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.

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.

Essays on corporate governance, stakeholders, and restructuring

This dissertation consists of an introductory section and three theoretical essays analyzing the interaction of corporate governance and restructuring. The essays adopt an incomplete contracts approach and analyze the role of different institutional designs to facilitate the alignment of the objectives of shareholders and management (or employees) over the magnitude of corporate restructuring. The first essay analyzes how a firm's choice of production technology affects the employees' human capital investment. In the essay, the owners of the firm can choose between a specific and a general technology that both require a costly human capital investment by the employees. The specific technology is initially superior in using the human capital of employees but, in contrast to the general technology, it is not compatible with future innovations. As a result, anticipated changes in the specific technology diminish the ex ante incentives of the employees to invest in human capital unless the shareholders grant the employees specific governance mechanisms (a right of veto, severance pay) so as to protect their investments. The results of the first essay indicate that the level of protection that the shareholders are willing to offer falls short of the socially desirable one. Furthermore, when restructuring opportunities become more abundant, it becomes more attractive both socially and from the viewpoint of the shareholders to initially adopt the general technology. The second essay analyzes how the allocation of authority within the firm interacts with the owners' choice of business strategy when the ability of the owners to monitor the project proposals of the management is biased in favor of the status quo strategy. The essay shows that a bias in the monitoring ability will affect not only the allocation of authority within the firm but also the choice of business strategy. Especially, when delegation has positive managerial incentive effects, delegation turns out to be more attractive under the new business strategy because the improved managerial incentives are a way for the owners to compensate their own reduced information gathering ability. This effect, however, simultaneously makes the owners hesitant to switch the strategy since it would involve a more frequent loss of control over the project choice. Consequently, the owners' lack of knowledge of the new business strategy may lead to a suboptimal choice of strategy. The third essay analyzes the implications of CEO succession process for the ideal board structure. In this essay, the presence of the departing CEO on the board facilitates the ability of the board to find a matching successor and to counsel him. However, the ex-CEO's presence may simultaneously also weaken the ability of the board to restructure since the predecessor may use the opportunity to distort the successor's project choice. The results of the essay suggest that the extent of restructuring gains, the firm's ability to hire good outside directors and the importance of board's advisory role affect at which point and for how long the shareholders may want to nominate the predecessor to the board.

Food waste, power, and corporate social responsibility in the Australian food supply chain

By examining corporate social responsibility (CSR) and power within the context of the food supply chain, this paper illustrates how food retailers claim to address food waste while simultaneously setting standards that result in the large-scale rejection of edible food on cosmetic grounds. Specifically, this paper considers the powerful role of food retailers and how they may be considered to be legitimately engaging in socially responsible behaviors to lower food waste, yet implement practices that ultimately contribute to higher levels of food waste elsewhere in the supply chain. Through interviews with key actors in the Australian fresh fruit and vegetable supply chain, we highlight the existence of a legitimacy gap in corporate social responsibility whereby undesirable behaviors are pushed elsewhere in the supply chain. It is argued that the structural power held by Australia’s retail duopoly means that supermarkets are able to claim virtuous and responsible behaviors, despite counter claims from within the fresh food industry that the food supermarkets’ private quality standards mean that fresh food is wasted. We argue that the supermarkets claim CSR kudos for reducing food waste at the expense of other supply chain actors who bear both the economic cost and the moral burden of waste, and that this is a consequence of supermarkets’ remarkable market power in Australia.

Behaviour and rationality in corporate governance

Marnet, Oliver, 'Behaviour and rationality in corporate governance', Journal of Economic Issues (2005) 39(3) pp.613-632 RAE2008

Relational dimensions of corporate governance in translation: networked governance in China and India

