Corporate Governance and Family-owned Companies

2018 ◽  
Author(s):  
Prem Sikka
Keyword(s):  
Corporate Governance ◽  
Agency Theory ◽  
Ownership Structure ◽  
Agency Problems ◽  
Board Members ◽  
Socially Responsible ◽  
Shareholder Capitalism ◽  
And Control

It is often claimed that the ownership structure and the close involvement of family members alleviates agency problems and gives them a long-term orientation compared to a corporation with dispersed shareholding and control. Through a case study relating to the demise of BHS, one of the biggest UK retailers, the chapter probes these claims. BHS was an epitome of shareholder capitalism. It was owned and controlled by Sir Philip Green and his family. The control enabled the Green family to extract large amounts of cash from BHS through dividends and complex intragroup transactions, with virtually no questions from board members, regulators or auditors. The flawed corporate governance of BHS inflicted considerable hardship on other stakeholders. The demise of BHS should encourage reflections on the claims (agency theory) that an alignment of the interests of shareholders and directors somehow leads to better governance and socially responsible management.

scholarly journals Ownership and control in Germany: do cross-shareholdings reflect bank control on large companies?

2009 ◽  
Vol 6 (4) ◽  
pp. 54-77 ◽  
Author(s):  
Alberto Onetti ◽  
Alessia Pisoni
Keyword(s):  
Corporate Governance ◽  
Supervisory Board ◽  
Personal Relationships ◽  
Insurance Companies ◽  
Board Members ◽  
Industrial Firms ◽  
Supervisory Boards ◽  
And Control ◽  
Cross Shareholdings

This paper aims to analyse the relationships (equity and non-equity) between German banks and German firms, which are the peculiarities of the German institutional system of corporate governance. Scholars agree on the fact that cross shareholdings among banks, insurance companies and institutional firms (Charkham 1994, Baums 1993), combined with long term shareholdings (Gerschenkron 1989), and close relationships and interlocking between board members of different companies (Tilly 1969, Hopt and Prigge 1998), are the main features of bank-firms relationships in Germany. Specifically the main purpose of the paper is to demonstrate, for the panel of German companies investigated, that bank-firm relationship relies not only on patrimonial linkages but also on personal relationships. In the light of the sweeping changes that this model has undergone since the late 1990s, an empirical study has been carried out regarding relationships (patrimonial and personal) among the first 100 German companies with the highest turnover and the 6 main German financial institutions, showing the evolving trend along a period of 8 years and comparing the collected data with previous research. Therefore, in order to try to measure the extent of the banks role in Corporate Governance and to evaluate in a deeper sense the effective influence they have on the industry management, we carried out two different analyses. The first, takes into consideration the equity relationships between banks/insurances and the German industrial firms, the second analyses the number of seats held by the same banks in the correspondent supervisory board. In particular, in our opinion, the analysis of the composition of the supervisory boards can help to outline the personal relationships above mentioned. Therefore is understood, that we consider the presence of bank’s representatives in others than banks’ supervisory boards as signal of banks’ opportunity to exert power and influence

scholarly journals Stewardship theory: is board accountability necessary?

2017 ◽  
Vol 59 (6) ◽  
pp. 1292-1314 ◽  
Author(s):  
Andrew Keay
Keyword(s):  
Corporate Governance ◽  
Agency Theory ◽  
Design Methodology ◽  
Agency Problems ◽  
Stewardship Theory ◽  
Content Type ◽  
General Terms ◽  
Practical Implications

