Corporate group

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

The figure in the landscape: a comparative sketch of directors' self-interested transactions

Abstract: DEBORAH A. DEMOTT [*] I INTRODUCTION A central question that underlies many analyses of corporate governance is whether the law and legal institutions have a constituent role in shaping governance practices, or whether the law, as well as governance practices, are best viewed as the inevitable results of market forces, centered upon capital markets. A separate, but related question is the degree to which mechanisms of governance--such as shareholder voting, take-over bids, independent directors, mandatory disclosure, and shareholder litigation--can function adequately as substitutes for one another. The perspective I offer on these questions is based on a comparison between the United States and the United Kingdom, which are sufficiently similar in relevant respects that their divergences are illuminating. The Law Commissions of England and Scotland recently released a Consultation Paper surveying U.K. law on directors' duties with a particular focus on Part X of the Companies Act 1985, which addresses specific types of self-dealing by directors. [1] Reading the Consultation Paper is an instructive experience for one familiar with corporate law in the United States because it confounds conventional wisdom about the degree of similarity between corporate law in the two countries. The descriptive as well as the evaluative portions of the Paper suggest that underlying principles diverge more between the United States and the United Kingdom than often is assumed. In particular, each country's body of law reflects different assumptions about the appropriate role of specific institutions in shaping the conduct of corporate directors and managers. The degree of some of the substantive contrasts is striking. For example, the U.K. statute criminalizes particular transactions that, in the United States, would be well within the discretion of financially disinterested directors. As legislation, moreover, Part X of the Companies Act 1985 has a style and feel that is distinctly different from counterpart provisions in U.S. corporation statutes. Finally, the Consultation Paper illustrates the difficulty of rethinking settled doctrines and statutory structures within the law, so pervasive and inescapable is the force of underlying assumptions. Even analyses grounded in economics may reflect starting assumptions drawn not from economic principles of general applicability, but from a specific legal context. In this article, I focus on the subject of Part X--transactions involving self-interested directors--drawing contrasts with corporate law in the United States. I focus primarily on public companies and on the law of Delaware, the leading situs of incorporation in the United States for public companies. [2] I examine several types of conflict scenarios: self-dealing between the corporation itself and the director; indemnification; directors' pursuit of business opportunities related to the corporation; and defenses to hostile take-over bids. The legal treatment of self-interested transactions diverges more between the United States and the United Kingdom than one might predict, given common starting points. The United States and the United Kingdom share a legal heritage encompassing the common law and principles of equity. Corporation statutes in both countries do not supplant these principles. [3] In both countries, corporation law is grounded in a necessary formalism that treats the corporation itself as a distinct legal entity that may incur obligations and possess rights separate from its owners. Likewise, although directors owe duties to the corporation itself, corporate law accords primacy to shareholders' interests. In both countries, moreover, much business financing and investment is intermediated by capital markets, in contrast with financial systems predominantly organized around relatively activist financial institutions that themselves make and hold loans to business borrowers, and buy and hold equity investments in businesses. …

South Korea's efforts for structural changes in corporate governance of large Korean business groups after the Asian financial crisis

Abstract: This study introduces the characteristics of large Korean business groups (chaebols) and reviews various efforts toward structural changes in South Korea to improve the accounting system and corporate governance in the post Asian financial crisis period Using descriptive trend analysis, this study also examines the consequences of the structural changes Our findings show that major important financial indicators of the Korean economy have improved, implying that Korea's efforts seem to be somewhat successful However, some sophisticated indicators, such as the magnitude of ownership discrepancy between cash flow rights and voting rights and the level of discretionary accruals, are shown to be rather deteriorated, indicating that the efforts toward structural changes have not fully resolved the fundamental problems prevalent in large Korean business groups

Corporate Social Performance of Indonesian State-Owned and Private Companies

Abstract: The objectives of this study are to analyze the difference of corporate social performance between State-owned and private companies in Indonesia, and also to analyze the correlation between the corporate social performance (CSP) and the corporate financial performance by using company size, and institutional ownership as control variables. The population of this study is Indonesian state owned and private companies in the year of 2001-2004. Purposive sampling was used in this study, and final samples are 461 companies. The CSP or CSR (Corporate social responsibility) score is measured by content analysis of corporate annual report using seven item developed by Michael Research Jantzi Research Associate, Inc. The data is tested by independent t-test to determine the mean difference and by using partial correlation test to know the correlation between the corporate social performance and financial performance. The results of this study are that there is no significant difference mean of corporate social performance between state-owned and private owned companies in Indonesia. In addition, the correlation test indicates that there is no association between corporation social performance and financial performance both in SOCs and POCs.

Coordination, control, or charade? The role of board interlocks among business group members

Abstract: How do business groups manage their internal processes? The purpose of this paper is to explore how board interlocks between members serve as control and coordination mechanisms within business groups. The authors propose that centrality of groups’ affiliates in the group network of interlocking directorates is shaped by agency and resource dependence forces. In particular, the authors examine the role of international board ties as a resource and information conduit.,This study leverages proprietary information on firm-to-firm transaction ties among all 155 affiliates belonging to a large Italian business group. The authors use network analysis to develop multiple measures of the centrality of each group member, and link these to resource transactions, ownership patterns and geographic distributions. The authors test the hypotheses in a structural equation model using LISREL.,The results demonstrate that both resource exchanges and the presence of cross-national relations increase an affiliate’s central position in the group’s network of board ties. In contrast, ownership ties between members were unrelated to affiliate centrality.,Internal governance mechanisms of business groups are rarely studied. While groups are often portrayed as inefficient or value-destroying, the analysis of proprietary firm data suggests a very different scenario: inter-unit ties are much more supportive of a model of business groups as strategic portfolios, using internal ties to share information and resources.

The influence of ownership, control, governance and diversification on the performance of family- controlled firms in malaysia

Abstract: This study explores how a concentrated ownership structure and the underlying firm strategies/activities or practices influence the performance of family-controlled publicly-listed firms in Malaysia. Specifically, it aims to enhance our understanding of how differing types of significant owners, control-enhancing means, business groups and firm diversification affect firm performance within a national corporate governance system characterized by pervasive political involvement in business. It also aims to enhance out understanding of the role of board independence in moderating the above effects. the distinctiveness of this study arises from its approach of considering ownership structure and the underlying firm strategies/activities or practices in an integrated manner with particular emphasis on their inter-relationships. Multivariate with moderate regression analysis were utilized as primary tools of analysis. Based on a sample of 314 firms, major findings include (i) the proportion of family equity ownership positively influences corporate performance, (ii) group-affiliated firms generally under-perform non-group affiliated firms, (iii) the heterogeneity of business groups results in considerable differences in performance. Specifically, size of business group has a negative moderating effect on the firm diversification-performance relationship, (iv) profit redistribution occurs in firms that have a high level of family ownership and that are affiliated to large business groups, (v) board independence in general lacks effectiveness in moderating the influence of firm strategies or activities on firm performance. In terms of practical/managerial implications, the study demonstrates (i) the importance of conceptualising corporate governance in a broader sense, particularly in emerging economies such as Malaysia, (ii) how policymakers and regulators may identify and better monitor firms that are more likely to expropriate investors and/or exhibit governance problems, and (iii) a potentially fruitful approach to be adopted by investment professionals in selecting firms with better overall governance structures and performance that enhance their investment returns, particularly in the long term.