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Governance Systems (governance + system)
Kinds of Governance Systems Selected AbstractsThe Role of Competition in Determining Corporate Governance Outcomes: Lessons from Australia's Corporate Governance SystemTHE MODERN LAW REVIEW, Issue 5 2005Alan Dignam Successive waves of corporate collapse in every decade of Australia's history suggest that there is a significant unresolved corporate governance problem in Australia. Corporate collapse has been followed by reform but with little effect on the overall pattern of collapse and reform every decade. This article suggests that one of the elements which entrenches corporate governance problems in Australia is the competitive environment in which companies operate, which currently is not regulating management. It is argued that this anti-competitive environment has two significant effects. First, key shareholders have retained controlling blocks of shares as the benefits of control and the costs of unconstrained management are high in such distorted markets. Secondly, management skills have stagnated, so that bad management and regular management failure have become features of the corporate governance system. [source] Beyond Kyoto: Climate Change Policy in Multilevel Governance SystemsGOVERNANCE, Issue 3 2007BARRY G. RABE Climate change policy has commonly been framed as a matter of international governance for which global policy strategies can be readily employed. The decade of experience following the 1997 signing of the Kyoto Protocol suggests a far more complex process involving a wide range of policy options and varied engagement by multiple levels of governance systems. The respective experiences of the United States and Canada suggest that formal engagement in the international realm of policy is not a good indicator of domestic policy development or emissions reductions. The different contexts of intergovernmental relations, varied resources available to subnational governments for policy development and implementation, and role of subnational leaders in policy formation have emerged as important factors in explaining national differences between these North American neighbors. Consequently, climate change increasingly presents itself as a challenge not only of international relations but also of multilevel governance, thereby creating considerable opportunity to learn from domestic policy experimentation. [source] Why Adopt Codes of Good Governance?CORPORATE GOVERNANCE, Issue 1 2008A Comparison of Institutional, Efficiency Perspectives ABSTRACT Manuscript Type: Empirical Research Question/Issue: Given the global diffusion and the relevance of codes of good governance, the aim of this article is to investigate if the main reason behind their proliferation in civil law countries is: (i) the determination to improve the efficiency of the national governance system; or (ii) the will to "legitimize" domestic companies in the global financial market without radically improving the governance practices. Research Findings/Insights: We collected corporate governance codes developed worldwide at the end of 2005, and classified them according to the country's legal system (common or civil law). Then, we made a comparative analysis of the scope, coverage, and strictness of recommendations of the codes. We tested differences between common law and civil law countries using t-tests and probit models. Our findings suggest that the issuance of codes in civil law countries be prompted more by legitimation reasons than by the determination to improve the governance practices of national companies. Theoretical/Academic Implications: The study contributes to enriching our knowledge on the process of reinvention characterizing the diffusion of new practices. Our results are consistent with a symbolic perspective on corporate governance, and support the view that diffusing practices are usually modified or "reinvented" by adopters. Practitioner/Policy Implications: Our results support the idea that the characteristics of the national corporate governance system and law explain the main differences among the coverage of codes. This conclusion indicates the existence of a strong interplay between hard and soft law. [source] Corporate Governance and International Location Decisions of Multinational EnterprisesCORPORATE GOVERNANCE, Issue 6 2007Lammertjan Dam This paper analyses international location decisions of corporations based on corporate governance considerations. Using firm level data on 540 Multinational Enterprises (MNEs) with 44,149 subsidiaries in 188 countries, we test whether firms with relatively good governance standards are more often located in countries with a weak governance system. We find empirical support for this hypothesis, especially for those corporations present in low-income countries. [source] Principles and Agents: CalPERS and corporate governance in JapanCORPORATE GOVERNANCE, Issue 1 2007Sanford M. Jacoby A growing literature discusses the convergence of national systems of corporate governance. Fostering convergence are activist institutional investors, especially from the United States. The following is a case study of one institutional investor , the giant pension fund, CalPERS , and its efforts to change governance in Japan over the past 15 years. CalPERS' involvement in Japan went through three stages: solo activism; cultivation of local partners; and, most recently, a shift from marketwide activism to company-level relational