The Redistribution of Property Rights, Corporate Governance and Company Restructuring after Privatisation"

The project covered the main issues of privatisation, corporate governance and company restructuring after privatisation in Hungary and in the Russian Republic, together with a summary of the broader picture of company-level changes in Central and Eastern Europe, discussing the issues of micro-financial restructuring in the Czech Republic, Hungary, Poland and Slovakia. The two countries selected as the focus of research can be regarded as the two most widely differing cases of the economic transformation in Central and Eastern Europe. Hungary began its transition very early in 1989, while Russia was very late in doing so. Hungary first implemented a series of institutional and systemic reforms before stabilising its public finances, while Russia has struggled with financial stabilisation for years without great success. Company restructuring and the introduction of new forms of governance only began in Russia in the mid-1990s. Hungary opted for "traditional" western methods of privatisation and invited a large amount of foreign direct investment (FDI) while in Russia the bulk of state-owned property was privatised either by free distribution or by a strange blend of ESOP-MBO schemes. FDI in Russia remained modest because of the high risk and uncertainty surrounding economic transactions there. Hungary was a forerunner in privatising public utilities, while Russia has moved cautiously in this area. The group's studies show that the Hungarian economy is now over the "transformation recession" and its economic success is largely due to its successful privatisation and to the dominant participation of foreign investors in company take-overs and in the restructuring process. The study of Russia provides a comprehensive account of the main factors in the so-far modest results in Russian privatisation and economic transformation.

Corporate governance in the NHS

Corporate Governance - which is concerned with the management and direction of organizations at the very highest level - has grown in importance in the private sector, from where the concept largely derives, as a result mainly of malpractice. As a consequence, interest in the topic has grown steadily, largely on the part of Governments, regulators and academics. Managerial reforms of the NHS introduced refashioned District Health Authorities (DHAs) which mimic the role and structure of the Company board. The research reported in this thesis is an assessment of corporate governance in post reform English DHAs. The research examines the characteristics of directors, the extent to which corporate governance can be empirically demonstrated, the extent to which it is consistent with the Working for Patients reforms, and, the consequences of such changes for the development of directors and of DHAs. The research also considers the relevance of the findings to other parts of the NHS and public sector. The work draws upon the conceptual framework established by Tricker (1984; also Hilmer & Tricker 1991) with detailed survey and case study findings concerned with issues of direction, executive management, supervision and accountability. The findings from this new research make an important contribution to the policy debate and to the literature(s) concerned.

Corporate governance and cost of capital: evidence from Pakistani listed firms

This thesis investigates the effectiveness of Corporate Governance (CG) reforms in Pakistan. Using a sample of 160 Pakistani firms from 2003 to 2013 and governance data collected manually from the annual reports, this thesis investigates seven closely related and important corporate issues that are related to the compliance of governance rules. Specifically, it aims to : (i) investigate the degree of CG compliance with 2002 Pakistani Code of CG (PCCG); (ii) determine whether the introduction of 2002 PCCG has improved Pakistani CG practices; (iii) investigate the determinants of CG compliance and disclosure for Pakistani listed firms; (iv) test the nexus between CG compliance with the 2002 PCCG and firms’ cost of capital (COC); (v) investigate the impact of different individual CG mechanisms on listed firms COC; (vi) examine how different ownership structures impact on firms’ COC; and (vii) analyse relationship between CG structures and Cost of Equity (COE) as well as Cost of Debt (COD) for Pakistani listed firms. These empirical investigations report some important results. First, the reported findings suggest that Pakistani firms have responded positively to governance disclosure requirements over the eleven year period from 2003 to 2013. The results also show that the introduction of the PCCG in 2002 has improved CG standards by Pakistani listed firms. Second, the reported results related to the determinants of CG compliance demonstrate that significant and positive association between institutional, government and foreign ownership with CG compliance. However, findings relating to the determinants of CG compliance show a negative and significant association between board size and block ownership with CG compliance and disclosure. The study finds no significant relationship between director ownership, audit firm size and the presence of female board members with the constructed Pakistan Corporate Governance Index (PCGI). Third, the investigation on the relationship between CG and COC report a significantly negative nexus between PCGI and firms’ COC. The investigation on the association between ownership structures and COC report a negative and significant nexus between block ownership with firms’ COC. Further, a number of robustness analyses performed in this study suggest that the empirical results reported in this study are generally robust to the alternative CG variables, alternative COC variables and potential endogeneity problems.

Security of employee entitlements : corporate governance issues

Following the collapse across the last decade of a number of large organizations such as Enron in the USA and several domestic organizations including Ansett Airlines, HIH Insurance and One.Tel, much discussion has ensued about the need to secure employee entitlements. However, tangible improvements in this area are elusive. Good corporate governance policies would suggest that deferred obligations as well as current debts should not be neglected and that appropriate arrangements be put in place to adequately fund employee entitlements. In this paper we consider recent Australian attempts to introduce better governance of employee entitlements.