Purpose The purpose of the paper is to demonstrate that notwithstanding the fact that stewardship theory embraces things like trust of directors, their professionalism, loyalty and willingness to be concerned for the interests of others, as well as rejecting the foundations of classic agency problems that are asserted by agency theory, board accountability is as relevant to stewardship theory as it is to agency theory. Design/methodology/approach The paper applies the theory underlying board accountability in corporate governance, which is so often applied both in the corporate governance literature and in practice with agency theory in mind, to stewardship theory. Findings While the idea of accountability of boards is generally associated with an explanation and conceptualisation of the role and behaviour of directors as agents within classic agency theory, the paper demonstrates that board accountability is a necessary part of board life even if the role of directors is explained and conceptualised in terms of stewardship theory. Practical implications The paper suggests some accountability mechanisms that might be employed in a stewardship approach. Originality/value While many authors have talked in general terms about board accountability and its importance, this is the first paper that has engaged in a substantial study that links board accountability directly with stewardship theory, and to establish that accountability is necessary.

scholarly journals Executive board members’ remuneration: A longitudinal study

2009 ◽  
Vol 6 (3) ◽  
pp. 97-103 ◽  
Author(s):  
Themistokles Lazarides ◽  
Evaggelos Drimpetas ◽  
Dimitrios N. Koufopoulos
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Board Members ◽  
Anglo Saxon ◽  
Executive Board ◽  
Financial Measures ◽  
Corporate Governance Mechanisms ◽  
Governance Quality ◽  
Corporate Governance Quality ◽  
Measures Of Performance

Remuneration is considered to be closely connected with financial performance (positively), firm size (positively), the organizational structure (negatively) and corporate governance mechanisms (negatively). Furthermore, a connection of ownership structure and executives’ remuneration has been well established (theoretically and empirically) in the literature (agency theory). The paper examines if these relationships are valid in Greece. Greece hasn’t the characteristics of an Anglo-Saxon country. Overall the study has shown that remuneration levels in Greece are defined by a different set of factors than the ones that are prominent in an Aglo-Saxon country. Notably, fundamental financial measures of performance are more widely used. The age of firms and corporate governance quality have a catalytic impact on remuneration levels.

scholarly journals Opening the black box: Unpacking board involvement in innovation

2019 ◽  
Vol 18 (4) ◽  
pp. 487-519 ◽  
Author(s):  
Patricia Klarner ◽  
Gilbert Probst ◽  
Michael Useem
Keyword(s):  
Corporate Governance ◽  
Boards Of Directors ◽  
Company Strategy ◽  
Behavioral Diversity ◽  
Pharmaceutical Firms ◽  
Scientific Innovation ◽  
Multiple Case ◽  
Temporal Dimensions

Corporate governance research suggests that boards of directors play key roles in governing company strategy. Although qualitative research has examined board–management relationships to describe board involvement in strategy, we lack detailed insights into how directors engage with organizational members for governing a complex and long-term issue such as product innovation. Our multiple-case study of four listed pharmaceutical firms reveals a sequential process of board involvement: Directors with deep expertise govern scientific innovation, followed by the full board’s involvement in its strategic aspects. The nature of director involvement varies across board levels in terms of the direction (proactive or reactive), timing (regular or spontaneous), and the extent of formality of exchanges between directors and organizational members. Our study contributes to corporate governance research by introducing the concept of board behavioral diversity and by theorizing about the multilevel, structural, and temporal dimensions of board behavior and its relational characteristics.

scholarly journals The board of directors and firm performance: empirical evidence from listed companies

2019 ◽  
Vol 19 (3) ◽  
pp. 508-551 ◽  
Author(s):  
Alessandro Merendino ◽  
Rob Melville
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Agency Theory ◽  
Ownership Structure ◽  
Listed Companies ◽  
Independent Directors ◽  
Board Structure ◽  
Board Size ◽  
Ceo Duality ◽  
Content Type