investing. Although CalPERS has had some success in changing Japanese corporate governance, economic and political factors have limited its influence and permitted the persistence of Japan's distinctive governance system. [source] RECENT DEVELOPMENTS IN GERMAN CAPITAL MARKETS AND CORPORATE GOVERNANCEJOURNAL OF APPLIED CORPORATE FINANCE, Issue 3 2001Eric Nowak Financial economists continue to point to Germany as a relatively successful model of a "bank-centered," as opposed to a market-based, economy. But few seem to recognize that, in the years leading up to World War I, German equity capital markets were among the most highly developed in the world. Although there are now only about 750 companies listed on German stock exchanges, in 1914 there were almost 1,200 (as compared to only about 600 stocks then listed on the New York Stock Exchange). Since German reunification in 1990, there have been signs of a possible restoration of the country's equity markets to something like their former prominence. The last 10 years have seen important legal and institutional developments that can be seen as preparing the way for larger and more active German equity markets, together with a more "shareholder-friendly" corporate governance system. In particular, the 1994 Securities Act, the Corporation Control and Transparency Act passed in 1998, and the just released Takeover Act and Fourth Financial Market Promotion Act all contain legal reforms that are essential conditions for well functioning equity markets. Such legal and regulatory changes have helped lay the groundwork for more visible and dramatic milestones, such as the Deutsche Telekom IPO in 1996, the opening of the Neuer Market in 1997, and, perhaps most important, the acquisition in 2000 of Mannesmann by Vodafone, the first successful hostile takeover of a German company. [source] THE CEO: A VISIBLE HAND IN WEALTH CREATION?JOURNAL OF APPLIED CORPORATE FINANCE, Issue 3 2000C. K. Prahalad Commensurate with the growth of their pay packages and public visibility, the role of the CEO in the corporate value creation process has increased significantly in recent years. This article argues that sustained wealth creation in a corporation has three distinct elements. The first and most basic is the selection of the lines of business in which to operate; this element is probably the most visible manifestation of CEO action in large corporations today. The second element is the value creation model, which answers the question: How is this particular set of businesses expected to add value over and above the sum of the values of each business or asset category standing alone? The third element is the internal governance system, which establishes the corporate structure and administrative processes of the firm and, perhaps even more important, defines the corporate values that drive the strategic and operational priorities of the different business units. The authors suggest that the essence of the work of the CEO is to develop and maintain a balanced relationship among these three elements of wealth creation and to ensure that the relationship evolves in the face of changing circumstances. CEOs are inevitably faced with dilemmas in managing this process,in particular, the need to balance continuity and change and to maintain the integrity of short-term performance disciplines while encouraging not only investment in growth opportunities (which can hurt near term performance), but also experimentation and collaboration among business units (which are difficult to measure and reward with most performance measurement and incentive schemes). Adding to the difficulties of managing such dilemmas, visibility and a strong public image are often thrust upon (if not sought by) CEOs, who must then determine how they can use that image to strengthen the commitment of their employees and investors. [source] The Accrual Anomaly Under Different Accounting Standards , Lessons Learned from the German ExperimentJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 7-8 2008Christoph Kaserer Abstract:, Several studies document that investors systematically overreact to accrual-based accounting information. We address the question to what extent this accrual anomaly is related to different accounting standards. We provide empirical evidence that the accrual anomaly is also present in Germany. However, this anomaly seems mainly to be driven by firms presenting their financial statements under IFRS or US-GAAP, while the anomaly is unlikely to exist for those firms complying with German GAAP. It is argued that introducing true and fair view accounting, like IFRS, that relies on difficult-to-verify information, may not be suitable to improve accounting information quality in the context of a weak corporate governance system. [source] Multilevel governance and organizational performance: Investigating the political-bureaucratic labyrinthJOURNAL OF POLICY ANALYSIS AND MANAGEMENT, Issue 1 2004Kenneth J. Meier Research on governance has extensively explored the complex interactions of governmental, nongovernmental, and for-profit entities in the execution of public policy. It has consistently failed, however, to model empirically the joint effects of political and bureaucratic actors in governance systems. To address this issue, a theory of multilevel governance built upon the foundation of representative bureaucracy was developed and tested. Results from an analysis of Texas school districts suggest that Latinos at all levels of