The Dynamics of Managerial Entrenchment: The Corporate Governance Failure in Anglo-Irish Bank

2017 ◽  
Author(s):  
Gary Abrahams ◽  
Joanne Horton ◽  
Yuval Millo
Keyword(s):  
Corporate Governance ◽  
Managerial Entrenchment

Governance Practices and CEO Hubris

2021 ◽  
pp. 161-182
Author(s):  
Paola Ferretti ◽  
Cristina Gonnella
Keyword(s):  
Decision Making ◽  
Corporate Governance ◽  
Internal Control ◽  
Financial Distress ◽  
Good Governance ◽  
Power Dynamics ◽  
Control Mechanisms ◽  
Managerial Entrenchment ◽  
Governance Practices

This chapter analyzes the connection between CEO hubris and corporate governance contingencies, including a case study of an Italian bank for which the state of financial distress shall be linkable also to bad governance. The main objective is to verify whether, in presence of hubristic CEO, the internal control mechanisms, set to ensure the board vigilance and limit the overconfidence of the leader, are implemented, and if so, whether such mechanisms, even when formally respected, may be not so appropriate to guarantee a good governance. Particularly, the existence of a CEO hubris could neutralize their positive expected balancing effects on the power dynamics between CEO and board, such as to give prevalence to substance over form. Therefore, it may occur that some governance mechanisms (e.g., independence, non-duality), even if formally implemented, are unable to stem the managerial entrenchment of the CEO, who succeeds in enhancing immoderately his substantial power in the decision-making process.

What Is Shareholder-Driven Corporate Governance?

2019 ◽  
pp. 1-12
Author(s):  
Anita Indira Anand
Keyword(s):  
Corporate Governance ◽  
Majority Voting ◽  
Voting Power ◽  
Distinctive Features ◽  
Managerial Entrenchment ◽  
Public Corporations ◽  
The Impact ◽  
Governance Reforms

This introductory chapter provides an overview of shareholder-driven corporate governance (SCG). SCG is a broad-based analytical concept that refers to the trend in corporate governance whereby shareholders participate in the governance reforms that public corporations adopt. Participation is defined broadly: it does not merely refer to increases in shareholders’ direct voting power; rather, it encompasses reforms that reduce opportunities for managerial entrenchment (boards and management alike) that generally increase the ability of shareholders to become involved in the day-to-day operation of the business. After setting forth the framework for analyzing shareholders’ role in today’s corporation, the chapter outlines the distinctive features of SCG, such as majority voting and proxy access. It also looks at differences in governance regimes across a number of countries and the impact of these differences on shareholders’ interests.

scholarly journals Corporate governance, family firms, and innovation

2020 ◽  
Vol 18 (1) ◽  
pp. 138-151
Author(s):  
Brian Bolton ◽  
Jung Eung Park
Keyword(s):  
Corporate Governance ◽  
Family Firms ◽  
Governance Mechanisms ◽  
Managerial Entrenchment ◽  
Ownership Structures ◽  
Corporate Governance Mechanisms ◽  
Dual Class ◽  
The Impact ◽  
Comprehensive Study ◽  
Board Ownership

We provide a comprehensive study of how corporate governance influences innovation at family firms. Specifically, we consider productive innovation or the impact that R&D spending has on firm revenues. First, we find that family firms do indeed generate more productive innovation than non-family firms, perhaps because they are better able to have a longer-term perspective. We then show how different corporate governance mechanisms influence this relationship. In general, board ownership and CEO ownership are associated with more productive innovation at all firms. Importantly, we find that managerial entrenchment leads to more productive innovation in general, consistent with prior research; however, contrary to prior research, we do not find this result at family firms, suggesting that it’s the ownership relationship, not managerial entrenchment, that drives innovation. We also find that independent boards are associated with greater innovation at family firms but not at non-family firms. Finally, we find that dual-class share structures are harmful for innovation at all firms. Our primary contributions are identifying how firms with different ownership structures focus on creating productive innovation and analyzing how ownership structures interact with different corporate governance mechanisms to allow the firm to make longer-term investments in innovation.

