Seven Myths of Corporate Governance

Larcker, David F.; Tayan, Brian

doi:10.2139/ssrn.1856869

Cited by 57 publications

(63 citation statements)

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“…This opinion from this analyst report appears to go beyond the relevant "best practice" recommendations articulated originally in formal regulations, such as Section 303A of the NYSE Listed Company Manual (NYSE, 2003). It echoes the idea articulated in other writings on CG that board effectiveness and quality are more than a matter of structure (Bradley, 2004;Larcker and Tayan, 2011). Instead, the "human side" of the board, i.e., the extent to which individual board members are engaged, well informed, and equipped with diverse skill sets and perspectives, is equally important (Bradley, 2004, p. 112).…”

Section: Andmentioning

confidence: 61%

Textual construction of comparative space

Tan

2018

AAAJ

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Purpose The purpose of this paper is to contribute to scholarly work on the role of sell-side financial analysts in corporate governance (CG). It examines the more recent work products pertaining specifically to CG that analysts based in the USA and UK have generated in the past two decades, namely, their CGCG reports. Specifically, this paper focusses on analysing how analyst CG reports constitute a comparative space in which the governance procedures of companies are evaluated and “best practices” are created. Design/methodology/approach This study involves a social constructivist textual analysis of 48 CG reports produced by analysts based in the USA and UK between 1998 and 2009. Findings Analyst CG reports textually construct a comparative space comprising four dimensions. First, the space is constructed for some carefully edited users to evaluate the governance of companies. Second, the construction of this space requires the selection of “building materials”, i.e., governance issues included in the space that render companies amenable to evaluation and comparison. Third, by linking the range of governance issues chosen to formal regulations, firms are rendered governable and regulatory requirements reinterpreted. Lastly, by using different types of inscriptions, such as narratives and tables, the space highlights “winners”, i.e., those companies which do better than others, and constructs their governance procedures as “best practices”. Research limitations/implications This research provides a first step towards an in-depth understanding of analyst CG reports. The insights from this paper generate a range of areas for future research, including how these reports are produced and used. Originality/value This paper adds to the existing literature focussing on the role of analysts in CG. It extends previous studies by examining the more recent and debatable work products generated by analysts, namely, their CG reports, and suggests an extended CG role for them. Theoretically, analyst CG reports are conceptualised as “inscriptions” that construct “documentary reality”. The notion of “editing” is also drawn upon, to analyse a particular way in which documentary reality is constructed. Accordingly, this paper broadens the theoretical perspectives used in CG research.

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Section: Andmentioning

confidence: 61%

Textual construction of comparative space

Tan

2018

AAAJ

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“…Academic researchers have put considerable effort toward the development of models to measure governance quality. The typical model takes the form of a CG index that aggregates several input variables into single metrics (Larcker and Tayan, 2011).…”

Section: Research In Slovenia On “Comply or Explain” And Some Resultsmentioning

confidence: 99%

The “comply or explain” principle in the Republic of Slovenia

Djokic

Duh

2018

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Purpose This paper aims to provide an overview of the quality of corporate governance (CG) disclosures in the framework of CGS and the “comply or explain” code principle in Slovenia. It aims to observe the differences among companies of the prime, standard and entry markets in terms of the differences in governance standards and regulatory frameworks. Design/methodology/approach This paper analyzes the historical development, legal approach and methods used in the regulation of the “comply or explain” principle in Slovenia. In the 2014 SEECGAN research – Slovenia, we measured the quality of CG by applying the newly created SEECGAN index methodology covering seven segments of CG and assessing 98 attributes. This paper upgrades the results of this research with additional case study research. Findings The analysis from 2011 to 2014 on the “comply or explain” principle showed a gradual improvement of transparency in Slovenian public companies. The 2014 SEECGAN research – Slovenia revealed that the number of specific and high-quality explanations of deviations has increased. The study in this paper showed that the governance practice in some cases is still not in line with code recommendations and does not disclose the deviations from the code. Originality/value Disclosures of the Slovenian public companies are presented for the period 2004-2018. This paper points out the improvements to be realized to change unsatisfactory practices. The measurement of the quality of CG by the 2014 SEECGAN research – Slovenia introduced a methodology, which could be recognized and improved by the EU and/or its member states.

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“…A cross-country comparison would bring additional insights by identifying the impact of country-specific factors on the nature of this relationship. Furthermore, large investors differ in terms of investment horizon, objectives, constraints and activity level, which may have a direct effect on the level of their activism (Larcker and Tayan, 2011). Thus, future research could examine the impact of the identity or type of the major shareholder on CoD.…”

Section: Discussionmentioning

confidence: 99%

Does ownership concentration affect cost of debt? Evidence from an emerging market

Jabbouri

Naili

2019

RBF

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Purpose The purpose of this paper is to explore how ownership concentration affects cost of debt (CoD) in one of the most important emerging markets in the Middle East and North Africa, Morocco. Design/methodology/approach The study employs panel data analysis using non-financial firms listed on Casablanca Stock Exchange (CSE) between 2004 and 2016. To unveil the hidden facets of the relationship between ownership concentration and CoD, and examine if this relationship changes with market conditions, we conduct a pre–post-crisis analysis. Findings The results demonstrate that controlling shareholders promote decent governance as long as they are able to generate appropriate returns. However, this behavior seems to change during the post-crisis period. In their attempts to increase their returns adversely affected by the financial crisis, controlling shareholders switch from guardians of decent governance and firm’s resources to a menace to creditors’ interests. Practical implications Our results expose the severity of agency problems in CSE. It is the duty of all market participants including regulators, board of directors, financial analysts, shareholders and creditors to scrutiny and reinforce governance mechanisms to alleviate expropriation by controlling shareholders. Improving country and firm-level governance mechanisms would enhance investors’ protection, attract international investors and boost the economic activity. Originality/value Prior research is inconclusive about the impact of ownership concentration on CoD. Hence, it is worthwhile to seek new evidence in a new market on the nature of this relationship.

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Seven Myths of Corporate Governance

Cited by 57 publications

References 0 publications

Textual construction of comparative space

Textual construction of comparative space

The “comply or explain” principle in the Republic of Slovenia

Does ownership concentration affect cost of debt? Evidence from an emerging market

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