Investors will step up corporate governance monitoring

2019 ◽  
Keyword(s):  
Corporate Governance ◽  
Global Financial Crisis ◽  
Socially Responsible ◽  
Content Type ◽  
Responsible Investment ◽  
Climate Risks ◽  
Ceo Pay ◽  
The Face ◽  
The Global Financial Crisis ◽  
First Time

Subject Corporate governance. Significance Policymakers in Europe are, for the first time, pressing institutional investors to police the capital market by exercising tools of stewardship. US policy has taken similar steps, and this top-down pressure is finding echoes at the grassroots level. Worldwide targets include the kind of systemic risk that sparked the global financial crisis and a host of socially unwelcome corporate traits including unethical behaviour, richly rewarding failing CEOs, lack of diversity on boards and passivity in the face of climate change threats. Impacts Some boards are already responding to the scale of investor transformation, but for many it may take a shareholder crisis to bring action. The responsible investment trend has momentum -- firm transparency and diversity will rise; climate risks and excessive CEO pay will fall. Boding well for the sector, surveys show socially responsible investment entices women and 'millennials' more than older savers.

scholarly journals The impact of socially responsible investment index constituent announcements on firm price: evidence from the JSE

2012 ◽  
Vol 15 (4) ◽  
pp. 429-439 ◽  
Author(s):  
Chimwemwe Chipeta ◽  
Olga Gladysek
Keyword(s):  
Global Financial Crisis ◽  
Abnormal Returns ◽  
Total Sample ◽  
Socially Responsible Investment ◽  
Socially Responsible ◽  
Event Window ◽  
Responsible Investment ◽  
Study Methodology ◽  
The Global Financial Crisis ◽  
The Impact

This paper examines whether Socially Responsible Investment (SRI) Index constituent announcements have any impact on the returns of firms listing on the JSE SRI Index. The event study methodology is utilised to estimate abnormal returns for the firms included in the Index. The results indicate insignificant average abnormal returns (AARs) for the years 2004, 2006, 2007, 2008 and 2009, suggesting no significant shareholder gains over the entire event window. However, the year 2005 is associated with positive and significant abnormal returns. Post announcement cumulative average abnormal returns (CAARs) are positive for the years 2005 and 2007. However, the year 2008 exhibited extreme swings in CAARs with a general declining trend in the latter part of the event window. These swings are attributed to the global financial crisis of 2008. Furthermore, the cumulative returns for the total sample show no clear outperformance of the SRI over the JSE All Share Index.

scholarly journals Evolution of German corporate governance (1995-2014): an empirical analysis

2019 ◽  
Vol 19 (5) ◽  
pp. 1042-1062
Author(s):  
Andreas Rühmkorf ◽  
Felix Spindler ◽  
Navajyoti Samanta
Keyword(s):  
Corporate Governance ◽  
Financial Crisis ◽  
Global Financial Crisis ◽  
Governance System ◽  
Content Type ◽  
Convergence Process ◽  
Corporate Governance System ◽  
Anglo American ◽  
The Stability ◽  
The Global Financial Crisis

Purpose This paper aims to address the evolution of corporate governance in Germany with a particular regard to whether there can be observed a gradual convergence to a shareholder primacy corporate governance system. Design/methodology/approach To investigate a potential shift of the German corporate governance system to an Anglo-American tiled corporate governance system, the authors have empirically assessed on a polynomial base 52 separate company and corporate governance variables for 20 years (1995-2014). Findings This research suggests that a gradual convergence has taken place prior to the global financial crisis. However, the results suggest that the convergence process experienced a slowdown in the aftermath of the global financial crisis, which may be linked to the stability of the German corporate governance system during the global financial crisis and the political environment during this time. Originality/value This paper contributes to the research by not only analysing the development of the German corporate governance system but also identifying new reasons for this development and explaining why a new convergence process may be observed in the future again.

