Corporate governance

About: Corporate governance is a research topic. Over the lifetime, 118591 publications have been published within this topic receiving 2793582 citations.

Corporate Governance and Firm Value: The Impact of Corporate Social Responsibility

Abstract: This study investigates the effects of internal and external corporate governance and monitoring mechanisms on the choice of corporate social responsibility (CSR) engagement and the value of firms engaging in CSR activities. The study finds the CSR choice is positively associated with the internal and external corporate governance and monitoring mechanisms, including board leadership, board independence, institutional ownership, analyst following, and anti- takeover provisions, after controlling for various firm characteristics. After correcting for endogeneity and simultaneity issues, the results show that CSR engagement positively influences firm value measured by industry-adjusted Tobin’s q. We find that the impact of analyst following for firms that engage in CSR on firm value is strongly positive, while the board leadership, board independence, blockholders’ ownership, and institutional ownership play a relatively weaker role in enhancing firm value. Furthermore, we find that CSR activities that address internal social enhancement within the firm, such as employees diversity, firm relationship with its employees, and product quality, enhance the value of firm more than other CSR subcategories for broader external social enhancement such as community relation and environmental concerns.

Does it pay to be different? An analysis of the relationship between corporate social and financial performance

Abstract: This study explores the relationship between corporate social performance (CSP) and corporate financial performance (CFP) within the context of a specific component of CSP: corporate charitable giving. A model of the determinants of the extent of corporate charitable giving is estimated and used as the basis of a classification that groups firms according to the difference between their actual and their predicted intensity of gift giving. The financial performance attributes of the classification are explored. We found that firms with both unusually high and low CSP have higher financial performance than other firms, with unusually poor social performers doing best in the short run and unusually good social performers doing best over longer time horizons. Copyright © 2008 John Wiley & Sons, Ltd. ABSTRACT FROM AUTHOR

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.

Ownership Structure, Corporate Governance, and Firm Value: Evidence from the East Asian Financial Crisis

Abstract: We use a sample of 800 firms in eight East Asian countries to study the effect of ownership structure on value during the region's financial crisis. The crisis negatively impacted firms' investment opportunities, raising the incentives of controlling shareholders to expropriate minority investors. Crisis period stock returns of firms in which managers have high levels of control rights, but have separated their control and cash flow ownership, are 10-20 percentage points lower than those of other firms. The evidence is consistent with the view that ownership structure plays an important role in determining whether insiders expropriate minority shareholders. CONFLICT OF INTEREST BETWEEN CORPORATE INSIDERS (controlling shareholders and managers) and outside investors is central to the analysis of the modern corporation in which insiders have less than full ownership of the cash flow rights of the firm (Berle and Means (1932) and Jensen and Meckling (1976)). These analyses suggest that the firm's ownership structure is a primary determinant of the extent of agency problems between controlling insiders and outside investors, which has important implications for the valuation of the firm. The insiders who control corporate assets can potentially expropriate outside investors by diverting resources for their personal use or by committing funds to unprofitable projects that provide private benefits. By diverting resources for private benefit, controlling managers have the opportunity to increase their current wealth or perquisite consumption without bearing the full cost of their actions.1 Alternatively, by investing resources within the firm in positive NPV projects,

Deepening Democracy: Institutional Innovations in Empowered Participatory Governance

Abstract: The institutional forms of liberal democracy developed in the nineteenth century seem increasingly ill-suited to the problems we face in the twenty-first. This dilemma has given rise in some places to a new, deliberative democracy, and this volume explores four contemporary empirical cases in which the principles of such a democracy have been at least partially instituted: the participatory budget in Porto Alegre; the school decentralization councils and community policing councils in Chicago; stakeholder councils in environmental protection and habitat management; and new decentralised governance structures in Kerala. In keeping with the other Real Utopias Project volumes, these case studies are framed by an editors' introduction, a set of commentaries, and concluding notes.