Do financial reforms improve the performance of financial holding companies? The case of Taiwan

We examine the performance of financial holding companies (FHCs) in Taiwan after the financial reform that removes the separation of banking, securities, insurance, and other financial services. Using data envelopment analysis, we find that FHCs fail to improve technical efficiencies in the post-reform era. They also do not outperform independent commercial banks after the financial reform. Lower technical efficiency caused by excess operating expenses appears to be the primary source of inefficiency. While scale efficiency may improve as FHCs grow larger, the benefits are marginal and insufficient to offset the potential costs of organizational diseconomies. Our findings suggest that increasing the size and scope of financial activities alone do not necessarily improve the performance of financial firms.

Impact of policy changes on the efficiency and returns-to-scale of Japanese financial institutions: an evaluation

This paper examines the impact of FSA's (Financial Services Agency) recent policy changes on the efficiency and returns-to-scale (RTS) of Japanese financial institutions including banks, securities companies and bank holding companies. Three kinds of efficiency are investigated namely, technical efficiency (TE), pure technical efficiency (PTE) and scale efficiency (SE) using the non-parametric methodology named data envelopment analysis (DEA). The DEA analysis shows a substantial improvement in the overall efficiency of Japanese banks, albeit a significant difference of efficiency scores between the major/city banks and the regional banks. Results are robust to alternative specifications of efficiency and scale changes.

Do MBA degrees matter? A study of boards of directors in Australia's top 200 companies

Pfeffer and Fong (2002) suggest that “business school enrolments have soared and business education has become a big business”. The Master of Business Administration (MBA) degree has often been held out to be useful in the career development of managers. The highest level that managers can aspire to, is to be a director of a large public company. This study investigates how many directors within the boards of Australia’s top 200 companies by market capitalization hold an MBA degree. We find that larger companies have proportionally more MBA holding directors than smaller companies. Interestingly we also find that proportionally more women hold MBAs than men; nearly one in five women directors hold an MBA within the top 200 companies dataset.

Does banks’ dual holding affect bank lending and firms’ investment decisions? Evidence from China

This study investigates the effect of banks’ dual holding on bank lending and firms’ investment decisions using a sample of listed firms in China. We find that dual holding leads to easier access to bank loans, a result that is more pronounced for non-state-owned enterprises (non-SOEs) than SOEs. We also find that dual holding distorts banks’ lending decisions and harms the investment efficiency for SOEs, while resulting in optimal lending decisions and enhanced investment efficiency for non-SOEs. For non-SOEs, further analysis suggests that optimal lending decisions and efficient investment can be achieved for firms with higher ownership concentration, and firms in which the family and foreign investors are the controlling shareholders. We argue that, in emerging markets, whether a bank plays a monitoring role by directly holding the debt and equity claims of companies relies heavily on whether the potential collusion between firm executives and bank managers can be averted, which in turn is determined by the firms’ governance framework and ownership structure.

Environmental factors and product adaptation in Middle Eastern markets : the experience of Australian companies

This paper examines the impact that environmental factors have on the decision of Australian companies to adapt products for Middle Eastern markets. It  concludes that of all product aspects, labeling requires the greatest amount of adaptation and that socio-cultural factors have the greatest influence on overall product adaptation. Furthermore, environmental factors impact on product   adaptation in different ways, reflected in the adaptation of different aspects of the overall product.

Information disclosure and corporate governance in listed companies in China: from Yinguangxia to Enron

China's path to the development of a modern securities market has not been a smooth one. This article argues that efforts to impose Western securities market models on China have been fraught with difficulty. This is especially clear from the adoption of information disclosure principles and practices. While the integrity of disclosure practices is a fundamental element in maintaining investors' confidence in securities markets, disclosure practices need to be attuned to China '5 systemic features, especially in regard to its legal structure and rules. Market failures, such as the collapse of Enron in the United States, have led to a realisation that US disclosure models have their own difficulties and that these should not be uncritically used. This article reviews recent Chinese law andpractice (using the Yinguangxia false disclosure scandal as an example) in this area and calls for the adoption of a more critical approach towards the use of Western models with particular regard to China's own distinctive pathways of reform.

Towards manadatory shareholder committees in Australian companies

A common objective in recent Australian and international corporate governance reform programs is the enhancement of shareholder participation. Active shareholder involvement brings account- ability to the board and management, and is appropriate considering that shareholders are the ultimate owners of the company. Curiously, however, while shareholder participation and representation has become a priority in the contemporary corporate governance arena, the bulk of recent governance reform initiatives operate on the assumption that there is a clear separation of the board and management from the general body of shareholders, and that this is necessary to achieve optimal performance. The requirement that directors be 'independent' of the company and its shareholders is a prime example. In this article, the authors propose the establishment of a mandatory shareholder committee in Australian companies as a way of enhancing shareholder participation and representation.]

Holding the purse strings : the continuing evolution of human rights law and the potential liability of the finance industry for human rights abuses

While the responsibility of States and, in more recent times, corporations, has been thoroughly discussed in relation to human right~, a new stage of evolution may be emerging in relation to the liability of the financial backers of an enterprise that is accused of human rights abuses. This article considers the basis in international law for such emerging liability and examines some of the legal avenues used in recent domestic litigation against financial institutions. The article concludes by examining some of the relevant instruments of 'soft' international law and notes that although there is little in the way of concrete legislation or judicial precedent that would hold financial institutions responsible for the actions of those they invest in, the potential for the law to evolve in that direction is clear.

