...------------------------------------------------- Learning Journal II: Week 6 to Week 12 Corporate governance is ‘the system by which business corporations are directed and controlled’ (Mucciarone 2012). Milton Friedman argued that “corporate governance is to conduct the business in accordance with the owner or shareholders’ desires, which generally will be to make as much money as possible while conforming to the basic rules of the society embodied in law and local customs (Mucciarone 2012). I’ve learnt now that corporate governance is an integral part of our lives. This was evident during the collapses of Enron and WorldCom in the United States and the collapse of ABC learning in Australia. ABC Learning was a listed company on the Australian Securities Exchange, with market shares worth A$2.5million. In 2008, the company went into administrative receivership and was overwhelmed with massive debts. According to (Kruger 2009), it came to light that ABC Learning employed methods of financial reporting designed to artificially create apparent shareholder value, when, in fact, that shareholder value associated with the child-care licences (91 per cent of net assets) is based entirely on the future net cash flows of the company. ABC Learning’s profits increased rapidly through acquisitions, which should have raised questions about the underlying valuation of assets it acquired - especially given that 70 per cent of its assets were intangibles (Kruger 2009). Dr Philip Ross, the...
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...of mobile telecommunications corporate governance firms in Zimbabwe. By Mugombe Godfrey Background and Introduction The purpose of this study is to provide insight into the association between business performance of the telecommunications sector in Zimbabwe and corporate governance practices as prescribed in the Organization for Economic Cooperation and Development (OECD). It is widely believed that better corporate governance manifest itself in enhanced corporate performance and lead to higher economic growth (Brickley & James, 2011). There are four major players in the mobile telecommunications sector of Zimbabwe namely Econet Wireless Zimbabwe, Telecel Zimbabwe, NetOne and Africom. NetOne is a state controlled entity whilst the other three companies are privately owned with Econet Wireless Zimbabwe commanding the lion’s share of mobile telephone & broadband business in Zimbabwe (Econet Wireless Zimbabwe, 2013). Statement of the problem The major telecommunications companies in Zimbabwe like NetOne, Telecel, Africom and Econet have embraced corporate governance principles and practices since the turn of the new millennium. However, as Ernst & Young (2012) and Gwatiringa (2012) show, wide ranging differences on corporate performance exist in these companies even after the introduction of the multiple currency regime in 2009. It therefore remains unknown to the public stakeholders and the practitioners of corporate governance in general and potential investors...
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...A STUDY OF EFFECT OF CORPORATE GOVERNANCE PRACTICES AND BOARD COMPOSITION ON DIVIDEND PAYOUT POLICIES ON NIFTY 50 COMPANIES (2000-2012) | RESEARCH PROPOSAL, BUSINESS RESEARCH METHODS | | 2/27/2013 2/27/2013 Abstract Purpose: The purpose of this study is to examine the relationship between Corporate Governance practices and corporate dividend policy in India. Design/methodology/approach: Data regarding ownership structure, dividend policies and board composition would be collected for 40 non-financial companies listed on National Stock Exchange in India. The period of investigation has been taken from 2000-2012. Regression models would be run to define the relationship and for estimation purpose. Potential Findings: Based on the some heuristics and back of mind observations it can be seen that board size and composition, extent of ownership of promoters, the amount of free float in the market, firm size and investment opportunities are positively and significantly associated with dividend policies and dividend payout decisions. On the contrary, there are some instances which show a negative relationship between profitability and dividend payouts indicating the need of reinvesting funds. A significant number of independent directors in the board also have an impact on the payout policies, albeit not a significant one. A number of positive NPV investment opportunities also bear a negative relationship with dividend payout as more money is retained to invest...
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...British Journal of Arts and Social Sciences ISSN: 2046-9578, Vol.9 No.I (2012) ©BritishJournal Publishing, Inc. 2012 http://www.bjournal.co.uk/BJASS.aspx Corporate Governance and Performance of Saudi Arabia Listed Companies Yahya Ali Al-Matari Faculty of Accountancy, Universiti Utara Malaysia matariyahya@yahoo.com Dr. Abdullah Kaid Al-Swidi College of Arts & Sciences, Universiti Utara Malaysia swidi@uum.edu.my, and Assoc. Prof. Dr. Faudziah Hanim Bt Fadzil Faculty of Accountancy, Universiti Utara Malaysia fhanim@uum.edu.my Abstract: This study aims to provide a concise view of the background of Saudi Arabia‟s legal system, important regulations and monitoring policies related to the corporate governance followed by the Saudi government to enhance the attractiveness of the business environment. In so doing, this study attempted to provide an overview on corporate governance in the emerging markets and more specifically in Saudi Arabia. Additionally, this study has shed lights on the main monitoring devices which play a significant role in regulating and developing the Saudi business environment. The focus was on some corporate governance mechanisms that might affect firm performance including board composition (BODCOM), CEO duality (DUAL), board size (BSIZE), audit committee independence (ACIND), audit committee activities (ACMEET) and audit committee size (ACSIZE). Keywords: Corporate governance, firm performance, emerging countries, Saudi Arabia. ...
