulated monopolies and the predominant governance structure in the U.S. - rate-of-return regulation - receiving the greatest attention. The authors next take a close-up look at four specific public utilitiesfocusing on pricing and efficiency. Michael A. Crew is Professor of Economics at the Graduate School of Management, Rutgers University. Paul R. Kleindorfer is Professor of Decision Sciences and Economics at the Wharton School, University of Pennsylvania, and Director of the Center for the Study of Organizational Innovation. The Economics of Public Utility Regulation is the thirteenth in the MIT Press Series on the Regulation of Economic Activity, edited by Richard Schmalensee.

Worker Attachment and Workplace Authority

Abstract: This paper develops a sociological approach to worker attachment that differs markedly from the capital value model of labor economics and the job satisfaction/organizational committment approach of organizational psychology. Given that the worker's subordination is a key structural feature of the employment relation, the paper argues that the experience of subordination, as shaped by institutionalized normative codes governing the organization of domination, ought to be a central feature of models of attachment. Drawing on Weber's theory of authority, the paper holds that attachment is partly the outcome of a process whereby workers grade employer governance practices by reference to legitimating beliefs that prescribe proper modes of domination. Focusing on the American case, it is argued that this process of legitimation and attachment is governed largely by a belief in legality. A qualitative review of historical evidence suggests that, controlling for the economic rewards of work, the relationship between forms of governance and attachment over the last hundred years may be understood by reference to workers' belief in legality. The findings of an exploratory analysis of data from a firm and a national sample of workers lends additional support to the approach. The evidence weighs in favor of an approach that links normative principles of domination to worker attachment.

Industry influence on corporate working capital decisions

Abstract: This paper provides evidence that corporate working capital decisions are affected by the industry/sector in which firms belong

Mergers and the market for corporate control: the Canadian evidence

Abstract: The proposition that a competitive market for corporate control effectively limits managerial divergence from shareholder wealth maximization implies that corporate takeovers are beneficial to shareholders of both firms involved in the transaction. This paper presents the first systematic large-sample study of the valuation effects of Canadian mergers and concludes that these investments indeed create significant gains to shareholders of both bidder and target firms. This evidence, which is particularly interesting in light of extant evidence on the performance of u.s. bidder firms, indicates that the Canadian market for corporate control plays an important role in promoting an optimal resource allocation.

The New Corporate Directors: Insights for Board Members and Executives

Abstract: The Board and Corporate Governance. The Director's Role. The Role of the Chairman-CEO. Dealing with Crises. The Nominating Committee. The Compensation Committee. The Audit Committee. The Finance Committee. Nonprofit Organizations. Trends. Appendix.

Technology, Residual Claimants, and Corporate Control

Abstract: Corporate law requires that incorporated firms be managed under the direction of a board of directors who are legally accountable to the firm's shareholders (Henn; Eisenberg). The latter delegate to the board the formal authority to hire, fire, and compensate the firm's professional managers. Economists have begun to study how governance structures like the board of directors limit managerial discretion (agency) in large corporations, economize on the transaction costs associated with this organizational form, and influence firm performance (Baysinger and Butler, 1985a; Fama and Jensen, 1983a, 1983b; Williamson, 1984). Along the same lines, organization theorists have examined the board's ability to set the premises of managerial decision making through the exercise of its formal authority and, hence, to control the goal setting and strategy formulation processes (Mizruchi). Preliminary empirical tests tend to support the notion that the board of directors contributes to the effective governance of large business corporations (Baysinger and Butler, 1985a).

The evolution of transaction governance in the tectile-clothing industry

Abstract: This paper argues that the structural evolution of the textile-clothing industry is mainly the result of organizational innovations to economize on transactional costs and increase the dynamic efficiency of firms. The rise of managerial hierarchies in the coordination of diversified activities, the drop in the number of vertical hierarchical arrangements and the diffusion of intermediate governance structures are the main changes in industrial organization. There is evidence from the Italian industry which supports this trend.

Nonprofit Boards: Roles, Responsibilities, and Performance

Abstract: Models of Governance and Leadership. Accountability: A Board's Fiduciary Obligations. Structuring a Board for Maximum Effectiveness. Organizing the Board's Work. The Core Responsibilities of a Nonprofit Board. Building a Cooperative Spirit. Effective Board Meetings. Maintaining Focus on Mission. New Challenges for Nonprofit Boards. Appendices. Notes. Index.

