scholarly journals The Seller's Side of the Story: Acquisition as Courtship and Governance as Syndicate in Entrepreneurial Firms

2004 ◽  
Vol 49 (3) ◽  
pp. 366-403
Author(s):  
Melissa E. Graebner ◽  
Kathleen M. Eisenhardt
Keyword(s):  
Corporate Governance ◽  
Chief Executive ◽  
Entrepreneurial Firms ◽  
Joint Decision ◽  
Public Firms ◽  
Executive Search ◽  
Self Interest ◽  
Multiple Case ◽  
Common Goals

In contrast to the prior acquisitions literature, which has emphasized the buyer's perspective, we examine the seller's perspective. This has important implications for understanding both the acquisition process and, more broadly, corporate governance in successful firms. Using a multiple-case, inductive study of 12 technology-based ventures, we find that acquisition occurs when sellers are pushed toward acquisition by difficult, albeit natural strategic hurdles, such as a chief executive search or funding round, and by strong personal motivations for sale, such as past failures and investments by friends. Sellers are also more likely to be pulled toward acquisition by attractive buyers that offer synergistic combination potential and organizational rapport, factors usually associated with the long-term interests of buyers. We reframe acquisition as courtship and corporate governance as a syndicate, indicating joint decision making with some common goals, and explore the generalizability of these views for private versus public firms and other contingencies. Together, courtship and syndicate suggest a behaviorally informed account of organization that belies the rhetoric of price and self-interest.

scholarly journals Opening the black box: Unpacking board involvement in innovation

2019 ◽  
Vol 18 (4) ◽  
pp. 487-519 ◽  
Author(s):  
Patricia Klarner ◽  
Gilbert Probst ◽  
Michael Useem
Keyword(s):  
Corporate Governance ◽  
Boards Of Directors ◽  
Company Strategy ◽  
Behavioral Diversity ◽  
Pharmaceutical Firms ◽  
Scientific Innovation ◽  
Multiple Case ◽  
Temporal Dimensions

Corporate governance research suggests that boards of directors play key roles in governing company strategy. Although qualitative research has examined board–management relationships to describe board involvement in strategy, we lack detailed insights into how directors engage with organizational members for governing a complex and long-term issue such as product innovation. Our multiple-case study of four listed pharmaceutical firms reveals a sequential process of board involvement: Directors with deep expertise govern scientific innovation, followed by the full board’s involvement in its strategic aspects. The nature of director involvement varies across board levels in terms of the direction (proactive or reactive), timing (regular or spontaneous), and the extent of formality of exchanges between directors and organizational members. Our study contributes to corporate governance research by introducing the concept of board behavioral diversity and by theorizing about the multilevel, structural, and temporal dimensions of board behavior and its relational characteristics.

scholarly journals Dynamic effect of corporate governance on financing decisions: Evidence from Sri Lanka

2021 ◽  
Vol 17 (2) ◽  
pp. 133-159
Author(s):  
Ruzita Abdul-Rahim ◽  
Mohamed Cassim Abdul Nazar ◽  
Mohd Hasimi Yaacob Abdul-Rahim
Keyword(s):  
Corporate Governance ◽  
Sri Lanka ◽  
Best Practices ◽  
Generalized Method Of Moments ◽  
Dynamic Effect ◽  
Chief Executive ◽  
Debt Financing ◽  
Financing Decision

This study investigates the role of corporate governance in influencing the debt financing decision of 198 non-financial listed companies in Sri Lanka from 2009 to 2016. Sri Lanka’s corporate governance (CG) code promotes dispersed ownerships, larger board size and balance of power and authority through various means, such as exclusivity between the Chief Executive Officer and Chairperson and the independent Board composition. This study tests the role of CG through four indicators while controlling for other firm-specific variables. Results of the two-step system Generalized Method of Moments on a balance panel data shows that the effect of CG indicators on financing decision depends on the financing terms. In general, the influence of CG indicators is significant on the two debt financing measurements, except for managerial ownership when investments in assets are involved. This influence appears eminent in predicting the debt ratio, although the effect is not necessarily consistent with the hypotheses. The latest revision on CG codes of best practices has also improved firms’ access to debt financing, except for raising long-term debt to acquire assets. Results imply that the Sri Lankan firms adopting the CG best practices would need to rely on other factors to access long-term debt financing or on other external financing sources.