The effectiveness of corporate governance mechanisms has been a subject of academic research for many decades. Although the large majority of corporate governance studies prior to mid 1990s were based on data from developed market economies such as the U.S., U.K. and Japan, in recent years researchers have begun examining corporate governance in transition economies. A comparison of China and India offers a unique environment for analyzing the effectiveness of corporate governance. First, both countries state-owned enterprise (SOE) reform strategies hinges on the Modern Enterprise System characterized by the separation of ownership and control. Ownership of an SOE’s assets is distributed among the government, institutional investors, managers, employees, and private investors. Effective control rights are assigned to management, which generally has a very small, or even nonexistent ownership stake. This distinctive shareholding structure creates conflict of interest not only between management (insiders) and outside investors but also between large shareholders and minority investors. Moreover, because both governments desire to retain some control—in part through partial retained ownership of commercialized SOEs, further conflicts arise between politicians and firms. Second, directors in publicly listed firms in both countries are predominantly drawn from institutions with significant non-market objectives: the government and other state enterprises, particularly in China, and extended families, particularly in India. As a result, the effectiveness of internal governance mechanisms, such as the number of independent directors on the board and the number of independent supervisors on the supervisory committee, are likely to be quiet limited, although this has yet to be fully evaluated. Third, because of the political nature of the privatization process itself, typical external governance mechanisms, such as debt (in conjunction with appropriate bankruptcy procedures), takeover threats, legal protection of investors, product market competition, etc., have not been effective. Bank loans have traditionally been viewed as grants from the state designed to bail out failing firms. State-owned banks retain monopoly or quasi-monopoly positions in the banking sector and profit is not their overriding objective. If political favor is deemed appropriate, subsidized loans, rescheduling of overdue debt or even outright transfer of funds can be arranged with SOEs (soft budget constraints). In addition, a market for private, non-bank debt is limited in India and has yet to be established China. There is no active merger or takeover activity in Chinese stock markets to discipline management. Information available in the capital markets is insufficient to keep at arm’s length of the corporate decisions. In light of the above peculiarities, China and India share many of the typical institutional characteristics as a transition economy, including poor legal protection of creditors and investors, the absence of an effective takeover market, an underdeveloped capital market, a relative inefficient banking system and significant interference of politicians in firm management. Su (2005) finds that the extent of political interference, managerial entrenchment and institutional control can help explain corporate dividend policies and post-IPO financing choices in this situation. Allen et al. (2005) demonstrate that standard corporate governance mechanisms are weak and ineffective for publicly listed firms while alternative governance mechanisms based on reputation and relationship have been remarkably effective in the private sector. Because the peculiarities are significant in this context, the differences in the political-economies of the two countries are likely to be evident in such relational terms. In this paper we explore the peculiarities of corporate governance in this transitional environment through a systematic examination of certain aspects of these reputational and relationship dimensions. Utilising the methods of social network analysis we identify the inter-organisational relationships at board level formed by equity holdings and by shared directors. Using data drawn from the Orbis database we map these relations among the 3700 largest firms in India and China respectively and identify the roles played in these relational networks by the particularly characteristic institutions in each case. We find greatly different social network structures in each case with some support in these relational dimensions for their distinctive features of governance. Further, the social network metrics allow us to considerably refine proxies for political interference, managerial entrenchment and institutional control used in earlier econometric analysis.

Internalities and the Foundations of Corporate Governance

This paper considers the potential contained in an 'internalities' approach to corporate governance. Rather than viewing the company as a ‘black box’ that can only be regulated through state action, we argue that corporate governance holds in tension the relationship between investors, managers and the corporate board. It is from that tension that a change in corporate culture will emerge. We argue that a state focus on promoting and managing the dialogical character of corporate governance will limit the negative effects of corporate power

Corporate Governance as a School of Social Reform

In this paper, I present a vision of the corporation as a moral person. I point to “the separation of ownership and control” as a moment when the corporation broke away from the moral lives of ownermanagers. I then draw out the manner in which we can speak of the company as a moral person. Finally, through a discussion of social reporting in two British banks, I point to a shift in how this moral personhood is articulated, with the rise of corporate governance—or doing business well—as its own foundation of corporate responsibility. I propose a view of corporate responsibility as a “transmission mechanism” for the company’s role in moral life, situated in the broader social conception of “moral economy.” This viewpoint sets out landscapes of legitimation and justification through which the ties that underpin economic life are founded

