Corporate governance and innovation investment in publicly listed firms: the moderating effect of ownership type and legal jurisdiction

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ella Guangxin Xu ◽  
Chris Graves ◽  
Yuan George Shan ◽  
Joey W. Yang
Keyword(s):  
Corporate Governance ◽  
Design Methodology ◽  
Family Businesses ◽  
Ownership Type ◽  
Content Type ◽  
Family Control ◽  
Listed Firms ◽  
Legal Jurisdiction ◽  
Moderating Role

PurposeThe paper aims to examine the effect of corporate governance (CG) on innovation investment, with consideration of ownership types and legal jurisdictions.Design/methodology/approachThe authors' empirical analysis is based on a sample of publicly listed family businesses (FBs) from the top-500-list that matched worldwide with non-family counterparts from 2009 to 2018. The study uses a holistic measure of CG to mitigate the conflicting impact of individual CG components found in prior studies. This measure is applied to examine the moderating role of firm ownership type and legal jurisdiction.FindingsThe authors' results demonstrate that CG positively influences innovation investment. This positive relationship is more pronounced in FBs than in non-family businesses (NFBs) and is more prevalent in civil law economies than in common law economies.Originality/valueThe study holistically examines the effect of CG, capturing the combination of all individual governance mechanisms and their influence on innovation investment. The study further shows that comprehensive CG has diverse impacts on innovation investment when considering family control and legal jurisdiction.

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.

Determinants of voluntary formation of risk management committees

2014 ◽  
Vol 29 (7) ◽  
pp. 649-671 ◽  
Author(s):  
Nkoko Blessy Sekome ◽  
Tesfaye Taddesse Lemma
Keyword(s):  
South Africa ◽  
Risk Management ◽  
Corporate Governance ◽  
Management Practices ◽  
Emerging Economy ◽  
Board Structure ◽  
Content Type ◽  
Listed Firms ◽  
Practical Implications

Purpose – The aim of this paper is to examine the nexus between firm-specific attributes and a company’s decision to setup a separate risk management committee (RMC) as a sub-committee of the board within the context of an emerging economy, South Africa. Design/methodology/approach – The authors analyse data extracted from audited annual financial reports of 181 non-financial firms listed on the Johannesburg Securities Exchange (JSE) by using logistic regression technique. Findings – The results show a strong positive relationship between the existence of a separate RMC and board independence, board size, firm size and industry type. However, the authors fail to find support for the hypotheses that independent board chairman, auditor reputation, reporting risk and financial leverage have an influence on a firm’s decision to establish RMC as a separately standing committee in the board structure. The findings signify the role of costs associated with information asymmetry, agency, upkeep of a standalone RMC, damage to the reputation of directors and industry-specific idiosyncrasies on a firm’s decision to form a separate RMC. Research limitations/implications – As in most empirical studies, this study focuses on listed firms. Nonetheless, future studies that focus on non-listed firms could add additional insights to the literature. Investigating the role of firm-specific governance attributes other than those considered in the present study (e.g. gender of directors, ownership structure, etc.) could further enhance the understanding of antecedents of risk-management practices. Practical implications – The findings have practical implications for the investment community in assessing the quality of risk management practices of companies listed on the JSE. Furthermore, the results provide insights that are potentially useful to the King Committee and other corporate governance regulators in South Africa in their effort to improve corporate governance practices. Originality/value – The present study focuses on firms drawn from an emerging economy which has profound economic, institutional, political and cultural differences compared to advanced economies, which have received a disproportionately higher share of attention in prior studies. Thus, the study contributes additional insights to the literature on corporate risk management from the perspective of an emerging economy.

scholarly journals Can compensation committees effectively mitigate the CEO horizon problem? The role of co-opted directors