The Mythical Value of Voice and Stewardship in the EU Directive on Long-term Shareholder Engagement: Rights Do Not an Engaged Shareholder Make

2018 ◽  
Vol 20 ◽  
pp. 88-115 ◽  
Author(s):  
Deirdre AHERN
Keyword(s):  
Corporate Governance ◽  
Shareholder Rights ◽  
Executive Pay ◽  
Related Party Transactions ◽  
Shareholder Engagement ◽  
Eu Directive ◽  
Self Interest ◽  
Regulatory Impact ◽  
The Eu

AbstractThrough the lens of assessing the likely regulatory impact of the 2017 EU Directive on Long-term Shareholder Engagement and its amendments to the 2007 Directive on Shareholder Rights, this article considers the mythical voice and stewardship role attributed by the EU to shareholders as active corporate governance gatekeepers and drivers of its long-term sustainability agenda. It identifies limitations of the Directive itself and practical challenges concerning the provisions on shareholder identification, executive pay, related party transactions, proxy advisors and shareholder engagement policies. It is argued that there is a considerable normative gap between the EU narrative of engagement and the challenge of engaging shareholders away from self-interest and rational apathy to fulfil a stewardship role.

scholarly journals CEOs’ extensive term of office inhibits discretionary accruals

2018 ◽  
Vol 53 (4) ◽  
pp. 575-596 ◽  
Author(s):  
Cristian Baú Dal Magro ◽  
Roberto Carlos Klann ◽  
Vanessa Edy Dagnoni Mondini
Keyword(s):  
Corporate Governance ◽  
Negative Impact ◽  
Chief Executive ◽  
Discretionary Accruals ◽  
Early Years ◽  
Senior Year ◽  
Cross Sectional ◽  
Content Type ◽  
Corporate Governance Mechanisms

PurposeCEOs’ (chief executive officer) term of office may explain discretionary accruals as a result of opportunistic behavior arising during certain periods of the term of office. Therefore, CEOs, in their early years of office, have incentives to report results that meet market expectations. In turn, CEOs in their senior year may be motivated to use discretionary accruals to gain private benefits. In this scenario, corporate governance mechanisms play an important role in monitoring relationships. Hence, the purpose of this study is to verify the influence of monitoring mechanisms on the relationship between CEOs’ term of office and discretionary accruals.Design/methodology/approachDescriptive statistics, multiple cross-sectional regression to estimate the accruals and regression of panel data to test the hypotheses were used. The sample comprised 195 companies listed on BM&FBovespa.FindingsThe results indicated that CEOs’ long term of office has a negative impact on the level of discretionary accruals, and thus, Brazilian CEOs with a longer term of office tend to establish a certain reputation in the stock market. On the other hand, it is concluded that CEOs’ intentions, in the first years of term, are positively related to the use of accruals and that the monitoring mechanisms can minimize these CEOs’ opportunistic practices.Originality/valueThe results broaden the literature on corporate governance, pointing that different systems of variable remuneration may influence CEOs’ willingness to manage results in their last year of term.

scholarly journals The Effect of Multiple Large Shareholders on Banks’ Profitability and Risk

2021 ◽  
Vol 13 (4) ◽  
pp. 1888
Author(s):  
Maria Gaia Soana ◽  
Laura Barbieri ◽  
Andrea Lippi ◽  
Simone Rossi
Keyword(s):  
Corporate Governance ◽  
Commercial Banks ◽  
Banking Sector ◽  
Positive Impact ◽  
Corporate Structure ◽  
Academic Literature ◽  
Large Shareholders ◽  
Bank Ownership ◽  
Institutional Shareholders

The wide-ranging academic literature on corporate governance in the banking sector includes only a few studies on bank ownership and, specifically, on the comparative power of shareholders within the corporate structure. This paper reports an investigation into the presence of multiple large shareholders and their influence on profitability and risk in the long-term, considering a sample of 697 U.S. and European listed commercial banks from 2008 to 2018. It was found that the number of large and institutional shareholders has a positive impact on profitability, but no effect on risk. However, long-term ownership by multiple large shareholders contributes to decreasing risk in banks.