Role of corporate governance in mitigating the selective disclosure of executive stock option information

We examine the nature and extent of statutory executive stock option (ESO) disclosures by Australian listed companies over the 2001 to 2004 period, and the influence of corporate governance mechanisms on these disclosures. Our results show a progressive increase in overall compliance from 2001 to 2004. However, despite the improved compliance, the results reveal managements’ continued reluctance to disclose more sensitive ESO information. Factors associated with good internal governance, including board independence, audit committee independence and effectiveness, and compensation committee independence and effectiveness are found to contribute to improved compliance. Similarly, certain external governance factors are associated with improved disclosure, including external auditor quality, shareholder activism (as proxied by companies identified as poor performers by the Australian Shareholders’ Association), and regulatory intervention.

Regulating corporate governance in China and Hong Kong : do Chinese values and ethics have a place in the age of globalization?

Much has been said about the convergence of corporate governance and regulations. The underlying assumptions of this phenomenon are driven by globalisation and the dominance of the Anglo-US model of corporate governance. Since the Asian crisis in 1997, Hong Kong and perhaps to a less extend Mainland China, had amended both Company laws and Stock Exchange Listing Rules obligations, arguably, mirroring provisions and rules in the UK and US. However, there has been a small amount of literature in law drawing from cross cultural management asking the question - is Western governance and regulation appropriate for the East? This paper will approach this issue from a different mindset, instead of drawing distinctions about East and West, a meta-regulatory framework will attempt to incorporate Western ‗hard‘ and ‗soft‘ laws with Asian ethical values. The aim is to combine laws and ethics thereby enhancing corporate governance and, improve compliance of those rules by adapting Chinese ethical values like Confucianism into the regulatory system. The overarching goal of this exercise is to adapt the wisdom of Chinese ethics into regulatory guidelines to suit the modern global market.

Corporate governance for Hong Kong : conceptualizing an 'Asianized' framework

Hong Kong is a thriving cosmopolitan business capital in Asia where much of its values are shaped by both pragmatism and its Chinese heritage. Against this backdrop, Hong Kong's corporate law and governance principles are mostly British, much of which remains quite alien to the local business community. Like may other countries, Hong Kong is obligated by international markets to embrace these requirements. Yet many business operators lack even the understanding of basic company law and governance expectations, partly because the provisions are incompatible with their values and corporate cultures. The paper will argue that Confucian philosophies should be the basis for developing a corporate governance framework for Hong Kong, given that Confucius; doctrines are already entrenched in the island's traditions and identity.

Corporate governance and compliance : preventative measure or just another fad?

In the wake of recent corporate collapses, 'corporate governance' has received unprecedented levels of attention. It can be narrowly defined as how a company is directed and steered. The responsibility of steering a company is entrusted with the board of directors, who become the focus of governance mechanisms.Yet this is not as straightforward as it appears - Australia has experienced massive shifts in business regulations over the past two decades. One innovation in Australian business regulation is 'enforced self-regulation' which combines the benefits of voluntary self-regulation with the coercive power of the State, implemented via a compliance program. A possible hazard of compliance system is that management might treat this responsibility as a 'box ticking' exercise. Therefore effective governance and compliance entails more than setting up internal and regulatory mechanisms; the willingness of various stakeholders to collaborate is crucial. This suggests that managing relationships between stakeholders of an organization is the key to averting corporate collapses.

Corporate governance in China

So far as Asia is concerned, corporate governance is an import. The concept itself was virtually unknown in China ¬a decade ago. Yet corporate governance has now been enthusiastically embraced in China, to the point that the year 2005 was declared the Year of Corporate Governance and extensive amendments have been made to several laws and regulations with an emphasis on corporate governance. This essay will consider the effectiveness of China’s corporate governance law on paper and in practice with the OECD’s Principles of Corporate Governance acting as a general guide.

Diffusion of corporate governance practices : the Dutch response to pressures for shareholder value

As part of a larger literature focused on identifying and relating the antecedents and consequences of diffusing organizational practices/ideas, recent research has debated the international adoption of a shareholder-value-orientation (SVO). The debate has financial economists characterizing the adoption of an SVO as performance-enhancing and thus inevitable, with behavioral scientists disputing both claims, invoking institutional differences. This study seeks to provide some resolution to the debate (and advance current understanding on the diffusion of practices/ideas) by developing a socio-political perspective that links the antecedents and consequences of an SVO. In particular, we introduce the notion of misaligned elites and misfitted practices in our analysis of how and why differences in the technical and cultural preferences of major owners will influence a firm’s adoption and (un)successful implementation of an SVO among the largest 100 corporations in the Netherlands from 1992-2006. We conclude with a discussion of the implications of our perspective and our findings for future research on corporate governance and the diffusion of organizational practices/ideas.

