Showing papers on "Corporate governance published in 2010"

The Worldwide Governance Indicators: Methodology and Analytical Issues

Abstract: This paper summarizes the methodology of the Worldwide Governance Indicators (WGI) project, and related analytical issues. The WGI cover over 200 countries and territories, measuring six dimensions of governance starting in 1996: Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption. The aggregate indicators are based on several hundred individual underlying variables, taken from a wide variety of existing data sources. The data reflect the views on governance of survey respondents and public, private, and NGO sector experts worldwide. The WGI also explicitly report margins of error accompanying each country estimate. These reflect the inherent difficulties in measuring governance using any kind of data. Even after taking these margins of error into account, the WGI permit meaningful cross-country and over-time comparisons.

The Worldwide Governance Indicators : Methodology and Analytical Issues

Abstract: This paper summarizes the methodology of the Worldwide Governance Indicators (WGI) project, and related analytical issues. The WGI cover over 200 countries and territories, measuring six dimensions of governance starting in 1996: Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption. The aggregate indicators are based on several hundred individual underlying variables, taken from a wide variety of existing data sources. The data reflect the views on governance of survey respondents and public, private, and NGO sector experts worldwide. The WGI also explicitly report margins of error accompanying each country estimate. These reflect the inherent difficulties in measuring governance using any kind of data. Even after taking these margins of error into account, the WGI permit meaningful cross-country and over-time comparisons. The aggregate indicators, together with the disaggregated underlying source data, are available at www.govindicators.org.

The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and Survey

Abstract: This paper is a survey of the literature on boards of directors, with an emphasis on research done subsequent to the Benjamin E. Hermalin and Michael S. Weisbach (2003) survey. The two questions most asked about boards are what determines their makeup and what determines their actions? These questions are fundamentally intertwined, which complicates the study of boards because makeup and actions are jointly endogenous. A focus of this survey is how the literature, theoretical as well as empirical, deals—or on occasions fails to deal—with this complication. We suggest that many studies of boards can best be interpreted as joint statements about both the director-selection process and the effect of board composition on board actions and firm performance. ( JEL G34, L25)

The Impact of Board Diversity and Gender Composition on Corporate Social Responsibility and Firm Reputation

Abstract: This article explores how the diversity of board resources and the number of women on boards affect firms’ corporate social responsibility (CSR) ratings, and how, in turn, CSR influences corporate reputation. In addition, this article examines whether CSR ratings mediate the relationships among board resource diversity, gender composition, and corporate reputation. The OLS regression results using lagged data for independent and control variables were statistically significant for the gender composition hypotheses, but not for the resource diversity-based hypotheses. CSR ratings had a positive impact on reputation and mediated the relationship between the number of women on the board and corporate reputation.

The Gender and Ethnic Diversity of US Boards and Board Committees and Firm Financial Performance

Abstract: Manuscript Type: Empirical Research Question/Issue: We examine the business case for the inclusion of women and ethnic minority directors on the board. Specifically, we investigate the relationship between the number of women directors and the number of ethnic minority directors on the board and important board committees and financial performance measured as return on assets and Tobin’s Q. Research Findings/Insights: We do not find a significant relationship between the gender or ethnic diversity of the board, or important board committees, and financial performance for a sample of major US corporations. Our evidence also suggests that the gender and ethnic minority diversity of the board and firm financial performance appear to be endogenous. Theoretical/Academic Implications: Reasonable theoretical arguments drawn from resource dependence theory, human capital theory, agency theory, and social psychology suggest that gender and ethnic diversity may have either a positive, negative, or neutral effect on the financial performance of the firm. Our statistical analysis supports the theoretical position of no effect, either positive or negative. Our results are consistent with a contingency explanation because the effect of the gender and ethnic diversity of the board may be different under different circumstances at different times. Over several companies and time periods, the results could offset to produce no effect. Practitioner/Policy Implications: The results of our analysis do not support the business case for inclusion of women and ethnic minorities on corporate boards. However, we find no evidence of any negative effect either. Our evidence implies that decisions concerning the appointment of women and ethnic minorities to corporate boards should be based on criteria other than future financial performance.

