Corporate governance, accounting transparency and stock exchange sizes in Germany, Japan and «Anglo-Saxon» economies, 1870–1950

2019 ◽  
Vol 64 (2) ◽  
pp. 157-186
Author(s):  
Leslie Hannah
Keyword(s):  
New York ◽  
Corporate Governance ◽  
Stock Exchange ◽  
Civil Law ◽  
Corporate Bond ◽  
Stock Exchanges ◽  
Anglo Saxon ◽  
Legal Rules ◽  
Legal Origins ◽  
The Us

AbstractModern discussions of corporate governance have focused on convergence of «varieties of capitalism», particularly the recent «Americanisation» of laws and voluntary codes in Germany, Japan, and other civil law countries. However German and Japanese legal and business historians have suggested that corporate governance, accounting transparency or other favourable factors in their countries were historically a match for – or even superior to – those in the US. An alleged consequence was deeper penetration by the Berlin and Tokyo stock exchanges of their domestic economies than of the US by the New York Stock Exchange (NYSE), using measures such as market capitalization/GDP ratios. This paper reviews the classic Rajan and Zingales data on the sizes of stock exchanges. It concludes that the evidence for Japanese historical precocity relative to the US, after the necessary allowance is made for regional stock exchanges and corporate bond finance, stands up better to this closer examination than that for Germany.Many financial historians now agree that stock exchange development was not historically determined by legal origins («Anglo-Saxon» common vs Euro-Japanese civil law), though today it appears to be driven by legal rules protecting shareholders and/or bondholders and limiting directorial autocracy and information asymmetry. However, both today and historically in some cultures private order rules (voluntary codes, bourse listing requirements, bankers as trusted intermediaries, block-holder monitoring, etc) offered substitute protections, or at least complemented protective laws. This paper reviews the plausibility of these determinants of historical stock exchange sizes – and others that have been neglected – in Japan, Germany, and elsewhere, before 1950.

Cross-Listing, Firm Valuation, and Corporate Governance

2013 ◽  
pp. 108-154
Keyword(s):  
New York ◽  
Corporate Governance ◽  
Hong Kong ◽  
Firm Value ◽  
Stock Exchange ◽  
Firm Valuation ◽  
Stock Exchanges ◽  
Refined Theory ◽  
Bonding Theory ◽  
Cross Listing

This chapter examines a unique dataset, which, to the best of my knowledge, has not hitherto been used. It concerns the relationship between corporate governance and firm value in the context of Chinese firms cross-listed on major international exchanges, which include the NASDAQ, the New York Stock Exchange (NYSE), the Hong Kong Main Board, the Hong Kong Growth Enterprise Market (GEM), the Singapore Stock Exchange, and the London Alternative Investment Market (AIM). The study is grounded in the bonding theory, which asserts that stringent corporate governance requirements imposed by overseas regulations enhance firm value. Contrary to this theory, firms listed on stock exchanges in mainland China alone command significantly better value than those that are cross-listed on overseas stock exchanges. This results in the conclusion that the general bonding theory cannot adequately explain how cross-listing affects firm valuation in the Chinese context, and thus a refined theory is required.

scholarly journals Corporate governance listing requirements: protecting investors from fraudulent financial reporting

2014 ◽  
Vol 11 (4) ◽  
pp. 717-746 ◽  
Author(s):  
Khaled Aljifri ◽  
Hugh Grove ◽  
Lisa Victoravich
Keyword(s):  
New York ◽  
Corporate Governance ◽  
Financial Reporting ◽  
Stock Exchange ◽  
Investor Protection ◽  
Stock Exchanges ◽  
Structural Factors ◽  
Behavioral Factors ◽  
Fraudulent Financial Reporting ◽  
The 2008 Financial Crisis

