The effect of ownership concentration on management behavior in Belgian banks: A case study

Double Degree. A Work Project, presented as part of the requirements for the Award of a Master’s Degree in Finance from NOVA – School of Business and Economics and a Masters Degree in Management from Louvain School of Management

Board independence and innovation

Legislation introduced in the U.S. in 2002/2003 significantly changed board composition of public firms by imposing a 50% independent directors’ ratio. Research on the effect of independent directors is not consensual, implying that this exogenous shock is a unique opportunity to study their importance. This study answers the question of whether or not independent directors can effectively mitigate agency conflicts between shareholders and the management, having a positive impact on the choice of successful R&D projects. We find that an increase of board independence has a positive impact on patent counts. Hence, the results support that independent directors truly spur innovation and risk taking.

The good, the bad and the ugly: The fall and resolution of Banco Espírito Santo

This case study – and accompanying teaching note – briefly describes the history of the Espírito Santo family, a banking dynasty who led one of Portugal’s leading economic and financial groups, along with its “crown jewel”, Banco Espírito Santo. It chronicles how the corporate governance issues at BES allowed the family to exploit the bank, its shareholders and its customers, so as to support its unprofitable non-financial businesses. This left the bank in a poor financial situation, which deteriorated beyond control, leaving regulators – whose actions are also analysed here – with no alternative, amidst a severe liquidity crisis, but to apply a resolution measure, pinning large losses on junior bondholders and shareholders before recapitalising the bank.

Proxy statement proposals after the 2008 financial crash

In traumatic financial times, both shareholders and the media promptly blame companies for lack of decent corporate governance mechanisms. Proxy statement proposals have increasingly been used by the more active shareholders as to vindicate managers to correct anomalies and restore financial markets’ confidence. I examine the proposals of the largest companies in the S&P 500 index after the Lehmann Brothers crash and their effect on stock prices. Proposals initiated by shareholders negatively impact the company’s stock price, particularly if the proposers are unions, pension funds and institutional investors. Also, I find corporate governance proposals to harm firm’s market performance, unlike compensation and social policy proposals whose effects are intangible. The exception to these disappointing attempts to improve companies’ conduct relies on proposals shared by several investors.

Carl Icahn pushes ebay to spin-off paypal

The following case-study describes the situation involving eBay, PayPal and Carl Icahn as of February 2014. Its structure is divided between the narrative and a teaching note. The case narrative describes all the events between the three parties until the 24th of February 2014, when the activist investor Carl Icahn sends a public shareholder letter strongly criticizing eBay’s board and corporate governance practices while proposing at the same time the spin-off of PayPal from eBay. The teaching note intends to analyse the possibility of spinning-off PayPal, while at the same time analysing the Corporate Governance issues in eBay’s board. The final conclusion in the teaching note is favourable towards the spin-off of PayPal.

PT Multimedia

The purpose of the present case – and accompanying Teaching Notes – is to better understand the spin-off of PT Multimédia, by Portugal Telecom, after receiving a Public Takeover Offer from Sonaecom, in 2006. The Government and the Competition Authority had never looked in a serious way at PT’s dominant position and the lack of room for competition in the TMT sector – PT was the owner of both the cable and copper networks, having access to privileged information from its competitors with control over the wholesale and retail businesses. In 2006, the company received a takeover offer from Sonaecom, the TMT subsidiary from the Portuguese conglomerate Sonae. The offer was voted and rejected by a majority of PT shareholders, but the whole process triggered several recommendations from the regulatory bodies. As a result, PT divested its cable business with the spin-off of PT Multimédia, giving birth to a new competitor and a totally different landscape in the telecommunications sector in Portugal.

Portugal Telecom

This Masters Thesis aims to be used in class for teaching purposes. The primary objective of the case is to understand the way critical anti-takeover measures can be used in a hostile takeover environment. The case portrays not only all defensive tools used by PT against Sonaecom (conditioned by the Portuguese Securities Code) but also all major interactions with relevant stakeholders. Communication is positioned as a central tool to stakeholders’ interaction. As a consequence of that, students are supposed to comprehend how PT used this instrument to implement its defensive strategy. This Masters Thesis was written essentially from PT’s perspective but it also includes all available Sonacom’s public statements and data. It joins several different points of view (from PT’s CEO and top management to PT’s employees and labor unions). Therefore, it is not supposed to mach exactly to one’s perspective of Sonecom’s takeover attempt but instead to be an aggregate view of the case. The mains idea is to promote debate in order to create an interactive class environment among session’s attendants. Main areas developed in this Thesis are Mergers and Acquisitions, Corporate Communication and Corporate Governance. The case's recommended questions are in line with these areas. Suggested answers for these questions are balanced with some academic documentation that can be complemented with some in-class notes according to the session's objectives.

