Corporate Social Responsibility Assurance: Theory, Regulations and Practice in China

This chapter aims to provide a comprehensive understanding of the theory, regulations and practice of corporate social responsibility (CSR) assurance in China. Built on stakeholder and related theories, it employs a demand-and-supply analytical framework to illustrate the development and current status of China’s CSR assurance market. It finds that government agencies, stock exchanges, accounting standard setters and industrial associations have collectively shaped the current regulatory framework on CSR reporting and assurance in China. Regarding demand, differences in the social and legal environments across such a large country influence the regional development of CSR assurance. Industries under intensive CSR regulations and/or social reporting pressure—for example, the finance, aviation and mining industries—more actively achieve CSR report assurance. Regarding supply, the CSR assurance market in China is shared by accounting firms and professional certification bodies. Different assurance standards adopted by the two streams of assurance providers have different foci, potentially leading to different assurance coverage and emphases.

Director independence or decision bias? An investigation of alternative sources of agency costs in board decision making

Research into boards traditionally focuses on independent monitoring of management, with studies focused on the effect of board independence on firm performance. This thesis aims to broaden the research tradition by consolidating prior research and investigating how agents may circumvent independent monitoring. Meta-analysis of previous board independence-firm performance studies indicated no systematic relationship between board independence and firm performance. Next, a series of experiments demonstrated that the presentation of recommendations to directors may bias decision making irrespective of other information presented and the independence of the decision maker. Together, results suggest that independence may be less important than the agent's motivation to misdirect the monitoring process.

Regulating against corporate phoenix activity

This paper considers the adequacy and efficiency of existing legal and regulatory frameworks to deal with corporate phoenix activity. Phoenix activity, which is often triggered by a solvency crisis, is estimated to cost the Australian economy up to $3 billion each year. Despite the raft of piecemeal Australian legislation directed at this activity, phoenix activity does not appear to be abating. This paper considers regulatory approaches to detection and enforcement of the underlying law. This study reveals and explores a perception that the law is deficient, and the tension that exists between the adequacy of the law and the regulatory approach.

Introduction: Japan’s gradual transformation in corporate governance

Japan has recovered from a ‘lost decade’ of economic stagnation over the 1990s. Anyway, it has been a ‘found decade’ for civil and criminal justice law reform, especially in corporate and securities law. Yet, have liberalisation and globalisation in those fields led to major changes in the ‘law in action’? Does this represent ‘Americanisation’ of Japan’s corporate governance system, focusing on shareholders rather than other key stakeholders such as ‘main banks’, core employees, and partners within diffuse corporate groups (keiretsu)? This version of our introductory chapter explains how our forthcoming book argues for a more complex ‘gradual transformation’. Such shifts are also found in many other post-industrial economies, but Japan appears to give greater emphasis given to certain modes of achieving change. The book brings together contributions from academics and practitioners from Japan, Australia, New Zealand, Canada and the United States. An early chapter introduces methodology for effective cross-country comparisons and for evaluating the burgeoning but divergent literature on Japanese corporate governance. The concluding chapter compares continuities and changes in Japan’s largest companies now and two decades ago. Other chapters cover ‘lifelong employment’, main banks, the untold story of closely-held companies, the limited uptake of the Committee-based governance form, and the procedural, substantive and FDI policy dimensions of takeovers law and practice.

The corporate regulation of sexual harassment in Japan

Book Title in Japanese: 雇用・社会保障とジェンダー Chapter Title in Japanese: セクシャル・ハラスメント規制の企業化と男女平等政策への示唆

Corporate governance and law reform in Japan: From the lost decade to the end of history?

Japan is in the midst of massive law reform. Mired in ongoing recession since the early 1990s, Japan has been implementing a new regulatory blueprint to kickstart a sluggish economy through structural change. A key element to this reform process is a rethink of corporate governance and its stakeholder relations. With a patchwork of legislative initiatives in areas as diverse as corporate law, finance, labour relations, consumer protection, public administration and civil justice, this new model is beginning to take shape. But to what extent does this model represent a break from the past? Some commentators are breathlessly predicting the "Americanisation" of Japanese law. They see the triumph of Western-style capitalism - the "End of History", to borrow the words of Francis Fukuyama - with its emphasis on market-based, arms-length transactions. Others are more cautious, advancing the view that there new reforms are merely "creative twists" on what is a uniquely (although slowly evolving) strand of Japanese capitalism. This paper takes issue with both interpretations. It argues that the new reforms merely follow Japan's long tradition of 'adopting and adapting' foreign models to suit domestic purposes. They are neither the wholesale importation of "Anglo-Saxon" regulatory principles nor a thin veneer over a 'uniquely unique' form of Confucian cultural capitalism. Rather, they represent a specific and largely political solution (conservative reformism) to a current economic problem (recession). The larger themes of this paper are 'change' and 'continuity'. 'Change' suggests evolution to something identifiable; 'continuity' suggests adhering to an existing state of affairs. Although notionally opposites, 'change' and 'continuity' have something in common - they both suggest some form of predictability and coherence in regulatory reform. Our paper, by contrast, submits that Japanese corporate governance reform or, indeed, law reform more generally in Japan, is context-specific, multi-layered (with different dimensions not necessarily pulling all in the same direction for example, in relations with key outside suppliers), and therefore more random or 'chaotic'.