This paper analyzes the corporate governance listing requirements of major global stock exchanges to assess the level of investor protection from investment disasters, such as corporate fraudulent financial reporting (e.g. Enron, Lehman Brothers, Satyam, and Parmalat) and the 2008 financial crisis which destroyed over $1 trillion in market capitalization of U.S. companies. This investor protection issue is especially critical for emerging stock exchanges that are trying to attract foreign investors, such as in the United Arab Emirates (UAE) and Russia. This issue is assessed by comparing the corporate governance listing requirements of the well-established stock exchanges in the United States (both the New York Stock Exchange or NYSE and the over-the-counter-stock-exchange or NASDAQ), United Kingdom (London), and Singapore to the listing requirements of the emerging stock exchanges in the UAE and Russia. The effectiveness of these corporate governance listing requirements in protecting investors is assessed by determining how they address ten common corporate governance factors which represent lessons learned from recent fraudulent financial reporting scandals. These ten factors have been divided into two groups of five. The first five common factors were the same ones found in a 2010 Commission on Corporate Governance report, sponsored by the New York Stock Exchange, to investigate the 2008 financial crisis. This paper has called them “structural” factors and labelled the other five common factors as “behavioral” factors. The global listing requirement comparisons reveal that investors seem to be quite well protected from the five “structural” factors but not the five “behavioral” factors. The paper concludes with listing requirement suggestions to protect investors from these five “behavioral” factors. Investor protection from all ten factors is still needed as recent U.S. and global surveys have indicated that financial reporting manipulations are ongoing

Absence of the weekend effect and industry-style portfolios

2019 ◽  
Vol 12 (4) ◽  
pp. 463-475
Author(s):  
Selma Izadi ◽  
Abdullah Noman
Keyword(s):  
New York ◽  
Stock Market ◽  
Structural Breaks ◽  
Stock Exchange ◽  
Structural Break ◽  
Weekend Effect ◽  
Content Type ◽  
Market Portfolio ◽  
The Us ◽  
Using Data

Purpose The existence of the weekend effect has been reported from the 1950s to 1970s in the US stock markets. Recently, Robins and Smith (2016, Critical Finance Review, 5: 417-424) have argued that the weekend effect has disappeared after 1975. Using data on the market portfolio, they document existence of structural break before 1975 and absence of any weekend effects after that date. The purpose of this study is to contribute some new empirical evidences on the weekend effect for the industry-style portfolios in the US stock market using data over 90 years. Design/methodology/approach The authors re-examine persistence or reversal of the weekend effect in the industry portfolios consisting of The New York Stock Exchange (NYSE), The American Stock Exchange (AMEX) and The National Association of Securities Dealers Automated Quotations exchange (NASDAQ) stocks using daily returns from 1926 to 2017. Our results confirm varying dates for structural breaks across industrial portfolios. Findings As for the existence of weekend effects, the authors get mixed results for different portfolios. However, the overall findings provide broad support for the absence of weekend effects in most of the industrial portfolios as reported in Robins and Smith (2016). In addition, structural breaks for other weekdays and days of the week effects for other days have also been documented in the paper. Originality/value As far as the authors are aware, this paper is the first research that analyzes weekend effect for the industry-style portfolios in the US stock market using data over 90 years.

scholarly journals The role of corporate governance in executive compensation system

2015 ◽  
Vol 12 (4) ◽  
pp. 467-479
Author(s):  
Yusuf Mohammed Nulla
Keyword(s):  
New York ◽  
Corporate Governance ◽  
Executive Compensation ◽  
Research Study ◽  
Stock Exchange ◽  
Pearson Correlation ◽  
New York Stock Exchange ◽  
Statistical Regression ◽  
Toronto Stock Exchange ◽  
York Stock Exchange

This research study explores the relationship between the executive compensation and corporate governance among the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX/S&P) companies from 2005 to 2010. The quantitative research method was selected for this research study. The eighty largest companies from the New York Stock Exchange and the Toronto Stock Exchange were selected. The random sample method was used to select the two populations from each index. The research question for this research study was: is there a relationship between CEO cash compensation and corporate governance among the Toronto Stock Exchange and the New York Stock Exchange companies. The four statistical regression models found that there was a weak relationship between corporate governance and executive compensation among the TSX/S&P and the NYSE populations. Also, the Pearson correlation results indicated that the corporate governance has a minimal role towards the determination of the executive compensation