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...International Journal of Business and Social Science Vol. 3 No. 15; August 2012 Corporate Governance Attributes and Financial Reporting Quality: Empirical Evidence from Iran Pari Chalaki Department of Accounting Urmia University Iran Hamzeh Didar Department of Accounting Urmia University Iran Mohadeseh Riahinezhad M.A. student in Accounting Urmia University Iran Abstract The aim of this study is to investigate the effect of corporate governance attributes on financial reporting quality in firms listed in Tehran Stock Exchange (TSE) during the period of 2003 to 2011. In this study McNichols (2002) and Collins and Kothari (1989) are used for financial reporting quality measurement purpose, and institutional ownership, ownership concentration, board independence and board size is considered as corporate governance attributes. The results of the study show that there is no relationship between corporate governance attributes including board size, board independence, ownership concentration, institutional ownership and financial reporting quality. In addition, no evidence is found to support significant relationship between control variables (audit size, firm size and firm age) and financial reporting quality. Keywords: Corporate governance attributes, financial reporting quality Introduction Financial reporting quality is a major concern for all current and potential investors. According to Biddle et al. (2009) financial reporting quality is defined...
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...characteristics on corporate social responsibility disclosure by Islamic banks: evidence from Gulf Cooperation Council countries Abdullah Awadh Bukair and Azhar Abdul Rahman Abstract Corporate social activities have become major subjects because of their effects on the quality life of citizens, in particular, and on the society at large. Therefore, today, there is an increase awareness of social responsibility due to the challenges meeting the financial institutions (particularly, Islamic banking) around the world. This paper examines the influence of the board of directors’ characteristics, consisting of board size, board composition, and the separation roles of CEO and chairman, on corporate social responsibility (CSR) disclosure in 53 annual reports of Islamic banks of Gulf Cooperation Council (GCC) countries after controlling of bank size, financial performance and relevant public. Based on the framework of legitimacy theory, the findings show that CSR disclosure has a negative and insignificant relationship with board composition. On contrast, the study found insignificantly and positive association between CSR disclosure and other characteristics of board of directors (board size and the separation roles of CEO and chairman). With regards control variables, the study indicates that bank size and financial performance have a positive and significant influence on CSR disclosure, while relevant public has no effect. Therefore, the results indicate that corporate governance structure...
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...International Journal of Accounting & Information Management The role of corporate governance in convergence with IFRS: evidence from China Yu Chen Zabihollah Rezaee Downloaded by UNIVERSITI MALAYSIA SABAH At 05:16 06 October 2015 (PT) Article information: To cite this document: Yu Chen Zabihollah Rezaee, (2012),"The role of corporate governance in convergence with IFRS: evidence from China", International Journal of Accounting & Information Management, Vol. 20 Iss 2 pp. 171 - 188 Permanent link to this document: http://dx.doi.org/10.1108/18347641211218470 Downloaded on: 06 October 2015, At: 05:16 (PT) References: this document contains references to 50 other documents. To copy this document: permissions@emeraldinsight.com The fulltext of this document has been downloaded 1824 times since 2012* Users who downloaded this article also downloaded: Songlan Peng, Kathryn Bewley, (2010),"Adaptability to fair value accounting in an emerging economy: A case study of China's IFRS convergence", Accounting, Auditing & Accountability Journal, Vol. 23 Iss 8 pp. 982-1011 http://dx.doi.org/10.1108/09513571011092529 Randy Moser, (2014),"IFRS and convergence in China and the USA", Journal of Technology Management in China, Vol. 9 Iss 1 pp. 56-66 http://dx.doi.org/10.1108/JTMC-12-2013-0042 Ronita D. Singh, Susan Newberry, (2008),"Corporate governance and International Financial Reporting Standard (IFRS): The case of developing countries", Research in Accounting in...
