Social Network Evolution:The Case of UK Companies Before and After Brexit

The Brexit referendum has impacted both the UK and the EU economies in several ways. The uncertainty around Brexit highlighted the importance of a relationships network between directors of companies to access information and resources that are necessary for optimal decision making. It is difficult to develop informed business and economy policies without a deep understanding of the magnitude of Brexit on business-to-business relationships with EU-based firms. This study aims to analyze the impact of the passage of the Brexit referendum on the evolution of board interlock networks. The study uses network analysis to measure the evolution of UK-EU directors’ relationships over the Brexit period, predominantly between the 2010 and 2020 period. The study models the structural changes in dynamic networks by converting this evolving network into static graphs on yearly basis. The analysis indicates that links formation in the UK is affected negatively by the Brexit referendum. It also has a negative impact on forming a new link with potential companies’ directors in the EU, but it shows a rising tendency for shared affiliation bias analysis. Interestingly, the contradicted trend in 2007, the number of directors’ connection in consumer service and food & drug sectors was decreasing in the UK while rocketing in the EU

INGOs, Inc. : the effects of INGO adoption of "Best Corporate Practices" on funding received

Since the late 1980s, the exponential growth of the nonprofit sector, large amounts of funding devoted to it, occurrence of major scandals in the corporate and nonprofit realms, and fear that international non-governmental organizations (INGOs) are vulnerable to misuse of funds for terrorist purposes have contributed to creating a more demanding environment for INGOs through new calls for accountability from within and outside the sector. Many solutions proposed by INGOs and others seem to emanate from corporate sector practices. How well have norms of accountability traveled from the corporate to the nonprofit sector? Using interviews and archival data, I examine the cases of Greenpeace USA and Environmental Defense Fund (EDF) in order to examine the relationship between INGO adoption of corporate norms and INGOs financial performance. I argue that adopting corporate norms is likely to improve INGO financial performance. INGOs that copy corporate norms are likely to improve more financially than INGOs that adapt them because the former can respond more directly and rapidly to varied donor demands. However, INGOs which copy corporate norms are more likely to experience lower mission performance than INGOs which adapt them because copied corporate norms can conflict with the greater purpose of the organization or lead to goal displacement. If it is the case that INGOs which perform better financially are less likely to succeed in their mission, it could put into question the current collaborative relationships between INGOs and corporations as corporate norms may be incompatible, and even detrimental to INGOs purposes

The Influence of Ceo Decision-Making and Corporate Strategy on Corporate Social Performance

In this dissertation, I examine the role of CEOs and corporate diversification on corporate social performance (CSP). In the first essay of the dissertation, I evaluate the financial implications of corporate social performance and assess the validity of a widely used measure of social performance, the KLD social ratings. In the first part of this essay, I examine the relationship between CSP and financial performance. The results show that CSP has a negative relationship with short-term financial performance, but a positive relationship with long-term financial performance. In addition, I examine whether introducing the Sarbanes-Oxley Act had a substantial impact on the relationship between CSP and financial performance. The results show that enactment of the Sarbanes-Oxley Act may have caused changes in social perceptions about the importance of corporate social responsibility (CSR). In the second part of this essay, I examine the validity of the KLD social ratings. The analysis shows that the KLD social ratings effectively summarize the past CSP information of firms, but they predict future CSP less effectively. In the second essay of the dissertation, I examine how CEO retirement may influence CSP. I propose that CEOs reduce investment in social issues when they are approaching retirement, resulting in a negative relationship between CEO retirement and CSP. To understand why CEOs close to retirement reduces CSR investment, I compare two possible CEO motivations. The results suggest that CEOs may reduce investment in CSR in order to improve profit figures, which will eventually improve their post-retirement career continuation chances. In further support of this finding, the results show that CEOs who remain on the board of directors after retirement are less likely to reduce investment in CSR than CEOs who do not. In the third essay of the dissertation, I examine the influence of corporate diversification strategy on CSP. Previous work in this topic has ignored the important difference between firms pursuing unrelated and related diversification: the range of stakeholders and transferability of a brand. In this work, I note that unrelated diversifiers are likely to face much more diverse stakeholder demands than related diversifiers; moreover, they are likely to face bigger challenges in transferring the brand across subsidiaries. I propose that such differences will influence a firm’s investment in social issues, and eventually will result in varying levels of CSP

