Downs, Stokes and the Dynamics of Electoral Choice

A six-wave 2005–09 national panel survey conducted in conjunction with the British Election Study provided data for an investigation of sources of stability and change in voters’ party preferences. The authors test competing spatial and valence theories of party choice and investigate the hypothesis that spatial calculations provide cues for making valence judgements. Analyses reveal that valence mechanisms – heuristics based on party leader images, party performance evaluations and mutable partisan attachments – outperform a spatial model in terms of strength of direct effects on party choice. However, spatial effects still have sizeable indirect effects on the vote via their influence on valence judgements. The results of exogeneity tests bolster claims about the flow of influence from spatial calculations to valence judgments to electoral choice.</jats:p

The culture of UK employee-owned worker cooperatives

Purpose – This paper presents exploratory, empirical data from a three-year study of organizational culture in for-profit, employee-owned businesses within the UK, comparing ownership types (direct, trust, and cooperative). It outlines the study and then focuses on worker cooperatives. Culture is illuminated through the lens of performance and reward management. Design/methodology/approach – Qualitative data was gathered from three worker cooperatives based in the North of England, using semi-structured interviews, participant observation, and document review and was compared to qualitative data collected from other types of employee-owned businesses. Findings – The findings suggest a distinct culture within worker cooperatives encompassing five key values: a whole life perspective, consistently shared values, self-ownership, self-control, and secure employment. Research limitations/implications – Additional time with each cooperative and a greater spread of cooperatives would be beneficial. The research was carried out during a period of organizational growth for the case organizations, which may influence attitudes to reward and retention management. Practical implications – The results inform recruitment and retention policy and practice within worker cooperatives and highlight concerns regarding the stresses of being a self-owner. These are important considerations for potential worker co-operatives alongside policy recommendations to advance employee ownership. Originality/value – A comparative analysis of culture, performance, and rewards across different employee ownership types has not been undertaken before. This addresses an under-researched area of employee ownership regarding HR practices. Within the UK, recent research on the culture(s) of worker cooperatives is limited

Setting the agenda or responding to voters? Political parties, voters and issue attention

Why do political parties prioritise some policy issues over others? While the issue ownership theory suggests that parties emphasise policy issues on which they have an advantage in order to increase the salience of these issues among voters, the riding the wave theory argues instead that parties respond to voters by highlighting policy issues that are salient in the minds of citizens. This study sheds new light on the selective issue emphasis of political parties by analysing issue attention throughout the entire electoral cycle. On the basis of a quantitative text analysis of more than 40,000 press releases published by German parties from 2000 until 2010, this article provides empirical support for the riding the wave theory. It shows that political parties take their cues from voters by responding to the issue priorities of their electorate. The results have important implications for political representation and the role that parties play in democracies

Control Structures and Payout Policy

This paper examines the payout policies of UK firms listed on the London Stock Exchange during the 1990s.It complements the existing literature by analyzing the trends in both dividends and total payouts (including share repurchases).In a dynamic panel data regression setting, we relate target payout ratios to control structure variables.Profitability drives payout decisions of the UK companies, but the presence of strong block holders or block holder coalitions considerably weakens the relationship between corporate earnings and payout dynamics.While the impact of the voting power of shareholders coalitions on payout ratios is found to be always negative, the magnitude of this effect differs across different categories of block holders (i.e. industrial firms, outside individuals, directors, financial institutions).The controlling shareholders appear to trade off the agency problems of free cash flow against the risk of underinvestment, and try to enforce payout policies that optimally balance these two costs.Finally, the paper improves upon some methodological flaws of the recent empirical studies of payout policy.Payout policy;dividend payout;share repurchases;partial adjustment;ownership and control;voting power;Banzhaf power indices;corporate governance;free cash flow;pecking order

One Share - One Vote: The Theory

The impact of separating cash flow and votes depends on the ownership structure. In widely held firms, one share - one vote is in general not optimal. While it ensures an efficient outcome in bidding contests, dual-class shares mitigate the free-rider problem, thereby promoting takeovers. In the presence of a controlling shareholder, one share - one vote promotes value-increasing control transfers and deters value-decreasing control transfers more effectively than any other vote allocation. Moreover, leveraging the insider's voting power aggravates agency conflicts because it protects her from the takeover threat and provides less alignment with other shareholders. Even so, minority shareholder protection is not a compelling argument for regulatory intervention, as rational investors anticipate the insider's opportunism. Rather, the rationale for mandating one share – one vote must be to disempower controlling minority shareholders in order to promote value-increasing takeovers. As this policy tends to empower managers vis-a-vis shareholders, it is an open question whether it would improve the quality of corporate governance, notably in systems built around large active owners. The verdict in the case of depositary certificates, priority shares, voting and ownership ceilings is less I ambiguous, since they insulate managers from both takeovers and effective shareholder monitoring.Security-voting structure; market for corporate control; controlling minority shareholders

CEO and Board Characteristics as Determinants of Private Benefits of Control: Evidence from the Russian Stock Exchange

This paper investigates whether and how various characteristics of CEOs and corporate boards are related to the severity of corporate governance problems within firms. The latter is proxied by private benefits of control, which we measure for dual class stock firms using the voting premium approach. Our empirical analysis is based on data from Russia and takes advantage of the extreme corporate governance problems in the country, considerable variation in corporate governance practices across firms and over time, and presence of a large and exogenously created (during the process of privatization) group of dual class stock companies. The data are assembled from the RTS, SKRIN and SPARK databases and include over 200 firms observed in 1997-2009, with over 1000 observations in total. Our econometric analysis suggests a quadratic relationship between private benefits of control and CEO ownership with a minimum at about 4% CEO ownership, a positive association between CEO tenure and private benefits, and a quadratic in CEO age with a dip in private benefits at about 52 years of age. There is also a quadratic relationship between private benefits of control and board size, implying the optimality of medium-sized (about 9-10 directors) boards. We find no gender effects on private benefits of control.CEO, corporate board, private benefits of control, dual-class stock firms, Russia

