The bounded incentive effect of informal institutions

2019 ◽  
Vol 10 (2) ◽  
pp. 207-232
Author(s):  
Yilin Zhang ◽  
Dongling Cai ◽  
Fansheng Jia ◽  
Guangzhong Li
Keyword(s):  
Executive Compensation ◽  
Formal System ◽  
Governance Mechanism ◽  
Content Type ◽  
The Sustainable Development ◽  
Informal System ◽  
Corporate Governance Mechanism ◽  
New Perspective ◽  
Compensation Incentives

Purpose This paper aims to mainly investigate the role of trust, which is an important informal system, in executive compensation incentives. Design/methodology/approach Using the data of Chinese A-share private enterprises from 2003 to 2014, the paper estimates the effect that trust has on executive compensation incentives. Findings Results indicate that trust can significantly enhance the effectiveness of executive compensation incentives. Furthermore, the better the regional trust environment in which companies are located, the more pronounced the effect is. In particular, the effect of trust on executive compensation incentives is only significant when the formal legal system is immature. As companies continue to grow and develop and the formal system becomes perfect, the role of trust weakens. The formal system, including the corporate governance mechanism and perfect legislation, then becomes the key to promoting executive compensation incentives. Practical implications This paper provides evidence of the significance of both informal and formal systems. It not only emphasises the important role that the informal system has played in “the mystery of China’s economic growth” but also supports the “ruling the country by law” strategy for the sustainable development of China’s economy. Originality/value This paper reveals the relationship between the formal and informal systems, which provides a new perspective on and empirical evidence for the determinants of executive compensation incentives, and it also finds an explanation for the rapid growth of China’s economic development.

scholarly journals Corporate governance in practice: the role of practitioners' understanding in implementing compliance programs

2020 ◽  
Vol 33 (4) ◽  
pp. 887-911
Author(s):  
Riccardo Stacchezzini ◽  
Francesca Rossignoli ◽  
Silvano Corbella
Keyword(s):  
Corporate Governance ◽  
Governance Mechanism ◽  
Content Type ◽  
Case Study Analysis ◽  
Implementation Processes ◽  
Compliance Programs ◽  
Corporate Governance Mechanisms ◽  
Potential Benefits ◽  
Corporate Governance Mechanism

PurposeThis article investigates the implementation of a compliance programme (CP) in terms of how practitioners conceive of and execute the responsibilities arising from this corporate governance mechanism.Design/methodology/approachThis study involves a practice lens approach forms the case study analysis and interpretation, involving both interviews and documentary materials collected from an Italian company with prolonged compliance experience. Schatzki's (2002, 2010) practice organisation framework guides the interpretation of CP as a practice organised by rules, practical and general understandings and teleoaffective structures.FindingsCP practice evolves over time. A practical understanding of daily actions required to accomplish the CP and a general understanding of the responsibilities connected with the CP, such as the attitudes with which the CP is performed, are mutually constitutive and jointly favour this evolution. Dedicated artefacts – such as IT platforms, training seminars and compliance performance indicators – help spread both of these types of understanding. These artefacts also align practitioners' general understanding with the CP's teleoaffective structures imposed, including the CP's assigned objectives and the desired reactions to them.Research limitations/implicationsThe findings have theoretical and practical implications by revealing the relevance of practitioners' understanding of corporate governance mechanisms in their implementation processes.Originality/valueThis study reveals the potential benefits of practice lens approaches in corporate governance studies. It responds to the call for qualitative studies that demonstrate corporate governance as implemented in daily activities.

