Showing papers on "Corporate governance published in 1988"
TL;DR: This paper analyzed the relationship between perceptions of firms' corporate social responsibility and measures of their financial performance and found that a firm's prior performance, assessed by both stock-market returns and accounting-based measures, is more closely related to corporate social concern than is subsequent performance.
Abstract: Using Fortune magazine's ratings of corporate reputations, we analyzed the relationships between perceptions of firms’ corporate social responsibility and measures of their financial performance. Results show that a firm's prior performance, assessed by both stock-market returns and accounting-based measures, is more closely related to corporate social responsibility than is subsequent performance. Results also show that measures of risk are more closely associated with social responsibility than previous studies have suggested.
2,862 citations
TL;DR: In this article, a combined treatment of corporate finance and corporate governance is proposed, where both debt and equity are treated not mainly as alternative financial instruments, but rather as alternative governance structures.
Abstract: A combined treatment of corporate finance and corporate governance is herein proposed. Debt and equity are treated not mainly as alternative financial instruments, but rather as alternative governance structures. Debt governance works mainly out of rules, while equity governance allows much greater discretion. A project-financing approach is adopted. I argue that whether a project should be financed by debt or by equity depends principally on the characteristics of the assets. Transaction-cost reasoning supports the use of debt (rules) to finance redeployable assets, while non-redeployable assets are financed by equity (discretion). Experiences with leasing and leveraged buyouts are used to illustrate the argument. The article also compares and contrasts the transaction-cost approach with the agency approach to the study of economic organization.
2,366 citations
TL;DR: In this paper, the authors examine empirically the theory's predictions in the context of the multinational corporation (MNC), which attempts to control the operations of foreign "subsidiaries" (business units) that it owns in whole or in part.
Abstract: Should a business function be vertically integrated? Increasingly, economists have acknowledged that this is the wrong question. The right question is to what degree a function should be integrated, whereby integration is a continuum anchored by the options of market and hierarchy (Williamson, 1985). Movement along the continuum from market contracting to unified governance is accompanied by an increased degree to which resources are placed at hazard. The firm is compensated for this by an increased level of control that it presumably will use "correctly" in order to generate superior profit outcomes. The central questions of transaction cost analysis are twofold: When will the firm need more control (that is, when do lower-control outcomes become less desirable), and when will the benefits of increased control more than offset the costs of resource commitment and risk? Oliver Williamson (1985) offers a theory to answer these questions. In this paper we examine empirically the theory's predictions in the context of the multinational corporation (MNC), which attempts to control the operations of foreign "subsidiaries" (business units) that it owns in whole or in part. We
1,406 citations
TL;DR: Grimm et al. as mentioned in this paper showed that shareholders of target firms in successful tender offers from 1981 through 1986 received payments in excess of $54 billion over the value of their holdings before the tender offers.
Abstract: C orporate takeovers have been very big business in the 1980s. The Office of the Chief Economist (OCE) of the Securities and Exchange Commission estimates that shareholders of target firms in successful tender offers from 1981 through 1986 received payments in excess of $54 billion over the value of their holdings before the tender offers. Almost $38 billion of the total was received after 1984. If we include the increased wealth of target firm shareholders resulting from leveraged buyouts, mergers, and corporate restructurings (prompted in large part by the threat of takeovers) these numbers are even larger. W. T. Grimm & Co. collects similar data for a larger sample of change-of-control transactions, including mergers and leveraged buyouts. They estimate that from 1981 to 1986 the total dollar value of the premiums over the pre-announcement price paid for securities involved in change-of-control transactions was $118.4 billion.1 Corporate restructurings have created even more
1,232 citations
TL;DR: In this article, the authors derive conditions under which the simple majority voting rule for electing controlling management and one share-one vote constitute a socially optimal corporate governance rule and show that other majority rules and/or multiple classes of shares are not socially optimal.
720 citations
TL;DR: In this article, the authors report evidence that dissident stockholders who wage a proxy contest for board seats typically site poor earnings rather than poor stock price performance as necessitating the proposed hostile management change.
658 citations
TL;DR: In this article, the authors focus on interest associations in a disaggregated, rather than global, approach to economics and politics and suggest that the development of private interest governments might be a more viable policy alternative for the future.
Abstract: Market liberalism and state interventionism are both challenged as modes of democratic government by this book. It suggests that the development of private interest governments might be a more viable policy alternative for the future. It also questions whether the state could devolve certain public policy responsibilities to interest associations in specific economic sectors. The book focuses specifically on interest associations in a disaggregated, rather than global, approach to economics and politics. Ten Western industrialized countries are covered, subjects ranging from advertising with self-regulation, private accountancy regulation and the British voluntary sector to four comparative papers on the corporatist arrangements in the governance of the dairy industry.
428 citations
TL;DR: In this paper, the assumptions about people and about the world underlying these HRM practices as they may differ from those of the national culture of the subsidiary are discussed, and issues concerning the use of corporate culture as a mechanism for globalization are raised.