Sexual harassment and the corporation in Australia and Japan: The potential for corporate governance of human rights

The authors explore the legal and social undercurrents in Australia and Japan which are encouraging corporations to embrace broader social responsibilities. They consider a case study of sexual harassment and its regulation within Australian corporations, uncovering the legal and social conditions that have led to the adoption of sexual harassment policies. The authors propose a model for determining when corporate governance of sexual harassment is likely to be effective and test the model by reference to the experience of sexual harassment in Japan. They draw some conclusions about what the experience of corporate implementation of management of sexual harassment might mean for other areas of human rights.

External administration in corporate insolvency and reorganisation: The insider alternative

This article considers the merits of alternative policy approaches to management of companies in insolvency administration, in particular from an identity economics theoretical perspective. The use of this perspective provides a novel assessment of the policy alternatives for insolvency administration, which can be characterized as either following the more flexible United States Chapter 11-style debtor-in-possession arrangement, or relying on the appointment of an external administrator or trustee to manage the insolvent company who automatically displaces incumbent management. This analysis indicates that stigma and reputational damage from automatic removal of managers in voluntary administration leaders to "identity loss" and that an insider alternative to the current external administration approach could be a beneficial policy change.

Corporate fraud culture: Re-examining the corporate governance and performance relation

We analyse the corporate governance and performance relation, when conditioning on corporate fraud, for fraud firms during 2000 – 2007. Fraud firms are identified as either self- reported fraud events, or subject to regulatory investigation. We use the inverse Mills ratio procedure to account for firms' (unobservable) fraud culture in the dynamic system GMM model of the performance- governance relation. We find that corporate governance is an endogenously determined characteristic that has no causal impact on firm performance when conditioning on fraud. Fraud is a significant regulatory event but its overall economic impact at the firm level is highly variable.

Corporate disclosure in relation to combating corporate bribery: A case study of two Chinese telecommunications companies

This paper investigates the association between global community concerns about bribery activities and anti-bribery disclosure practices by two Chinese telecommunication companies operating internationally, namely China Mobile and ZTE. Based on content analysis of annual reports and global news media articles over a period of 16 years from 1995-2010, the findings suggest that the changes in the level of disclosures by the two major Chinese telecommunications companies were closely associated with the level of international concerns over bribery practices within the Chinese telecommunications industry. This finding indicates that the companies adopt anti-bribery disclosure practices in order to minimise the gap of trust (Social capital) between companies themselves and global stakeholders. In this paper we argue that, for domestic companies in China, culturally constructed social capital, such as guanxi, creates a level of trust between managers and their stakeholders, which obviates the need for managers to disclose anti-bribery performance information. However, for companies operating internationally, as social capital is inadequate to bridge the gap of trust between managers and global stakeholders, managers use disclosures of anti-bribery performance information as a way to minimise such a gap.

Do stakeholders or social obligations drive corporate social and environmental responsibility reporting? Managerial views from a developing country

Purpose – The purpose of this study is to explore senior managers’ perception and motivations of corporate social and environmental responsibility (CSER) reporting in the context of a developing country, Bangladesh. Design/methodology/approach – In-depth semi-structured interviews were conducted with 25 senior managers of companies listed on the Dhaka Stock Exchange. Publicly available annual reports of these companies were also analysed. Findings – The results indicate that senior managers perceive CSER reporting as a social obligation. The study finds that the managers focus mostly on child labour, human resources/rights, responsible products/services, health education, sports and community engagement activities as part of the social obligations. Interviewees identify a lack of a regulatory framework along with socio-cultural and religious factors as contributing to the low level of disclosures. These findings suggest that CSER reporting is not merely stakeholder-driven, but rather country-specific social and environmental issues play an important role in relation to CSER reporting practices. Research limitations/implications – This paper contributes to engagement-based studies by focussing on CSER reporting practices in developing countries and are useful for academics, practitioners and policymakers in understanding the reasons behind CSER reporting in developing countries. Originality/value – This paper addresses a literature “gap” in the empirical study of CSER reporting in a developing country, such as Bangladesh. This study fills a gap in the existing literature to understand managers’ motivations for CSER reporting in a developing country context. Managerial perceptions on CSER issues are largely unexplored in developing countries.