The Impact of Corporate Governance Mechanisms on the Commitment of Managers in an IPO Setting: Evidence from Korean Small and Venture Firms

Managers’ commitment and dedication crucially affect the sustainable growth of firms. When private companies first offer their shares to the public in an initial public offering (IPO), an IPO lockup is one way of revealing managers’ commitments. IPO lockups are agreements that promise not to sell the shares retained by pre-IPO shareholders for a specified period in the market after the IPO. This paper investigates the impact of corporate governance mechanisms on the length of the lockup period. The paper’s sample consists of IPO firms that have gone public in Korea’s KOSDAQ market, which is a listing venue for small and venture companies. The major findings of this paper are as follows: first, the length of the lockup period increases with the number of outside directors and, second, IPO firms with audit committees have longer lockup periods than those without them. These results indicate that managers of firms with greater board independence choose a longer lockup period when going public. This paper also finds that the lockup period is positively related to the presence of venture capitalists serving as directors of IPO firms, which suggests that venture capital directors may ensure that managers have longer lockups. Overall, these findings suggest that, when small and venture companies go public, managers may use the IPO lockup as a commitment device that complements corporate governance mechanisms in reducing investor concern about the moral hazard problem of managers.

Impact of Corporate Governance on Research & Development Investment in The Pharmaceutical Industry in Indonesia

Deciding the investment scale of a company's Research & Development is a strategic investment decision related to creating long-term value of the company and it is a very important decision because it has a certain level of risk and the cost is not small. Corporate governance of a company differs according to the ownership structure of each company, and corporate governance will affect the company's decision-making. The purpose of this study is to examine the effect of corporate governance structure, namely major shareholder, institutional investor, and outside directors to investment research & development at a pharmaceutical company listed in Indonesian Stock Exchange period 2010 to 2017. The population of this study is a pharmaceutical company listed on the Indonesia Stock Exchange. The number of pharmaceutical companies listed during the period 2010 to 2017 is as many as 11 companies. By using purposive sampling, obtained a sample of 5 companies. The data analysis technique used in this research is multiple linear regression analysis. The results of this study indicate that major shareholders have a positive significant influence on research & development investment. Meanwhile, the institutional investor has a positively significant influence on research & development investment. And the outside directors have an insignificant negative effect on investment & development investment.

Corporate governance and remuneration: a bibliometric analysis

PurposeThis study aims to pinpoint gaps in the literature on corporate governance and remuneration by producing a comprehensive bibliometric review for the period 1990–2020.Design/methodology/approachBibliometric analysis is the quantitative study of the bibliographic material in a specific research field. It allows an analyst to classify that material by paper, journal, author, indexation, institution or country, among other possibilities. This study reviews a total of 298 Web of Science–indexed journal articles on corporate governance and top-management remuneration schemes.FindingsThe authors find five distinct research strands: (1) firm performance and remuneration of top management, (2) the remuneration and independence of boards of directors and the efficiency of boards of directors as a governance system, (3) outside-director remuneration and the efficiency of outside directors as a monitoring system, (4) director remuneration and the corporate governance of companies and (5) the role of ownership structure and top managers' compensation schemes as corporate-governance tools. The authors identify gaps in the literature and avenues for future research for each of these strands.Practical implicationsThe authors’ findings have implications for board diversity (e.g. gender diversity), remuneration policy for top-level managers and governance issues (independent directors, separation of ownership with control). This study is the only one to summarize the key topics on which top research has been focused and can be broadly used for corporate governance management perspective.Originality/valueThis paper provides an overview of how the literature on corporate governance and remuneration has developed and a synopsis of the most influential and most productive authors, countries and journal sources. It creates an opportunity for other researchers to focus on this area. This study will also serve as a foundation for future meta-analyses.

The Securities Act Registration Framework

This chapter addresses the Securities Act registration framework. In its determination to maintain a transaction-based Securities Act registration framework while making necessary adjustments, the SEC has appropriately acted. With the improvements made, the registration framework functions in a relatively efficient manner and generally provides investors with adequate safeguards. Nonetheless, significant deficiencies exist which are addressed in this chapter. Among the improvements that should be implemented are: mandating that all material information (absent a meritorious business justification) be contained in a registration statement; limiting the use of incorporation by reference to those issuers whose securities in fact trade in efficient markets; and requiring that a sufficiently comprehensive summary section be included in the statutory prospectus. The chapter also focuses on due diligence and the integrated disclosure system. In the context of incorporation by reference and shelf registered offerings, the dilemma faced by outside directors and underwriters in performing their due diligence functions can be largely ameliorated by: for outside directors, the presence of a vibrant disclosure committee (comprised solely of outside directors) that is actively engaged in the disclosure process; and, for underwriters, the retention by a subject company’s audit or disclosure committee of a reputable law firm to conduct continuous due diligence on the prospective underwriter’s behalf.

The Old Boys Club in New Zealand Listed Companies

The board of directors plays an important role in implementing corporate governance in the firm, as directors have a fiduciary duty to the firm’s shareholders. The effectiveness of directors is a key determinant of corporate value and they need to bring a range of skills and experience to the boardroom. This skill and experience cannot be developed solely within the firm, and most boards incorporate non-executive directors who are or have been directors of other firms. Current research on the benefits of interlocking directorships is mixed between the claim that they bring outside feedback to the table and open decision makers’ minds, and those who think outside directors are a waste of money and can reduce company performance. This paper investigates the extent of interlocking directorship in New Zealand and how it affects corporate performance. Our findings of largely no significant impact on firm performance are consistent with the management control theory of director interlocks; the exceptions support the class hegemony theory that links interlocking directorship with a negative firm performance.