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Corporate governance
About: Corporate governance is a research topic. Over the lifetime, 118591 publications have been published within this topic receiving 2793582 citations.
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TL;DR: The argument that the relationship between corporate philanthropy and financial performance is best captured by an inverse U-shaped relationship varies with the level of dynamism in firms' operational environment is developed.
Abstract: 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 best captured by an inverse U-shape. In addition, it posits that the inverse U-shaped relationship varies with the level of dynamism in firms' operational environment. Using a panel data set of 817 firms listed in the Taft Corporate Giving Directory from 1987 to 1999, we find strong support for these arguments.
509 citations
TL;DR: A framework that positions governance quality in relation to governance and management effectiveness is presented and good protected area governance is characterized according to a set of seven principles - legitimacy, transparency, accountability, inclusiveness, fairness, connectivity and resilience.
508 citations
TL;DR: The authors found that foreign investors invest less in firms that reside in countries with poor outsider protection and disclosure and have ownership structures that are conducive to governance problems, indicating that information asymmetry and monitoring costs faced by foreign investors likely drive the results.
Abstract: As domestic sources of outside finance are limited in many countries around the world, it is important to understand factors that influence whether foreign investors provide capital to a country's firms. We study 4,409 firms from twenty-nine countries to assess whether and why concerns about corporate governance result in fewer foreign holdings. We find that foreigners invest less in firms that reside in countries with poor outsider protection and disclosure and have ownership structures that are conducive to governance problems. This effect is particularly pronounced when earnings are opaque, indicating that information asymmetry and monitoring costs faced by foreign investors likely drive the results. The Author 2008. 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.
508 citations
TL;DR: In this paper, the authors predict that firms with stronger corporate governance will exhibit a higher degree of accounting conservatism, and study the impact of earnings discretion on the sensitivity of earnings to bad news across governance structures.
Abstract: We predict that firms with stronger corporate governance will exhibit a higher degree of accounting conservatism. Governance level is assessed using a composite measure that incorporates several internal and external characteristics. Consistent with our prediction, strong governance firms show significantly higher levels of conditional accounting conservatism. Our tests take into account the endogenous nature of corporate governance, and the results are robust to the use of several measures of conservatism (market-based and nonmarket-based). Our evidence is consistent with the direction of causality flowing from governance to conservatism, and not vice versa, indicating that governance and conservatism are not substitutes. Finally, we study the impact of earnings discretion on the sensitivity of earnings to bad news across governance structures. We find that, on average, strong-governance firms appear to use discretionary accruals to inform investors about bad news in a timelier manner.
505 citations
TL;DR: In this article, the authors extend transaction cost economics by arguing that prior contractual commitments made by a firm can limit its ability to differentiate or change its governance arrangements in the future, a condition they termed governance inseparability.
Abstract: We extend transaction cost economics by arguing that prior contractual commitments made by a firm can limit its ability to differentiate or change its governance arrangements in the future—a condition we term governance inseparability. Changes in bargaining power between a firm and its exchange partners also can result in governance inseparability. Consequently, governance choice may be more particularistic than the current version of transaction cost economics allows. We provide several testable propositions.
505 citations