the governance system, political and managerial, influence representation at other levels. Findings also indicate that Latinos at each level of governance have positive effects, directly and indirectly, on outcomes for Latino students. The influence of both political and managerial actors at times extends beyond the immediately adjoining level; the effects of such actors cascade through the governance system. The results show that a priority for systematic research should be the identification of approaches and settings for examining the multilevel aspect of governance. © 2004 by the Association for Public Policy Analysis and Management. [source] Patterns of corporate governance and technical efficiency in Italian manufacturingMANAGERIAL AND DECISION ECONOMICS, Issue 1 2007Sergio Destefanis The purpose of this paper is to analyse the relationship between the corporate governance system and technical efficiency in Italian manufacturing. We use a non-parametric frontier technique (DEA) to derive technical efficiency measures for a sample of Italian firms taken from nine manufacturing industries. These measures are then related to the characteristics of the corporate governance system. Two of these characteristics turn out to have a positive impact on technical efficiency: the percentage of the company shares owned by the largest shareholder and the fact that a firm belongs to a pyramidal group. Interestingly, a trade-off emerges between these influences, in the sense that one is stronger in industries where the other is weaker. Copyright © 2007 John Wiley & Sons, Ltd. [source] The Role of Competition in Determining Corporate Governance Outcomes: Lessons from Australia's Corporate Governance SystemTHE MODERN LAW REVIEW, Issue 5 2005Alan Dignam Successive waves of corporate collapse in every decade of Australia's history suggest that there is a significant unresolved corporate governance problem in Australia. Corporate collapse has been followed by reform but with little effect on the overall pattern of collapse and reform every decade. This article suggests that one of the elements which entrenches corporate governance problems in Australia is the competitive environment in which companies operate, which currently is not regulating management. It is argued that this anti-competitive environment has two significant effects. First, key shareholders have retained controlling blocks of shares as the benefits of control and the costs of unconstrained management are high in such distorted markets. Secondly, management skills have stagnated, so that bad management and regular management failure have become features of the corporate governance system. [source] Corporate Governance in China,Is Economic Growth Potential Hindered by Guanxi?BUSINESS AND SOCIETY REVIEW, Issue 4 2005UDO C. BRAENDLE Despite the opening of the market and partial privatization of state-owned companies in China, the state still represents the controlling shareholder in larger companies. By analyzing the weaknesses of Chinese corporate governance we illustrate the framework for harmful corruption. China is characterized by a weak legal system and strong influences of traditions such as guanxi. In this article we analyze the influence of guanxi on the Chinese corporate governance system. We find that guanxi is in general a double-edged sword, but business-to-government guanxi in particular can harm the weak Chinese corporate governance system and hamper its further economic development and growth. [source] Taking Stock of Corporate Governance Research While Looking to the FutureCORPORATE GOVERNANCE, Issue 3 2009Igor Filatotchev ABSTRACT Manuscript Type: Editorial Research Question/Issue: This essay identifies some key issues for the analysis of corporate governance based on the articles within this special review issue coupled with our own perspectives. Our aim in this issue is to distil some research streams in the field and identify opportunities for future research. Research Findings/Results: We summarize the eight papers included in this special issue and briefly highlight their main contributions to the literature which collectively deal with the role and impact of corporate boards, codes of corporate governance, and the globalization of corporate governance systems. In addition to the new insights offered by these reviews, we attempt to offer our own ideas on where future research needs to be targeted. Theoretical Implications: We highlight a number of research themes where future governance research may prove fruitful. This includes taking a more holistic approach to corporate governance issues and developing an inter-disciplinary perspective by building on agency theory while considering the rich new insights offered by complementary theories, such as behavioral theory, institutional theory and the resource-based views of the firm. In particular, future corporate governance research needs to be conducted in multiple countries, particularly in emerging economies, if we want to move closer to the journal's aim of producing a global theory of corporate governance. Practical Implications: Our analysis suggests that analytic and regulatory approaches to corporate governance issues should move from a "one-size-fits-all" template to taking into account organizational, institutional and national contexts. [source] Beyond Kyoto: Climate Change Policy in Multilevel Governance SystemsGOVERNANCE, Issue 3 2007BARRY G. RABE Climate change policy has commonly been framed as a matter of