A framework for diagnosing board effectiveness

Pressure on boards to improve corporate performance and management oversight has led to a series of inquiries and reports advocating governance reform. These reports largely reflect an agency perspective of governance and seek to ensure greater board independence from and control of management. While board independence is important to good governance, we contend that frameworks, models and advice centred on one element of governance ignore the complexity of how boards work. We develop a holistic board framework based upon the concept of board intellectual capital to address this concern. Our framework proposes a series of inputs (e.g. company history, company constitution, legal environment) that lead to a particular mix of board intellectual capital. We contend that the balance of the different elements of board intellectual capital will lead to a series of board behaviours. Further, the board needs to mobilise its intellectual capital to carry out a series of roles. The exact nature of these roles will depend on the company's requirements. Thus, the governance outputs of organisational performance, board effectiveness and director effectiveness will depend on the match between the board's intellectual capital and the roles required of it. We conclude by demonstrating the benefits of this framework as a diagnostic tool. We outline how boards wishing to improve their governance systems can diagnose common governance problems by evaluating their own board's capabilities in relation to the different components of the framework.

Evaluating boards and directors

The challenge for boards is to prevent crises in the organisations they govern. Performance evaluation is a key means by which boards can recognise and correct corporate governance problems and add real value to their organisations. Our paper provides a practical introduction to board and director evaluations. We discuss the reasons for governance failures and how board evaluations can help prevent them from occurring. We then review the performance pressures facing boards and the benefits of board evaluations in meeting these pressures. Finally, we introduce our framework for a successful board and/or individual director evaluation, whatever the company type. In this framework, we suggest there are seven key questions to consider when planning a board evaluation and discuss each of these seven decision areas.

Multiple directorships and corporate performance in Australian listed companies

How many directorships are too many? Globally, normative advice emphasises the importance of limiting the number of directorships any individual should hold due to the workloads they entail. However, there is little empirical evidence to support this view. Rather, there is a strong tradition of supporting multiple directorships as a mechanism for the firm to co-opt external resources. To explore the issue of director workloads and multiple directorships, we first consider the issues related to multiple directorships and outline the conclusions of extant international and Australian studies into multiple directorships. We then detail our objectives in undertaking this research and our approach to data collection. Our findings indicate that the incidence of multiple directorships in Australian listed companies is low. We also find that many of the apparent examples of multiple directorships are due to related entities, which share common directors and, due to the nature of these entities, have much lower workload requirements. Further, there does not appear to be any relationship between holding multiple directorships and firm financial performance. Finally, we discuss the implications for boards and those interested in governance, particularly the need to ensure governance recommendations and guidelines reflect empirical findings. We offer one solution to address the concerns of boards, investors, other stakeholders and the community regarding multiple directorships: board and individual director evaluations.

ANÁLISE DAS MUDANÇAS DOS FATORES DETERMINANTES DA ESTRUTURA DE CAPITAL EM FUNÇÃO DO CICLO DE VIDA DAS EMPRESAS BRASILEIRAS SÃO BERNARDO DO CAMPO

As várias teorias acerca da estrutura de capital despertam interesse motivando diversos estudos sobre o assunto sem, no entanto, ter um consenso. Outro tema aparentemente pouco explorado refere-se ao ciclo de vida das empresas e como ele pode influenciar a estrutura de capital. Este estudo teve como objetivo verificar quais determinantes possuem maior relevância no endividamento das empresas e se estes determinantes alteram-se dependendo do ciclo de vida da empresa apoiada pelas teorias Trade Off, Pecking Order e Teoria da Agência. Para alcançar o objetivo deste trabalho foi utilizado análise em painel de efeito fixo sendo a amostra composta por empresas brasileiras de capital aberto, com dados secundários disponíveis na Economática® no período de 2005 a 2013, utilizando-se os setores da BM&FBOVESPA. Como resultado principal destaca-se o mesmo comportamento entre a amostra geral, alto e baixo crescimento pelo endividamento contábil para o determinante Lucratividade apresentando uma relação negativa, e para os determinantes Oportunidade de Crescimento e Tamanho, estes com uma relação positiva. Para os grupos de alto e baixo crescimento alguns determinantes apresentaram resultados diferentes, como a singularidade que resultou significância nestes dois grupos, sendo positiva no baixo crescimento e negativa no alto crescimento, para o valor colateral dos ativos e benefício fiscal não dívida apresentaram significância apenas no grupo de baixo crescimento. Para o endividamento a valor de mercado foi observado significância para o Benefício fiscal não dívida e Singularidade. Este resultado reforça o argumento de que o ciclo de vida influência a estrutura de capital

The East Asian crisis and financing corporate investment:is there a cause for concern?