The relationship between managerial entrenchment and accounting conservatism

2021 ◽  
Vol 19 (5) ◽  
pp. 612-631
Author(s):  
Mahdi Salehi ◽  
Ebrahim Ghanbari ◽  
Saleh Orfizadeh
Keyword(s):  
Corporate Governance ◽  
Fixed Effects ◽  
Balance Sheet ◽  
Accounting Conservatism ◽  
Content Type ◽  
Managerial Entrenchment ◽  
Conservative Accounting ◽  
Income Statement ◽  
Study Results ◽  
The Relationship

Purpose This study aims to assess the relationship between managerial entrenchment and accounting conservatism in Iran. Design/methodology/approach To test hypotheses, all listed companies on the Tehran Stock Exchange during 2013–2018 (six years) that qualified were selected. Given the defined limitations of the study, a total of 120 firms with 720 year-observations was selected. After collecting data and figures, they were analyzed using EViews software. Having presented the inferential model tests, the panel data with fixed effects model is chosen. Findings The study results indicate a positive and significant relationship between managerial entrenchment and unconditional conservatism presented in the income statement. Moreover, the authors find a meaningful relationship between managerial entrenchment and unconditional conservatism about the balance sheet. Practical implications Managers will be more aware of the positive consequences of employment optimal corporate governance such as conservative accounting. Such corporate governance is likely to serve their interest in the long run by providing positive signals to the equity owners and board of directors. Originality/value By assessing conservatism’s literature in Iran, we observe many studies on this concept. Still, no investigation is carried out on the relationship between conservatism in accounting and managerial entrenchment. The present study is innovative because it evaluates the relationship between managerial entrenchment and two types of conservatism, namely, balance sheet and income statement conservatism, which have never been investigated by prior studies, notably in emerging markets.

scholarly journals Corporate R&D and Creditor Value: A Contingency Perspective

2019 ◽  
Vol 2 (4) ◽  
Author(s):  
Jiameng Ma
Keyword(s):  
Corporate Governance ◽  
Manufacturing Sector ◽  
Institutional Arrangement ◽  
Curvilinear Relationship ◽  
Listed Firms ◽  
Managerial Entrenchment ◽  
Empirical Results ◽  
Contingency Perspective ◽  
The Relationship ◽  
D Investment

This study investigates the relationship between corporate R&D and creditor value. The empirical results suggest that such relationship is contingent on the situations of existing R&D investment and institutional arrangement of corporate governance. We find that R&D investment increases creditor value when insufficient R&D threatens survival, while reduces creditor value when such threat is mitigated. Moreover, such curvilinear relationship is mainly driven by firms with relatively weak managerial entrenchment. Hypotheses are tested with 98 U.S. listed firms in manufacturing sector over 2001-2007.

scholarly journals Incentives vs. entrenchment: a comparison of competing governance mechanisms

2009 ◽  
Vol 7 (1) ◽  
pp. 204-221
Author(s):  
Brian Bolton
Keyword(s):  
Corporate Governance ◽  
Stock Ownership ◽  
Governance Mechanism ◽  
Policy Makers ◽  
Incentive Effect ◽  
Managerial Entrenchment ◽  
Time Period ◽  
Size Growth ◽  
Corporate Governance Mechanism ◽  
Dollar Amount

This study explores the relationships between firm performance and the incentive and entrenchment effects of corporate governance structures. It analyzes whether the benefits of providing stock ownership to directors are greater than the potential costs of entrenching officers and directors. Using the dollar amount of stock owned by various classes of directors, the results suggest that the incentive effect dominates any costs related to entrenchment: firms with greater stock ownership outperform other firms, regardless of the degree of managerial entrenchment that may be present. This result is robust to firm size, growth opportunities, time period, and other controls. The implication for policy-makers is that providing directors with incentives through stock ownership remains a very effective corporate governance mechanism.

scholarly journals Corporate governance in family run business – a Malaysian case study

2009 ◽  
Vol 6 (4) ◽  
pp. 135-147
Author(s):  
Cyril H. Ponnu ◽  
C.K. Lee ◽  
Geron Tan ◽  
T.H. Khor ◽  
Adelyn Leong
Keyword(s):  
Corporate Governance ◽  
Minority Shareholders ◽  
Chinese Families ◽  
Managerial Entrenchment ◽  
External Auditors ◽  
Ethnic Chinese ◽  
Before And After ◽  
Transparency And Disclosure ◽  
And Control

This paper addresses the debate on family run business and corporate governance before and after the Asian Financial Crisis in 1997. As there are only few studies on the corporate governance of family businesses in Malaysia, this paper aims to provide a broad view of the corporate governance practises of family run companies in Malaysia. The majority of family-run companies in Malaysia are operated by ethnic Chinese families in Malaysia. To understand the practices of corporate governance in these companies, this study selected 3 of the top 10 family run companies by market capitalization in Malaysia. This paper discusses the issues and problems related to family run businesses in the light of the separation of ownership and control, lack of board independence and protection of minority shareholders, lack of independence of external auditors, lack of transparency and disclosure as well as managerial entrenchment.

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