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The Introduction defines and describes private equity-backed companies, explains why they matter and why policymakers are concerned about them. It explains how the book explores corporate governance mechanisms in these companies and why these might be expected to affect outcomes. The Introduction also explains that the book is focused on the UK but has global relevance.
To contribute to our knowledge of the capabilities that are perceived as strategic by emerging market firms, this chapter presents a study of eight Chinese companies with different internationalization levels. They includes two exporters, the high-tech bus manufacturer Higer and the low-tech manufacturer of car seats Baby First. We also examine high-tech multinationals AVIC (aviation), Advantech (computer systems), and ShangGong Group (industrial sewing machines), in addition to low-tech Chervon (hand-held outdoor tools) and Siwei-Johnson (specialized vehicles). Finally, we examine retail service firm Sanpower. By examining and comparing/contrasting the capabilities identified as strategic by these companies, we aim to gain insights into strategic capability development based on the experience of the world’s largest emerging economy. For example, more than one company mentioned their reflection capabilities, a cognitive process where people attempt to increase their awareness and learn from past business experiences, and explained how they apply this mechanism to corporate governance.
How does corporate law work? This question has puzzled corporate legal scholarship for decades. The puzzle stems from the apparent lack of legal sanctions. Corporate decision makers practically never pay out of pocket for their misbehavior, so presumably the law lacks teeth. An influential strand of the literature suggested that corporate law’s teeth consist in facilitating nonlegal sanctions. But so far the existing accounts have failed to develop a satisfactory theory of how nonlegal forces work or how exactly the law facilitates them.
At International Harvester, a 1902 merger, the defining feature was discord. A J. P. Morgan financier by the name of George W. Perkins and a formal agreement initiated changes to mitigate stress and struggle. Existing research dates improvement to 1906. This paper extends the analysis and documents that, among changes, entrepreneur William Deering and his children parted with some holdings, helping to diminish tensions. Meanwhile, the McCormicks agreed to a stock dividend. This action helped mellow strife and augment their power. How did discord affect efficiency? The conventional answer centers on management along with expansion abroad, but that analysis is enhanced through study of seven brands and their local factories, pricing, and an antitrust consent decree. When a voting trust ran out its clock in 1912, conflict at International Harvester was receding. The firm’s record suggests various governance formats could yield efficiency and profitability.
Mobilizing Foucault’s genealogy, this article investigates how an “ethics event”—the involvement by some sell-side financial analysts in the United States and United Kingdom across the past two decades in corporate governance—emerged. It is found that the complex relations formed between specific historical precedents, normative discourses, and fields of power rendered certain issues in financial markets morally problematic and constructed analysts’ corporate governance work as a potential solution. Contributing to research in finance ethics, this article develops a novel perspective to conceptualize the rise of ethically relevant practices in financial markets, focusing on how ethical problems and their solutions are outcomes of discursive construction and power relations. This article also revises our understanding of the boundary between technical norms and moral norms in financial markets. When ethical crises occur, it is argued, transforming technical practices and revising the technical norms adopted by financial professionals has the potential to tackle ethical concerns.
This is the first book to provide a comparative and critical analysis of why and how corporate governance and corporate law have been or can be used to promote and protect sustainability in the four common law jurisdictions in Asia, ie Singapore, Hong Kong, India and Malaysia. Based on theoretical, doctrinal and empirical research, I critically evaluate the rationales for, and effectiveness of, six corporate mechanisms, namely (1) sustainability reporting; (2) gender diversity on the board of directors; (3) constituency directors; (4) stewardship codes; (5) directors’ duty to act in the best interests of the company; and (6) liability on companies, shareholders and directors.
It has been observed that ‘between 2008 and 2015 32 countries implemented 42 boardroom diversity policies in the form of legal quotas for listed or state-owned firms (8 and 5 countries respectively), governance code amendments (26 countries) and disclosure requirements (4 countries)’.1 India and Malaysia are classified among the countries that have quotas for listed firms.
This book seeks to contribute to three principal areas of research: (1) comparative sustainability/CSR; (2) comparative legal analysis of sustainability/CSR; and (3) company law and corporate governance, and sustainability/CSR.
The economic decline of Italy between the mid-1990s and the outset of the financial crisis is a critical case in European political economy because its model of capitalism was deeply reformed at the time when its decline commenced. This paper argues that the Italian economic stagnation cannot be attributed to the lack of market-friendly reforms in a globalized economic context, as argued by previous literature. Instead, Italian economic decline is a consequence of institutional change which on the one hand has destroyed previous institutional complementarities, and on the other hand has led to an incoherent, or ‘hybrid,’ capitalist setting. Under the lenses of the Varieties of Capitalism approach, this paper reviews the main reforms in the fields of corporate governance and finance as well as in the labor market. It shows that such reforms established new institutions alternatively apt to support both strategic coordination and market coordination, resulting in institutional incoherence, and mixed incentives. In the short-run, incoherent reforms have reduced the availability of capital to SMEs; in the longer-run, they failed to give actors incentives to pursue innovation. This paper contributes theories of economic growth/decline focused on the supply-side of the economy and it is compatible with other – non-rival – explanations focused on the demand-side.
The chapter draws insights from the institutional theoretic model to investigate the role of courts and other formal adjudicative institutions in promoting sustainable development. Its tripartite institutions framework emphasises the knowledge and communicative elements of sustainable development flowing from key social actors such as adjudicative institutions to other segments of society. Using environmental protection as a case study and making references to national laws and judicial decisions, the chapter demonstrates that adjudicative institutions can manifest a commitment to sustainable development, affirm applicable global standards influence other actors in, and segments of, society. It is argued that the regulatory role of adjudicative institutions includes constitutionalisation of sustainable development, empowerment of individuals and stakeholder groups and addressing vulnerability of victims while the normative role ensures the internalisation and transmission of sustainable development values. The cognitive role includes reshaping local practices by promoting effective glocalisation and appropriate corporate governance and social responsibility for sustainable development. While it shows adjudicative institutions as a key champion for sustainable development in the public and private spheres, the chapter proposes solutions to overcoming impediments to such as lack of explicit provisions, narrowly focusing on compensatory remedies, locus standi, forum non conveniens and choice of law.