PurposeThis study aims to reconcile some of the conflicting results in prior studies of the board structure–firm performance relationship and to evaluate the effectiveness and applicability of agency theory in the specific context of Italian corporate governance practice.Design/methodology/approachThis research applies a dynamic generalised method of moments on a sample of Italian listed companies over the period 2003-2015. Proxies for corporate governance mechanisms are the board size, the level of board independence, ownership structure, shareholder agreements and CEO–chairman leadership.FindingsWhile directors elected by minority shareholders are not able to impact performance, independent directors do have a non-linear effect on performance. Board size has a positive effect on firm performance for lower levels of board size. Ownership structure per se and shareholder agreements do not affect firm performance.Research limitations/implicationsThis paper contributes to the literature on agency theory by reconciling some of the conflicting results inherent in the board structure–performance relationship. Firm performance is not necessarily improved by having a high number of independent directors on the board. Ownership structure and composition do not affect firm performance; therefore, greater monitoring provided by concentrated ownership does not necessarily lead to stronger firm performance.Practical implicationsThis paper suggests that Italian corporate governance law should improve the rules and effectiveness of minority directors by analysing whether they are able to impede the main shareholders to expropriate private benefits on the expenses of the minority. The legislator should not impose any restrictive regulations with regard to CEO duality, as the influence of CEO duality on performance may vary with respect to the unique characteristics of each company.Originality/valueThe results enrich the understanding of the applicability of agency theory in listed companies, especially in Italy. Additionally, this paper provides a comprehensive synthesis of research evidence of agency theory studies.

CSR and Its Development in Poland

2011 ◽  
Vol 21 (3) ◽  
pp. 59-72
Author(s):  
Marzena Syper-Jędrzejak
Keyword(s):  
Corporate Governance ◽  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Competitive Advantage ◽  
Social Marketing ◽  
Socially Responsible ◽  
Csr Strategy ◽  
Corporate Social ◽  
Global World

Regulations on corporate social responsibility, are instruments that fill the space between the codes of law and tradition, and morality. In this way the ethics of the company builds customer confidence, investor interest and pride in employees. Business activities in a global world result in many threats associated with loss of reputation of the company, exposure to the accusation of unethical actions. In this situation, conducting a long-term CSR strategy can become a tool for prevention and building competitive advantage. Among the tools used by organizations, to build socially responsible business the most popular are: eco-labelling, social marketing programs, including the ethics programs for staff and corporate governance. It should be noted that a huge responsibility for the effectiveness of programs and tools for CSR rests with the managers.

scholarly journals Agency costs, ownership structure and corporate governance mechanisms: A case study in New Zealand unlisted small companies

2011 ◽  
Vol 6 (3) ◽  
Author(s):  
Nirosha Hewa Wellalage ◽  
Stuart Locke
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Small Businesses ◽  
Diagnostic Tests ◽  
Agency Costs ◽  
Small Companies ◽  
Dynamic Panel ◽  
Corporate Governance Mechanisms ◽  
And Performance

This study investigates the linkage between agency costs, ownership structure and corporate governance in small business. Eleven years of data for 100 unlisted small businesses, are collected and 1099 observations are analysed using as dynamic panel GMM estimation. Various diagnostic tests are utilised to check for stationary and convergence of variables. The results indicate that ownership concentration has the most significant governance effect and also has the largest impact on corporate governance. Moreover, this study finds U-shape relationship between internal ownership and performance, which under that agency proxy. Agency costs vary with leverage the life of the business and with its size.

scholarly journals Role of Democratic Volunteers as the "Election Marketer"

2018 ◽  
Vol 2 (2) ◽  
pp. 148
Author(s):  
M. Daimul Abror ◽  
Heri Sunarno
Keyword(s):  
Agency Theory ◽  
Voter Turnout ◽  
Short Term ◽  
Study Approach ◽  
Model Contract ◽  
The Government ◽  
Principal Agency Theory