In view of limited empirical evidence concerning the microeconomic aspects of corporate financial problems in the East Asian countries in the 1990s, this paper analyses the financing pattern of corporate investment in Indonesia, Korea, Malaysia, and Thailand. The analysis is based on an unbalanced panel of listed firms during the period 1989–1997. By using firm size, retention practices, and leverage as three different indicators of financial constraint on firm investment, we have examined the role of various internal and external financing variables on corporate investment in the sample countries. Results indicate that a large number of sample firms depend on free cash flow, especially in Indonesia; there was also a steady increase in debt-equity ratio in all countries. There were signs of agency costs in the use of cash flow in Korea and Malaysia and also in the use of debt financing in Malaysia and Thailand. There was also sign of over-investment among the Thai firms during 1994–1997 though it appears very little if at all was done to redress it in time.

Strategy as practice:Interactive governance spaces and the corporate strategies of retail transnationals

There is growing interest in the role of corporate governance systems within the strategy-making process of firms. Using a 'strategy as practice' perspective, we conceptualize the governance system as a contested space in which management and security analysts mutually adapt/transform and enact corporate strategies vis-à-vis argumentation. Synthesizing this micropractice perspective within corporate governance research, the supple role of securities analysts' arguments in shaping corporate strategies assumes a new significance. It also provides a basis for observing and understanding the contested nature of the retail internationalization process. The implications and opportunities for management studies and economic geography are considered. © The Author (2007). Published by Oxford Press. All rights reserved.

Pathways to leadership:board independence, diversity, and the emerging pipeline in the US for women directors

In the wake of this decade's corporate scandals, crimes and excesses, improving the effectiveness of corporate governance in the United States has become a priority. An important influence on a board's effectiveness at monitoring is its members’ degree of independence from senior management. While the current definition of independence revolves around the absence of familial and economic connections between a firm and its directors, research suggests that this standard may be inadequate in ensuring independent oversight. Rather, diversity along racial, gender and other dimensions has been proposed as a potentially more effective standard for board independence. This is especially welcome news for women, who currently comprise 51 per cent of the US managerial workforce but only 14.8 per cent of the directors on boards of large, publicly traded US corporations. Some explain the current dearth of women board members by claiming that there are no qualified women available for board service and/or that women are not interested in board service. However, there is more anecdotal rather than empirical evidence on the issue. Surveying women at a women's leadership conference in Boston, this research investigates the extent to which women are currently involved in some type of board service and the extent to which women aspire to future board service. We find that women are currently more active in governance activities than prior research on corporate boards suggests and that they aspire to play a continued and expanded role in governance activities.

Fundos de investimento : um tipo societário autônomo e suas principais características

Dissertação (mestrado)—Universidade de Brasília, Faculdade de Direito, Programa de Pós-Graduação em Direito, 2016.

On the relation between ownership structure and capital structure

The agency relationship between managers and shareholders has the potential to influence decision-making in the firm which in turn potentially impacts on firm characteristics such as value and leverage. Prior evidence has demonstrated an association between ownership structure and firm value. This paper extends the literature by examining a further link between ownership structure and capital structure. Using an agency framework, it is argued that the distribution of equity ownership among corporate managers and external blockholders may have a significant relation with leverage. The empirical results provide support for a positive relation between external blockholders and leverage, and non-linear relation between the level of managerial share ownership and leverage. The results also suggest that the relation between external block ownership and leverage varies across the level of managerial share ownership. These results are consistent with active monitoring by blockholders, and the effects of convergence-of-interests and management entrenchment.

Transações com partes relacionadas : determinantes e impactos no desempenho das empresas

