19 research outputs found
Do standard corporate governance practices matter in family firms?
We study the unique governance dynamics surrounding family ownership in a voluntary regulatory arena where we can directly observe the impact of firm ownership on corporate governance practices pertaining to the composition of the board of directors. We find that family firms are more likely to deviate from standards of best practice in corporate governance. However, lesser governance standards in family firms are not associated with lower performance because the family shareholder is the monitor in-place. In contrast, governance practices and disclosures matter in widely-held firms because they alleviate the conflicts between managers and dispersed shareholders. More broadly, our results show that family ownership and board governance practices are substitute governance mechanisms
Essays in corporate finance.
This thesis is divided into three chapters. Even though the three chapters have different aims, they all concerned with corporate finance. The first chapter concerns venture capital and chapters two and three deal with corporate governance. The first chapter deals with a special kind of security used in venture capital contracting -participating convertible preferred stock. Participating Convertible Preferred (PCP) stock is similar to convertible preferred stock but comes with participation rights. Participating rights allow the holder to participate in earnings along with common shareholders. PCPs play an important role in venture capital exits. The two major forms of exit observed in venture capital are initial public offerings (IPOs) and trade sale. Typically, a PCP stake is converted into common equity during an IPO exit but not converted in case of trade sales. We develop a model where VCs can signal the quality of their venture by costly conversion. We show that PCPs have the required features to implement the signalling mechanism. VCs signal by converting their PCP stake into common equity, when they exit from the venture and in the process give up some of their cash flow rights. We show that this can also help in alleviating the problem of entrepreneurial effort. Finally, we derive empirical implications for the two forms of exit. The second and third chapters are concerned with corporate governance. Firstly, we examine the effectiveness of the "comply or explain" approach to corporate governance in the UK. Using a unique database of 245 non-financial companies for the period 1998 - 2004. we perform a detailed analysis of both the degree of compliance with the provisions of the corporate governance code of best practice (Combined Code), and the explanations given in case of non-compliance. We rank the quality of explanations based on their information content. We find an increasing trend of compliance with the provisions of the Combined Code, but also a frequent use of standard and uninformative explanations when departing from best practice. We then use this data to analyse the extent of moral hazard problem in different groups of companies and the role of monitoring in alleviating it. The third chapter extends the above analysis. We use the dataset to identify well- governed companies by accounting for heterogeneity in their governance choices and investigate its association with performance. We find that companies that depart from governance best practice because of genuine circumstances outperform all others and cannot be considered badly-governed. On the contrary, we find that mechanical adherence to best practice does not always lead to superior performance. We thus argue that flexibility in corporate governance regulation plays a crucial role, because companies are not homogenous entities
Last of the Tai-Pans: Improving the Sustainability of Long-Term Financial Flows by Improving Hong Kong's Corporate Governance
From local to global: the rise of AIM as a stock market for growing companies: a comprehensive report analysing the growth of AIM
In the light of a great deal of negative press activity and factual inaccuracies presented in the media, The London Stock Exchange approached LSE Enterprise to commission an independent research study, which would analyse and comment on the Alternative Investment Market (AIM), London's stock market for small or growing businesses. This report, which looked extensively at the statistical data available, as well as the regulatory reforms which AIM has undergone throughout its history, was designed as an authoritative guide to the development, governance and dynamics of AIM and of its contribution to the UK economy. The report, published in full, electronically (an abridged hard copy is also available), considers both how successful AIM has been to date, as well as the reasons for its various successes, and the challenges that it has faced
Corporate governance in the UK: is the comply-or-explain approach working?
No abstract is available for this pape
(Corporate Governance Series No 001) Corporate Governance in the UK: is the Comply-or-Explain Approach Working?
Corporate governance in the UK: Is the comply or explain approach working?
We examine the effectiveness of the "Comply or Explain" approach to corporate governance in the UK. Using a unique database of 245 non-financial companies for the period of 1998-2004, we find an increasing trend of compliance with the Combined Code, but a frequent use of standard explanations in case of non-compliance. We show how the Combined Code has been interpreted and applied, and we discuss the existence of enforcement and monitoring problems. We make recommendations so that the approach could be strengthened with the greatest possible benefits.Corporate governance Comply or explain Combined Code
Fund Managers under Pressure: Rationale and Determinants of Secondary Buyouts
During the last decade an increasing fraction of PE exits have been secondary deals, in which one PE fund sells their portfolio company to another PE fund. On a comprehensive sample of 9,771 LBO deals in the U.S. and in 12 European countries from 1980 to 2010, this paper investigates to what extent secondary deals are outcomes of opportunistic behavior of the sponsor or adverse incentives of the PE contract. We report evidence that a secondary deal is significantly more likely if either the buyer fund is under pressure to invest or if the seller fund is under pressure to exit. We measure deal pressure by the closeness to the end of the lifecycle/investment period of a fund, by its degree of inactivity or unused funds and by its lack of reputation. Deal pressure also has an impact on deal valuation: Buyers under pressure pay relatively more for the secondary deals that they enter into, while sellers under pressure are willing to accept lower prices for their portfolio firms in secondary buyouts. The latter effect in dominated by the former suggesting that sellers have more bargaining power in secondary transactions.ouirechercheInternationa