Abstract: Corporate culture has been described as the “glue” that holds organizations together by providing cohesiveness and coherence among the parts. Multinational companies are increasingly interested in promoting corporate culture to improve control, coordination, and integration of their subsidiaries. Yet these subsidiaries are embedded in local national cultures wherein the underlying basic assumptions about people and the world may differ from that of the national and corporate culture of the multinational. These differences may hinder the acceptance and implementation of human resource practices, such as career planning, appraisal and compensation systems, and selection and socialization. This article discusses the assumptions about people and about the world underlying these HRM practices as they may differ from those of the national culture of the subsidiary. Finally, issues concerning the use of corporate culture as a mechanism for globalization will be raised.
366 citations
TL;DR: In this paper, a transaction cost model for the transition between two distinct governance modes for serving a foreign market; a wholly owned subsidiary and licensing is presented. And the model is then extended, first to incorporate a temporal perspective and then a dynamic perspective.
Abstract: This paper constructs a transaction cost model that provides an explanation for the transition between two distinct governance modes for serving a foreign market; a wholly owned subsidiary and licensing. The paper initially outlines a single-period model of the factors that influence a firm's choice of governance mode. The model is then extended, first to incorporate a temporal perspective and then a dynamic perspective. The completed model identifies organizational and environmental contingencies that shape dynamic multi-period decision-making for the choice of governance mode.
158 citations
Book•
01 Jan 1988
TL;DR: The Science and Corporate Strategy: Du Pont R and D, 1902 as mentioned in this paper provides a comprehensive, critical study of research and development in a large US corporation, focusing on the role of RD science in corporate strategy.
Abstract: Based on voluminous corporate records and extensive interviews with key employees, Science and Corporate Strategy: Du Pont R and D, 1902–1980 provides a comprehensive, critical study of research and development in a large US corporation. Du Pont was among a handful of US corporations that established formal research and development laboratories at the turn of the century to improve competitive positions in their respective industries. Initially, Du Pont's executives viewed RD science became a central part of corporate strategy.
146 citations
TL;DR: In this article, the authors discuss how outside directors can help companies to cross the threshold from closely held to publicly held family companies, and discuss the difficulties of family companies changing from closely-held to publicly-held.
Abstract: Family companies changing from closely held to publicly held face critical difficulties. This article–adapted in part from the author's forthcoming book, Corporate Governance in America–discusses how outside directors can help companies to cross the threshold.
TL;DR: In this article, the authors point out that the concept of ownership of firms is crucial to an understanding of internal governance issues, and that the incompletely articulated position of leading authors on the economics of organization is that the firm is a commodity and must be so for purposes of efficiency.
Abstract: Recent years have seen the flowering of a new literature on the economic nature of firms marked by a concern with their internal organization and contractual characteristics. Related literatures on the principal-agent problem and the theory of financial markets have also contributed to a better understanding of firms as economic institutions. However, the place of the concept of the ownership of the firm is poorly developed in most of this literature, with many writers either ignoring the concept entirely or arguing that it is of no importance. The purpose of the present article is to point out that the concept of ownership of firms is crucial to an understanding of internal governance issues. Most economists implicitly presume that firms must be ownable and saleable if they are to be operated efficiently, and recently this viewpoint has been made more explicit by writers such as Jensen and Fama and Williamson. Their point of view is to some degree at odds with views of the firm as a coalition, which frequently appear in the same literature, and even more fundamentally in conflict with conceptions of the firm as an association or polity within which greater or lesser degrees of democracy in governance may be pursued. The first purpose of this article is to show that the incompletely articulated position of the leading authors on the economics of organization is that the firm is a commodity and must be so for purposes of efficiency.
TL;DR: The working definition of corporate culture is derived from anthropologist Clyde Kluckhohn, who defined culture as "the set of habitual and traditional ways of thinking, feeling, and reacting that are characteristic of the ways a particular society meets its problems at a particular point in time".
Abstract: Strategy and Culture Corporate strategy refers basically to a firm's relationships with its environment, its main objectives and its means of accomplishing them. Corporate culture, on the other hand, is a nebulous concept with almost as many definitions as there are “experts” on the subject. The working definition for this article is derived from anthropologist Clyde Kluckhohn, who defined culture as “the set of habitual and traditional ways of thinking, feeling, and reacting that are characteristic of the ways a particular society meets its problems at a particular point in time”. Our working definition of corporate culture substitutes the word “organisation” for “society”.
Journal Article•
TL;DR: This study examines the effects of corporate restructuring by community hospitals on the structure, composition, and activity of hospital governing boards and hypothesizes that the hospital board under corporate restructuring will conform more to the "corporate" model found in the business/industrial sector and less in the "philanthropic" model common to most community hospitals to date.