international governance for which global policy strategies can be readily employed. The decade of experience following the 1997 signing of the Kyoto Protocol suggests a far more complex process involving a wide range of policy options and varied engagement by multiple levels of governance systems. The respective experiences of the United States and Canada suggest that formal engagement in the international realm of policy is not a good indicator of domestic policy development or emissions reductions. The different contexts of intergovernmental relations, varied resources available to subnational governments for policy development and implementation, and role of subnational leaders in policy formation have emerged as important factors in explaining national differences between these North American neighbors. Consequently, climate change increasingly presents itself as a challenge not only of international relations but also of multilevel governance, thereby creating considerable opportunity to learn from domestic policy experimentation. [source] Legitimacy and the Privatization of Environmental Governance: How Non,State Market,Driven (NSMD) Governance Systems Gain Rule,Making AuthorityGOVERNANCE, Issue 4 2002Benjamin Cashore In recent years, transnational and domestic nongovernmental organizations have created non,state market,driven (NSMD) governance systems whose purpose is to develop and implement environmentally and socially responsible management practices. Eschewing traditional state authority, these systems and their supporters have turned to the market's supply chain to create incentives and force companies to comply. This paper develops an analytical framework designed to understand better the emergence of NSMD governance systems and the conditions under which they may gain authority to create policy. Its theoretical roots draw on pragmatic, moral, and cognitive legitimacy granting distinctions made within organizational sociology, while its empirical focus is on the case of sustainable forestry certification, arguably the most advanced case of NSMD governance globally. The paper argues that such a framework is needed to assess whether these new private governance systems might ultimately challenge existing state,centered authority and public policy,making processes, and in so doing reshape power relations within domestic and global environmental governance. [source] Corruption in Africa , Part 1HISTORY COMPASS (ELECTRONIC), Issue 5 2009John Mukum Mbaku As Africans struggled against colonial exploitation, there was near universal agreement among the freedom fighters and other nationalists that one of the most important determinants of poverty in the colonies was the control of the instruments of economic and political governance by foreign interlopers, all of whose objectives were in conflict with those of the Africans. Colonial institutional arrangements were primarily instruments for the exploitation of Africans and their resources. Europeans came to Africa to maximize metropolitan objectives and hence, established within each colony, institutional arrangements that enhanced their ability to exploit Africans and their resources for the benefit of the metropolitan economies. With their comparative advantage in the employment of military and police force, the Europeans were able to impose on the African colonies laws and institutions that enhanced their objectives but significantly impoverished Africans. Hence, independence was considered critical not only to the elimination of the psychological effects of foreign occupation but also to the empowerment of Africans and the enhancement of their ability to take full control of their governance systems. First, independence was expected to expel the European interlopers from the continent and allow the in-coming African leaders to rid their societies of the exploitative, despotic and non-democratic institutions that had been brought to the colonies by the Europeans. In the post-independence period, Africans were expected to have full control of their own destiny, allocate their own resources, and generally take responsibility for the design and implementation of policies affecting their own welfare. Second, the new leaders were then expected to engage all relevant stakeholder groups in each country in democratic constitution making to develop and adopt locally focused, participatory, inclusive and politically and economically relevant institutional arrangements. Finally, Africa's post-independence leaders were expected to use public policy as an instrument for the effective eradication of mass poverty and deprivation. [source] Assessing quality in community pharmacyINTERNATIONAL JOURNAL OF PHARMACY PRACTICE, Issue 3 2008Mrs. Devina Halsall PhD student Objective This review aimed to identify English-language instruments used to assess quality in community pharmacy and to evaluate their reported validity, reliability, feasibility and acceptability. Method A systematic review was conducted to identify literature relating to the use of instruments to assess quality in community pharmacy. The electronic databases searched included Embase, International Pharmaceutical Abstracts, Medline, e-PIC and Pharmline, covering the period of time between January 1990 and March 2007. Reference lists of identified studies and websites of pharmacy bodies were also searched. Key findings Ten instruments were identified from Canada, Malta, the UK and the US. These were used for quality-assurance and/or