Transition management for sustainable development: A prescriptive, complexity-based governance framework

Abstract: This article introduces transition management as a new governance approach for sustainable development. Sustainable development is used here as a common notion referring to those persistent problems in (Western industrialized) societies that can only be dealt with on the very long term (decades or more) through specific types of network and decision-making processes. Based on interdisciplinary research into complex processes of long term, structural change in society, basic tenets for complexity-based governance are formulated. These tenets are translated into a framework that distinguishes between four different types of governance activities and their respective roles in societal transitions. This framework can be used for implementation of governance strategies and instruments. The approach and framework have been developed deductively and inductively in the Netherlands since 2000. This article presents the theoretical basis of transition management and will be illustrated by examples from transition management practice, especially the Dutch national energy transition program.

The new public governance? : emerging perspectives on the theory and practice of public governance

Abstract: 1. Introduction: The (New) Public Governance: A Suitable Case for Treatment? (Stephen P. Osborne) Part I: Theoretical Perspectives on Public Governance 2. Global Perspectives on Governance (Patricia Kennett) 3. Meta-Governance and Public Management (B. Guy Peters) 4. Innovations in Governance (Mark Moore and Jean Hartley) 5. Governance and Governability (Jan Kooiman) 6. Does Governance Exist? (Owen Hughes) 7. What Endures? Public Governance and the Cycle of Reform (Laurence E. Lynn, Jr.) Part II: Governance and Inter-Organizational Partnerships to Deliver Public Services 8. Theory of Organizational Partnerships: Partnership Advantages, Disadvantages and Success Factors (Ronald W. McQuaid) 9. Public-Private Partnerships and Public Governance Challenges (Carsten Greve and Graeme Hodge) 10. Introducing the Theory of Collaborative Advantage (Siv Vangen and Chris Huxham) 11. Relationship Marketing, Relational Capital and the Governance of Public Services Delivery (Stephen P. Osborne, Kate McLaughlin and Celine Chew) 12. Leading Across Frontiers: How Visionary Leaders Integrate People, Processes, Structures and Resources (Barbara C. Crosby, John M. Bryson and Melissa M. Stone) 13. Public Governance and the Third Sector: Opportunities for Co-Production and Innovation? (Victor Pestoff and Taco Brandsen) Part III: Governance of Contractual Relationships 14. Governance, Contract Management and Public Management (Donald F. Kettl) 15. Governance of Outsourcing and Contractual Relationships (Federica Farneti, Emanuele Padovani and David W. Young) 16. The Governance of Contracting Relationships: "Killing the Golden Goose": A Third-Sector Perspective (Steven Rathgeb Smith and Judith Smyth) Part IV: Governance of Inter-Organizational Networks 17. Trust in Governance Networks: Looking for Conditions for Innovative Solutions and Outcomes (Erik-Hans Klijn) 18. Implementation and Managerial Networking in the New Public Governance (Laurence J. O'Toole Jr, and Kenneth J. Meier) 19. From New Public Management to Networked Community Governance? Strategic Local Public Service Networks in England (Steve Martin) Part V: Governance of Policy Networks 20. Policy Networks: Theory and Practice (Tobias Jung) 21. Policy Networks in Practice: The Debate on the Future of Amsterdam Airport Schiphol (Menno Huys and Joop Koppenjan) 22. Governance, Networks and Policy Change: The Case of Cannabis in the United Kingdom (Beatriz Acevedo and Richard Common) 23. Conclusions: Public Governance and Public Services Delivery: A Research Agenda for the Future (Stephen P. Osborne)

Corporate Tax Avoidance and Stock Price Crash Risk: Firm-Level Analysis

Abstract: Using a large sample of U.S. firms for the period 1995-2008, we provide strong and robust evidence that corporate tax avoidance is positively associated with firm-specific stock price crash risk. This finding is consistent with the following view: Tax avoidance facilitates managerial rent extraction and bad news hoarding activities for extended periods by providing tools, masks, and justifications for these opportunistic behaviors. The hoarding and accumulation of bad news for extended periods lead to stock price crashes when the accumulated hidden bad news crosses a tipping point, and thus comes out all at once. Moreover, we show that the positive relation between tax avoidance and crash risk is attenuated when firms have strong external monitoring mechanisms such as high institutional ownership, high analyst coverage, and greater takeover threat from corporate control markets.