Abstract: Hospital corporate restructuring is the segmentation of assets or functions of the hospital into separate corporations. While these functions are almost always legally separated from the hospital, their impact on hospital policymaking may be far more direct. This study examines the effects of corporate restructuring by community hospitals on the structure, composition, and activity of hospital governing boards. In general, we expect that the policymaking function of the hospital will change to adapt to the multicorporate structure implemented under corporate restructuring, as well as the overlapping boards and diversified business responsibilities of the new corporate entity. Specifically, we hypothesize that the hospital board under corporate restructuring will conform more to the "corporate" model found in the business/industrial sector and less to the "philanthropic" model common to most community hospitals to date. Analysis of survey data from 1,037 hospitals undergoing corporate restructuring from 1979-1985 and a comparison group of 1,883 noncorporately restructured hospitals suggests general support for this hypothesis. Implications for health care governance and research are discussed.
Journal Article•
Journal Article•
TL;DR: In this article, an expert on corporate governance discusses the special sensitivities that outside directors need and how they use these characteristics in the roles that they play on the family board, and how to use them in their roles on the board.
Abstract: An expert on corporate governance discusses the special sensitivities that outside directors need and how they use these characteristics in the roles that they play on the family board.
Journal Article•
TL;DR: In this paper, the authors compare selected characteristics of community hospital governing boards with those of high technology industries acknowledged for successful transitions in a rapidly changing competitive environment, and propose a normative model for nonprofit community health care systems.
Abstract: This study compares selected characteristics of community hospital governing boards with those of high technology industries acknowledged for successful transitions in a rapidly changing competitive environment. Sponsored by the Estes Park Institute, the purpose of this investigation was to identify emerging governance issues and to propose a normative model for nonprofit community health care systems. Results suggest that for health care systems to succeed in a rapidly changing competitive environment, strategic alterations in top-level governance structures will be necessary to focus on market-driven policy issues, with accompanying changes toward smaller boards composed of expert directors. Trends and implications for board terms, committee structures, and relationships between the board and chief executive officers are also discussed.
TL;DR: In this article, an Institutional Analysis of Corporate Power is presented, with a focus on the role of corporate power in economic decision-making, and an analysis of the relationship between the two.
Abstract: (1988). An Institutional Analysis of Corporate Power. Journal of Economic Issues: Vol. 22, No. 1, pp. 79-111.
Journal Article•
TL;DR: In this paper, the authors examine existing models of career bureaucrat and political appointee relationships and ask: to what extent is the broader purpose of public service for both politicals and careerists considered?
Abstract: This analysis examines existing models of career bureaucrat and political appointee relationships and asks: to what extent is the broader purpose of public service for both politicals and careerists considered? Because most current models focus on career responsibilities, but exclude the special public responsibilities of political managers, a new “Public Service Model” is proposed. The new-model proposes a joint political-career commitment to serving the public interest and a heightened recognition of the value of both sets of public executives. Both have a critical role to play in democratic policy processes; joint action and cooperation are essential to effective governance.
TL;DR: A survey of California district attorneys regarding corporate crime focused on the recent experiences of the prosecutors with such crimes and on factors that limit the likelihood of their prosecuting corporate offenders as discussed by the authors, finding that a significant majority of the district attorneys had prosecuted a variety of corporate crimes, and a sizable minority anticipated devoting more resources to corporate crime prosecutions in the future.
Abstract: A mail survey of California district attorneys regarding corporate crime focused on the recent experiences of the prosecutors with such crimes and on factors that limit the likelihood of their prosecuting corporate offenders. A significant majority of the district attorneys had prosecuted a variety of corporate crimes, and a sizable minority anticipated devoting more resources to corporate crime prosecutions in the future. There was a strong consensus among the district attorneys that the primary obstacle to corporate crime prosecutions is not political but practical and inheres in the level of resources available to them. Prosecutors in small districts were more constrained by the potential impact that a corporate prosecution might have on the local economy than their counterparts in large districts. This finding suggests that community context may influence social control responses to corporate lawbreakers.
TL;DR: In this article, a five-step development plan of management strategies toward rebuilding a company's value system on this corporate ethos through: corporate policy and strategy reformulation; corporate ethical code promulgation and value-statement formulation; management ethical training and corporate ethical education; and corporate performance evaluation.
Abstract: The increase of scandals in the business sector is forcing many companies to examine their corporate ethical behavior with a view toward rebuilding their corporate value system. This article describes how value-system reconstruction must proceed in a company and demonstrates that corporate ethics can only become plausible if based on a corporate ethical ethos. It outlines a five-step development plan of management strategies toward rebuilding a company's value system on this corporate ethos through: corporate policy and strategy reformulation; corporate ethical code promulgation and value-statement formulation; management ethical training and corporate ethical education; and corporate ethical performance evaluation. The role of the corporate ethical consultant is also outlined to illustrate how corporate ethical consulting can provide the specialized services designed to insure an enduring management ethical upgrading and to improve a company's corporate ethical performance record. The discussion indicates how corporate ethical consulting promotes good business through its capacity to deliver industry credibility and company security.