A literatura internacional que analisa os fatores impactantes das transações com partes relacionadas concentra-se no Reino Unido, nos EUA e no continente asiático, sendo o Brasil um ambiente pouco investigado. Esta pesquisa tem por objetivo investigar tanto os fatores impactantes dos contratos com partes relacionadas, quanto o impacto dessas transações no desempenho das empresas brasileiras. Estudos recentes que investigaram as determinantes das transações com partes relacionadas (TPRs), assim como seus impactos no desempenho das empresas, levaram em consideração as vertentes apresentadas por Gordon, Henry e Palia (2004): (a) de conflitos de interesses, as quais apoiam a visão de que as TPRs são danosas para os acionistas minoritários, implicando expropriação da riqueza deles, por parte dos controladores (acionistas majoritários); e (b) transações eficientes que podem ser benéficas às empresas, atendendo, desse modo, aos objetivos econômicos subjacentes delas. Esta pesquisa apoia-se na vertente de conflito de interesses, com base na teoria da agência e no fato de que o cenário brasileiro apresenta ter como característica uma estrutura de propriedade concentrada e ser um país emergente com ambiente legal caracterizado pela baixa proteção aos acionistas minoritários. Para operacionalizar a pesquisa, utilizou-se uma amostra inicial composta de 70 empresas com ações listadas na BM&FBovespa, observando o período de 2010 a 2012. Os contratos relacionados foram identificados e quantificados de duas formas, de acordo com a metodologia aplicada por Kohlbeck e Mayhew (2004; 2010) e Silveira, Prado e Sasso (2009). Como principais determinantes foram investigadas proxies para captar os efeitos dos mecanismos de governança corporativa e ambiente legal, do desempenho das empresas, dos desvios entre direitos sobre controle e direitos sobre fluxo de caixa e do excesso de remuneração executiva. Também foram adicionadas variáveis de controle para isolar as características intrínsecas das firmas. Nas análises econométricas foram estimados os modelos pelos métodos de Poisson, corte transversal agrupado (Pooled-OLS) e logit. A estimação foi feita pelo método dos mínimos quadrados ordinários (MQO), e para aumentar a robustez das estimativas econométricas, foram utilizadas variáveis instrumentais estimadas pelo método dos momentos generalizados (MMG). As evidências indicam que os fatores investigados impactam diferentemente as diversas medidas de TPRs das empresas analisadas. Verificou-se que os contratos relacionados, em geral, são danosos às empresas, impactando negativamente o desempenho delas, desempenho este que é aumentado pela presença de mecanismos eficazes de governança corporativa. Os resultados do impacto das medidas de governança corporativa e das características intrínsecas das firmas no desempenho das empresas são robustos à presença de endogeneidade com base nas regressões com variáveis instrumentais.

Os modelos de governance nas nonprofit organizations de actuação local: uma revisão de literatura

O crescimento do sector não lucrativo, por força da criação de novas organizações sem fins lucrativos, tem-se acentuado nos últimos anos tentando dar resposta ao serviço público que a comunidade exige e que o Estado não tem sabido dar resposta. O sector não lucrativo, ou terceiro sector, realiza funções sociais ou culturais relevantes para a sociedade sem o objectivo de produzir lucros. Em Portugal não existem, para este sector, padrões específicos para os modelos de gestão nem tipologias de informação a utilizar pelos seus stakeholders e, por isso, utilizam-se os mesmos moldes do sector empresarial, cumprindo assim a real consistência do isomorfismo mimético. Existe claramente uma diferença entre os objectivos da informação financeira e não financeira nas organizações lucrativas e nas não lucrativas, e essa destrinça tem a ver directamente com os tipos de destinatários e utilizadores da informação. A abordagem às práticas de corporate governance é uma incontornável realidade no mundo organizacional actual face ao crescente aumento das preocupações das organizações enquanto agentes económicos, sociais e políticos. A sociedade exige às organizações não lucrativas transparência e accountability da informação financeira e não financeira (Carvalho & Blanco, 2007a)) e por isso a adopção de práticas de governance pode trazer benefícios na solução de alguns problemas de gestão. Esta investigação pretende, assim, fazer uma revisão de literatura sobre os modelos de governance, numa abordagem à gestão das organizações sem fins lucrativos de âmbito local, contribuindo assim para a possível definição de um modelo de governance próprio para o sector não lucrativo português.

Impactos do projecto solvência II nos sistemas de governance das seguradoras portuguesas

Mestrado em Contabilidade e Gestão das Instituições Financeiras

Gestão do risco : contributos da auditoria interna em Portugal

Mestrado em Auditoria

Influência do modelo de governação das administrações portuárias no seu desempenho

Mestrado em Auditoria

Factors Affecting Audit Quality in the 2007 UK Regulatory Environment: Perceptions of Chief Financial Officers, Audit Committee Chairs and Audit Engagement Partners

In line with global changes, the UK regulatory regime for audit and corporate governance has changed significantly since the Enron scandal, with an increased role for audit committees and independent inspection of audit firms. UK listed company chief financial officers (CFOs), audit committee chairs (ACCs) and audit partners (APs) were surveyed in 2007 to obtain views on the impact of 36 economic and regulatory factors on audit quality. 498 usable responses were received, representing a response rate of 36%. All groups rated various audit committee interactions with auditors among the factors most enhancing audit quality. Exploratory factor analysis reduces the 36 factors to nine uncorrelated dimensions. In order of extraction, these are: economic risk; audit committee activities; risk of regulatory action; audit firm ethics; economic independence of auditor; audit partner rotation; risk of client loss; audit firm size; and, lastly, International Standards on Auditing (ISAs) and audit inspection. In addition to the activities of the audit committee, risk factors for the auditor (both economic and certain regulatory risks) are believed to most enhance audit quality. However, ISAs and the audit inspection regime, aspects of the ‘standards-surveillance compliance’ regulatory system, are viewed as less effective. Respondents commented that aspects of the changed regime are largely process and compliance driven, with high costs for limited benefits, supporting psychological bias regulation theory that claims there is overconfidence that a useful regulatory intervention exists.