quality-improvement purposes and focused on: clinical governance systems; organisational culture/maturity; safety (climate and systems); effectiveness of pharmacy services; and stakeholders' feedback on services. The assessments were at different stages of development, and the majority had not been tested for construct validity, reliability and feasibility. Conclusions Assessments with high validity and reliability give a good indication of the quality of care provided and can indicate areas for improvement. Further research is needed to establish a composite view of quality in community pharmacy; and many of the instruments identified required validation. [source] International Regimes: The Case of Western Corporate GovernanceINTERNATIONAL STUDIES REVIEW, Issue 2 2006DAVID A. DETOMASI Accounting and financial scandals of unprecedented scale have recently occurred in the United States, Europe, and elsewhere. Much of the cause for these scandals has been attributed to the poor corporate governance standards practiced by the offending companies, leading researchers to re-examine how corporate governance affects economic development. One topic receiving significant research attention has been whether national corporate governance systems are likely to converge, what form that convergence may take, and what barriers currently inhibit convergence. This essay argues that the tools of regime theory hold significant potential for helping to structure empirical inquiry into the process of corporate governance convergence. It then draws upon the recent experience of Western corporate governance systems to illustrate how a consensus on norms, values, and principles in the issue area of corporate governance is emerging. The essay concludes by drawing out the implications of the developing corporate governance regime for emerging market economies and the general topic of global governance. It also poses questions for continued empirical research in the area of corporate governance and international relations. [source] Private Equity, Corporate Governance, and the Reinvention of the Market for Corporate ControlJOURNAL OF APPLIED CORPORATE FINANCE, Issue 3 2008Karen H. Wruck In the early 1980s, during the first U.S. wave of debt-financed hostile takeovers and leveraged buyouts, finance professors Michael Jensen and Richard Ruback introduced the concept of the "market for corporate control" and defined it as "the market in which alternative management teams compete for the right to manage corporate resources." Since then, the dramatic expansion of the private equity market, and the resulting competition between corporate (or "strategic") and "financial" buyers for deals, have both reinforced and revealed the limitations of this old definition. This article explains how, over the past 25 years, the private equity market has helped reinvent the market for corporate control, particularly in the U.S. What's more, the author argues that the effects of private equity on the behavior of companies both public and private have been important enough to warrant a new definition of the market for corporate control,one that, as presented in this article, emphasizes corporate governance and the benefits of the competition for deals between private equity firms and public acquirers. Along with their more effective governance systems, top private equity firms have developed a distinctive approach to reorganizing companies for efficiency and value. The author's research on private equity, comprising over 20 years of interviews and case studies as well as large-sample analysis, has led her to identify four principles of reorganization that help explain the success of these buyout firms. Besides providing a source of competitive advantage to private equity firms, the management practices that derive from these four principles are now being adopted by many public companies. And, in the author's words, "private equity's most important and lasting contribution to the global economy may well be its effect on the world's public corporations,those companies that will continue to carry out the lion's share of the world's growth opportunities." [source] FREE CASH FLOW AND PUBLIC GOVERNANCE: THE CASE OF ALASKAJOURNAL OF APPLIED CORPORATE FINANCE, Issue 3 2000Dwight R. Lee In a widely cited 1986 article in the American Economic Review, Michael Jensen gave the concept of free cash flow (FCF) a new twist by redefining it as cash flow in excess of that required to fund all projects with positive net present values. Put another way, FCF represents funds available in the firm that managers may choose to hold as idle cash, return to shareholders, or invest in projects with returns below the firm's cost of capital. In redefining FCF in this way, Jensen converted FCF from a measure of economic income and value into a measure of corporate assets available for discretionary, and potentially value-destroying, use by firm managers. And, as he argued in his important article, managers in mature businesses with substantial free cash flow have a tendency to destroy value by plowing too much capital back into those businesses or, often worse, making ill-advised acquisitions in unrelated businesses. Several methods have been developed in financial markets and internal corporate governance systems to discourage managers from wasting FCF. Better monitoring by boards of directors, large ownership blocks, and properly aligned management compensation contracts are all parts of the solution. And the extraordinary