Corporate governance and investment efficiency in Indonesia: the moderating role of industry competition

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Irenius Dwinanto Bimo ◽  
Engelbertha Evrantine Silalahi ◽  
Ni Luh Gde Lydia Kusumadewi
Keyword(s):  
Corporate Governance ◽  
Generalized Method Of Moments ◽  
Investment Efficiency ◽  
Governance Mechanism ◽  
Content Type ◽  
Industry Competition ◽  
Corporate Governance Mechanisms ◽  
Corporate Governance Mechanism ◽  
The Relationship

Purpose This study aims to analyse the effect of corporate governance on investment efficiency and the moderating impact of industry competition on the relationship between corporate governance and investment efficiency. Design/methodology/approach The research sample includes a total of 36 publicly listed companies assessed by the Indonesian Institute for Corporate Directorship from 2012 to 2018. Testing is performed on full sample and overinvestment and underinvestment subsamples. Additional testing is further carried out using the generalized method of moments to address endogeneity problems and a robustness test is performed to assess the estimated investment efficiency. Findings Corporate governance can increase investment efficiency and the effectiveness of corporate governance is found to drop when the level of industry competition is higher. Practical implications The results of the present study corroborate the suggestion that companies need to implement corporate governance mechanisms. Furthermore, designing a corporate governance mechanism requires the scrutiny of the external environment, including industry competition. Originality/value The present study adds the profitability factor in the calculation of investment efficiency levels. This study also considers external factors that can influence the effectiveness of corporate governance in determining investment efficiency.

Do bank independency and diversification affect bank failures in Europe?

2019 ◽  
Vol 18 (3) ◽  
pp. 366-398
Author(s):  
Mehdi Mili ◽  
Anis Khayati ◽  
Amira Khouaja
Keyword(s):  
Corporate Governance ◽  
Bank Failure ◽  
Bank Failures ◽  
Governance Mechanism ◽  
Content Type ◽  
Failure Risk ◽  
Corporate Governance Mechanism ◽  
The Impact ◽  
The Relationship

Purpose Motivated by agency theory, this paper aims to explore the impact of bank diversification and bank independency on the likelihood of bank failure. The effects of corporate governance (ownership and board structures) are also examined. Design/methodology/approach Logistic regressions are used to explore the role of corporate governance on bank failure risk. This sample covers 608 banks from eight European countries. Findings The results suggest that the well-documented finding that diversification and bank independency may increase bank failure risk does not persist under strong corporate governance mechanism. Thus, to reduce the bank failure risk, diversification should be strongly monitored by the management to avoid excessive risk-taking by shareholders. Originality/value The approach used in this study differs from that used in previous studies from certain perspectives. First, unlike most previous studies that focused on the relationship between bank performance and bank diversification, the impact of income and asset diversification on bank failure is tested. Also, the impact of a combined effect of diversification and corporate governance variables on bank failure is tested. This allows the control for different ownership and board variables as factors that would potentially affect the likelihood of bank failure.

Challenge-hindrance stressors and career initiative: a moderated mediation model

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yan Liu ◽  
Lei Ren
Keyword(s):  
Positive Affect ◽  
Job Autonomy ◽  
Content Type ◽  
Mba Students ◽  
Mediating Role ◽  
Moderated Mediation Model ◽  
Part Time ◽  
New Perspective ◽  
The Relationship

PurposeThe purpose of this paper is to explore the relationship between challenge-hindrance stressors and employees’ career initiative while incorporating the mediating role of positive affect and the moderating role of job autonomy.Design/methodology/approachFive proposed hypotheses were tested using path analysis with two waves of data collected from 136 part-time MBA students.FindingsThe findings show that challenge stressors indirectly facilitate career initiative, whereas hindrance stressors indirectly inhibit career initiative, both with positive affect as mediators. Job autonomy enhances the direct relationship between positive affect and career initiative, as well as the indirect relationships among challenge/hindrance stressors, positive affect and career initiative.Originality/valueThe study brings a new perspective to understanding why an employee conducts career initiative, thereby widening the scope of the antecedents of career initiative. The study discloses positive affect as the mediator that transmits the opposite effects from challenge-hindrance stressors to career initiative. It also identifies job autonomy as an important boundary condition for positive affect to exert its influence on career initiative, as well as challenge-hindrance stressors that influence career initiative via positive affect.