2020 ◽  
Vol 34 (1) ◽  
pp. 1-21
Author(s):  
Ruonan Liu
Keyword(s):  
Corporate Governance ◽  
Research And Development ◽  
Empirical Evidence ◽  
Design Methodology ◽  
Ceo Compensation ◽  
Content Type ◽  
Horizon Problem ◽  
Accruals Management ◽  
Compensation Committees

Purpose This study aims to examine whether compensation committees dominated by co-opted directors are less effective in mitigating the CEO horizon problem. Design/methodology/approach The author uses a sample of 7,280 firm-year observations from 1998 to 2011. Findings In this study, the author finds evidence of opportunistic research and development (R&D) reduction and accruals management in firms with retiring CEOs and compensation committees dominated by co-opted directors. Moreover, it is found that R&D reduction and income-increasing accruals are less discouraged when determining the compensation for retiring CEOs by compensation committees that are dominated by co-opted directors. The results suggest that compensation committees dominated by co-opted directors are less effective in adjusting CEO compensation to mitigate the CEO horizon problem. Originality/value The study reveals that co-opted directors are weak monitors. Moreover, the study adds empirical evidence to the debate of organizations’ CEO horizon problem. Finally, the study adds to the literature on corporate governance, revealing that compensation committees play an important role in mitigating an organization’s CEO horizon problem by adjusting CEO compensation.

The moderating role of previous venture experience on breadth of learning and innovation and the impacts on SME performance

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Kanhaiya K. Sinha ◽  
Chad Saunders ◽  
Simon Raby ◽  
Jim Dewald
Keyword(s):  
Design Methodology ◽  
Leadership Team ◽  
Higher Learning ◽  
Curvilinear Relationship ◽  
Content Type ◽  
Innovation Activities ◽  
The Relationship ◽  
Moderating Role ◽  
Practical Implications

PurposeThe purpose of this paper is to investigate the moderating role of previous venture experience on the relationship between learning breadth and innovation breadth, defined as the range of innovation types within a firm, and the impacts on SME performance.Design/methodology/approachA theoretical model was developed, and hypotheses were tested using step-wise multivariate regressions on survey data from 509 North American SME respondents.FindingsThe results demonstrate that the previous venture experience of a firm's top management plays a key role in enhancing the innovation breadth for a given level of learning breadth. There is a curvilinear relationship between innovation breadth and learning breadth, and increases in innovation breadth lead to increases in firm performance.Practical implicationsThe results indicate that organizations seeking higher performance returns by expanding their breadth of innovations need parallel attention on higher learning breadth in order to adequately capture the value from this broader set of innovations.Originality/valueThe paper contextualizes learning and innovation in the SMEs and argues that the consideration of diversity (breadth) of learning and innovation can help us understand their performance implications across industries. It also extends the effect of previous venture experience (PVE) of the leadership team in explaining performance. Beyond their ability to address external factors, PVE has a moderating effect on the relationship between learning and innovation breadth across the organization. Previous venture experience serves as both a guide and catalyst for investments in learning activities that lead to a broader range of innovation activities across the firm.

Fear after being fired: the moderating role of resilience in lessening the time between employment

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Alex Scrimpshire ◽  
Marcia Lensges
Keyword(s):  
Personality Trait ◽  
Design Methodology ◽  
Affective Events Theory ◽  
Content Type ◽  
Future Analysis ◽  
Natural Response ◽  
Conceptual Paper ◽  
Job Termination ◽  
Moderating Role

PurposeThe purpose of this paper is to study how the interplay of the emotion of fear and the personality trait of resilience affect time to reemployment after job termination. The authors carried out the research by extending affective events theory (AET) beyond the workplace.Design/methodology/approachThis paper is a conceptual paper intended to lay the groundwork for future analysis in the areas of fear and resilience, specifically in the time after job termination.FindingsThe paper suggests that fear is a natural response to job termination, and there are two responses to fear: one of action to rid oneself of fear (“fight or flight”) and one of paralysis, in which an individual remains in a fear state. The authors put forth that one's level of resilience is a factor in determining time to reemployment.Originality/valueWhile there are numerous studies on the role emotions play in the workplace and in particular, the role of fear about potentially getting fired, there are few, if any, studies on the role of fear after losing a job. The authors feel this is a warranted area of study as fear can have both positive and negative responses. The authors also contend that a major diver of these fear responses is an individual's level of resilience, and this can be a significant predictor of the individual's time to reemployment.