increase in stock repurchases in recent years, invariably applauded by investors, is another illustration of the market's success in encouraging companies to address their free cash flow problems. But if the "FCF problem" of the private sector has attracted considerable attention from finance scholars, the problem is even more acute in the public sector, where FCF can be thought of as tax revenue in excess of what is required to finance well-defined and generally accepted levels of public services. Unlike the private sector, in the public sector there are neither measures nor mechanisms by which to monitor and constrain wasteful spending by elected officials. In this article, the authors attempt to measure the costs to taxpayers of government FCF using the case of Alaska, which since 1969 has received a huge windfall of tax revenue from North Slope oil leases. After examining the state's public finances from 1968 through 1993, the authors offer $25 billion as a conservative estimate of the social losses from Alaska's waste of free cash flow during that 25-year period. [source] Firm Performance, Governance Structure, and Top Management Turnover in a Transitional Economy*JOURNAL OF MANAGEMENT STUDIES, Issue 6 2006Michael Firth abstract Recent research has argued that political and regulatory environments have a significant impact on corporate governance systems. In particular, countries with poor investor protection laws and weak law enforcement have low levels of corporate governance that manifests itself in substandard financial performance, management entrenchment, and the expropriation of minority shareholders. One implication of this research is that China will have poor corporate governance and entrenched managers as its legal system is relatively underdeveloped and inefficient. However, using data on top management turnover in China's listed firms, our results refute the prediction of entrenched management. We find evidence of very high turnover of company chairmen and there are many cases that we interpret to be forced departures. Our results show that chairman turnover is related to a firm's profitability but not to its stock returns. Turnover-performance sensitivity is higher if legal entities are major shareholders but the proportion of non-executive directors perversely affects it. We find no evidence that profitability improves after a change in chairman and this suggests that a firm's governance structure is ineffective as it is unable to recruit suitable replacements that can turn around its financial performance. [source] Multilevel governance and organizational performance: Investigating the political-bureaucratic labyrinthJOURNAL OF POLICY ANALYSIS AND MANAGEMENT, Issue 1 2004Kenneth J. Meier Research on governance has extensively explored the complex interactions of governmental, nongovernmental, and for-profit entities in the execution of public policy. It has consistently failed, however, to model empirically the joint effects of political and bureaucratic actors in governance systems. To address this issue, a theory of multilevel governance built upon the foundation of representative bureaucracy was developed and tested. Results from an analysis of Texas school districts suggest that Latinos at all levels of the governance system, political and managerial, influence representation at other levels. Findings also indicate that Latinos at each level of governance have positive effects, directly and indirectly, on outcomes for Latino students. The influence of both political and managerial actors at times extends beyond the immediately adjoining level; the effects of such actors cascade through the governance system. The results show that a priority for systematic research should be the identification of approaches and settings for examining the multilevel aspect of governance. © 2004 by the Association for Public Policy Analysis and Management. [source] Rebuilding governance in failed states and post-conflict societies: core concepts and cross-cutting themesPUBLIC ADMINISTRATION & DEVELOPMENT, Issue 1 2005Derick W. Brinkerhoff This overview article looks at the emergence of failed and post-conflict states on the international relations and assistance agenda, and at the importance of governance in establishing peace, pursuing state reconstruction and preventing conflict. It introduces the topic of the special issue, how effective governance can be re-established following societal conflict or war. After a brief review of the terminology of failed states, post-conflict and governance, the article discusses governance reconstruction in terms of three dimensions: reconstituting legitimacy, re-establishing security and rebuilding effectiveness. The article summarises key points made by the contributors to the special issue, who look at donor governance reconstruction agendas, security-sector governance and subnational governance. Several common themes emerge and are elaborated upon: similarities between development and post-conflict assistance; linkages among governance's legitimacy, effectiveness and security dimensions; rebuilding versus creating governance systems; local versus national governance reconstruction; formal versus informal governance. The article concludes with a call for further work to elaborate frameworks that can incorporate the particulars of individual countries in addressing legitimacy, security and effectiveness. Copyright © 2005 John Wiley & Sons, Ltd. 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