Proximity to broad bond rating change and CEO power

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Akhilesh Bajaj ◽  
Li Sun
Keyword(s):  
Corporate Governance ◽  
Personal Characteristics ◽  
Chief Executive ◽  
Negative Consequences ◽  
Ceo Power ◽  
Bond Ratings ◽  
Rating Data ◽  
Bond Rating ◽  
Content Type ◽  
Rating Change

PurposeBorderline firms whose bond rating has a plus or minus specification by a rating agency face a greater potential for an upgrade or downgrade by the agency. The authors examine the level of chief executive officer (CEO) power in firms with a plus or minus bond rating. The authors test whether CEOs of these firms become more or less powerful, along with the effect of corporate governance and existing bond rating.Design/methodology/approachThe authors use a panel sample with 16,429 observations from 1992 to 2016 from the ExecuComp database.FindingsThe authors find that CEOs of borderline-rated firms tend to be less powerful, relative to firms with a non-proximate rating. This result is largely present in firms with a plus rating. The authors also find that our primary findings are mainly driven by firms with low bond ratings (i.e. below investment grade) or by firms with weak corporate governance. Lastly, the authors document that CEO personal characteristics (i.e. CEO age, gender and tenure) impact our findings.Research limitations/implicationsFirst, firms in our sample are large public companies, and the external validity of our results to smaller firms that may also be private is unknown. Second, the Compustat database discontinued reporting bond rating data (i.e. S&P bond ratings) in 2017. Hence, the authors are unable to analyze the CEO power of borderline firms in years after 2016.Practical implicationsThe study contributes to the larger debate on whether having powerful CEOs is beneficial to an organization or not, because prior research has examined the consequences of CEO power with mixed results. The authors document evidence to support the research stream that links CEO power to negative consequences.Social implicationsThe authors find that our primary results are enhanced in firms with weak corporate governance, which is consistent with prior research that finds effective governance may mitigate CEO power and agency problems between the CEO and the Board.Originality/valuePrior research primarily uses CEO power as a driver for performance. Our study focuses on CEO power as a dependent variable, with the bond rating change proximity as a driver of CEO power. The authors believe that this helps develop a more comprehensive understanding of CEO power.

Coördinatie tussen individuen en tussen teams: over het belang van inzicht in sociale dilemma's

2004 ◽  
Vol 17 (3) ◽  
Author(s):  
Marjolein de Best-Waldhober ◽  
Carsten K.W. De Dreu ◽  
Daan van Knippenberg
Keyword(s):  
Term Structure ◽  
Social Dilemmas ◽  
Social Dilemma ◽  
The Other ◽  
Long Run ◽  
Self Interest ◽  
Turn Taking ◽  
Group Negotiation

Coordination between individuals and between teams: the importance of insight in social dilemmas Coordination between individuals and between teams: the importance of insight in social dilemmas Marjolein de Best-Waldhober, Carsten K.W. De Dreu & Daan van Knippenberg, Gedrag & Organisatie, Volume 17, June 2004, nr. 3, pp. 187-203. In the context of a social dilemma, in which turn taking serves collective outcomes and only in the long run self-interest and personal outcomes, we studied long-term coordination, i.e. the alternation of sacrifice to achieve maximum joint outcomes. In particular, we studied the differences between individuals and dyads (two person groups) in coordination situations. Recent studies that compared individual with group negotiation seem to lead to opposite predictions. One paradigm predicts groups will perform better, because they outweigh individuals cognitively. The other paradigm predicts individuals will perform better, because they tend to have less fear and greed than groups. Results from the current study primarily support the first explanation. Dyads were less influenced by the complexity of the situation structure than individuals, because they have a better understanding of the long term structure of the situation.