Close Corporations and Agency Costs

Abstract: The economic analysis of publicly held corporations has exploded in recent years. Yet there has been little attention to the more common corporate form of organization, the closely held corporation.2 This is not because one analysis will cover both. There is a fundamental difference between closely and publicly held corporations. Risk bearing and management are separated in publicly held but not in closely held corporations. The presence or absence of this separation of functions determines the governance mechanisms that have evolved in the two types of firms.3

The Education of Linguistic and Cultural Minorities in the OECD Countries

Abstract: This book provides an overview of the principles used by policy makers in western industrialized countries as they seek to meet the educational needs of cultural and linguistic minorities as diverse as Australian aboriginal peoples, resident foreign workers in Western Europe and Francophone minorities in Canadian provinces. This is a synthesis of information gathered in more than 30 national case studies and consultants' reports prepared for an OECD-sponsored study entitled: Finance, Organisation and Governance of Education for Special Populations. Drawing on this data, the author shows that current policies fit within a relatively simple framework of development by stages, each stage determined by the assumptions used in defining the educational problem to be solved. At the lower end of the scale, methods are borrowed from special education of the mentally retarded; at the upper end, the minorities are treated as equals or near equals in mature bilingual and multilingual nations such as Finland or Switzerland. The emphasis is on showing how policy makers grapple with tradeoffs to determine the best policy "mix", such as between centralization and decentralization or between financial incentive schemes and direct regulation, in order to ensure adequate educational services for the minorities. The entire analytical framework is shown to fit within an integrated model linking minority aspirations, public attitudes and governmental policy responses.

Public policy issues for management

Abstract: 1 Public Policy Issues 2 Government Regulation 3 Antitrust Policies 4 Corporate Governance 5 Wealth and Poverty 6 Equal Employment Opportunity 7 Occupational Safety and Health 8 Consumer Protection 9 The Physical Environment and Pollution Control 10 International Public Policy Issues

What is necessary for corporate moral excellence

Abstract: At the beginning of this essay I sketch a solution to the question of how we can predicate moral properties, such as moral excellence, to the corporation. This solution suggests that there are at least two necessary criteria for corporate moral excellence: (1) a moral corporate culture and (2) the moral autonomy of the individual within the corporate culture. I put forward guidelines for the development of both and argue for their necessary interdependence.

Corporate planning and capital investment

Abstract: Based on interviews with corporate managers and reviews of corporate plannitlg documents, corporate planning and implementation processes related to capital investment are examlned in four large corporations. From the examination, models are developed and estimated on corporate plans and actual outcomes to explain corporate forecasts of capital investment, forecasts of changes in debt, and actual capital investment. The results of both the qualitative and quantitative data analyses are summarized and a new conceptual framework for the determinants of corporate capital investment is proposed.

Corporate governance in korea

Abstract: The 1984 revision of Korea's Commercial Code failed to respond adequately to the issues of structure and governance in large Korean corporations. The managements of such corporations are able to circumvent both legal and market restraints on this conduct and thus act more freely than their U.S. counterparts. If the Korean economy is to continue expanding the government must confront the problem of management accountability or suffer stagnation as foreign and domestic investors seek other markets.

Models of governance in multihospital systems. Implications for hospital and system-level decision-making.

Abstract: This study utilizes data from a national survey of 159 multihospital systems in order to describe the types of governance structures currently being utilized, and to compare the policy making process for various types of decisions in systems with different approaches to governance. Survey results indicate that multihospital systems most often use one of three governance models. Forty-one percent of the systems (including 33% of system hospitals) use a parent holding company model in which there is a system-wide corporate governing board and separate governing boards for each member hospital. Twenty-two percent of systems in the sample (but 47% of all system hospitals) utilize what we have termed a modified parent holding company model in which there is one system-wide governing board, but advisory boards are substituted for governing boards at the local hospital level. Twenty-three percent of the sampled systems (including 11% of system hospitals) use a corporate model in which there is one system-wide governing board but no other governing or advisory boards at either the divisional, regional or local hospital levels. A comparison of systems using these three governance approaches found significant variation in terms of system size, ownership and the geographic proximity of member hospitals. In order to examine the relationship between alternative approaches to governance and patterns of decision-making, the three model types were compared with respect to the percentages of systems reporting that local boards, corporate management and/or system-wide corporate boards have responsibility for decision-making in a number of specific issue areas. Study results indicate that, regardless of model type, corporate boards are most likely to have responsibility for decisions regarding the transfer, pledging and sale of assets; the formation of new companies; purchase of assets greater than $100,000; changes in hospital bylaws; and the appointment of local board members. In contrast corporate management is relatively uninvolved in these issues, again regardless of governance model type. There is substantial variation in the locus of decision-making responsibility by governance model type for a variety of other issues, however, including: hospital-level service additions and deletions; operating and capital budgets; medical staff privileges, hospital-level long-range planning; hospital CEO performance evaluation and the appointment of hospital CEOs.(ABSTRACT TRUNCATED AT 400 WORDS)

