Will Disclosure of Friendship Ties between Directors and CEOs Yield Perverse Effects?

2014 ◽  
Vol 89 (4) ◽  
pp. 1545-1563 ◽  
Author(s):  
Jacob M. Rose ◽  
Anna M. Rose ◽  
Carolyn Strand Norman ◽  
Cheri R. Mazza
Keyword(s):  
Corporate Governance ◽  
Research And Development ◽  
Board Members ◽  
Public Disclosure ◽  
Short Term ◽  
Ceo Bonuses

ABSTRACT: Our paper examines three related questions: Will directors who have friendship ties with the CEO manage earnings to benefit the CEO in the short term while potentially sacrificing the welfare of the company in the long term? Will public disclosure of friendship ties mitigate or exacerbate such behavior, and will disclosure of friendship ties influence investors' perceptions of director decisions? We conduct an experiment involving 56 active and experienced corporate directors from U.S. firms and a second experiment with M.B.A. students. We find that friendship ties caused directors to be more willing to approve reductions to research and development (R&D) expenses that cause earnings to rise enough to meet the CEO's minimum bonus target more often than when the directors and CEO were not friends. However, disclosing friendship ties resulted in even greater reductions in R&D expenses and higher CEO bonuses than not disclosing friendship ties. In a second experiment, we find that shareholders were more likely to agree with directors' decisions to approve cuts to R&D when friendship ties were disclosed. These findings have potentially important implications for corporate governance because they suggest that friendship ties between the CEO and board members can impair the directors' independence and objectivity, and that disclosure of the relationships can worsen this effect.

scholarly journals Family Control and Corporate Innovation in Stakeholder-Oriented Corporate Governance

2021 ◽  
Vol 13 (9) ◽  
pp. 5044
Author(s):  
Hideaki Sakawa ◽  
Naoki Watanabel
Keyword(s):  
Corporate Governance ◽  
Research And Development ◽  
Innovation Activity ◽  
Board Members ◽  
Publicly Traded ◽  
Family Control ◽  
Corporate Innovation ◽  
Main Bank ◽  
Publicly Traded Firms

This study investigates the effects of family control on corporate innovation activity in publicly traded firms in Japan under stakeholder-oriented corporate governance. In a sample of 14,991 firm-year observations in publicly traded firms in Japan during the period 2007 to 2016, we tested whether family owners or board members are enhancing research and development investments. While theoretical perspectives of principal–principal conflicts generally assume a negative relationship between family control and research and development intensity, we find a positive relationship, which supports the stewardship theory perspective. Additionally, we find that main bank ownership positively moderates the relationship between family control and research and development, suggesting that the main bank could affect the decision-making of family board members in the long-term. This result is supported by the close relationships between the main bank and client firms. Furthermore, our study reveals that the shareholder orientation of foreign shareholders suppresses family board members’ long-term orientation. We conclude that the exploitation presumed by principal–principal conflict perspectives has not been thoroughly investigated in Japan’s stakeholder-oriented corporate governance system.

Proactive Law as Competitive Advantage in Crowdfunding

2020 ◽  
pp. 861-881
Author(s):  
Jack Wroldsen
Keyword(s):  
Corporate Governance ◽  
Intellectual Property ◽  
Competitive Advantage ◽  
Competitive Advantages ◽  
Business Law ◽  
Short Term ◽  
Proactive Approach ◽  
Governance Challenges ◽  
Tax Efficiency

This chapter explains how the paradigm of proactive law as competitive advantage can help entrepreneurs succeed in crowdfunding campaigns. Business law scholars have developed theories of “proactive law” and “law as competitive advantage” to show how law can be transformed from an obstacle into a strategic business advantage. This chapter analyzes the evolving crowdfunding landscape through the lens of proactive law as competitive advantage. The chapter proposes several types of innovative securities designed to create competitive advantages in crowdfunding offerings. For example, one type would give crowdfunding investors long-term equity interests while simultaneously eliminating short-term corporate governance challenges for small crowdfunded companies. Apart from securities, the chapter also describes how a proactive approach to law can enhance crowdfunding campaigns in multiple areas, from intellectual property to tax efficiency. To conclude, the chapter suggests expanding the theory of proactive law as competitive advantage to additional areas of entrepreneurship, beyond crowdfunding.