Labor lawsuits and debt maturity

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Omer Unsal
Keyword(s):  
Chief Executive ◽  
Debt Maturity ◽  
Employee Relations ◽  
Short Term ◽  
Content Type ◽  
Negative Effect ◽  
Debt Market ◽  
Legal Fees

Purpose This paper aims to investigate how firms’ relationships with employees define their debt maturity. The authors empirically test the role of employee litigations in influencing firms’ choice of short-term versus long-term debt. The authors study employee relations by analyzing the importance of the workplace environment on capital structure. Design/methodology/approach The author’s test hypotheses using a sample of US publicly traded firms between 2000 and 2017, including 3,056 unique firms with 4,256 unique chief executive officer, adopting the fixed effect panel model. Findings The authors document that employee litigations have a significant negative effect on the use of short-term debt and a significant positive affect on long-term debt. Employee litigations, along with legal fees, outcomes and charging parties, matter the most in explaining debt maturity. In addition, frequently sued firms abandon the short-term debt market and use less shareholders’ equity to finance their operations while relying more on the longer debt market. Originality/value To the best of the authors’ knowledge, this is the first study to examine the role of employee mistreatment in debt maturity choice. The study extends the lawsuit and finance literature by examining unique, hand-collected data sets of employee lawsuits, allegations, violations, settlements, charging parties, case outcomes and case durations.

scholarly journals Determinants of Capital Structure within the Context of Corporate Governance in Egypt

2018 ◽  
Vol 13 (8) ◽  
pp. 26 ◽  
Author(s):  
Hanaa A. El-Habashy
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Emerging Economy ◽  
Managerial Ownership ◽  
Listed Firms ◽  
Western Countries ◽  
Specific Factors ◽  
The Impact ◽  
The Capital Structure

This study aims to investigate the characteristics of corporate governance that impact the capital structure decisions in listed firms in Egypt, to test the efficiency of the research results conducted in the developed Western countries in an emerging economy. A sample of 240 observations from the most active non-financial companies collected in the period 2009-2014 was used for hypothesis testing. Multiple regression models (OLS) were used for data analysis. Seven variables are used in measuring the attributes of corporate governance; they are the managerial ownership, institutional shareholding, shares owned by a large block, board size, board composition, separation of CEO/Chair positions and audit type. Four ratios were calculated for measuring the capital structure, they are long-term and short-term debt to assets, total debt to assets and debt to equity. The results suggest that corporate governance attributes have a significant impact on the capital structure decisions of listed Egyptian companies. In addition, firm-specific factors such as profitability, tangibility, growth opportunities, corporate tax, firm size and non-debt tax shields influence the choice of capital structure in Egypt. The results showed the same relationship with what was obtained in developed Western countries. The paper offers some contribution in the literature and helps to understand the impact of corporate governance on Egypt's capital structure as an emerging economy.

scholarly journals Aplicação dos princípios da governança corporativa ao sector público

2007 ◽  
Vol 11 (2) ◽  
pp. 11-26 ◽  
Author(s):  
Maria da Conceição da Costa Marques
Keyword(s):  
Corporate Governance ◽  
Chief Executive Officer ◽  
Chief Executive

A corporate governance na perspectiva dos Estados Unidos influenciou largamente a Europa, mas não serviu assim tão bem quanto isso. A corporate governance é para assegurar que as empresas apresentam melhor performance, melhor monitorização e protecção dos investidores. No modelo anglo-saxónico, os accionistas estão longe da empresa, mas nos Estados Unidos as administrações são dominadas pela gestão, e existe algum conflito real entre o CEO (Chief Executive Officer) e o Presidente. Sob várias perspectivas, o modelo europeu é um bom modelo porque a maioria das empresas têm um grupo de accionistas que exercem uma influência directa no controlo dos negócios das empresas, mesmo que alguns não o façam. Em Portugal, esta situação requer novas estruturas e atitudes. As empresas locais ainda não quantificaram os custos de uma fraca governação. O teste deste sucesso será o encaminhamento do capital para mercados onde os investidores têm confiança. Um caminho português deve ser encontrado. Neste estudo pretende-se apresentar como os princípios da corporate governance podem ser aplicados ao sector público.

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