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...8-3-2004 The Institutions of Corporate Governance Mark J. Roe Harvard Law School Recommended Citation Roe, Mark J., "The Institutions of Corporate Governance" (2004). Harvard Law School John M. Olin Center for Law, Economics and Business Discussion Paper Series. Paper 488. http://lsr.nellco.org/harvard_olin/488 This Article is brought to you for free and open access by the Harvard Law School at NELLCO Legal Scholarship Repository. It has been accepted for inclusion in Harvard Law School John M. Olin Center for Law, Economics and Business Discussion Paper Series by an authorized administrator of NELLCO Legal Scholarship Repository. For more information, please contact tracy.thompson@nellco.org. ISSN 1045-6333 HARVARD JOHN M. OLIN CENTER FOR LAW, ECONOMICS, AND BUSINESS THE INSTITUTIONS OF CORPORATE GOVERNANCE Mark J. Roe Discussion Paper No. 488 08/2004 Harvard Law School Cambridge, MA 02138 This paper can be downloaded without charge from: The Harvard John M. Olin Discussion Paper Series: http://www.law.harvard.edu/programs/olin_center/ The Social Science Research Network Electronic Paper Collection: http://papers.ssrn.com/abstract_id=###### This paper is also a discussion paper of the John M. Olin Center's Program on Corporate Governance JEL K4, H73, G34, G28 The Institutions of Corporate Governance Mark J. Roe* Abstract In this review piece, I outline the institutions of corporate governance decisionmaking in the large...
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...Management Review 2003, Vol. 28, No. 3, 447–465. THE CROSS-NATIONAL DIVERSITY OF CORPORATE GOVERNANCE: DIMENSIONS AND DETERMINANTS RUTH V. AGUILERA University of Illinois at Urbana-Champaign GREGORY JACKSON Research Institute of Economy, Trade and Industry We develop a theoretical model to describe and explain variation in corporate governance among advanced capitalist economies, identifying the social relations and institutional arrangements that shape who controls corporations, what interests corporations serve, and the allocation of rights and responsibilities among corporate stakeholders. Our “actor-centered” institutional approach explains firm-level corporate governance practices in terms of institutional factors that shape how actors’ interests are defined (“socially constructed”) and represented. Our model has strong implications for studying issues of international convergence. Corporate governance concerns “the structure of rights and responsibilities among the parties with a stake in the firm” (Aoki, 2000: 11). Yet the diversity of practices around the world nearly defies a common definition. Internationalization has sparked policy debates over the transportability of best practices and has fueled academic studies on the prospects of international convergence (Guillen, 2000; Rubach & Sebora, ´ 1998; Thomas & Waring, 1999). What the salient national differences in corporate governance are and how they should best be conceptualized remain hotly debated (Gedajlovic...
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...Corporate Governance refers to the way an organization is directed, administrated or controlled. It includes the set of rules and regulations that affect the manager’s decision and contribute to the way company is perceived by the current and potential stakeholders. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation such as; boards, managers, shareholders and other stakeholders and spells out the rules and procedures and also decision making assistance on corporate affairs. By doing this, italso provides the structure through which the company’s objectives are set and the means of obtaining those objectives and monitoring performance. Corporate governance may be the ways of bringing the interests of investors and managers into line and ensuring that firms are run for the benefit of investors. Given the state of the economy of Pakistan in 2010, troubled as it is; ideally it would be more desirable to look at the governance issues at macro level for Pakistan. As a famous economist, Dr Shahid Javaid Burki- a long observer of Pakistan’s economy has recently stated “Pakistan can generate a greater bounce in its economy than India by creating better governance. It has occurred before in the country’s difficult economic history and could happen again.” (Improved Governance: Dawn, 12th, October 2010). However, as a starting point , in this paper we look at closely the governanceissues for the...
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...Journal of Economic Perspectives—Volume 17, Number 3—Summer 2003—Pages 71–92 Executive Compensation as an Agency Problem Lucian Arye Bebchuk and Jesse M. Fried E xecutive compensation has long attracted a great deal of attention from financial economists. Indeed, the increase in academic papers on the subject of CEO compensation during the 1990s seems to have outpaced even the remarkable increase in CEO pay itself during this period (Murphy, 1999). Much research has focused on how executive compensation schemes can help alleviate the agency problem in publicly traded companies. To understand adequately the landscape of executive compensation, however, one must recognize that the design of compensation arrangements is also partly a product of this same agency problem. Alternative Approaches to Executive Compensation Our focus in this paper is on publicly traded companies without a controlling shareholder. When ownership and management are separated in this way, managers might have substantial power. This recognition goes back, of course, to Berle and Means (1932, p. 139) who observed that top corporate executives, “while in office, have almost complete discretion in management.” Since Jensen and Meckling (1976), the problem of managerial power and discretion has been analyzed in modern finance as an “agency problem.” Managers may use their discretion to benefit themselves personally in a variety y Lucian Arye Bebchuk is the William J. Friedman Professor...