Corporate governance, the GFC and independent directors

2015 ◽  
Vol 30 (4/5) ◽  
pp. 324-346 ◽  
Author(s):  
Belinda Rachael Williams ◽  
Simone Bingham ◽  
Sonia Shimeld
Keyword(s):  
Corporate Governance ◽  
Design Methodology ◽  
Global Financial Crisis ◽  
Good Governance ◽  
Board Composition ◽  
Content Type ◽  
Effective Governance ◽  
Analysis Techniques ◽  
The Global Financial Crisis ◽  
Made In

Purpose – The purpose of this study is to understand how board composition and independent non-executive director (INED) disclosures have changed in light of the global financial crisis (GFC) from an accountability perspective. Design/methodology/approach – Content analysis techniques were undertaken on a random sample of 75 publicly listed companies across two time periods, 2005 and 2010. Findings – The findings highlighted increased INED board membership and increased skill and experience disclosure across all board positions, with the most significant increase being the INED position. The results support the notion that firms are attempting to restore their accountability relationships post-GFC through more transparent mechanisms of governance. However, concerns are also raised in the way individual companies are meeting the ASX Corporate Governance independence requirements. Research limitations/implications – The results raise questions as to whether firms have implemented these changes to ensure effective governance and accountability responsibilities, or simply to give the appearance of good governance. Originality/value – Little attention has been given in the literature to the characteristics of INEDs and whether board changes have been made in the wake of corporate and financial crises. The findings from this study contribute to an understanding of board composition and disclosures pre- and post-GFC.

Recent corporate governance developments in Greece

2014 ◽  
Vol 14 (3) ◽  
pp. 281-299 ◽  
Author(s):  
Michail Nerantzidis ◽  
John Filos
Keyword(s):  
Corporate Governance ◽  
Economic Crisis ◽  
Global Financial Crisis ◽  
High Mobility ◽  
State Level ◽  
Business Community ◽  
Economic Conditions ◽  
The European Union ◽  
Content Type ◽  
The Global Financial Crisis

Purpose – This study aims to investigate the recent corporate governance (CG) developments in Greece. The recent economic crisis of Greece has caused very high mobility, both at a state level by imposing a new Greek regulation in capital market and at a level of associations in Greece by recommending new voluntary codes on CG. Both the new economic conditions in the world economy after the global financial crisis of 2007-2010 and the 2009 economic crisis in Greece provide a valuable opportunity to study the CG and regulatory aspects of CG in Greece. Design/methodology/approach – This study has three objectives, namely, to present the reasons which lead the business community in Greece to reconsider existing CG practices and outline the main aspects; to locate the current CG developments and trends in Greece in the last decade (2002-2011), especially in the light of the recent debate between various voluntary codes that have lately been proposed; and, finally, to highlight the efforts that have been made so far by companies to comply with the expanding body of CG best practices and Greek legislation. Findings – The main finding is that the development of regulatory reforms and practices on CG is a process based on the European Union directives. Practical implications – The improvement of legal, institutional and regulatory framework of CG in Greece can attract new investors. Originality/value – This paper re-examines the value of CG in Greece under the new economic conditions.

Pragmatic protectionism may persist in many economies

2016 ◽  
Keyword(s):  
Global Financial Crisis ◽  
Gdp Growth ◽  
Content Type ◽  
Investment Protection ◽  
Legislative Action ◽  
The Us ◽  
Growth Prospects ◽  
Us Presidential Election ◽  
The Global Financial Crisis ◽  
First Time

Subject Fears of a period of imminent 'deglobalisation' involving more protectionism and less integration. Significance The WTO forecast for world trade growth has fallen below GDP growth for the first time since the global financial crisis. Historical evidence suggests a clear link between trade liberalisation and higher GDP growth, raising fears that increased protectionism, sharpened by Brexit and the US presidential election campaign, will dampen global growth. Impacts The EU is likely to scale back the provisions of both CETA and TTIP, particularly on investment protection. Beyond the attention on Trump, the US landscape appears to have shifted more broadly towards deglobalisation. An increase in protectionist policies is likely to lead to more court challenges or legislative action to reverse them. Retaliation between countries may increase, particularly in countries that are likely to be most affected such as China and Mexico. Historically, protectionism has had a bigger impact than competitive devaluations; the trend poses a risk to world growth prospects.

