ABSTRACT

Purpose Director interlocks, with their extended resources and shared experiences, have the potential power to go beyond the basic role of providing advice and monitoring the activities of an organization. Interlocked directors can have a cross-cultural role in manipulating corporate choices and strategies in several areas, including capital structure, based on learned behavior in their internal company. Shareholders and creditors are the two main capital providers for a company. However, their risk return horizons are very different, and policies that benefit one group may not be optimal to the other. Interlocks can act as carriers of sub-par practices that affect the behavior of several organizations. Such transactional and relational activities may increase short-term value for equity shareholders, but increase the risk for the creditors. The purpose of this paper is to examine cross-cultural effects of interlocks on corporate strategies that affect this essential agency relationship. Design/methodology/approach This paper surveys the extant literature on board interlocks, board practices, equity valuation and credit risk to develop a link between such interlocks and creditor protection. Based on a brief survey of the central concepts of governance and the role of directors, this paper then provides various propositions on the role of interlocking directorships and their effect on the shareholder–creditor agency problem. Findings Director interlocks, through their linked common practices, have the potential to increase or worsen shareholder–creditor conflicts by magnifying strategic practices like short-termism, earnings management or through its effects on chief executive officer compensation. Such cross-cultural effects persist across ownership structures and cultural differences in governance. Research limitations/implications The paper is not an empirical study of the conflict. This paper uses a literature review to arrive at propositions that may impact shareholder–creditor conflicts. Practical implications Several studies have shown cronyism and the dense corporate network has been a large factor in the financial crisis that affected both shareholders and creditors. As the influence of creditors grows with the current availability, and therefore increase in debt levels, this conflict can be magnified through homophily inherent in interlocks. For an organization to be successful in its role of protecting all stakeholders, especially the two major providers of equity capital, factors that cause conflicts must be taken into account while developing the tenets of governance policies and, on a regular basis, during the strategic planning process within the organization. Regulations affecting interlocks, including governance policies, must therefore take into account such influences. Social implications Board interlocks act as channels of information between companies, creating a social network where processes and polices are shared and implemented as defined by the concept of homophily. Such management actions reduce both the quality of information available to creditors and their monitoring capabilities. This juxtaposition of shareholder and creditor interest can, therefore, be worsened by director interlocks. Originality/value Prior literature has not specifically linked director interlocks and their mutual impact on the culture and strategy of linked corporations to the shareholder–creditor conflict.

This study examines the relationship between board attributes and corporate philanthropic behavior for combating the COVID‐19 epidemic and stock price fluctuations The results show that the philanthropic behavior has a positive effect on the stock prices; that companies with female leaders are more likely to engage in philanthropic behavior; and that the proportion of female's directors is positively correlated with philanthropic behavior. Additionally, the results show that board size is negatively correlated with philanthropic behavior.

<p class="MsoPlainText" style="text-align: justify; margin: 0in 0.5in 0pt; mso-pagination: none;"><span style="font-family: &quot;Times New Roman&quot;,&quot;serif&quot;;"><span style="font-size: x-small;">With the current attention focused on the Sarbanes-Oxley Act of 2002, it is timely to investigate the characteristics of firms that are early in implementing corporate governance policies pursuant to the Act.<span style="mso-spacerun: yes;">&nbsp; </span>Since a relationship between corporate citizenship and financial success has been established in prior research, it is of interest to further probe these associations.<span style="mso-spacerun: yes;">&nbsp; </span>The purpose of this particular study is to examine some characteristics of firms that were early in adopting corporate governance policies in response to the Act.</span></span></p>

<span>This study focuses on the conflict between First Amendment rights of churches and religious organizations and the need by public authorities to investigate and regulate abuses of tax exemptions. The relative lack of accountability of religious organizations opens the door to a number of abusive schemes and scams. Table 1 shows that the IRS has attempted in recent years to improve its ability to enforce regulations pertaining to tax-exempt organizations. Table 2 shows that the number of Tax Exempt tax returns examined by the IRS has increased by 106% from 2005 to 2009, the number of examinations in 2009 still amounted to only 1.24% of returns filed. Table 3 shows that, at the state level, the number of prosecutions and legal actions taken in 2007 by states was a total of 513, just slightly more than 10 per state. Given the obstacles faced by Federal and state enforcement authorities, self-regulation and self-policing by charitable and tax-exempt organizations are likely to be the only way the faithful will receive additional protection against those who would use religion as a tool to mislead them and misappropriate their gifts.</span>