“Hey Alexa–order groceries for me” – the effect of consumer–VAI emotional attachment on satisfaction and repurchase intention

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Reema Singh
Keyword(s):  
Emotional Attachment ◽  
Repurchase Intention ◽  
Self Disclosure ◽  
Content Type ◽  
Self Identity ◽  
New Perspective ◽  
Grocery Purchase ◽  
Strategic Market ◽  
Purchase Satisfaction

Purpose Given the growing prominence of voice-activated artificial intelligent devices (VAIs) as the strategic market-facing technology for grocery purchases, this article aims to bring together theories on anthropomorphism, trust, emotional attachment, self-connection and self-disclosure in one conceptual framework establishing that consumer–VAI relationship has significant implications for grocery purchase satisfaction and intention to repurchase using VAIs. Design/methodology/approach The study tested seven hypotheses through a survey-based approach comprising of two studies. Findings The study empirically supports VAI anthropomorphism and trust in VAIs as predictors of consumer–VAI emotional attachment and establishes the moderating role of consumer self-disclosure. Consumer–VAI self-connection resulting from emotional attachment results in grocery purchase satisfaction and intention to repurchase using VAIs. Research limitations/implications The article offers a novel perspective on consumer–VAI relationships and the use of VAIs for grocery purchases. It establishes an agentic role of consumers when ordering groceries using VAIs, creating a deeper understanding of how consumer–VAI emotional attachment results in extensions of consumers’ self-identity, resulting in purchase satisfaction and repurchase intention using VAIs. Practical implications Establishing a consumer–VAI relationship, the article brings out the strategic importance of VAIs for marketers in grocery purchases and repurchases, which can be extended to other purchases. Originality/value The article offers a new perspective on establishing VAIs as strategically important market-facing devices by examining consumer relationships with VAIs and offering valuable insights on how consumer emotional attachment with VAIs results in satisfaction and intention to repurchase using VAIs.

Investor protection: effects of takeover convergence

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jyoti Dixit ◽  
Poonam Singh ◽  
Arunima Haldar
Keyword(s):  
Corporate Governance ◽  
Common Law ◽  
Investor Protection ◽  
Critical Role ◽  
Emerging Economy ◽  
International Standards ◽  
Governance Mechanism ◽  
Content Type ◽  
Global Standards ◽  
Corporate Governance Mechanism

Purpose Takeovers play a critical role as an external corporate governance mechanism to ensure investor protection. There is a long-standing debate on whether the convergence of corporate governance to global standards can enable emerging economies to ensure investor protection. This paper aims to analyse the evolution of the takeover code, namely, Securities Exchange Board of India’s Substantial Acquisition of Shares and Takeovers (2011) in India from the lens of investor protection. It then compares the takeover provisions in India, the USA, the UK, Singapore and Australia to examine the extent of convergence and its implications for investor protection. Design/methodology/approach Using a cross-national comparative analysis of takeover mechanisms in common law countries, the study analyses the extent and relevance of convergence in form. The focus of the comparison is on regulations governing offer size, offer price, creeping acquisition and initial trigger limit for the mandatory open offer. Findings The findings suggest that certain provisions such as the initial trigger threshold for the mandatory offer and the offer prices of the Indian takeover code are converging with the standards in common law countries. However, the offer price determination based on market prices may not reflect true market value in an inefficient market like India. Other provisions such as creeping acquisition and offer size are not only diverging from the international standards but are also inconsistent with the key objective of investor protections of the Indian regulator. Research limitations/implications Indian takeover regulation needs to converge to higher global standards to ensure adherence to improved investor protection. This needs to be done for the initial trigger limit for mandatory bid and offer prices, after accounting for the differences in institutional structure. The Indian regulators need to revisit provisions on the initial trigger, creeping acquisition to converge to the broader principle of investor protection. Originality/value This technical paper provides a comprehensive depiction of takeover mechanisms in an emerging economy context as a means of investor protection. Further using a comparative lens, it analyses the relevance of convergence of takeover laws. Thus, advances the theoretical knowledge of limited extant work on external corporate governance mechanism in an emerging economy context.

