Showing papers on "Corporate group published in 1998"

Engineering growth : Business group structure and firm performance in China's transition economy

Abstract: Business groups have received increasing attention from academics interested in interorganizational relations and their impact on firms. As part of industrial reform, the Chinese government began in the mid‐1980s to encourage firms to form business groups with structural characteristics that promised to enhance financial performance and productivity. Using 1988‐90 panel data on China's 40 largest business groups and their 535 member firms, the study finds that the presence and predominance of interlocking directorates and finance companies in business groups improved the financial performance and productivity of the groups' member firms. In addition, firms in groups with nonhierarchical organizational structures performed better than firms in hierarchical groups, suggesting that complete integration into a hierarchical organization is not an optimal strategy.

Innovation systems in regions of Europe: A comparative perspective

Abstract: The understanding of the innovation process has changed considerably in the past years. Models have shifted from linear and firm based conceptions towards interdependent and systemic approaches. Both national and regional innovation systems have been discussed in recent literature. The present paper investigates on the basis of data for eight European regions, collected in the course of a European project, to which extent companies engage into networks in their innovation process. Also, the types of partners, their respective locations (regional, national, European) as well as differences between the regions are explored. First results show, that for many firms innovation is still a rather internal process. Reliance on internal competence, lack of trust to other firms and fear of losing economic benefits to others are among the reasons. Nevertheless, for another group of companies networks are much more relevant. They draw on ideas, know-how and complementary assets from customers, suppliers, consultants, universities, funding and training institutions. With regard to the spatial reach of networks, we find considerable differences between company types and regions, however.

Corporate groups, dual-class shares and the value of voting rights

Abstract: It is known that deviating from the one-share–one-vote principle through the issue of non-voting stock increases the value of outsiders' voting rights. We argue that the creation of a business group is another way to deviate from one-share–one-vote and we show that it produces a larger voting-share premium in holding companies. As a consequence, having both subsidiaries and non-voting stock produces a multiplier effect on the voting premium. The puzzling size of the premium in Italy was never related to the interaction of pyramiding and non-voting stock. Our empirical study confirms that the premium is larger for holding companies issuing non-voting stock than for similar operating companies without non-voting equity.

The localisation of corporate technological trajectories in the interwar cartels: Cooperative learning versus an exchange of knowledge

Abstract: By itself, an exchange of knowledge between complementary activities is inadequate to bring the localised technological specialisation of firms closer together, but cooperative 1earning tends to like the technological profile of partner companies more closely cornplementary Interwar cartels in the electrical equipment industry were restricted to an exchange of knowledge at the corporate group level, but in chemicals they sometimes included cooperative Learning. US patent data for the interwar period arc used to construct a measure of the pattern of the localised technological trajectories of the largest US and European firms. Cartels had a limited impact on the overall level of research or the propensity to patent ar the corporate group level. hut cooperative learning made the technological trajectories of chemical firms more similar or closely complementry. Instend. electrical equipment firms became more localised in their learning, paths, by separating products while exchanging knowledge between activit...

An Evolutionary Theory of Corporate Law and Corporate Bankruptcy

Abstract: This article contends that the important recent literature exploring historical and political influences on American corporate law has neglected a crucial component of corporate governance: corporate bankruptcy. Only by appreciating the complementary relationship between corporate law and corporate bankruptcy can we understand how corporate governance operates in any given nation. To show this, I contrast American corporate governance with Japan and Germany. America's market-driven corporate governance can only function effectively if the bankruptcy framework includes a manager-driven reorganization option. The relational shareholding that characterizes Japanese and German corporate governance, by contrast, requires a much harsher bankruptcy regime. Drawing on recent insights in corporate finance, I argue that a permanent change in the corporate governance approach (such as an increase in relational governance in the United States, as some commentators have advocated) would require a corresponding change in corporate bankruptcy, and vice versa. In order to understand why American corporate governance differs so dramatically from Japan and Germany, I explore the evolution of corporate governance and corporate bankruptcy in the three countries in historical and political terms. Focusing in greatest detail on the United States, I provide a more complete account (including extensive research of primary sources) of the remarkable history of corporate reorganization in this country than any previous analysis; and demonstrate that market-driven corporate governance and corporate reorganization did, as my theory predicts, develop in complementary fashion. My analysis of interest group activity, as well as structural and ideological factors, in the United States and in Japan and Germany suggests that corporate governance patterns will remain surprisingly stable in each of the three countries, despite the increasing internationalization of markets. This is not to say that one of the two systems is now and will continue to be superior to the other, however. The two approaches appear both to be generally efficient and to have characteristic biases.