Removal of directors of public companies takes centre stage in Australia : an exploration of the corporate law and governance issues

Increasing attention is being given to the legal and governance issues relating to the removal of directors in Australian public companies. This has been due mainly to the difficulties experienced by the board of National Australia Bank in attempting to remove one of its fellow directors, and the subsequent development of public companies entering into so-called 'prenuptial agreements' with new directors, requiring that the director 'resign' if the board pass a vote of no-confidence in the director. In this article, the author revisits the area of director removal in Australian public companies for two reasons. The first reason, which covers the majority of the article, is to engage in a detailed analysis of whether the pre-nuptial agreements which some public companies have indicated that they support using to remove directors, are in fact enforceable under Australia's Corporations Act The second reason is to outline a law reform proposal to enable public companies to remove directors without requiring the vote of shareholders at a general meeting. The proposal involves providing Australia' corporate  regulator, the Australian Securities and Investments Commission (ASIC) with the power to grant relief from the statutory removal provisions to public companies, but in a way which balances the competing objectives of commercial efficiency and shareholder participation and, very importantly, encourages good corporate governance practices by companies in relation to the performance assessment  of directors.

It is in the interests of both shareholders and directors to agree on a set of ground rules for the effective supervision of companies that reconciles the rights of the owners to overall control with the much tougher demands on modern directors

The gender composition of boards after an IPO

Purpose - The purpose of this paper is to empirically analyse the change in the gender composition of the boards of large Australian companies, after listing.
Design/methodology/approach - This study investigates the gender composition of the boards of large Australian companies at the time of the initial public offering (IPO) and subsequently as these companies mature into established public companies. It also investigates industry influences and organizational size influences on the board composition at the time of the IPO and subsequently.
Findings - No significant change is found in the proportion of male and female directors holding directorships at the time of the IPO and some five to eight years later when the company is recorded as a top 500 company (by market capitalization) on the Australian lists. This implies that the capital market is generally satisfied by the gender composition of boards from the time of the IPO.
Originality/value - This paper extends on previous work which provides evidence of a relatively low proportion of female directors on the boards of Australian initial public offerings.

Environmental management system auditing within Australasian companies

Reviews the literature on environmental management auditing, and surveys 132 ISO 14001 certified organizations in Australia and in New Zealand. Identifies the main reason for internal environmental audit, and the most frequent actions that result from the audit process, such as formation of a preventive plan. Looks at review procedures by top management, and the frequency of audit. Reveals the length of time an audit takes and the method of documentation adopted, by different industries. Notes six major findings and recommends sharing the findings of audits with employees and  suppliers so that improvements can be identified and implemented.

Can the use of foreign currency derivatives explain variations in foreign exchange exposure? Evidence from Australian companies

We investigate the role of foreign currency derivatives (FCD) in alleviating foreign exchange rate exposure of Australian firms. While there is some evidence that the use of FCD reduces the level of ex-post short-term exposure, such an effect is absent with regard to the degree of foreign operations. Our results support the view that FCDs are used to hedge existing exchange rate exposures and that Australian firms, generally, are extensively exposed to currency fluctuations in the long run. While monthly exposure appears to be a function of a firm's size and financial hedging, exchange rate exposure of shorter horizons (1 and 3 months) appears to be negatively related to a firm's price earnings ratio (proxying growth opportunities)—thereby supporting the ‘underinvestment’ hypothesis. Further, the exposure of longer horizons (12 and 24 months) is positively related to a firm's liquidity, supporting the view that liquidity is a substitute for hedging.

On the determinants of derivative usage by Australian companies

This paper provides an examination of the determinants of derivative use by Australian corporations. We analysed the characteristics of a sample of 469 firm/year observations drawn from the largest Australian publicly listed companies in 1999 and 2000 to address two issues: the decision to use financial derivatives and the extent to which they are used. Logit analysis suggests that a firm's leverage (distress proxy), size (financial distress and setup costs) and liquidity (financial constraints proxy) are important factors associated with the decision to use derivatives. These findings support the financial distress hypothesis while the evidence on the underinvestment hypothesis is mixed. Additionally, setup costs appear to be important, as larger firms are more likely to use derivatives. Tobit results, on the other hand, show that once the decision to use derivatives has been made, a firm uses more derivatives as its leverage increases and as it pays out more dividends (hedging substitute proxy). The overall results indicate that Australian companies use derivatives with a view to enhancing the firms' value rather than to maximizing managerial wealth. In particular, corporations' derivative policies are mostly concerned with reducing the expected cost of financial distress and managing cash flows. Our inability to identify managerial influences behind the derivative decision suggests a competitive Australian managerial labor market.

Pharmaceutical companies' public relations and representation by internet

This paper is part of study of how the adoption of the Internet is affecting the traditional public relations practices of Australian pharmaceutical companies. It suggests that Australian pharmaceutical companies are behind both America and Europe, not only in their adoption of the Internet, but also in their application of Internet technologies for public relations. It also suggests that direct interpersonal communication remains the preferred option for Australian pharmaceutical companies to communicate and build relationships with doctors and pharmacists. The paper is the result of interviews with pharmacists and doctors and one pharmaceutical industry representative. It also involved a survey of pharmaceutical companies’ web sites.