Corporate group

About: Corporate group is a research topic. Over the lifetime, 1747 publications have been published within this topic receiving 46868 citations.

Politics and Business Group Formation in China: The Party in Control?

Abstract: As a result of economic reform and administrative restructuring in China, a number of powerful state-owned business groups (“national champions”) have emerged within sectors of strategic importance. They are headed by a new corporate elite which enjoys unprecedentedly high levels of remuneration and managerial independence from government agencies and which derives legitimacy from symbolizing China's economic rise. However, through the nomenklatura system, the Party controls the appointment of the CEOs and presidents of the most important of these enterprises and manages a cadre transfer system which makes it possible to transfer/rotate business leaders to take up positions in state and Party agencies. In order to conceptualize the coexistence of the contradicting forces for further enterprise autonomy and continued central control that characterizes the evolving relationship between business groups and the Party-state, this paper proposes the notion of integrated fragmentation.

The Impact of Corporate Governance Practices on Firms' Financial Performance: Evidence from Malaysian Companies

Abstract: I Introduction The East Asian financial crisis of 1997-98 demonstrated the importance of effective corporate governance in developing countries (Krugman 1994; Radelet and Sachs 1998; Rasiah 1999) Malaysia was adversely affected by this financial crisis The contraction of the Malaysian economy, along with instability in the exchange rate and a marked decline in share prices, adversely affected the corporate sector This resulted in considerable retrenchment and downsizing of operations, and the closure of many firms Poor governance standards in both private and government-owned firms were blamed in part for the East Asian financial crisis In Asia, corporations tend to follow the "insider" model, with the dominant control held by the original owners and large shareholders (Sycip 1998; Yamazawa 1998) The erosion of investor confidence was identified as one of the major factors that exacerbated the financial crisis in Malaysia and other Asian countries Many commentators, such as Noordin (1999b), argued that the erosion of investor confidence in Malaysia was brought about by the country's poor corporate governance standards and a lack of transparency in the financial system Therefore, the restoration of confidence in the economy by investors will rely on improvements in corporate governance standards, including the adoption of transparency as an important strategy in corporate management With the economic recovery of most East Asian countries, attention has understandably been drawn to addressing and researching the underlying issues and factors that led to the crisis, with a view to learning how to prevent a recurrence of the crisis The primary purpose of this study is to identify, and contribute to current knowledge on, corporate governance practices that affect, either positively or negatively, the rate of return on investments in firms In this context, the objectives of this article are to briefly discuss the current state of corporate practices of firms in Malaysia, and compare these practices with those of developed countries, such as the United States and the United Kingdom, and to establish corporate governance factors that significantly influence the financial performance of firms in Malaysia A related objective of this article is to indicate the corporate governance practices which do not significantly influence the financial performance of companies in Malaysia The next section of the article contains a brief literature review on the topic This is followed by a depiction of the methods and procedures used for this empirical study The results and conclusions follow II Literature Review II1 The Role of Lenders in Corporate Governance The role of lenders as a force in corporate governance has yet to be extensively analysed (Prigge 1998) Lenders are interested in the repayment of credit, in accordance with the credit contract Since the management's actions are one of the factors determining repayment, lenders may be motivated to carry out monitoring Bilimoria (1997) found evidence to indicate that the Chief Executive Officers (CEOs) of highly leveraged firms were paid less long-term emoluments Using three criteria--total voting power at the general meeting, chairmanship on the supervisory board, and liabilities owed to banks--Perlitz and Seger (1994) classify a sample of 110 listed industry companies into two groups: (1) those companies in which banks exert great potential influence on (comprising fifty-eight companies); and (2) those companies in which banks only have a small potential influence (comprising fifty-two companies) They found that the former group of companies has significantly lower profitability and growth than the latter group of companies Similarly, Cable (1985) and Nibler (1995) discover a positive relationship between apparent bank influence on companies and the profitability and growth of companies However, Chirinko and Elston (1996) did not find any significant relationship between bank influence and a company's earnings …

Institutional Logics or Agency Costs: The Influence of Corporate Governance Models on Business Group Restructuring in Emerging Economies

Abstract: Business groups, the leading economic players in emerging economies, have responded to the market-oriented transition primarily through corporate restructuring. Agency theory predicts that acquisition and divestiture would serve the interests of dominant families and foreign investors in different ways. Further, dominant families, foreign investors from shareholder-based countries, and foreign investors from stakeholder-based countries each operate under distinct institutional logics of appropriate restructuring strategies. We test hypotheses about agency and institutional mechanisms using large business groups in Taiwan between 1986 and 1998 as our empirical example. We find that, consistent with both mechanisms, family-controlled business groups are less likely to divest of unrelated businesses. However, the institutional logics mechanism can better explain the relative lack of unrelated acquisition in family-controlled groups and the difference in divestiture between groups with more shareholder-based ...

Using Organization Structure to Buffer Political Ties in Emerging Markets: A Case Study:

Abstract: We use and extend resource-dependence theory by analyzing how loosely-coupled organizational structures facilitate the management of political ties by business groups in emerging economies. This topic is particularly salient because business groups are a prevalent organizational form in these countries where they face both a high dependence on governments to secure key resources and a unique set of risks associated with political ties. We identify and analyze four buffering mechanisms that enable loosely-coupled business groups to protect themselves against the adverse effects of such ties. We ground and contextualize these mechanisms by relying on a longitudinal case study of the Salim Group – a very large and well-connected Indonesian business group under the Suharto regime. This study is particularly relevant in the context of the renewed interest in the study of firms’ organizational structure.

Board governance and company performance: any correlations?

Abstract: There persists the belief that a firm’s only responsibility to society is to maximize profits without breaking the law, hence the role of corporate governance is to provide appropriate corporate control. Research suggests that there is a growing perception that corporations are social entities overall, answerable to social constituencies and that the role of corporate governance is to understand and adequately address the interest of such social and political constituents. A review of research studies in the area of corporate governance’s contribution to corporate performance reveals that there is no conclusive evidence of contribution. Moreover, it illuminates the need for a boarder criteria of performance and for the adoption of a political model of corporate governance in order to facilitate a corporation’s external accountabilities.