Corporate tax laws, corporate restructuring, and subsidiarization of corporate form, 1981–1995

Abstract: Between 1981 and 1995 the dominant form of Fortune 500 firms changed from the multidivisional form to the multisubsidiary form (Zey and Camp 1996). The explanation for the movement toward subsidiarization originates in changes during the late 1970s and 1980s in the political economy, the relationship between corporations and capital, and the regulation of corporations. As a result of the declining capital accumulation of the 1970s, the federal government instituted two measures of corporate welfare, the Tax Reform Act of 1986 (TRA86) and the Revenue Act of 1987 (RA87), that provided corporations with nontaxable ways to restructure their acquisitions and divisions as subsidiaries. Thus, by the process of subsidiarization, corporations were able to continue capital flows. We examine the increase in subsidiarization from 1981–1995 as a means of assessing the utility of four theoretical perspectives to explain change in corporate form. A one-way random effects panel analysis demonstrates how corporate financial conditions, national business laws, and organizational characteristics combine to affect the rate of subsidiarization of U.S. corporations. Separate panel models for 1981–1985 (pre- TRA86) and 1986–1995 (post- TRA86) reveal that changes in corporate tax laws affect capital accumulation and result in significant change in corporate form. This analysis supports the structural political economy contingency theory arguing that change in capital accumulation, brought about by macro changes in political legal conditions of corporations, leads to the transformation of corporate form.

Corporate governance and corporate performance : implications for transition economies

Abstract: This study examines corporate governance modes in different international business systems: the Anglo-Saxon, the Communitarian, and the Asian/emerging business systems. The review of the literature covers the link between corporate governance and the agency problem on the basis that the latter is concerned with the conflicting interests between corporate managers and its financiers. In this respect, the literature has come up with mechanisms that can mitigate the negative effects of the agency problem such as incentive contracts. The study also addresses the conventional practices of corporate governance as equivalent to practices of corporate finance. In this respect, debt financing and equity financing are discussed as the two main financial tools that shape the financial phase of corporate governance. The management discretion, upon which financing mechanism(s) is (are) to be relatively relied upon, is inherent the certain institutional infrastructure that permits certain financing mechanism to relatively dominate the other(s). In this concern, the study discusses the political-legal perspectives of corporate governance. Considering that different international business systems result in different institutional structures and orientations, the financing mechanisms available in each system create certain economic institutions such as the stock markets, banks, ...etc. In this regard, the study discuses, from international business perspectives, the basic corporate governance mechanisms: the stock market governance, the banks governance and the role of the board of directors in corporate governance. The study extends the current domain of corporate governance to address non-financial issues drawn from the literature of social-business studies in international business context. These issues are corporate orientation towards its stakeholders interests and corporate identity as determinants to the corporate relative competitive position in the marketplace. In addition, from a transitional markets point of view, the study examines what information can be disclosed to company's stakeholders for monitoring its performance, thus providing an evidence that helps corporate stakeholders to certify the company's business affairs.

Corporations vs. The Court: Private Power, Public Interests

Abstract: This text looks methodically at corporate law, corporate governance, and judicial practice from the perspective of social theory. The author explores whether there are identifiable limits - legal or normative - to corporate power in any democratic society.