Power asymmetry, egalitarianism and team learning – Part 1: conceptualizing the moderating role of environmental hardship

2020 ◽  
Vol 27 (5) ◽  
pp. 389-401 ◽  
Author(s):  
Ruchi Sinha ◽  
Christina Stothard
Keyword(s):  
Conceptual Model ◽  
Design Methodology ◽  
Team Learning ◽  
Future Research ◽  
Power Dynamics ◽  
Power Asymmetry ◽  
Content Type ◽  
Military Teams ◽  
Moderating Role

Purpose This paper aims to understand the effects of team power asymmetry (hierarchy) on team learning. Design/methodology/approach Literature suggests that power asymmetry can hurt team learning due to unequal interactions. The authors integrate the situated focus theory of power and the theory of adversarial growth to propose that environmental hardship can moderate this relationship. Such that, under environmental hardship there is a shift in power relations within hierarchical teams, such that power asymmetry positively relates to team learning via increased team egalitarianism (interactional equality). Findings The study is presented in two parts. Part 1 reviews the literature and builds the theoretical arguments for the conceptual model, while Part 2 empirically examines the model on a sample of military teams. In Part 1, the authors propose a theoretically derived model and directions for future research in team power, dynamics and learning. Research limitations/implications It provides directions to empirically validate a contingency-based model to resolve the dilemma of creating equality and high levels of team learning in hierarchical teams. Originality/value The conceptual model and hypotheses contribute to the team learning literature by theoretically clarifying the conditions under which power asymmetry is likely to improve team learning.

Passing on the legacy: exploring the dynamics of succession in family businesses in Pakistan

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Asma AbdulRahim Chang ◽  
Muhammad Shujaat Mubarik ◽  
Navaz Naghavi
Keyword(s):  
Family Business ◽  
Succession Planning ◽  
Design Methodology ◽  
Family Firms ◽  
Family Members ◽  
Family Businesses ◽  
Content Type ◽  
Traditional Family ◽  
Interviewing Technique

PurposeBy taking the theory of entrepreneurial legacy as the baseline, this study explores the various aspects of succession planning in indigenous family businesses especially the role of female family members in succession and conflicts in family businesses.Design/methodology/approachThe study is qualitative in nature and adopts narrative inquiry to explore the aspects of succession planning. In doing so, the study utilizes an in-depth interviewing technique with nine participants who run their family-owned firms which are mostly in their second or third generation for analysis.FindingsThe findings are concurrent with the literature that indicates a lack of strategic succession planning although ordinary or natural succession does occur in some firms. The study also reports a lack of consideration for female members in succession, daughters in particular, for traditional family firms (FFs) in contrast to entrepreneurial FFs.Research limitations/implicationsThe study has many implications for family-owned firms in Pakistan as they need to align their family business with the theory of entrepreneurial legacy and its three strategic activities in order to ensure the longevity of their business.Originality/valueExploring how succession planning takes place in family indigenous family businesses and what is the role of female family members in succession and conflicts in family businesses are original contributions of this study.