THE EVOLUTION OF SHAREHOLDER AND CREDITOR PROTECTION IN AUSTRALIA: AN INTERNATIONAL COMPARISON

2012 ◽  
Vol 61 (1) ◽  
pp. 171-207 ◽  
Author(s):  
Helen Anderson ◽  
Michelle Welsh ◽  
Ian Ramsay ◽  
Peter Gahan
Keyword(s):  
Creditor Protection ◽  
Similar Data ◽  
Upward Trend ◽  
International Debate ◽  
Legal Rules ◽  
Shareholder Protection ◽  
Business Regulation ◽  
Legal Origins ◽  
The Us ◽  
The Uk

AbstractThis article is part of a larger international investigation of the effects of a country's legal origins on the style of business regulation. We employ an innovative ‘leximetric’ methodology to numerically code the protective strength of Australian corporate law for both shareholder and creditor protection for the period 1970 to 2010. This leximetric methodology has been used in a prominent international debate concerning the development of legal rules and the effects of different styles of regulation on a range of economic outcomes—the legal origins debate. Drawing on similar data compiled by Armour, Deakin, Lele and Siems in five other countries (France, Germany, India, the UK and the US) for the period 1970 to 2005, we compare changes in the level of protection afforded to Australian shareholders and creditors with developments in other countries. Our analysis finds that in Australia there was a sustained upward trend in shareholder protection, but not in the case of creditor protection. Compared to the five other countries, the level of protection afforded to shareholders under Australian law was relatively high, and this was the case for the level of protection afforded to creditors as well. We also examine the extent of convergence and divergence in shareholder and creditor protection among the countries in the study. We find persistent divergence in shareholder protection, with the extent of divergence in 2005 similar to that in 1970. For creditor protection, we find increasing divergence among the countries over the period of study. Our findings are not supportive of legal origins theory.

scholarly journals The Divergence of Legal Procedures

2009 ◽  
Vol 1 (2) ◽  
pp. 138-162 ◽  
Author(s):  
Aron Balas ◽  
Rafael La Porta ◽  
Florencio Lopez-de-Silanes ◽  
Andrei Shleifer
Keyword(s):  
Civil Law ◽  
Civil Procedure ◽  
Contract Enforcement ◽  
Legal Systems ◽  
Legal Rules ◽  
Legal Origins ◽  
Lasting Influence ◽  
Legal Procedures

Simeon Djankov et al. (2003) introduce a measure of the quality of contract enforcement—the formalism of civil procedure—for 109 countries as of 2000. For 40 of these countries, we compute procedural formalism every year since 1950. We find that large differences in procedural formalism between common and civil law countries existed in 1950 and widened by 2000. For this area of law, the findings are inconsistent with the hypothesis that national legal systems are converging, and support the view that legal origins exert long lasting influence on legal rules. (JEL K41, O17)

scholarly journals Social responsibility of a stock exchange: Corporate governance at Borsa Istanbul

2020 ◽  
Vol 7 (1) ◽  
pp. 72-82
Author(s):  
A. Can Inci
Keyword(s):  
Corporate Governance ◽  
Social Responsibility ◽  
Financial Institution ◽  
Stock Exchange ◽  
Stock Exchanges ◽  
Successful Implementation ◽  
Market Participants ◽  
Good Corporate Governance ◽  
Call Auction ◽  
Positive Engagement

Accentuated intraday volatility and uncertainty leads to mispricing, inefficiency, and the potential unfair treatment of some market participants. As an important financial institution, the stock exchange is required to find mechanisms to reduce volatility for good corporate governance and for social responsibility. In this paper, one such mechanism, closing call auction, is explored in the actively traded industrials sector of the emerging Borsa Istanbul. Evidence of the successful implementation of the mechanism is provided. Volatility decreases and efficiency of the prices increases after the implementation of the closing call auction. The exchange executives’ positive engagement in good corporate governance is documented and is suggested to other stock exchanges as a social responsibility instrument.

scholarly journals Dividends and institutional investors activism: Pressure resistant or pressure sensitive?

