248 research outputs found
Governance disclosure quality and market valuation of firms
This study develops a âcomply or explainâ index which captures compliance and quality of explanations given for non-compliance with the corporate governance codes in UK and Germany. In particular, we explain, how compliance and quality of explanations provided in non-compliance disclosures, and various other internal corporate governance mechanisms, affect the market valuation of firms in the two countries. A dynamic generalised method of moments (GMM) estimator is employed as the research technique for our analysis, which enabled us to control for the potential effects of endogeneity in our models. The findings of our content analysis suggest that firms exhibit significant differences in compliance, board independence and ownership structure in both countries. The âcomply or explainâ index is positively associated with the market valuation of UK firms suggesting that compliance and quality governance disclosure is value relevant in the UK. Institutional blockholdersâ ownership is however, negatively associated with the market value of firms, which raises questions about the monitoring role of institutional shareholders in both countries. We argue that both compliance and explanations given for non-compliance are equally important, as long as valid reasons and justifications for non-compliance are provided by the reporting companies. These findings thus imply that the âcomply or explainâ principle is working well and that UK and German companies could benefit from the flexibility offered by this principle. With respect to the role of board size, board independence, ownership structure, and institutional ownership of firms, this study offers policy implications
Director skill sets
Directors are not one-dimensional. We characterize their skill sets by exploiting Regulation
S-Kâs 2009 requirement that U.S. firms must disclose the experience, qualifications,
attributes or skills that led the nominating committee to choose an individual as a director.
We then examine how skills cluster on and across boards. Factor analysis indicates that the
main dimension along which boards vary is in the diversity of skills of their directors. We
find that firm performance increases when director skill sets exhibit more commonality
Agency Creativity: Teams and Performance: A Conceptual Model Links Agency Teams' Knowledge Utilization, Agency Creativity, and Performance
Agency creativity is a product of team efforts where they interact to share knowledge, skills, and expertise to produce creative campaigns. For an agency, this is an invaluable resource. Using a multi-disciplinary approach, the authors of the current paper propose a conceptual model is proposed that links teamsâ knowledge utilization, agency creativity, and performance. By considering incremental and radical creativity, it also builds on the idea that creativity is a multi-dimensional construct. The framework is presented to act as a catalyst upon which to build future empirical research on the nature of team creativity within advertising agencies
Antecedents to value diminution: A dyadic perspective
© 2016, © The Author(s) 2016. The purpose of this article is to identify the antecedents of diminished value in business-to-business exchange. There is only a limited amount of research on value destruction in the context of service-dominant (S-D) logic and, to the best of our knowledge, no dyadic studies. From a business perspective, awareness of factors that have the potential to impede value creation will enable relationship partners to increase mutual value realization. The article examines the accuracy of the term âvalue co-destructionâ as a blanket description for interaction that results in value reduction, and proposes that, in many instances, âvalue diminutionâ may be more appropriate. The study adopts an exploratory, qualitative approach. One-to-one interviews are conducted with clients and their creative agencies. The results suggest that diminished value outcomes are caused by resource deficiencies and resource misuse by both relational partners, separately and jointly. We propose a model of five higher-order antecedents of value diminution: absence of trust, inadequate communication, power/dependence imbalance, inadequate coordination and inadequate human capital
Say on Pay: A wolf in sheepâs clothing?
This paper debates whether Say on Pay can fix executive pay. We argue that Say on Pay benefits executive pay when shareholdersâ voice offsets CEO power and mitigates directorsâ information deficiencies. We admonish however that Say on Pay may raise novel problems. The pay resulting from Say on Pay can harm stakeholders whose interests differ from those of shareholders influential in pay- setting. Moreover, boards may resist shareholdersâ intervention in pay-setting and, accordingly, manage compensation disclosures to ensure a passing shareholder vote. Consequently, Say on Pay may not only fail to remedy suboptimal pay but also legitimize it
Frequencies of board meetings on various topics and corporate governance: evidence from China
This paper examines the relationship between number of topic-specific board meetings and quality of corporate governance. The quality of corporate governance is estimated by CEO turnover-performance and compensation-performance sensitivities. Information about topic-specific meetings is collected from the reports of independent directors of Chinese listed firms. We find that more frequent discussions of growth strategies related to the use of IPO proceeds, investment and acquisitions increase CEO compensation-performance sensitivity. By contrast, more discussions about the nomination of directors and top management are likely to reduce the sensitivities of both CEO turnover and compensation to performance. Our findings shed light on what makes boards efficient, and how board monitoring of assorted decisions modifies the relationship between CEO interests and firm performance
The Role of Information and Financial Reporting in Corporate Governance and Debt Contracting
We review recent literature on the role of financial reporting transparency in reducing governance-related agency conflicts among managers, directors, and shareholders, as well as in reducing agency conflicts between shareholders and creditors, and offer researchers some suggested avenues for future research. Key themes include the endogenous nature of debt contracts and governance mechanisms with respect to information asymmetry between contracting parties, the heterogeneous nature of the informational demands of contracting parties, and the heterogeneous nature of the resulting governance and debt contracts. We also emphasize the role of a commitment to financial reporting transparency in facilitating informal multiperiod contracts among managers, directors, shareholders, and creditors
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