The chapter examines the link between upper echelons gender composition and firm sustainability performance. Gender composition is considered as the level of women on TMTs and boards. Specifically, it is considered whether presence of three or more women on company boards as well as TMTs influence sustainability performance. Thereby, the study incorporates new theoretical developments by conceptualizing gender level using critical mass concept. The sample also consists of top performing 100 firms in Istanbul Stock Exchange (ISE) known as BIST 100. A dataset containing information of BIST 100 companies’ TMT members, board of directors, CEOs, as well as firm size, profitability, sustainability performance, and industry among others were constructed by using the data provided in PDP (Public Disclosure Platform). The findings of the study indicate that critical mass of women on board of directors is important for sustainability performance. In line with token theory and critical mass proposition, in the present sample, having three or more women directors on boards of directors improves the sustainability performance of companies.
Corporate social responsibility (CSR) has emerged as a tool for public and private institutions to promote sustainable development in developing and emerging markets. This work brings together contributors from a variety of fields and international perspectives to assess and improve the effectiveness of CSR by addressing the following questions: what are the linkages between CSR and sustainable development? What does CSR mean for developing or emerging economies and in what ways does this deviate from orthodoxies and universalist approaches? What institutional factors and actors influence the effectiveness of CSR in developing and emerging economies? How can developing and emerging economies promote a flexible, diverse and reconstructed form of CSR that leads to inclusive and sustainable development? This book should be read by anyone interested in understanding what normative factors, theoretical models, policy strategies, and corporate practices best facilitate effective CSR and sustainable development.
This chapter analyses the Pacific Alliance – an economic bloc formed by Chile, Colombia, Mexico, and Peru in 2011 – and its integrated stock exchange, the Mercado Integrado Latinoamericano. It contends that the Alliance has the potential to foster the transition toward a sustainable economy in Latin America, through a renewed system of corporate law and corporate governance. On the one hand, it asserts that Colombian Law 1901 of 2018, creating the Companies of Collective Benefit and Interest, initiated a healthy regulatory competition in corporate law among member states. On the other, it discusses alternatives to promote sustainable corporate practices through executive compensation, leveraging the legal convergence in corporate governance prompted by the integrated stock exchange. The Alliance’s economic strength and regional leadership further bolster its potential to bring about meaningful changes in the region.
Harmonizing corporate governance systems can potentially level the playing field for businesses, as it would increase financial and economic interconnections, including market integration, between countries. Although harmonization at the regional level such as the EU seems challenging because systems are so diverse, the reverse is the case at the national level. A critical issue in the harmonization effort is whether to adopt the “comply or explain” approach or the mandatory compliance approach. Although mandatory compliance is necessary in certain circumstances, particularly in cases of corporate pseudo-reporting that occasions corporate failures, the predominant approach involves “comply or explain”. Given competing interests in the business community, the inclination for flexibility and the regulatory authority's disposition for an oversight function, this article argues that a hybrid approach should be followed, which will internalize the merits of both the “comply or explain” and mandatory compliance approaches while eschewing their disadvantages.
The distinction between what I call nonelective obligations and discretionary obligations, a distinction that focuses on one particular thread of the distinction between perfect and imperfect duties, helps us to identify the obligations that carry over from principals to agents. Clarity on this issue is necessary to identify the moral obligations within “shareholder primacy” (i.e., “shareholder theory”), which conceives of managers as agents of shareholders. My main claim is that the principal-agent relation requires agents to fulfill nonelective obligations, but it does not always require (and sometimes actually prohibits) discharging discretionary obligations. I show that the requirement to fulfill nonelective obligations is more far-reaching than has been acknowledged by most defenders and critics of shareholder primacy. But I also show that managers are not bound by certain discretionary obligations like charity, showing that their moral obligations are more circumscribed than the obligations that apply to human beings in general.
Transferring public service provision to state-owned enterprises (SOEs) raises concerns over accountability deficits. We argue that the governance of SOEs requires reconciliation of the accountability relations found in traditional models of public administration, and the normative structures of control and accountability developed in the world of private enterprises, commonly referred to as corporate governance. To this end, we propose a model for structuring accountability relations between SOEs and governmental owners. The model prescribes a distinction between the roles of elected representatives and top managers as “forums” for accountability concerning the governmental owner’s mission-related and non-mission-related preferences towards the SOE. The model’s relevance is tested empirically using data from a study of SOEs in Norway’s local government sector. The analysis indicates that accountability practices in line with the prescriptions of the model were associated with a heightened sense of control over the SOEs.
In this chapter we discuss standards as forms of partial organization. Standards are defined as decided rules for common and voluntary use. Taking the example of CSR and corporate governance standards, we show that the degree of partiality of standards can vary widely – ranging from a single element of organization, i.e. decided rules, to all five elements of organization, i.e. decided rules, hierarchies, membership, monitoring and sanctioning. We demonstrate that in some cases partiality is the result of restrictions in the design of standards, while in other cases it is the result of an explicit choice. We also demonstrate that the degree of partiality of standards can change over time, as there are often pressures for standards to adopt additional organizational elements. Furthermore, we discuss the dispersed nature of many standards, showing how different actors often provide different organizational elements of standards without any central coordination. We close with an outline of an agenda for future research.