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...dollar organization, operating in nearly 80 countries worldwide. The roots of Halliburton trace back to the 1900s, with countless mergers and company acquisitions dotting its history. Halliburton is one of world’s leading oilfield services providers. The organization has a strong financial history that continues despite scandals, regulatory requirements and growing litigation. Halliburton continues to lead its market in innovative practices, diversified revenue streams and the breadth of its global footprint within the oilfield services industry. Table of Contents Page Abstract……………………………………………………………………................ 2 Table of Contents……………………………………………………………………. 3 History of Halliburton ……………………. ……………………………………….. 4-5 Corporate Governance………………………………………………………………. 5-7 Holistic Intrapreneurship …………………………………………………………… 7-9 Conclusion ………………………………………………………………………….. 10 References…………………………………………………………………………....11 History of Halliburton Halliburton is one of the world's leading oilfield services providers with revenues over $18 billion in 2010. Halliburton was incorporated in 1924 in Delaware. Halliburton has approximately 70,000 employees worldwide, and is in the business of “providing engineering and construction services to the upstream energy industry, to infrastructure companies and various governments across the world.” (Datamonitor, 2011). Halliburton has operations in nearly 80 countries and makes products at manufacturing and processing facilities worldwide...
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...Application Paper #2 Improved Corporate Governance will improve Japan’s Earning Power Luis C. Mendoza Corporate Governance GB-6215(Online) Spring 2015 18 April 2015 Can improved Corporate Governance improve Japan’s earning power? Tradition and honor in Japan’s culture are very strongest traits which develop the foundations of daily lives and how corporations conduct business. A tradition in Japan is taking an all male work team, salesmen and clients to visit a bar/club after hours that are greeted by a “Hostess”. A “Hostess” is a woman who is paid to flirt with men. These visits are sometimes mandatory which corporations cover fully and label them as “entertainment expenses” (Smith, Japan Flirts with Goverance Reform, 2015). One of Japan’s biggest problems is poor corporate governance (Smith, Bloomberg View, 2015). This is an example and evidence that poor corporate governance to a degree is liable for the potential drought of business investments into Japan’s economy (Smith, Japan Flirts with Goverance Reform, 2015). This is an example of why Japan’s Prime Minister Shinzo Abe’s made a decision to develop and incorporate Abenomics in 2014. Japan, as a society with extreme high value to culture and respect, views and approaches corporate governance has been very different for the past few decades compared to the United States. Japan’s board members are typically internal corporate managers rather than independent directors. Independent directors are very uncommon...
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...Journal of Banking & Finance 27 (2003) 103–131 www.elsevier.com/locate/econbase The impact of the manager–shareholder conflict on acquiring bank returns Marcia Millon Cornett a,*, Gayane Hovakimian b, Darius Palia c, Hassan Tehranian d,* a Department of Finance, College of Business, Southern Illinois University, Carbondale, IL 62901, USA b Graduate School of Business, Fordham University, New York, NY 10023, USA c Columbia Business School, Columbia University, New York, NY 10027, USA d Carroll School of Management, Boston College, Chestnut Hill, MA 02167, USA Received 22 May 2000; accepted 16 May 2001 Abstract This paper examines whether shareholder value-maximizing corporate governance mechanisms assist in reducing the managerial incentive to enter value-destroying bank acquisitions. We find that diversifying bank acquisitions earn significantly negative announcement period abnormal returns (AR) for bidder banks whereas focusing acquisitions earn zero AR. We then find that corporate governance variables (such as CEO share and option ownership and a smaller board size) in the bidding bank are less effective in diversifying acquisitions than in focusing acquisitions. These results are robust to the inclusion of the usual control variables. Ó 2002 Elsevier Science B.V. All rights reserved. JEL classification: G21; G34 Keywords: Banks; Bank acquisitions; Corporate governance 1. Introduction Several empirical studies have documented a negative relation between firm performance...
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...NIKE AND ITS FACTORIES IN VIETNAM THE CONTEXT OF THE ISSUE In order to offer competitive prices, a lot of Western companies relocate in low-wages countries. Nike is not unique in that respect: in fact the company choose to use subcontracted factories in Asia, especially in Vietnam. It is important to put this trend in context: this particular industry (the footwear industry) know a significant growth since two decades. Vietnam has a very high unemployment rate, which reflects the poor economic situation of the country. In this perspective it can be said that Nike factories are essential for Vietnam’s economy, because it offers plenty of jobs. In the 1990s some allegations were made that accused Nike of mistreating its Vietnamese workers. Nike tried to justify these local problems by the fact that cultural differences in South-East Asia make American management more difficult for the company. This was part of its explanation justifying its unethical behavior. WHAT IS IN STAKE AND AT WHICH LEVEL The problem was raised when people started to criticize Nike’s behavior. They acted publicly: college students asked their sport teams to drop Nike’s products, politicians signed petitions, web-sites against Nike were created… What enabled them to act what the researches done about Nike behavior: reports published had revealed information. Here we can notice different values in conflict. Profit, represented by big firms, would be one value, and the importance of ethical...
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