Voter turnout in 1999-2009 has decreased significantly. At 1999 92.6% chosen and 7.3% abstains, at 2004 84.1% chosen and 15.9% abstains, at 2009 70.9% chosen and 29.1% abstains. (www.merdeka.com). These conditions encourage Indonesian Election Commision to form Democratic Volunteer as an agent that helps the socialization of Election 2014. This study aims to comprehensively assess the role of Democratic Volunteer as "Election Marketer" in Principal Agency Theory perspective. This study uses qualitative research with case study approach. The results are (1) Relations between Pasuruan Regency Election Commision as principal with Democratic Volunteerasagent (2) Contract model of Democratic Volunteer in two aspects, the type of contract that contract model is short Term Contracts, and the type of both relationship are relation between government and civil society; (3) In carrying out its role as election marketer, Democratic Volunteer fulfill four criteria in Principal Agency Theory perspective. The weakness of model contract of Democratic Volunteer are Short Term Contracts must be solved by entering into a Long Term Contracts to be interwoven communication simultaneously between the government, in this case between Pasuruan Regency Election Commision with Democratic Volunteer as the embodiment of Civil Societies participation is represented by five segments groups of voters.

scholarly journals Examining models for measuring corporate governance to resolve financial crises

2021 ◽  
Author(s):  
Jabbar Sehan Issa ◽  
Asmaa Habib Alnasiry
Keyword(s):  
Economic Growth ◽  
Corporate Governance ◽  
Economic Consequences ◽  
Policy Implications ◽  
Key Factors ◽  
New Information ◽  
Governance Systems ◽  
And Control ◽  
Work Done

This document deals with corporate governance and its impact on corporate performance and economic performance. This work is first summarized and based on previous work done, for example, to provide a clearer expression of the corporate governance models of shareholders and shareholders. It then addresses some of the key factors that lead to the effectiveness of corporate governance, and examines some of the strengths, weaknesses, and economic consequences associated with different corporate governance systems. In addition to providing information not provided in previous work, it also provides new information on the concentration of ownership and voting rights in a number of OECD countries. This document also provides empirical evidence on the relationship between corporate governance, firm performance, and economic growth. Finally, several policy implications are identified. This document shows how a corporate governance framework can influence the development of stock markets, R&D and innovative, corporate activities and the development of an active SME sector, thereby affecting economic growth. However, there is no single model of corporate governance, and each country has, over time, developed a variety of mechanisms to overcome representation problems arising from separation of ownership and control. This document examines the various mechanisms used in different systems (eg centralized ownership, executive rent schemes, stock market, inter-corporate shareholding, etc.) and examines the available evidence. Whether they have achieved their goal or not. do. For example, one of the benefits of centralized ownership is that it provides more effective oversight of management and helps with representation problems arising from separation of ownership and control. However, some costs reduce liquidity and the likelihood of risk diversification. Although dispersed ownership carries more liquidity, it may not provide the appropriate incentive to encourage the long-term

Protecting Long-term Commitment

2018 ◽  
Author(s):  
Kevin Levillain ◽  
Simon Parker ◽  
Rory Ridley-Duff ◽  
Blanche Segrestin ◽  
Jeroen Veldman ◽  
...  
Keyword(s):  
Corporate Governance ◽  
Board Members ◽  
Multiple Time ◽  
Credible Commitment ◽  
Open Model ◽  
Time Horizons ◽  
Modern Corporation ◽  
Organizational Structuring ◽  
Multiple Constituencies

Growing attention is being paid to the benefits of considering the long-term interests of multiple constituencies in corporate governance. A theory of the corporation where fiduciary duties of directors point to the legal entity and not to its shareholders goes beyond a pure prioritization of shareholders’ interests. However, the notion that board members mediate the interests of all constituencies fails to account for a ‘positive’ conception of corporate purpose and underlying asymmetries in allocations of rights between stakeholders. Addressing corporate governance as a fundamentally ‘open’ model for organizational structuring, we engage with a variety of legal mechanisms that can be used to implement and protect a positive purpose for the modern corporation and to protect the conditions of credible commitment to manage the company for the interest of corporate constituencies, to commit the corporation to a social or environmental purpose and to take into account multiple time-horizons.

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