The carbon disclosure project, an evolution in international environmental corporate governance : motivations and determinants of market response to voluntary disclosures

This paper examines the factors associated with Canadian firms voluntarily disclosing climate change information through the Carbon Disclosure Project. Five hypotheses are presented to explain the factors influencing management's decision to disclose this information. These hypotheses include a response to shareholder activism, domestic institutional investor shareholder activism, signalling, litigation risk, and low cost publicity. Both binary logistic regressions as well as a cross-sectional analysis of the equity market's response to the environmental disclosures being made were used to test these hypotheses. Support was found for shareholder activism, low cost publicity, and litigation risk. However, the equity market's response was not found to be statistically significant.

Pushing the boundaries of the social: private agri-food standards and the governance of Fair Trade in European public procurement

The article explores how fair trade and associated private agri-food standards are incorporated into public procurement in Europe. Procurement law is underpinned by principles of equity, non-discrimination and transparency; one consequence is that legal obstacles exist to fair trade being privileged within procurement practice. These obstacles have pragmatic dimensions, concerning whether and how procurement can be used to fulfil wider social policy objectives or to incorporate private standards; they also bring to the fore underlying issues of value. Taking an agency-based approach and incorporating the concept of governability, empirical evidence demonstrates the role played by different actors in negotiating fair trade’s passage into procurement through pre-empting and managing legal risk. This process exposes contestations that arise when contrasting values come together within sustainable procurement. This examination of fair trade in public procurement helps reveal how practices and knowledge on ethical consumption enter into a new governance arena within the global agri-food system.

The post-financial crisis challenges for corporate governance and banking reform in China

The purpose of this paper is to review the impact of the global financial crisis on banking reform in China. The significant doubt concerning the efficiencies of Anglo-American model of corporate governance has raised a critical political question amongst scholars and practitioners as to whether China should continue to follow the U.K.-U.S. path in relation to financial reform. This conceptual paper provides an insightful review of the corporate governance literature and regulatory reports. After examining the fundamental limitations of the laissez-faire philosophy that underpins the neo-liberal model of capitalism, which promotes greater liberalization and less control, the paper considers the risks in opening China’s financial markets and relaxing monetary and fiscal policies. A critique of shareholder-capitalism is outlined in relation to the German’s “social market economy” styled capitalism. Through such analysis the paper explores a number of implications for China to consider in terms of developing a new and sustainable corporate governance model applicable to the Chinese context.

Do private equity and venture capital backed firms have better corporate governance after going public?

Mercados financeiros e finanças corporativas

The Road to Poverty Reduction: Corporate Governance and Female Participation in MFIs

1.Microfinance Industry – Context of Analysis. This paper is an introduction to the microfinance industry. It serves as a context of analysis, for the empirical settings and basis for building the theoretical argument for the thesis. 2.Women in Microfinance Institutions: The Road to Poverty Reduction and Gender Equality? One of the unique aspects of microfinance institutions is their focus on outreach, i.e. their ability to reach the poor. This paper explores whether the presence of women in microfinance institutions is associated with improved outreach. Building on prior research that shows that women tend to improve financial performance and social responsibility, we examine an original dataset of 226 microfinance institutions. The empirical results suggest that the presence of a female CEO, female managers and female loan officers is directly related to improved outreach, while the presence of women board members is not. 3. Women in Microfinance Institutions: Is There a Trade-Off Between Outreach and Sustainability? Abstract This paper’s contribution to the understanding of microfinance is two-fold. First, while it has been shown that female CEOs in MFIs increase financial performance, it will be argued that female managers, female loan officers and female board members will do the same. Secondly, having previously shown that having a female presence in management in MFIs improves social performance the outreach, it will be argued that having females in the MFIs’ management will not lead to a trade-off between outreach and sustainability. These findings are based on an original data set of 226 MFIs. Statistical analysis demonstrates that a weak relationship between female managers and female loan officers vis-à-vis financial performance, but female board members do not. The trade-off between outreach and sustainability can be avoided with the appointment of females to the MFIs’ management positions, but the same cannot be concluded for female board members.