Mediating role of attitude in halal cosmetics purchase intention: an ELM perspective

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Anubha  
Keyword(s):  
Purchase Intention ◽  
Structural Equation ◽  
Muslim Women ◽  
Final Analysis ◽  
Mediation Effect ◽  
Content Type ◽  
Purchasing Intention ◽  
Likelihood Model ◽  
New Perspective

Purpose The purpose of this study is to examine the role of attitude as a mediator in exploring the Halal cosmetics purchase intention of Indian Muslim women. Various drivers of electronic word of mouth (eWOM) (quality, quantity, consistency and quantity) have been tested as antecedents of purchase intention through the lenses of the elaboration likelihood model (ELM). Design/methodology/approach The positivist paradigm approach has been used to test the proposed mediation model using structural equation modelling. Responses of 313 Indian Muslim women who read reviews shared on various social media platforms before making any halal cosmetics purchase intention have been used for the final analysis. Mediation was tested using bootstrapping. Findings The findings of the study revealed that attitude towards halal cosmetics mediates the relationships of various drivers of eWOM with halal cosmetics purchase intention. However, it was observed that this mediation was partial in the context of eWOM quality, eWOM valence and eWOM consistency. Furthermore, for eWOM quantity, the mediation effect was full as the direct impact of eWOM quality on halal cosmetics purchase intention was not significant but its indirect impact on the latter via attitude was found to be significant. Research limitations/implications This study adds to the marketing communication literature, especially in the context of eWOM. The study also validates ELM theory in explaining the attitude that shapes the halal cosmetics purchase intention, thus the current study enriches the ELM literature. Practical implications The current study offers several implications for halal cosmetics marketers. It offers various suggestions to them on how to capitalize on eWOM as it influences Indian Muslim women’s purchasing intention for halal cosmetics by shaping their attitude towards such cosmetics favourably. Originality/value With reference to halal cosmetics, the current study offers a new perspective by examining the purchasing intention for such cosmetics based on various drivers of eWOM. The attitude towards halal cosmetics as a mediator has helped in better explaining the purchase intention for halal cosmetics.

scholarly journals Urban tourist motivations: why visit Ljubljana?

2017 ◽  
Vol 3 (4) ◽  
pp. 382-398 ◽  
Author(s):  
Sanja Bozic ◽  
James Kennell ◽  
Miroslav D. Vujicic ◽  
Tamara Jovanovic
Keyword(s):  
Capital City ◽  
Structured Interviews ◽  
Pull Factors ◽  
Analytic Hierarchy ◽  
Content Type ◽  
Ahp Model ◽  
Pull Factor ◽  
New Perspective ◽  
Hierarchy Process

Purpose The purpose of this paper is to develop a new perspective on urban tourist motivations by applying the analytic hierarchy process (AHP) model to help to understand how tourists make decisions about which destinations to visit. Design/methodology/approach This study was based on 30 one-hour-long structured interviews with visitors to Ljubljana, the capital city of Slovenia. Respondents were asked to express their preferences between different pull-factor motives for their visit, using Saaty’s scale, and further qualitative data were collected to examine these preferences in more depth. Findings The results of this study indicate that the most relevant criteria and thus predominant factors in motivation for visits to Ljubljana are the Cultural and Nightlife pull factors, while religious and business motives are the lowest ranked factors. The paper argues that the results show the value of applying the AHP model to understand the role of pull factors in urban tourism destination choice. Research limitations/implications As a single-destination case study, it is important that the findings of this research are evaluated against similar studies in other cities. A limitation of this research is the fact that sub motives within major groups of pull-factor motives have not been explored in this study and this should be the subject of future, more detailed research. Originality/value This research shows the value of applying an under-used methodology to understand urban tourist motivations and knowledge gained through applying this method will be of value to destination marketing organisations as well as to researchers conducting future studies.

Corporate governance: institutional arrangement or market choice?

2014 ◽  
Vol 8 (4) ◽  
pp. 717-744 ◽  
Author(s):  
Mian Du ◽  
Siyan Chen ◽  
Huan Shao
Keyword(s):  
Corporate Governance ◽  
Firm Value ◽  
Institutional Arrangement ◽  
Listed Companies ◽  
Managerial Ownership ◽  
Governance Mechanism ◽  
Director Compensation ◽  
Content Type ◽  
Market Choice ◽  
Corporate Governance Mechanism