A new vision for internal audit

2015 ◽  
Vol 30 (1) ◽  
pp. 34-55 ◽  
Author(s):  
Andrew D. Chambers ◽  
Marjan Odar
Keyword(s):  
Corporate Governance ◽  
Financial Crisis ◽  
Public Interest ◽  
Global Financial Crisis ◽  
Internal Audit ◽  
Internal Auditing ◽  
Content Type ◽  
Internal Auditors ◽  
The Public ◽  
The Global Financial Crisis

Purpose – The purpose of this paper is to explore how internal auditing may recover from being one of the corporate governance gatekeepers that failed to prevent the global financial crisis. Design/methodology/approach – This paper draws on the theory of professions and provides a brief analysis of internal auditing history, ending with an appraisal of contemporary status. Findings – Internal auditing has not been “fit for purpose” and can be enhanced. Low expectations of internal audit are currently addressed by enhanced guidelines from a number of parties. Internal audit needs to move firmly into the corporate governance space – to audit corporate governance more effectively and to provide more dependable assurance to boards. Practical implications – The global Institute of Internal Auditors can use recent enhanced internal auditing guidelines as a springboard to regain their lead. Internal audit needs to cut the umbilical cord that ties it to management. The accepted “dual reporting” of internal audit is flawed. Social implications – Society cedes professional status to an occupational group when it is in society’s best interests to do so. An attribute of a profession is its accent on serving the public interest. It is unsatisfactory that, five years after the global financial crisis broke, the international Standards for internal auditing still do not articulate the correct professional conduct on making external disclosures in the public interest when internal auditors are aware of serious wrongdoing not satisfactorily addressed internally. Originality/value – This paper comprises a conceptual analysis to challenge the internal audit profession.

scholarly journals ESG Performance and Shareholder Value Creation in the Banking Industry: International Differences

2019 ◽  
Vol 11 (5) ◽  
pp. 1404 ◽  
Author(s):  
María Miralles-Quirós ◽  
José Miralles-Quirós ◽  
Jesús Redondo Hernández
Keyword(s):  
Corporate Governance ◽  
Value Creation ◽  
Global Financial Crisis ◽  
Banking Industry ◽  
Shareholder Value ◽  
Geographic Area ◽  
Socially Responsible ◽  
The Global Financial Crisis ◽  
The Relationship

The aim of this paper is to study the role of socially responsible activities on shareholder value creation in a sample of 166 banks from 31 countries over the 2010–2015 period. Prior research about this relationship is scarce and limited to the period before and during the global financial crisis. In contrast, this research analyzes banks over a period of time when these institutions have increased their social responsibility practices in order to reinforce their credibility and the trust their stakeholders have in them. More precisely, we analyze the relationship between these two magnitudes distinguishing between environmental, social, and corporate governance actions as well as between countries taking into account the level of development, legal systems, and the geographic area. Our findings are relevant not only for academics, but also for the managers of these companies, policymakers, investors, and society in general.

The liquidity, performance and investor preference of socially responsible investments

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jennifer Brodmann ◽  
Phuvadon Wuthisatian ◽  
Rama K. Malladi
Keyword(s):  
Financial Crisis ◽  
Financial Crises ◽  
Global Financial Crisis ◽  
Excess Return ◽  
Socially Responsible ◽  
Content Type ◽  
Responsible Investment ◽  
Socially Responsible Investments ◽  
Significant Difference ◽  
Investor Preference

