Appointments of outsiders to Japanese boards: Determinants and implications for managers

Kaplan, Steven N.; Minton, Bernadette A.

doi:10.1016/0304-405x(94)90025-6

Cited by 767 publications

(369 citation statements)

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“…A number of governance mechanisms may help to align the interests of managers with those of shareholders. This includes equity ownership by managers (Jensen and Meckling, 1976), by outside blockholders (Kaplan and Minton, 1994) and executive compensation (Mehran, 1995). In addition the board of directors may play a central role in monitoring managers (Fama, 1980).…”

Section: Introductionmentioning

confidence: 99%

Board structure, ownership structure and firm performance: evidence from banking

Belkhir

2009

Applied Financial Economics

109

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RésuméCet article examine les relations qui puissent exister entre les caractéristiques de la structure de propriété et du conseil d'administration dans un échantillon de 260 banques commerciales et banquescaisses d'épargne. Ces caractéristiques de gouvernance, destinées à réduire les problèmes d'agence entre actionnaires et dirigeants, sont la participation des dirigeants dans le capital, la participation d'actionnaires majoritaires dans le capital, la proportion des administrateurs externes, la structure de leadership du conseil d'administration, et la taille du conseil d'administration. Utilisant la méthode des doubles moindres carrés, nous présentons des résultats qui favorisent l'idée selon laquelle les banques substituent entre les différents mécanismes de gouvernance qui alignent les intérêts des actionnaires et dirigeants. Ces résultats suggèrent que les régressions par les moindres carrés ordinaires (MCO) de mesures de la performance bancaire sur des mécanismes individuels de gouvernance peuvent induire en erreur. En effet, les estimations révèlent qu'il y a des relations statistiquement significatives entre la performance et la participation des dirigeants et des actionnaires majoritaires dans le capital lorsque les MCO sont utilisés. Cependant, ces relations statistiquement significatives disparaissent lorsque le cadre de travail des équations simultanées est utilisé. Ensemble, ces résultats suggèrent que les banques utilisent de manière optimale les différents mécanismes de gouvernance qui sont à leur disposition. AbstractThis paper examines the interrelations among five ownership and board characteristics in a sample of 260 bank and savings-and-loan holding companies. These governance characteristics, designed to reduce agency problems between shareholders and managers, are insider ownership, blockholder ownership, the proportion of outside directors, board leadership structure, and board size. Using two-stage least squares regressions, we present evidence of interdependencies between board and ownership structures. The results suggest that banks substitute between governance mechanisms that align the interests of managers and shareholders. These findings suggest that cross-sectional OLS regressions of bank performance on single governance mechanisms may be misleading. Indeed, we find statistically significant relationships between performance and insider ownership and blockholder ownership when using OLS regressions. However, these statistically significant relationships disappear when the simultaneous equations framework is used. Together, these findings are consistent with optimal use of each governance mechanism by banks.Keywords : Corporate governance, board structure, ownership structure, performance, banking, simultaneous equations.JEL classification : G21, G32, G34. * This paper was written while I was a Fulbright visiting scholar at the FIREL department of the University of North Texas. I am grateful to Christophe Hurlin and Mazhar Siddiqi for helpful comments and to JeanPaul Pollin for his...

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Section: Introductionmentioning

confidence: 99%

Board structure, ownership structure and firm performance: evidence from banking

Belkhir

2009

Applied Financial Economics

109

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“…For example, Bethel, Liebeskind, and Opler (1998) find that company performance improves after an activist investor purchases a block of shares. In addition, Kang and Shivdasani (1995), and Kaplan and Minton (1994) have found that the presence of large shareholders in a firm is associated with management turnover, suggesting that these shareholders provide a monitoring function. Further evidence is provided by Agrawal and Mandelker (1990) who report smaller 'overpayment' in corporate takeovers when the bidding firm has a large shareholder.…”

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confidence: 99%

“…Prowse (1990) concludes that agency problems in Japan are, in fact, lessened by the Japanese lenders' equity holdings, which suggests that lenders can contribute positively to a firm's performance through equity positions. 3 Further, Kaplan and Minton (1994) study the outside appointments of former bank employees to boards of directors in Japanese firms and conclude that banks (along with corporate shareholders) are an important aspect of corporate governance in Japan. However, Boehmer (1999) reports contrasting evidence for Germany.…”

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confidence: 99%

Institutional Investors, Corporate Ownership and Corporate Governance: Global Perspectives

Gillan¹,

Starks²

2003

Ownership and Governance of Enterprises

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We examine the role of institutional investors in financial markets and in corporate governance. In many countries, institutional investors have become the predominant players in financial markets and their influence worldwide is growing, chiefly due to the privatization and development of pension fund systems. Moreover, foreign institutional investors are becoming a significant presence, bringing their trading habits and corporate governance preferences to international markets. In fact, we argue that the primary actors prompting change in many corporate governance systems are institutional investors, often foreign institutional investors. In other countries the role of institutional investors is limited. Instead, large blockholders, often in the form of individuals, family groups, other corporations, or lending institutions are the dominant players. We present the theoretical arguments for the involvement of investors in shareholder monitoring and a brief history of institutional ownership and activism in the United States and other countries. We also discuss studies of the efficacy of such activism.We then examine differences in ownership structures around the world and the implications of the interactions of these ownership structures for institutional investor involvement in corporate governance. Although there may be some convergence in corporate governance systems across countries, because of the endogenous nature of the interrelation among the factors of corporate governance the evolution will most likely .../…

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“…Since information gathering on private firms is more costly vis-à-vis public firm, the premium will be set higher for private firms relative to public firms. During the term of the contract, the interest rate on loans might decrease (Berger and Udell, 1995) or increase (Kaplan and Minton, 1994), which banks pass on to firms through changes in the base lending rate. It is assumed that the banking market is perfectly competitive.…”

Section: Analytical Frameworkmentioning

confidence: 99%

Does Monetary Policy Matter for Corporate Governance? Firm-Level Evidence From India

Ghosh¹,

Sensarma²

Advances in Financial Economics

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________________________________________________________________________ AbstractThe paper assembles data on over 1,000 manufacturing and services firms in India for the entire post-reform period from 1992 through 2002 to examine the association between corporate governance and monetary policy. The findings suggests that (a) public firms are relatively more responsive to a monetary contraction vis-à-vis their private counterparts; and, (b) quoted firms lower their long-term bank borrowings in favour of short-term borrowings, post monetary tightening, as compared with unquoted firms. A disaggregated analysis based on firm size and leverage above a certain threshold validates these findings. The study concludes by analyzing the broad policy implications of these findings.

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Appointments of outsiders to Japanese boards: Determinants and implications for managers

Cited by 767 publications

References 11 publications

Board structure, ownership structure and firm performance: evidence from banking

Board structure, ownership structure and firm performance: evidence from banking

Institutional Investors, Corporate Ownership and Corporate Governance: Global Perspectives

Does Monetary Policy Matter for Corporate Governance? Firm-Level Evidence From India

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