Divulgação de informação sobre o governo das sociedades em Portugal: Extensão e determinantes

Tese de Doutoramento em Contabilidade

A Responsabilidade Civil dos Gerentes e Administradores pelo pagamento das coimas e multas imputáveis à sociedade

Dissertação de mestrado em Direito dos Contratos e da Empresa

Resilienz bei Rehabilitanden der Orthopädie und Psychosomatik : Eine Querschnittstudie

Theoretical background: The construct of resilience is now used in many fields, such as in sports, corporate governance and in health care system. Against the backdrop of the unique system of rehabilitation in Germany, that empowers people to participate in a social and pro-fessional way, the concept of resilience is becoming increasingly important. Accordingly this cross-sectional study should explore the resilience of orthopedic and psychosomatic patients in more detail.Questions: Are there differences in the sample that lead to different sub-samples based on the RS-13? Are there differences between the sub-samples in terms of socio-demographic data, psychosocial problems, psychological stress, stress in the workplace and the experi-ence of stress? Do socio-demografic, employment, psycho-social and psychological varia-bles influence resilience?Method: For this investigation the data of n = 131 patients was used. The data was collected in an orthopedic clinic of rehabilitation and in a psychosomatic clinic of rehabilitation. On the basis of the results of the short Resiliencescale RS-13 the sample was split into two sub-samples of N1 = 51 patients with low resilience and N2 = 80 patients with higher resilience. The questions were examined by regarding the Brief Symptom Checklist (BSCL), the Ultra-Kurz-Screening (UKS), the Stressscale (from the DASS-Questionnaire) and the Employee Attitude Survey (BAuA). Additionally a literature research was done in databases like Psy-Content, Psyndex and Springerlink to acquire the theoretical background.Results: Within the sample, there were two sub-samples, one which included patients with low resilience while the other was characterized by high resilience. Patients with low resili-ence did not differ by considering the variables of age, sex, marital status, children, educa-tion, occupational status, industry and job stress. Patients with high resilience are older and rarer incap

Stakeholder activism, managerial entrenchment, and the congruence of interests between shareholders and stakeholders

We argue that when stakeholder protection is left to the voluntary initiative of managers, concessions to social activists and pressure groups can turn into a self-entrenchment strategy for incumbent CEOs. Stakeholders other than shareholders thus benefit from corporate governance rules putting managers under a tough replacement threat. We show that a minimal amount of formal stakeholder protection, or the introduction of explicit covenants protecting stakeholder rights in the firm charter, may deprive CEOs of the alliance with powerful social activists, thus increasing managerial turnover and shareholder value. These results rationalize a recent trend whereby well-known social activists like Friends of the Earth and active shareholders like CalPERS are showing a growing support for each other's agendas.

Codes of best practice in competitive markets for managers

We study firms' corporate governance in environments where possibly heterogeneous shareholders compete for possibly heterogeneous managers. A firm, formed by a shareholder and a manager, can sign either an incentive contract or a contract including a Code of Best Practice. A Code allows for a better manager's control but makes manager's decisions hard to react when market conditions change. It tends to be adopted in markets with low volatility and in low-competitive environments. The firms with the best projects tend to adopt the Code when managers are not too heterogeneous while the best managers tend to be hired through incentive contracts when the projects are similar. Although the matching between shareholders and managers is often positively assortative, the shareholders with the best projects might be willing to renounce to hire the best managers, signing contracts including Codes with lower-ability managers.

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.

Agency cost of government ownership: a study of voluntary audit comitte formation in China

In this paper, we investigate the agency costs of government ownership and their impact on corporate governance and firm value. China is used as a laboratory because of the prevalent state shareholdings in exchange-listed firms. In this context, we specifically consider the trade-offs involved in the voluntary formation of an audit committee when the controlling shareholder is the state. The decision to improve corporate governance (in this case, introduce an audit committee) is shown to be value relevant and a function of existing agency relationships and non-trivial implementation costs. Our findings are robust to the level of pyramid groups, the ownership-control wedge, and financial leverage. The research adds to the debate regarding the effect of government shareholdings on corporate culture and performance - a topic that hastaken on renewed importance in recent times.

A forensic perspective of the AFL investigation into peptides: an antidoping investigation case study.

BACKGROUND: The World Anti-Doping Agency (WADA) is introducing enhancements to doping investigations in its 2015 Code, which include improved sharing of information between antidoping organisations (including sporting bodies) and enhanced accountability of athlete support staff. These additions will improve the control of links between sports doping and organised crime. In February 2013 the Australian Crime Commission released a report that linked several professional sporting codes, professional athletes with links to organised crime, performance enhancing drugs and illicit substances. Following this report the Australian Football League (AFL) partnered the Australian national antidoping organisation to investigate peptide use in Australian football. METHODS: This review compared the model proposed by Marclay, a hypothetical model for anti-doping investigations that proposed a forensic intelligence and analysis approach, to use the forensic capabilities of the AFL investigation to test the model's relevance to an actual case. RESULTS: The investigation uncovered the use of peptides used to enhance athlete performance. The AFL investigation found a high risk of doping where athlete support staff existed in teams with weak corporate governance controls. A further finding included the need for the investigation to provide a timely response in professional team sports that were sensitive to the competition timing. In the case of the AFL the team was sanctioned prior to the finals as an interim outcome for allowing the risk of use of performance-enhancing substances. Doping violation charges are still being considered. DISCUSSION: Antidoping strategies should include the investigation of corporate officers in team doping circumstances, the mandatory recording of all athlete substance use during competition and training phases, the wider sharing of forensic intelligence with non-sporting bodies particularly law enforcement and collaboration between antidoping and sporting organisations in doping investigations. CONCLUSIONS: The AFL investigation illustrated the importance of the 2015 WADA Code changes and highlighted the need for a systematic use of broad forensic intelligence activities in the investigation of doping violations.