Die Veränderung der wirtschaftlichen Lage im Verlauf eines Wechsels an der Unternehmensspitze

Abstract: This article examins the influence of CEO changes in big german companies on their financial statements two years prior and three years after the executive turnover. It is shown that conflicting results of prior research might be based on the lack of differing for turnover-reasons. Companies with unvoluntary changes of the CEO realize a different evolution of performance than companies with CEOs changing voluntarily or for reason like retirement or death. A closer examination of the “unvoluntary change-companies” reveals significant patterns of performance both over the years and in relation to a group of companies without an equivalent CEO-change. The data seems to prove that companies experience a so called “financial bath” in situations of unvoluntary CEO turnover.

Legal and accounting regulatory framework for corporate groups: implications for insolvency in group operations

Abstract: This article takes a cross-disciplinary approach to examine how the current legal and accounting regulatory frameworks present problems for an equitable, orderly administration of the insolvent company within a corporate group. It is proposed that the Australian legal and accounting frameworks do not provide specific, systematic solutions for ongoing operation of corporate groups and also their administration in liquidation. Further, that corporate, legal and accounting regulation are closely intertwined but lack consonance. The discrepancies between legal and accounting regulation have an adverse impact on the relevance and usefulness of financial information, particularly when insolvency strikes. Suggested reforms include explicit recognition of corporate groups in the Corporations Law, joint development of common precepts within law and accounting regulation, and statutory provisions facilitating a group solution in the event of insolvency.

Virtual Judgment Proofing: A Rejoinder

Abstract: This is a rejoinder by the author of The Death of Liability, 106 Yale L.J. 1 (1996). The rejoinder is to a reply by Professor James J. White to the original article. Corporate Judgment Proofing: A Response to Lynn LoPucki's The Death of Liability, 107 Yale L.J. 1363 (1998). In response to specific points made by White, LoPucki argues that the judgment proofing of large companies would not be visible in Compustat data because it is not accomplished through secured debt or leasing and because Compustat data is aggregated by corporate group. Contracting parties will permit debtors to judgment proof themselves because by doing so the contracting parties and debtors can externalize liability and split the profits between them. LoPucki also responds to arguments that corporate veil piercing, fraudulent conveyance law, government and consumer reaction, and mandatory insurance will prevent judgment proofing by large companies. The rejoinder concludes that computerization will lead to the proliferation of virtual companies that are born judgment proof.

Corporate Law and Practice of the Netherlands:Legal and Taxation

Abstract: Selection of business organizational form types of corporations, formation, corporate purpose corporate finance, funding shares, share transfer distribution of powers, management of business affairs duties of members corporate litigation major corporate changes - amendments, statutory mergers, statutory split-ups, divisions and demergers, adoption of different legal form, dissolution, and transfer of corporate seat commercial register, public findings employee participation, Works Councils taxation.

Institutional Structures, Organizational Learning, and Sequential Foreign Expansion:South Korean Firms and Business Groups in CHINA, 1987-1995

Abstract: This paper proposes to treat a firm’s foreign expansion as a process of organizational learning shaped by institutional structures in addition to economic variables at the firm, industry, and country levels. An analysis of the expansion of South Korean manufacturing firms into China between 1987 and 1995 shows that business group experience and emerging institutional norms in the organizational field increase the rate of foreign expansion. Organizational learning variables significantly contribute explanatory power to the model above and beyond economic variables. While the previous experiences of the firm and of other firms in the same group are mutually reinforcing, institutional effects in the home country tend to disappear after firms make their first entry into the foreign country. The implications for the institutional analysis of repeated organizational events are discussed.

Stable Set Internally Maximal: A Classification Method with Overlapping

Abstract: When the classification methods are applied to the companies’ positioning they are linked, either assigned to company in a group whose characteristics are predefined (economically should company rather than a company in financial difficulties) or to separate sub-groups within a population of companies. The stable set internally maximal (SSIM) allows, based on financial characteristics of a group of companies from the same sector, to obtain a classification of these in non-separated sub-groups. Such a classification improves the preciseness of the companies’ positioning within the economy activity.