Environmental integrity and corporate responsibility

Abstract: Environmental disasters like Bhopal have a way of calling attention to environmental and corporate ethical issues. This paper discusses these issues in terms of a livable environment as an inalienable right and of corporate responsibility as an philosophical and social psychological disposition that enables corporations to respect that right. The corporate conscience is compared to the individual conscience and analyzed according to the moral development theories of Lawrence Kohlberg. Its moral development is recognized as problematic from the cited performance records of some leading multinational corporations and from the anti-environmental lobbying efforts of the chemical industry itself. Outreach programs in environmental health associated with research projects in corporate ethics are suggested to develop the corporate conscience for preserving environmental integrity through corporate responsibility.

Corporate Financing: Too Much Debt?

Abstract: Are U.S. corporations overburdened with debt? Since 1970, internal funds have been taking wider swings as percentages of total funds sources, as compared with the 1950s and 1960s. Furthermore, use of debt financing has been consistently higher since the mid-1960s than during previous periods throughout the century. And short-term debt has accounted for most of this rise. After adjustment for inflation, however, the figures indicate that, since 1974, corporations have relied heavily on internal funds and cut their cost of debt financing to levels that are not high by historical standards. Despite fluctuations in internalfunds and increased use of short-term debt, corporations do not appear to have significantly riskier capital structures than they've had in the past. An examination of determinants of the composition of capital structure reveals that corporate reliance on debt financing increases as capital expenditures rise relative to available internal funds. Use of debt financing is limited, however, by investors' perceptions of the riskiness of the business environment and by relative supplies of federal government securities. Over long periods, furthermore, the tax system seems to affect the level of debt financing; corporate borrowing increases as personal income tax rates rise above corporate levels.

Corporate Strategy and ethics

Abstract: Corporate Strategy has emerged as a central metaphor for private-sector enterprise. Given inherent imperfections in markets, one important question to consider is how well the practice of Corporate Strategy contributes to social welfare. An account of the implicit morality of free markets is developed as a standard against which two particular, “second best” solutions to market imperfections — namely, American federal antitrust policy and Corporate Strategy — are compared. Corporate Strategy is subsequently evaluated in terms of the fundamental principles of Rawls' theory of justice. In both analyses, Corporate Strategy is found to depart significantly and systematically from the standards of social justice. An alternative principle, grounded in the concept of duty, is introduced as a means for reconceptualizing Corporate Strategy.

The Scientific State: A Theory with Hypotheses

Abstract: Our purpose in this article is to advance a theory to explain changes in the governance of modern industrial states. We believe that the traditional mode of government-what we term the administrative state-is being gradually replaced by a newer mode based on science-the scientific state.' In this article we also present some hypotheses derivable from the theory which can guide research aimed at testing the theory. Science and technology change all facets of society-including the functions, organization, and procedures of government. Scholars and practitioners of public policy and administration acknowledge that science and technology have changed, and continue to change, our system of governance, the nature of issues policymakers deal with, the role of government in society, the responsibilities of the citizen, and the meaning of such central concepts as liberty, political accountability, and democracy. There is less agreement about whether these changes add up to minor modifications or major transformations in the modem industrialized state's governance. More-

Perceptions of Contemporary Governance in Community Colleges: An Empirical Study:

Abstract: The literature on community college governance indicates that these institutions actually organize themselves around the bureaucratic frame of reference although shared authority models are advocated. This assertion, however, is not fully documented; few, if any, studies have empirically assessed the governing mechanisms of community colleges. In general, the literature tends to be rather speculative and prescriptive and offers few theoretical insights. The only published work that deals exclusively with academic governance in two-year colleges was introduced by Richardson, Blocker, and Bender (1972). Bensimon (1984) suggests that these colleges exhibit strong bureaucratic tendencies and a very high level of administrative control. A realistic assessment of these bureaucratic tendencies is offered by Palmer (1984). He indicates that the historical evolution of these schools, their collective bargaining component, state level coordination, and other factors help explain these bureaucratic tendencies. The problem, however, is that no empirical evidence is presented to substantiate some of the arguments stated by both Palmer and Bensimon. Clearly, empirically based research studies are needed to establish solid basis for argument. The purpose of this article is to determine and analyze what is the most predominant mode of college governance in community colleges as perceived by community college presidents, deans, chairpersons, and faculty. The review of literature is presented first, followed by the theoretical model used to conduct this study. The discussion of the findings is presented next. Finally, implications of the findings are presented, including suggestions for further research.