The impact of corporate governance code on earnings management in listed non-financial firms

2017 ◽  
Vol 7 (4) ◽  
pp. 428-444 ◽  
Author(s):  
Erick Rading Outa ◽  
Paul Eisenberg ◽  
Peterson K. Ozili
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Design Methodology ◽  
Explanatory Variable ◽  
Content Type ◽  
Listed Firms ◽  
Financial Firms ◽  
New Institutions ◽  
The Impact ◽  
Practical Implications

Purpose The purpose of this paper is to examine whether voluntary corporate governance (CG) code issued in 2002 constrain earnings management (EM) among listed non-finance companies in Kenya. Design/methodology/approach Using a panel data of 338-firm year’s observations between 2005 and 2014, the authors test the hypothesis that CG constrains EM in non-finance firms listed in Kenya. The authors regress discretionary accruals (DA) against a developed Corporate Governance Index (CGI). Findings The overall results show that DA is not significantly related to CG suggesting the voluntary CG code does not deter EM in non-finance companies in Kenya. Practical implications Evidence of income decreasing\increasing accruals implies EM still exists among the listed firms. This suggests that policymakers may need to consider radical actions including alternative or new CG approaches and new institutions to improve the effectiveness of CG. Originality/value This study extends existing studies by including composite CG as possible explanatory variable for constraining EM. The authors contribute to the debate by demonstrating that the voluntary CG code in Kenya is not effective in constraining DA and therefore the current initiatives by the regulator to change the current CG code are appropriately directed.

The effect of task conflict on outsourcers’ long-term orientation toward suppliers: the moderating role of formal control and Chinese guanxi

2019 ◽  
Vol 35 (2) ◽  
pp. 260-269 ◽  
Author(s):  
Shuting Li ◽  
Mark H. Haney ◽  
Gukseong Lee ◽  
Mingu Kang ◽  
Changsuk Ko
Keyword(s):  
Conflict Management ◽  
Design Methodology ◽  
Manufacturing Firms ◽  
Task Conflict ◽  
Content Type ◽  
Formal Control ◽  
Negative Effect ◽  
Moderating Role

Purpose This paper aims to investigate the antecedents of manufacturing firms’ long-term orientation towards their suppliers in the context of outsourcing relationships in China. Design/methodology/approach Based on survey data collected from 224 manufacturing firms in China, this study examines the hypothesized relationships. Findings The results show that task conflict has a negative effect on long-term orientation, both Chinese guanxi and formal control are useful governance mechanisms to enhance long-term orientation, and the negative effect of task conflict on the long-term orientation weakens as Chinese guanxi between a manufacturer and its supplier increases. Originality/value This study contributes to a better understanding of conflict management in outsourcing relationships in China.

scholarly journals Corporate governance and executive perquisites

2017 ◽  
Vol 16 (1) ◽  
pp. 21-45 ◽  
Author(s):  
Angela Andrews ◽  
Scott Linn ◽  
Han Yi
Keyword(s):  
Corporate Governance ◽  
Design Methodology ◽  
Ordinary Least Squares ◽  
Securities And Exchange Commission ◽  
Corporate Disclosure ◽  
Content Type ◽  
Listed Firms ◽  
The Public ◽  
Disclosure Requirements ◽  
Rule Change

Purpose The purpose of this paper is to examine the relation between executive perquisite consumption and indicators of corporate governance after the Securities and Exchange Commission (SEC) expanded the disclosure requirements related to perquisites. Design/methodology/approach This study uses ordinary least squares and Tobit regressions to examine the dollar value of perquisites consumed, the number of perquisites consumed and the types of perquisites consumed. Findings The analysis shows that firms with weak corporate governance are more likely to award perquisites to executives. Firms characterized as being more prone to the presence of agency problems are associated with greater levels of perquisite consumption. Finally, there is evidence that not all perquisite consumptions can be attributed to an agency problem. Efficiently operating firms are associated with greater levels of perquisite consumption as are larger firms. Research limitations/implications The authors examine firms in the period immediately after the SEC initiated the expanded disclosures. This may limit the generalizability of the results to other exchange-listed firms that changed their perquisite policy as a result of the rule change. Originality/value The paper extends the literature on corporate governance and mandatory corporate disclosure by investigating the association between corporate governance characteristics and perquisite consumption. This paper examines this relation immediately after the SEC expanded the disclosures surrounding perquisites to provide the public with more transparent disclosures.

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