Corporate group

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

Business Participation in Health Care Policy Reform: Factors Contributing to Collective Action Within the Business Community

Abstract: This paper examines business political activity by exploring those corporate characteristics that contribute to intercorporate coalition formation. Using differences of interest in relation to health care profitability to illustrate the difficulties inherent in corporate collective action, this study examines the role of corporate selfinterest in political behavior. Distinguishing between narrow individual interest, a broader self-interest that may overlap with the individual interests of other corporations, and classwide interest, this study addresses the extent to which corporate political activity reflects the narrow self-interest of individual firms. It begins by examining membership patterns in big business' major lobbying group on health — The Washington Business Group on Health continues by tracing the development of the WBGH — as it matured from a spinoff of the Business Roundtable to a mature lobbying group in its own right. Finally, it investigates individual corporate reaction to a proposed change in accounting requirements for health care costs, thus, comparing individual behaviors with collective action.

Too Big to Jail? Company Status and Judicial Bias in an Emerging Market

Abstract: Manuscript Type Empirical Research Question/Issue This paper examines prosecutorial and judicial decisions to incarcerate the suspect upon indictment or conviction of embezzlement or breach of fiduciary duty in Korean firms. Our aim is to evaluate whether the judicial system is biased in favor of large business groups or chaebols in criminal cases. Research Findings/Insights Using a sample of 84 indictments and 78 convictions for embezzlement or breach of duty against managers of publicly traded firms in Korea between 2004 and 2008, we find that the probability of incarceration is much smaller if the indicted are associated with large business groups or large firms. In non-large business group firms, initial disclosure of such accusation results in an average loss of a quarter of market value, and three quarters of convicted individuals are eventually removed from managerial positions. However, we observe neither such a loss nor turnover in large business group member firms. Theoretical/Academic Implications We identify a new determinant of judicial bias, namely the status of the company, in addition to individual-level social status or class that has been examined in the previous literature. Such bias may reflect potential future career concerns of the prosecutors and judges who later become lawyers. The results also suggest that an additional motivation behind empire building or size-maximizing behavior of top management is to effectively implement a legal strategy, a form of non-market strategy. Practitioner/Policy Implications Corporate managers may apply our findings to manage legal risks and to formulate nonmarket strategies. However, biases in individual sentences may create system risk and economy-wide inefficiencies. In order to reform the legal system, policymakers should take into account the externalities in individual sentencing decisions.

Decision Support System for the Agri-food Sector – The Sousacamp Group Case

Abstract: The agri-food organizations evolution, and its inherent need for well supported decision making, has led to an increase on the integration of IT/IS into their business and operational processes. With this in mind, an analysis was performed to the use of systems designed to support business decisions, thus allowing to acknowledge that there was none that answered to the needs inherent to organization from the mushroom production sector. This led to the definition and implementation of a DSS system, with the necessary features and qualities, which would help the mentioned activity sector needs. This DSS was designed and tested in a real environment through the implementation of a case study within a eatable mushrooms production company named “Sousacamp Group”. With the implementation of the proposed DSS, the referred business group has reported an increased in their performance levels and decision making accuracy.

Reputation and Spillovers: Evidence from Indian Business Groups

Abstract: We investigate the importance of reputation-based implicit contracts in firm financing in the context of Indian Business Groups. The group structure enables us to cleanly analyze the negative spillovers on other firms, triggered by a member firm defaulting on its debt obligations. We hypothesize that business group insiders will support financially distressed member firms in order to maintain the group's reputation. The default by a group firm will damage a group's reputation - making it more difficult for the remaining firms to raise capital, thereby affecting their performance and survival. We show this to be the case for our sample: Groups use intra-group loans to support member firms in financial distress and, as a result, firms belonging to groups with unimpaired reputation are less likely to become bankrupt, relative to stand alone firms. The first bankruptcy in a group is followed by a significant drop in the amount of external finance raised, a discontinuous drop in investments and profits, and an increase in the bankruptcy probability of other healthy firms in the group. Consistent with loss of reputation being the reason for these spillovers, we find that negative consequences are more severe for firms in the group with closer managerial links to the bankrupt firm and for firms which depend more on external finance.

On the Nature of Corporations

Abstract: Legal experts traditionally distinguish corporations from unincorporated business forms by focusing on such corporate characteristics as limited shareholder liability, centralized management, perpetual life, and freely transferred shares. While this approach has value, this essay argues that the nature of the corporation can be better understood by focusing on a fifth, often-overlooked, characteristic of corporations: their capacity to lock in equity investors' initial capital contributions by making it far more difficult for those investors to subsequently withdraw assets from the firm. Like a tar pit, a corporation is much easier for equity investors to get into, than to get out of. An emerging school of theorists has begun to explore the implications of this idea for corporate law and practice. The idea is still novel enough to lack a uniformly-accepted label - in addition to the phrase capital lock-in, scholars have described this aspect of incorporation as affirmative asset partitioning, the absence of a repurchase condition, and asset separation from shareholders. Whatever label one chooses, the idea shows great promise for illuminating a variety of thorny problems that have long troubled corporate scholars and practitioners. In illustration, this essay considers how the idea of capital lock-in sheds light on three corporate mysteries: the sui generis nature of corporate directors' fiduciary duties; the rise of the large modern service partnership; and lawmakers' enthusiasm for meddling with corporate governance rules.