PurposeThe purpose of the paper is to analyze socially responsible investment (SRI) asset performance compared to traditional assets using the MSCI KLD 400 Index. The authors examine the required return that investors expect to maintain their holdings in SRI stock and whether SRI stocks can be used for diversification during financial crises.Design/methodology/approachThe authors examine SRI stocks' liquidity from the MSCI KLD 400 index, encompassing all environmental, social and governance (ESG) factor investments over 25 years, from 1990 until 2019. The authors test whether sorting portfolios based on their excess return, liquidity and volatility can explain the difference in SRI and non-SRI stocks' returns and then examine the global financial crisis' (GFC) impact on excess returns for SRI and non-SRI assets.FindingsThe authors find a significant difference in liquidity and volatility between SRI and non-SRI stocks and that SRI stocks perform better during financial crises. The results suggest a possible general investor preference to invest in non-SRI stocks despite our findings that SRI stocks tend to withstand financial risk better than non-SRI stocks. The authors find that long-term investors may be willing to forego short-term gains to reduce their overall risk exposure during crises.Originality/valueSRI is gaining international popularity as an alternative investment that includes ratings based on ESG factors. Previous studies provide mixed results of whether SRI stocks outperform conventional stocks. In addition, there is limited research examining the liquidity and volatility of SRI assets. The authors compare the differences between SRI and non-SRI stocks in terms of excess return, volatility and liquidity and compare the liquidity of SRI and non-SRI stocks during the financial crisis.

Corporate governance and performance of REITs

2018 ◽  
Vol 33 (6/7) ◽  
pp. 586-612 ◽  
Author(s):  
Jayalakshmy Ramachandran ◽  
Khoo Kok Chen ◽  
Ramaiyer Subramanian ◽  
Ken Kyid Yeoh ◽  
Kok Wei Khong
Keyword(s):  
Corporate Governance ◽  
Regression Analysis ◽  
Firm Size ◽  
Global Financial Crisis ◽  
Equation Modeling ◽  
Content Type ◽  
And Performance ◽  
The Global Financial Crisis ◽  
The Impact ◽  
The Relationship

PurposeThis study aims to investigate the relationship between corporate governance (CG) and performance of Real Estate Investment Trust (REITs) in Singapore and Malaysia.Design/methodology/approachThe CG attributes that contribute best toward R-Index scores are tested followed by analysis of whether R-Index scores contribute toward better performance of the REITs when controlled for growth, firm size and leverage. Regression analysis using structured equation modeling (SEM) is instituted.FindingsAll attributes in the R-Index except management ownership are significantly correlated to R-Index. Regression analysis using SEM reveals that all the three measures of performance are significant. When controlled for growth and firm size, CG mechanisms reduce the impact of losses. However, highly levered firms could be risky for investors despite strong CG mechanisms.Research limitations/implicationsAll S-REITs and M-REIT sampled were grouped as one regardless of the country differences, which may have limited the results and findings. The R-Index used to score the CG practices for Asia is still very new.Practical implicationsFindings of the study will help REIT policymakers to update scorecards frequently. Loss-making REITs must emphasize on specific CG attributes to enhance their overall CG scores to gain market confidence and procure financial assistance through better disclosure.Originality/valueDue to research scarcity on CG effectiveness associated with performance of Asian REITs after the global financial crisis, this study comes as a timely contribution in understanding the relationship between CG and performance of REITs.

New normal for trade will shape global economy

2016 ◽  
Keyword(s):  
World Trade ◽  
Global Economy ◽  
Global Financial Crisis ◽  
Gdp Growth ◽  
Growth Estimate ◽  
Content Type ◽  
Communication Costs ◽  
Trade Growth ◽  
The Global Financial Crisis ◽  
First Time

Subject The slowdown in global trade. Significance The WTO forecast for world trade has fallen below GDP growth for the first time since the global financial crisis. The forecast hinges on a substantial recovery in the second half of 2016 to meet its meagre trade growth estimate of 1.7% for 2016 as a whole. The first quarter of 2016 actually saw a decline (-1.1%) and the second quarter was barely positive (0.3%). Impacts Economies dependent on goods exports will remain constrained by the weakness in both volumes and prices. Liberalisation of non-tariff barriers may prove difficult politically, particularly health, environment and labour protections. Technology will continue to lower transportation and communication costs, supporting goods trade and facilitating stronger services trade.

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