2008 ◽  
Vol 6 (1) ◽  
pp. 38-43 ◽  
Author(s):  
José María Diez-Esteban ◽  
Óscar López-de-Foronda
Keyword(s):  
Corporate Governance ◽  
Legal System ◽  
Institutional Investors ◽  
Dividend Policy ◽  
Civil Law ◽  
Insurance Companies ◽  
Agency Conflicts ◽  
Anglo Saxon ◽  
Investment Funds ◽  
Different Characteristics

This paper provides new international evidence on the relationship between dividend policy and institutional ownership by analysing a sample of US and UK and Irish firms characterised by an Anglo-Saxon tradition and a matching sample of other EU companies from Civil Law legal systems. We hypothesize that, due to the different characteristics of both the legal system and the nature of agency conflicts in firms from those countries, the type of institutional investors and their role in corporate governance is different and so the use of dividend policy to solve the conflict of corporate governance problem differs in each legal system. We find that while in firms from Anglo-Saxon tradition the relation between dividends and institutional investors, pension and investment funds, is possitive, in Civil Law countries the relation is negative where investors are banks or insurance companies with other private interest inside the firm. These results are consistent with our hypotheses and breed new insights into the role of dividend policy as a disciplining mechanism in firms from different legal system with an important presence of institutional investors

The Impact of Stock Exchange Rules on the Federalization of Corporate Governance

2018 ◽  
Author(s):  
Marc I. Steinberg
Keyword(s):  
Corporate Governance ◽  
Government Regulation ◽  
Stock Exchange ◽  
Codes Of Ethics ◽  
Stock Exchanges ◽  
Significant Component ◽  
Board Committees ◽  
Governance Practices ◽  
Nominating Committees ◽  
The Impact

This chapter focuses on the important role that the national stock exchanges play in the federalization of corporate governance. Responding to federal legislative and SEC directives and, at times, acting on their own initiative, the stock exchanges have promulgated meaningful rules that comprise a significant component of the corporate governance landscape. Although technically not government regulation, the national stock exchanges play a central role in the enhancement of sound corporate governance practices and policies. Examples include the emphasis by the exchanges on independent directors, board committees (including audit, compensation, and nominating committees), and corporate codes of ethics. Hence, when addressing the federalization of corporate governance, stock exchange regulation is to be given prominent status.

Corporate board for innovative managerial control: implications of corporate governance deviance perspective

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Irfan Saleem ◽  
Mujtaba Nasir Ali Khan ◽  
Rashedul Hasan ◽  
Muhammad Ashfaq
Keyword(s):  
New York ◽  
Corporate Governance ◽  
Stock Exchange ◽  
Management Control ◽  
Corporate Board ◽  
Managerial Control ◽  
Governance Mechanisms ◽  
Content Type ◽  
Governance Practices ◽  
The Impact

Purpose Drawing from the firm’s entrepreneurial identity and ecology perspectives, this study aims to explain why the firms deviate from standard corporate governance practices and apply innovative management control. Design/methodology/approach The authors used a panel of 2,538 public companies listed with the New York Stock Exchange to explain the impact of corporate governance deviance on firm’s performance. The authors relied on unique governance variables extracted from the Bloomberg database to develop the governance deviance index. Findings Study unveils that deviance from governance practices influences firm’s performance. Consequently, it can be said that the firms which use innovative governance mechanisms, usually stay ahead of the market by leading the governance trends. The findings also generalise the firm’s entrepreneurial identity and organisational ecology perspectives. Research limitations/implications Research implies that the firm’s entrepreneurial identity demands innovative managerial control. This study is focused on the US financial market, but in future, researchers could revalidate the deviance index. Scholars can also use mixed methods to test the need for innovative governance mechanisms in emerging markets. Practical implications The firms should focus on innovative governance practices not only to safeguard the firm’s entrepreneurial identity but also to pursue the growth objectives. Such innovative mechanisms and managerial controls are helpful to deal with industrial transformations to satisfy key stakeholders. Originality/value The study contributed to governance and management control research by sharing insights and catering the potential endogeneity problem faced to measure corporate governance measures. The study also proposes an alternative testing tool to measure governance deviance to add methodological uniqueness and reduce knowledge gap.

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