The Role of Information and Financial Reporting in Corporate Governance and Debt Contracting

Abstract: We review recent literature on the role of financial reporting transparency in reducing governance-related agency conflicts among managers, directors, and shareholders, as well as in reducing agency conflicts between shareholders and creditors, and offer researchers some suggested avenues for future research. Key themes include the endogenous nature of debt contracts and governance mechanisms with respect to information asymmetry between contracting parties, the heterogeneous nature of the informational demands of contracting parties, and the heterogeneous nature of the resulting governance and debt contracts. We also emphasize the role of a commitment to financial reporting transparency in facilitating informal multi-period contracts among managers, directors, shareholders, and creditors.

Innovation in Governance and Public Services: Past and Present

Abstract: Three approaches to innovation in the public sector in the post war period are identified and analysed for their implications for policy-makers, managers and citizens. Various relationships are identified between innovation and improvement in public services. The traditional bias of the literature that innovation is necessarily functional is undermined. Important lessons for policy, practice and research include the need to develop an understanding of innovation which is not over-reliant on the private sector manufacturing literature but reflects the distinctive contexts and purposes of the public sector.

The Contribution of Women on Boards of Directors: Going beyond the Surface

Abstract: Manuscript Type: Empirical Research Question/Issue: The increased attention to women on corporate boards presents new challenges to governance research. In this paper we go beyond demography and open the “black box” of board behavior by drawing upon theories of gender differences and group effectiveness. corg_784 136..148 Research Findings/Insights: A unique survey of 201 Norwegian firms is used. The findings suggest that the ratio of women directors is positively associated with board strategic control. In addition, we find that the positive effects of women directors on board effectiveness are mediated through increased board development activities and through decreased level of conflict. However, our results show no evidence for a positive association between women directors and open debate. Nonetheless, open debate enhances board’s strategic and operational control. Theoretical/Academic Implications: Recognizing the limitations of traditional governance theories to explain the role and contributions of women on corporate boards, this paper draws upon group effectiveness and gender differences theories to shed some light on whether and how women make a difference to board effectiveness in strategic and operational control. Practitioner/Policy Implications: Women’s ability to make a contribution to the board may be attributable to their different leadership styles. The presence of women on corporate boards seems to increase board effectiveness through reducing the level of conflict and ensuring high quality of board development activities.

Cities and the Governing of Climate Change

Abstract: Studies of the urban governance of climate change have proliferated over the past decade, as municipalities across the world increasingly place the issue on their agendas and private actors seek to respond to the issue. This review examines the history and development of urban climate governance, the policies and measures that have been put into place, the multilevel governance context in which these are undertaken, and the factors that have structured the posibilities for addressing the issue. It highlights the limits of existing work and the need for future research to provide more comprehensive analyses of the achievements and limitations of urban climate governance. It calls for engagement with alternative theoretical perspectives to understand how climate change is being governed in the city and the implications for urban governance, socioenvironmental justice, and the reconfiguration of political authority.

The “Antidirector Rights Index” Revisited

Abstract: The "antidirector rights index" has been used as a measure of shareholder protection in over a hundred articles since it was introduced by La Porta et al. ("Law and Finance." 1998, Journal of Political Economy 106:1113--55). A thorough reexamination of the legal data, however, leads to corrections for thirty-three of the forty-six countries analyzed. The correlation between corrected and original values is only 0.53. Consequently, many empirical results established using the original index may not be replicable with corrected values. In particular, the corrected index fails to support three widely influential claims: that shareholder protection is higher in common than in civil law countries; that shareholder protection predicts stock market size or ownership dispersion; and that weak corporate governance explains the extent of exchange rate depreciation during the Asian financial crisis of 1997--1998. The Author 2009. Published by Oxford University Press [on behalf of The Society for Financial Studies]. All rights reserved. For Permissions, please e-mail: journals.permissions@oxfordjournals.org., Oxford University Press.