Investigating the Development of the Internal and External Service Tasks of Non-executive Directors: The Case of the Netherlands (1997-2005)

During the last decade, globalization and liberalization of financial markets, changing societal expectations and corporate governance scandals have increased the attention for the fiduciary duties of non-executive directors. In this context, recent corporate governance reform initiatives have emphasized the control task and independence of non-executive directors. However, little attention has been paid to their impact on the external and internal service tasks of non-executive directors. Therefore, this paper investigates how the service tasks of non-executive directors have evolved in the Netherlands. Data on corporate governance at the top-100 listed companies in the Netherlands between 1997 and 2005 show that the emphasis on non-executive directors’ external service task has shifted to their internal service task, i.e. from non-executive directors acting as boundary spanners to non-executive directors providing advice and counseling to executive directors. This shift in board responsibilities affects non-executive directors’ ability to generate network benefits through board relationships and has implications for non-executive directors’ functional requirements.

Corporate governance and corporate failure: evidence from listed UK firms

This study is motivated by the numerous reforms to strengthen the efficacy of corporate boards and their oversight committees, in the wake of high profile corporate failures. The empirical question, however, is whether recent proposals would enhance board and their committee effectiveness and in this way, reduce the likelihood of firm`s failure. This study examines whether the composition, structure and functions of corporate boards and their interactions are related to the probability of corporate failure. Prior studies employ agency and resource dependency theories in isolation as theoretical lenses. This study, however, employs these aforementioned theories as theoretical lenses and argues that the board control and resource function affects the relationship between corporate board attributes and corporate failure. This study examines a sample of 358 UK listed firms, consisting of 95 failed firms and 263 non-failed firms during the period 1999-2011. This study also uses a unique hand-collected data set that measures the corporate governance attributes and functions of these 358 firms over a period of five years preceding failure or otherwise, resulting in 1748 firm-years observations. This study reveals that the probability of failure is lower in firms with large board size, former government officials, independent remuneration committee chairman and greater proportion of outside directors as well as effective audit and remuneration committees. This study also finds that the prospect of corporate failure is higher in firms with less than three independent NEDs on both the audit and nomination committees, without audit committee and where audit committee has no one with financial expertise. The results, however, suggest that the possibility of corporate failure is higher in firms whose boards have a female director and where the nomination committee meets often or where its membership is exclusively preserved for independent NEDs. On the interaction effects, the results show that frequency of board meetings as well as its interactions with presence of female directors, audit and remuneration committees effectiveness are positively related to the probability of corporate failure. The results also indicate that a number of interactions between corporate board attributes and functions are unrelated to the likelihood of corporate failure. These include the interactions between board composition measures (i.e. proportion of outside directors, presence of female directors and board size) and the board resource proxy (i.e. former government official). These associations, especially remuneration committee effectiveness, remuneration committee chairman independence, firm size and profitability, are not only statistically and economically significant but also robust to different specifications. Further, the Receiver Operating Curves indicate that the impact of corporate governance measures after controlling for firm size, liquidity, profitability, age, industry effects, and leverage is more profound in two years preceding failure. The implication of this is that corporate governance mechanisms alone are insufficient to rescue the firm on the verge of collapse. The findings are consistent with the idea that failing firms decline in size, managerial performance, corporate board attributes as well as their board`s ability to discharge it`s monitoring and resource roles. This study adds to the debate on the impact of corporate governance on corporate failure by developing, analysing and testing a robust UK corporate failure prediction model which is underpinned by a multi-theoretical framework: agency and resource dependency theories. This study also offers several recommendations for policy makers and firm-level corporate governance strategies in the mix of the numerous corporate governance reforms worldwide, this in particular makes this study unique