Proactive Law as Competitive Advantage in Crowdfunding

2020 ◽  
pp. 1107-1127
Author(s):  
Jack Wroldsen
Keyword(s):  
Corporate Governance ◽  
Intellectual Property ◽  
Competitive Advantage ◽  
Competitive Advantages ◽  
Business Law ◽  
Short Term ◽  
Proactive Approach ◽  
Governance Challenges ◽  
Tax Efficiency

This chapter explains how the paradigm of proactive law as competitive advantage can help entrepreneurs succeed in crowdfunding campaigns. Business law scholars have developed theories of “proactive law” and “law as competitive advantage” to show how law can be transformed from an obstacle into a strategic business advantage. This chapter analyzes the evolving crowdfunding landscape through the lens of proactive law as competitive advantage. The chapter proposes several types of innovative securities designed to create competitive advantages in crowdfunding offerings. For example, one type would give crowdfunding investors long-term equity interests while simultaneously eliminating short-term corporate governance challenges for small crowdfunded companies. Apart from securities, the chapter also describes how a proactive approach to law can enhance crowdfunding campaigns in multiple areas, from intellectual property to tax efficiency. To conclude, the chapter suggests expanding the theory of proactive law as competitive advantage to additional areas of entrepreneurship, beyond crowdfunding.

Causes and Consequences of the Korean Financial Crisis

2000 ◽  
Vol 03 (01) ◽  
pp. 1-26 ◽  
Author(s):  
Dosoung Choi ◽  
Frank C. Jen ◽  
H. Han Shin
Keyword(s):  
Corporate Governance ◽  
Financial Crisis ◽  
Capital Markets ◽  
Business Sector ◽  
External Shocks ◽  
Business Risk ◽  
Short Term ◽  
The Past ◽  
Debt Capital

During the past decade, the profitability of Korean firms has declined significantly while their business risk has risen substantially. The deteriorating condition was largely due to excessive investments in manufacturing capacity that were financed mainly with short-term debt capital. The measures to restructure the system are summarized in two major thrusts: one, to reform corporate governance so that the business sector becomes more transparent and more value-enhancing; and two, to help develop long-term capital markets so that the domestic financial system becomes less vulnerable to external shocks.

Board evaluation in the top Nordic football clubs

2012 ◽  
Vol 2 (3) ◽  
pp. 210-224 ◽  
Author(s):  
Tor Brunzell ◽  
Sten Söderman
Keyword(s):  
Design Methodology ◽  
Business Plan ◽  
Descriptive Statistics ◽  
Board Members ◽  
Short Term ◽  
Content Type ◽  
Football Clubs ◽  
Almost All ◽  
Positive Effect

PurposeThe purpose of this paper is to study if and how the evaluation of the boards in the top Nordic male football clubs affects the boards’ composition and work.Design/methodology/approachThe study includes all the clubs in the two top divisions in each of the five Nordic countries (Denmark, Finland, Iceland, Norway and Sweden). The study makes use of a questionnaire where 66 (out of 145) chairmen answer 17 questions concerning the board composition and work on a five‐point Likert‐scale.FindingsThe responses were related to whether the board is annually evaluated or not. Descriptive statistics demonstrates that more than half of the clubs have an annual board evaluation. Most common is that the Chairman performs the evaluation himself/herself with help from designated board members; the evaluation being performed through informal discussions. A total of 44 clubs have a nominee committee. Almost all of the clubs transfer the result of the board evaluation to its nominee committee, most commonly verbally. Furthermore, results show that board evaluation has a significant positive effect on the following functions of football boards: review of business plan, strategy, objective and budget; discussion on short‐term development; discussion on long‐term development; and work efficiency.Originality/valueThe results of this study are consistent with a similar study of listed Nordic companies. The main difference between the results of the two studies is that clubs, unlike publicly listed companies, almost always perform the evaluation through internal interviews rarely using external consultants and individual anonymous questionnaires.

Investor Horizons and Corporate Policies

2013 ◽  
Vol 48 (6) ◽  
pp. 1755-1780 ◽  
Author(s):  
François Derrien ◽  
Ambrus Kecskés ◽  
David Thesmar
Keyword(s):  
Corporate Governance ◽  
Market Timing ◽  
Short Term ◽  
Equity Financing ◽  
Corporate Policies ◽  
Corporate Behavior ◽  
Self Selection ◽  
Stock Mispricing

AbstractWe study the effect of investor horizons on corporate behavior. We argue that longer investor horizons attenuate the effect of stock mispricing on corporate policies. Consistent with our argument, we find that when a firm is undervalued, greater long-term investor ownership is associated with more investment, more equity financing, and less payouts to shareholders. Our results do not appear to be explained by long-term investor self-selection, monitoring (corporate governance), or concentration (blockholdings). Our results are consistent with a version of market timing in which mispriced firms cater to the tastes of their short-term investors rather than their long-term investors.

scholarly journals PENGARUH ASIMETRI INFORMASI TERHADAP MANAJEMEN LABA DENGAN GOOD CORPORATE GOVERNANCE SEBAGAI VARIABEL MODERASI

2017 ◽  
Vol 18 (1) ◽  
pp. 64
Author(s):  
Andri Veno ◽  
Noer Sasongko
Keyword(s):  
Corporate Governance ◽  
Linear Regression ◽  
Earnings Management ◽  
Multiple Linear Regression ◽  
Linear Regression Analysis ◽  
Discretionary Accruals ◽  
Multiple Linear Regression Analysis ◽  
Short Term ◽  
Good Corporate Governance