Governance and Development

Abstract: In this chapter, we discuss whether or not “governance” is an important source of variation in development experiences We draw four main conclusions First, governance is best thought of a subset of “institutions” and as such emphasis on governance is consistent with much recent academic work Nevertheless, governance is a quite vague rubric which is difficult to unbundle Second, the governance of a society is the outcome of a political process and as such is closely related to the literature on the political economy of development Third, improving governance necessitates understanding the nature of the entire political equilibrium Finally, an important research frontier is understanding the forces that create or impeded endogenous changes in governance

One Report: Integrated Reporting for a Sustainable Strategy

Abstract: Foreword. Acknowledgments. Introduction. Notes. Chapter 1 What Is One Report? The Meaning of One Report. Novo Nordisk: An Early Adopter of One Report. Rhetoric and Design in Natura's 2008 Annual Report. The Urgent Need for One Report. Notes. Chapter 2 United Technologies Corporation's First IntegratedReport. UTC's First One Report. A Brief History of Corporate Reporting at UTC. More on the 2008 Report. UTC's Half-Century of Corporate Reporting. Notes. Chapter 3 The State of Financial Reporting Today. Background on Financial Reporting. Complexity. Extensible Business Reporting Language (XBRL). Auditing. Notes. Chapter 4 The State of Nonfinancial Reporting Today. A Typology of Nonfinancial Information. Intangible Assets. Intangible Assets at Infosys. Key Performance Indicators. Environmental, Social and Governance Metrics. Assurance on Nonfinancial Information. Notes. Chapter 5 Sustainable Strategies for a SustainableSociety. Sustainability at Ricoh. Corporate Social Responsibility. Sustainability. Sustainable Competitive Advantage. Sustainable Strategies Require Integrated Reporting. Corporate Reporting at Ricoh. Notes. Chapter 6 It's Time for One Report. The Case for One Report. One Report for a Sustainable Strategy for a SustainableSociety. The Time Is Now. Objections to One Report. The Bottom Line. Notes. Chapter 7 The Internet and Integrated Reporting. A Web-based Perspective on One Report. The Essential Elements of Web-based Integrated Reporting. Web 3.0 and Integrated Reporting. Notes. Chapter 8 Integrated Reporting for a SustainableSociety. Companies Must Take Responsibility. Innovation. Support from the Investment Community. Development of Standards. Legislation and Regulation. Support from Civil Society. Notes. Appendix A: Companies and Organizations with URLs. Appendix B: Acronyms. Index.

Extreme Governance: An Analysis of Dual-Class Firms in the United States

Abstract: We construct a comprehensive list of dual-class firms in the United States and use this list to analyze the relationship between insider ownership and firm value. Our data have two useful features. First, since dual-class stock separates cash-flow rights from voting rights, we can separately identify the impact of each. Second, we address endogeneity concerns by using exogenous predictors of dual-class status as instruments. In single-stage regressions, we find strong evidence that firm value is increasing in insiders' cash-flow rights and decreasing in insider voting rights. In instrumental variable regressions, the point estimates are similar but the significance levels are lower. The Author 2009. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oxfordjournals.org., Oxford University Press.

Governing Knowledge Sharing in Organizations: Levels of Analysis, Governance Mechanisms, and Research Directions

Abstract: We discuss and examine recent claims that research on knowledge processes has paid insufficient attention to micro (individual) level constructs and mechanisms and to the role of formal organization in governing knowledge processes. We review knowledge sharing research published in 13 (top academic plus top practitioner-oriented) journals in the period 1996–2006 in relation to these two propositions. The review confirms the claim that the knowledge sharing literature is preoccupied with constructs, processes, and phenomena defined at a macro (collective, organizational) level and pay comparatively little attention to micro level constructs. The review provides less support for the proposition that formal governance mechanisms have been under-researched in comparison to formal organization. Still, the multiple ways in which formal governance mechanisms may interact in influencing knowledge sharing outcomes have been under-researched, as has the interaction between more informal aspects of the firm and formal governance mechanisms. We argue that future research on knowledge sharing needs to fill these gaps.

Corporate Social Responsibility in Western Europe: An Institutional Mirror or Substitute?