Purpose – The purpose of this paper is to investigate the relationship between corporate governance mechanism and firm value of the listed companies in China. Does the better corporate governance lead to the higher firm value? Or does the higher firm value make it easy to choose a better governance mechanism? Or they affect each other? In other words, this paper tries to answer whether the corporate governance mechanism is only decided by institutional arrangement, or by market choice according to firm value or performance or by the interaction of institutional arrangement and market choice? It tries to answer whether institutional arrangement maximizes the firm value, or an invisible hand pushes them to arrive at its maximum. Design/methodology/approach – This paper establishes an analytic framework of simultaneous equations based on causality, which includes five endogenous variables: ownership of larger shareholders, managerial ownership, director compensation, debt financing and firm value. It adopts 1,644 data samples from 274 Chinese listed companies in Shanghai and Shenzhen Stock Exchange during 2007- 2012 after the non-tradable shares reform. Ordinary least squares (OLS) estimation of single equation, 2SLS and 3SLS estimation of simultaneous equations are respectively done to show the differences of these three kinds of estimations. Findings – The empirical results show that differences exist among OLS, 2SLS and 3SLS estimation. Finally, 3SLS estimation should be adopted because the OLS and 2SLS estimation are biased. There are endogenous relationships between corporate governance mechanism and firm value. Through the 3SLS estimation, it is found that first, ownership concentration and firm value affect each other positively. Second, managerial ownership and firm value affect each other positively; third, director compensation and firm value affect each other negatively, while director compensation and firm performance affect each other positively. Finally, debt financing level and firm value are negatively related to each other. Practical implications – It means that ownership of large shareholders, managerial ownership, director compensation and debt financing in the Chinese listed companies are found to have a root in the interaction between institutional arrangement and market choice. It is also found that adverse selection occurs when creditors loan to the listed companies. Managerial compensation is positively related to accounting profit, but it is negatively related to firm value because managers increase profit due by earning management. This could only increase the accounting profits and obtain huge cash compensation, but not increase firm value and even harm the interests of shareholders. Originality/value – This paper not only shows the difference between OLS and 2SLS estimation but also compares the estimation of 2SLS and 3SLS in terms of empirical methods. It gives answers to the following questions: whether the relationship is one-way causality or bilateral causality between ownership concentration, managerial ownership, director compensation and firm value; whether governance mechanism affects firm value by institutional arrangement, or market drives both of them to strike a balance by an invisible hand. In other words, does it make them arrive at equilibrium through the competitive selection process when shareholders, directors, managers and creditors attempt to maximize themselves of their interests?

Contorted leadership in Chinese hierarchically oriented context

2014 ◽  
Vol 8 (3) ◽  
pp. 502-526 ◽  
Author(s):  
Lin Zhang ◽  
Xiaojun Zhang
Keyword(s):  
Behavioral Model ◽  
Governance Structure ◽  
Organizational Leaders ◽  
Governance Mechanism ◽  
Content Type ◽  
Chinese Context ◽  
Social Governance ◽  
The Social ◽  
And Behavior

Purpose – The aim of this research is to explore the behavioral model of Chinese organizational leaders acquiring resources for the development of their organizations under the influence of hierarchically oriented social governance. Design/methodology/approach – The paper compares the differences between Western and Chinese contexts and conducts a grounded multi-case study to explore leadership behavioral model in the Chinese context. Findings – First, the Chinese social governance structure is hierarchically oriented, whereas the Western social governance structure is market oriented. Second, this unique inconformity found in the Chinese organizational leaders as contorted leadership, which refers to the inconsistency between leaders’ cognition and their behavior when acquiring resources for the development of their organizations, is defined. Third, the conflict between leaders’ cognition and behaviors is caused by the social governance mechanism within which leaders are embedded. Research limitations/implications – The authors have just made a first step to understand contorted leadership in the Chinese context, further researches should pay more attention to exploring the origins, functions and impacts of leaders’ contorted behaviors. Originality/value – First, leadership is linked with social governance by emphasizing on the core role of social governance in allocating the resources which organizational leaders scramble for. Second, a new kind of leadership –contorted leadership – in the Chinese context that emphasizes on the contradiction between leaders’ cognition and behavior, which deepens the understanding of leadership contextualization, is identified.

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