The purpose of this study was to analyze the effect on earnings management information asymmetry, which was moderated by good corporate governance in 43 companies listed on the Indonesian Stock Exchange (BEI). To 43 companies such as sample in this study included the top 10 best Corporate Governance Perception Index (CGPI) during the period 2004 - 2013. The sampling technique is purposive sampling. Earnings management as independent variables proxy through Short Term Discretionary Accruals (STDA) and Long Term Discretionary Accruals (LTDA), while moderating variable is a proxy through Corporate Governance Corporate Governance Perception Index (CGPI). This analysis using multiple linear regression that was previously done through classical assumption test. The results of multiple linear regression analysis on the model of the Short Term Discretionary Accruals (STDA) showed that the asymmetry of information and good corporate governance significantly positive effect on earnings management. The results of multiple linear regression analysis on the model of the Long-Term Discretionary Accruals (LTDA) showed that the asymmetry of information and good corporate governance significantly negative effect on earnings management. While variable existing office Good Governance can moderate the effect of asymmetry in earnings management in Short-Term Discretionary Accruals (STDA) and Long Term Discretionary Accruals (Ltda).

scholarly journals Determinan Manajemen Laba dan Dampaknya Terhadap Relevansi Nilai Informasi Akuntansi: Pengujian Peran Good Corporate Governance

2019 ◽  
Vol 1 (1) ◽  
pp. 11-30
Author(s):  
Resti Kartika Dewi
Keyword(s):  
Corporate Governance ◽  
Discretionary Accruals ◽  
Partial Least Square ◽  
Least Square ◽  
Short Term ◽  
Purposive Sampling ◽  
Good Corporate Governance

Penelitian ini bertujuan untuk menganalisis determinan manajemen laba dan dampaknya terhadap relevansi nilai informasi akuntansi serta peran good corporate governance (GCG) sebagai variabel pemoderasi. Populasi penelitian ini adalah 83 perusahaan manufaktur yang terdaftar di Bursa Efek Indonesia (BEI) periode 2016. Jumlah sampel yang ditentukan dengan teknik purposive sampling berjumlah 62 perusahaan manufaktur. Alat analisis yang digunakan adalah Partial Least Square (PLS). Hasil penelitian ini menunjukkan bahwa kinerja keuangan dan struktur kepemilikan berpengaruh positif dan signifikan terhadap manajemen laba sementara karakteristik perusahaan berpengaruh positif tetapi tidak signifikan. Hasil lain menunjukkan bahwa manajemen laba dengan indikator short term discretionary accruals dan long term discretionary accruals merupakan indikator dari manajemen laba yang paling berpengaruh terhadap relevansi nilai informasi akuntansi dan good corporate governance terbukti memperlemah pengaruh manajemen laba terhadap relevansi nilai informasi akuntansi. Implikasi penelitian ini dapat berguna sebagai dasar masukan dan pertimbangan bagi pengguna laporan keuangan khususnya investor dalam melakukan pengambilan keputusan investasi. Bagi pihak manajemen, hasil penelitian dapat dijadikan sebagai bahan pertimbangan dalam penyusunan rencana kegiatan perusahaan dan bagi pemerintah dalam menetapkan kebijakan pajak.

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.

scholarly journals PENGARUH CORPORATE GOVERNANCE TERHADAP FIRM’S DEBT PADA PERUSAHAAN SEKTOR INDUSTRI BARANG KONSUMSI PERIODE 2013-2018

2020 ◽  
Vol 1 (1) ◽  
pp. 30-41
Author(s):  
Francisca ◽  
Mariana Ing Malelak
Keyword(s):  
Corporate Governance ◽  
Random Effect ◽  
Random Effect Model ◽  
Fixed Effect Model ◽  
Board Composition ◽  
Short Term ◽  
Board Size ◽  
Total Debt ◽  
Effect Model

Era globalisasi menjadikan perusahaan menjadi bersaing dan menentukan strategi bisnis yang sesuai dengan kondisi perusahaan. Kemampuan perusahaan dalam menentukan kinerjanya akan meningkatkan daya saing perusahaan. Penelitian ini bertujuan untuk meneliti pengaruh corporate governance terhadap firm’s debt pada perusaha­an sektor industri barang konsumsi periode 2013-2018. Sampel yang digunakan adalah 31 perusahaan sektor industri barang konsumsi yang tercatat selama periode 2013-2018. Metode analisa data dilakukan dengan menggunakan regresi data panel dengan fixed effect model dan random effect model. Variabel kontrol yang digunakan pada penelitian ini terdiri dari profitability dan firm size. Hasil penelitian in menunjukkan bahwa board size dan board composition berpengaruh signifikan terhadap short term debt, board size tidak berpengaruh signifikan terhadap long term debt namun board composition berpengaruh signifikan terhadap long term debt, serta board size dan board composition tidak berpengaruh signifikan terhadap total debt.

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