Abstract: In spite of extensive research on corporate social responsibility (CSR) and its link with economic and social performance, few studies have investigated the institutional determinants of CSR. This article draws upon neo-institutional theory and comparative institutional analysis to compare the influence of different institutional environments on CSR policies of European firms. On the basis of a dataset of European firms, we find that firms from the more liberal market economies of the Anglo-Saxon countries score higher on most dimensions of CSR than firms in the more coordinated market economies (CMEs) in Continental Europe. This result lends support to the view of voluntary CSR practices in liberal economies as being a substitute for institutionalized forms of stakeholder participation. Meanwhile, CSR tends not to mirror more institutionalized forms of stakeholder coordination. Instead, in CMEs, CSR often takes on more implicit forms. Our analysis also shows that national institutional and sectoral-level factors have an asymmetric effect – strongly influencing the likelihood of firms adopting ‘minimum standards’ of CSR, but having little influence on the adoption of ‘best practices’.

Does REDD+ Threaten to Recentralize Forest Governance?

Abstract: Over the past 25 years, developing countries have transitioned toward decentralized forest management that allows local actors increased rights and responsibilities ( 1 – 4 ), and has helped protect forests in many regions ( 5 , 6 ). A new approach to mitigating terrestrial emissions associated with climate change, Reducing Emissions from Deforestation and Forest Degradation (REDD+), is poised to interrupt this trend. Given the implications for tropical forest management, REDD+ governance links should be a research priority ( 7 ).

Governance without a state: Can it work?

Abstract: In this article we explore how much state is necessary to make governance work. We begin by clarifying concepts of governance and the “shadow of hierarchy” and we follow this clarification with a brief overview of empirical findings on governance research in developed countries. We then discuss the dilemmas for governance in areas of limited statehood, where political institutions are too weak to hierarchically adopt and enforce collectively binding rules. While prospects for effective policymaking appear to be rather bleak in these areas, we argue that governance research has consistently overlooked the existence of functional equivalents to the shadow of hierarchy. We assert that governance with(out) government can work even in the absence of a strong shadow of hierarchy, we identify functional equivalents to the shadow of hierarchy, and we discuss to what extent they can help overcome issues of legitimacy and effectiveness in areas of limited statehood.

Governance Principles for Natural Resource Management

Abstract: Sustainable natural resource use and management make novel demands on governance arrangements, the design of which requires normative guidance. Although governance principles have been developed for diverse contexts, their availability for sustainable natural resource governance is so far limited. In response, we present a suite of governance principles for natural resource governance that, while developed in an Australian multilevel context, has general applicability and significance at local, subnational, and national scales. The principles can be used to direct the design of governance institutions that are legitimate, transparent, accountable, inclusive, and fair and that also exhibit functional and structural integration, capability, and adaptability. Together, they can also serve as a platform for developing governance monitoring and evaluation instruments, crucial for both self-assessment and external audit purposes.

Navigating transformations in governance of Chilean marine coastal resources.

Abstract: Marine ecosystems are in decline. New transformational changes in governance are urgently required to cope with overfishing, pollution, global changes, and other drivers of degradation. Here we explore social, political, and ecological aspects of a transformation in governance of Chile's coastal marine resources, from 1980 to today. Critical elements in the initial preparatory phase of the transformation were (i) recognition of the depletion of resource stocks, (ii) scientific knowledge on the ecology and resilience of targeted species and their role in ecosystem dynamics, and (iii) demonstration-scale experimental trials, building on smaller-scale scientific experiments, which identified new management pathways. The trials improved cooperation among scientists and fishers, integrating knowledge and establishing trust. Political turbulence and resource stock collapse provided a window of opportunity that triggered the transformation, supported by new enabling legislation. Essential elements to navigate this transformation were the ability to network knowledge from the local level to influence the decision-making processes at the national level, and a preexisting social network of fishers that provided political leverage through a national confederation of artisanal fishing collectives. The resultant governance scheme includes a revolutionary national system of marine tenure that allocates user rights and responsibilities to fisher collectives. Although fine tuning is necessary to build resilience of this new regime, this transformation has improved the sustainability of the interconnected social-ecological system. Our analysis of how this transformation unfolded provides insights into how the Chilean system could be further developed and identifies generalized pathways for improved governance of marine resources around the world.