Key drivers of 'good' corporate governance and the appropriateness of UK policy responses : final report

The DTI’s Corporate Law and Governance strategy aims to promote and deliver an effective framework for corporate governance in the UK, giving confidence to investors, business, and other stakeholders to underpin the relationship between an organisation and those who hold future financial claims against that organisation. However, corporate governance involves various problems of asymmetric information and incomplete contracts that generate a need for public policy responses to mitigate market failures and ensuring that companies moves towards ‘good’ corporate governance. Since the early 1990s, the UK has been very active in undertaking policy reforms that includes a number of corporate governance codes, expert reports, a high level review of company law, and new regulations and legislation. These policy initiatives need to be monitored and evaluated in terms of their success in influencing the key drivers of ‘good’ corporate governance. This Report undertaken for the DTI has several aims: to identify key drivers of good corporate governance based on a review of social science literature; to describe the content of UK regulatory initiatives with regard to those drivers; and to evaluate gaps in the content and implementation of UK policy regarding corporate governance, using those drivers as benchmarks. In addition, some further implications of this study are discussed for future policy and research on UK corporate governance. The Report identifies key drivers of good corporate governance based on extensive review of the broad social science literature. Good corporate governance is defined here with regard to the rights and responsibilities of company stakeholders, and the wealth-creating and wealthprotecting functions of corporate governance within this context. Based on this definition, a detailed review of the theoretical and empirical social science literature on corporate governance was undertaken across seven broad areas: boards of directors, shareholder activism, information disclosure, auditing and internal controls, executive pay, the market for corporate control, and stakeholders. The result was the identification of 18 key ‘drivers’ or governance mechanisms, which promote ‘good’ corporate governance. An internet-based survey of international corporate governance experts was conducted in order to confirm and further specify these drivers in relation to the UK context. Next, key gaps in the UK regulatory framework are explored with reference to the drivers of good corporate governance. A comprehensive review was undertaken to evaluate corporate governance-related developments in UK regulation since 1990. Policy initiatives were analysed with regard to both their content and effectiveness in promoting each of the identified drivers. Several potential gaps in coverage were identified in the areas of executive pay and employees stakeholders. A number of potential gaps in effectiveness were also identified with regard to other key drivers such as boards, shareholder involvement, information disclosure, auditing, and the market for corporate control. The analysis was supported by feedback from a Focus Group of expert practitioners that took place at the DTI in January 2006. The Report also emphasises that the effectiveness of corporate governance regulation depends very much on balancing different governance demands and regulatory trade-offs. Corporate governance is shaped by a number of contingencies, complementarities, and costs. Various organisational contingencies may place different demands on corporate governance drivers, and their implementation is also associated with different sorts of costs. Looking more generally, different drivers may act as complements or substitutes for one another. Better appreciation of such interdependencies is crucial to formulating a coherent regulatory strategy and balancing important regulatory trade-offs between the following - mandatory regulation (uniform requirements) and more flexible forms of soft-law such as codes based on comply-or-explain principles and self-regulatory norms of professional groups. This analysis suggests a number of areas for future research. Bearing in mind the depth and breadth of the UK regulatory initiatives, it is important to verify whether they were followed by behavioural changes of the participants in corporate governance mechanisms, including unintended consequences such as the development of ‘gaming’ practices. Further research is needed on a potential ‘gatekeeper failure’ in situations where reliance on ‘reputational intermediaries’, such as auditors, securities analysts, attorneys, and other professionals, is not fully justified. Other research recommendations are related to wealth creation and performance trade-offs. It is important to go beyond the question of maximizing shareholder returns and consider to what extent different corporate governance configurations promote long-term, value-creating economic production in a fashion that benefits not only shareholders but also other groups that make specific investments in corporations. Finally, a more holistic approach to the effectiveness of corporate governance drivers requires further research on such aspects as stakeholder involvement, contingencies, complementarities, and cost aspects that may affect the effectiveness of corporate governance mechanisms. The authors would like to point out that, since the report was written, there have been various developments, not least changes in UK law, which have overtaken some of the details in our analysis. However, the basic review of the evidence basis and the perspectives offered remain very much current

The risk-opportunity cleavage and the transformation of Europe’s main political families

Analyses of the last two rounds of general elections in the EU (old) 15 member-states, as well as of the 1999 and 2004 European elections, reveal some of the symptoms of what Key and Burnham called "critical elections": elections that mark a sudden, considerable and lasting realignment in the electorate, leading to the formation of new electoral majorities. I explore the hypothesis that these series of critical elections at the turn of the century are triggering a radical realignment under the pressures of a new fault-line of conflict aggregation -- one shaped by attitudes to globalization. As a result, an opportunity-risk cleavage is emerging which is challenging, and opting out to replace, the capital-labor dynamics of conflict that have shaped the main political families in Europe over the 20th century. This paper traces the dynamics of realignment in terms of shifts at four levels: 1) The public agenda of political mobilization; 2) The social composition of electoral constituencies 3) the ideological basis of party competition. On this basis, an alignment is taking place, on the one hand between the centre-left and centre-right midpoint around an "opportunity" pole and, on the other, the circumference of far-right and radical-left parties around a "risk" pole. To what extend will these pressures of realignment manage to unfreeze (in reference to Rokkan and Lipset) the established party-political constellations in nation-states remains to the determined. However, tensions between the analyzed pressures of realignment and existing institutionalized forms of political representation go a long way in explaining the current crisis within both Social Democracy and European Conservatism, as well as the rise of new forms of populism in Europe