An analysis of the nature and effectiveness of corporate governance in smaller listed Australian companies

The objective of this thesis is to investigate the corporate governance attributes of smaller listed Australian firms. This study is motivated by evidence that these firms are associated with more regulatory concerns, the introduction of ASX Corporate Governance Recommendations in 2004, and a paucity of research to guide regulators and stakeholders of smaller firms. While there is an extensive body of literature examining the effectiveness of corporate governance, the literature principally focuses on larger companies, resulting in a deficiency in the understanding of the nature and effectiveness of corporate governance in smaller firms. Based on a review of agency theory literature, a theoretical model is developed that posits that agency costs are mitigated by internal governance mechanisms and transparency. The model includes external governance factors but in many smaller firms these factors are potentially absent, increasing the reliance on the internal governance mechanisms of the firm. Based on the model, the observed greater regulatory intervention in smaller companies may be due to sub-optimal internal governance practices. Accordingly, this study addresses four broad research questions (RQs). First, what is the extent and nature of the ASX Recommendations that have been adopted by smaller firms (RQ1)? Second, what firm characteristics explain differences in the recommendations adopted by smaller listed firms (RQ2), and third, what firm characteristics explain changes in the governance of smaller firms over time (RQ3)? Fourth, how effective are the corporate governance attributes of smaller firms (RQ4)? Six hypotheses are developed to address the RQs. The first two hypotheses explore the extent and nature of corporate governance, while the remaining hypotheses evaluate its effectiveness. A time-series, cross-sectional approach is used to evaluate the effectiveness of governance. Three models, based on individual governance attributes, an index of six items derived from the literature, and an index based on the full list of ASX Recommendations, are developed and tested using a sample of 298 smaller firms with annual observations over a five-year period (2002-2006) before and after the introduction of the ASX Recommendations in 2004. With respect to (RQ1) the results reveal that the overall adoption of the recommendations increased from 66 per cent in 2004 to 74 per cent in 2006. Interestingly, the adoption rate for recommendations regarding the structure of the board and formation of committees is significantly lower than the rates for other categories of recommendations. With respect to (RQ2) the results reveal that variations in rates of adoption are explained by key firm differences including, firm size, profitability, board size, audit quality, and ownership dispersion, while the results for (RQ3) were inconclusive. With respect to (RQ4), the results provide support for the association between better governance and superior accounting-based performance. In particular, the results highlight the importance of the independence of both the board and audit committee chairs, and of greater accounting-based expertise on the audit committee. In contrast, while there is little evidence that a majority independent board is associated with superior outcomes, there is evidence linking board independence with adverse audit opinion outcomes. These results suggest that board and chair independence are substitutes; in the presence of an independent chair a majority independent board may be an unnecessary and costly investment for smaller firms. The findings make several important contributions. First, the findings contribute to the literature by providing evidence on the extent, nature and effectiveness of governance in smaller firms. The findings also contribute to the policy debate regarding future development of Australia’s corporate governance code. The findings regarding board and chair independence, and audit committee characteristics, suggest that policy-makers could consider providing additional guidance for smaller companies. In general, the findings offer support for the “if not, why not?” approach of the ASX, rather than a prescriptive rules-based approach.

The impact of the Malaysian code on corporate governance: compliance, institutional investors and stock performance

In 2001, the Malaysian Code on Corporate Governance (MCCG) became an integral part of the Bursa Malaysia Listing Rules, which requires all listed firms to disclose the extent of compliance with the MCCG. Our panel analysis of 440 firms from 1999 to 2002 finds that corporate governance reform in Malaysia has been successful, with a significant improvement in governance practices. The relationship between ownership by the Employees Provident Fund (EPF) and corporate governance has strengthened during the period subsequent to the reform, in line with the lead role taken by the EPF in establishing the Minority Shareholders Watchdog Group. The implementation of MCCG has had a substantial effect on shareholders' wealth, increasing stock prices by an average of about 4.8%. Although there is no evidence that politically connected firms perform better, political connections do have a significantly negative effect on corporate governance, which is mitigated by institutional ownership.

Corporate governance, accounting and finance: a review

We review accounting and finance research on corporate governance (CG). In the course of our review, we focus on a particularly vexing issue, namely endogeneity in the relationships between CG and other matters of concern to accounting and finance scholars, and suggest ways to deal with it. Given the advent of large commercial CG databases, we also stress the importance of how CG is measured and in particular, the construction of CG indices, which should be sensitive to local institutional arrangements, and the need to capture both internal and external aspects of governance. The ‘stickiness’ of CG characteristics provides an additional challenge to CG scholars. Better theory is required, for example, to explain whether various CG practices substitute for each other or are complements. While a multidisciplinary approach to developing better theory is never without its difficulties, it could enrich the current body of knowledge in CG. Despite the vastness of the existing CG literature, these issues do suggest a number of avenues for future research.