CORPORATE GOVERNANCE, Issue 1 2007
D. Hugh Whittaker
Livedoor's attempted takeover of Nippon Broadcasting System in February 2005 marked a watershed in the history of mergers and acquisitions in Japan. The drama was played out in public, changing popular perceptions, influencing policy makers and sending managers scurrying to debate and erect legitimate defence measures in case they themselves should be targeted. Tensions on the investor relations interface were not subsequently reversed by Livedoor's equally dramatic demise. The article considers the rise of takeover bids in Japan, responses to it, and their significance for corporate control and governance, as well as for the "community firm". [source]

Corporate,community relations in Nigeria's oil industry: challenges and imperatives

CORPORATE SOCIAL RESPONSIBILITY AND ENVIRONMENTAL MANAGEMENT, Issue 4 2006
Uwafiokun Idemudia
Abstract The adoption of corporate social responsibility (CSR) policies and corporate,community relation (CCR) strategies by oil companies has failed to reduce the incidence of violent conflict between the host communities and oil companies in the Niger Delta, Nigeria. This paper argues that the failure to seek, understand and integrate community perceptions into CSR policies and practices, the over-emphasis of affirmative duties to the detriment of negative injunction duties and the absence of an enabling environment due to government failure are responsible for the observed problem. The paper concludes that unless these gaps are addressed, CSR by the Nigerian oil industry is likely to continue to fail to achieve its full potential. However, CCR in the Nigerian oil industry will be significantly improved if, and when, the needs and aspirations of the major stakeholders are addressed through a tri-sector partnership approach to development and conflict resolution. Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment. [source]

Corporate socially responsible (CSR) practices in the context of Greek industry

CORPORATE SOCIAL RESPONSIBILITY AND ENVIRONMENTAL MANAGEMENT, Issue 1 2003
Dr Constantina Bichta
This paper sets out to describe the level of corporate environmental responsibility of the Greek industrial sector. While the level of corporate socially responsible behaviour has been widely explored in the context of Northern European industry, the theoretical work surrounding the level of CSR practices of Greek industry is underdeveloped. A qualitative study was designed to increase awareness about the level of environmental responsibility of two Greek firms, which represented the chemical/fertilizer and metal sectors. The empirical findings suggest that a number of factors, both internal and external, determine the level of environmental policy and performance of the two companies. The environmental policy of the companies appears also to relate to the sector of operation. The paper concludes that the Greek business actor should look at his workforce in order to accelerate the environmental activities of the organization. With regard to the theory of CSR, it is argued that the development of a model of CSR is aided by the study and identification of factors that support and/or undermine the socially responsible behaviour of the European corporate sector. Copyright © 2003 John Wiley & Sons, Ltd. and ERP Environment. [source]

The Original Maturity of Corporate Bonds: The Influence of Credit Rating, Asset Maturity, Security, and Macroeconomic Conditions

FINANCIAL REVIEW, Issue 2 2006
Geetanjali Bali
G24 Abstract We examine the determinants of the new issue maturity of corporate bonds. As credit rating decreases, new bond issues have longer maturities, but substantial variation in maturity within each rating class remains. We seek to explain the variation of new issue maturity within credit classes. We find that asset maturity, security covenants, and macroeconomic conditions influence the new issue maturity of bonds within rating categories. [source]

Valuation and Cost of Capital Formulae with Corporate and Personal Taxes: A Synthesis Using the Dempsey Discounted Dividends Model

JOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 3-4 2001
Mike Dempsey
This paper advances expressions for the firm's valuation and cost of capital as a function of leverage. The framework is arrived at by introducing leverage in Dempsey's (1996 and 1998) cost of capital framework and is applicable in the context of both classical and imputation tax systems. The framework reveals that both the historical stability of corporate leverage and the firm's choice of financing structure as revealed by the Pecking Order hypothesis are consistent with a tax-based explanation. [source]

Knowledge and Use of Measures to Reduce Health Risks by Corporate Expatriate Employees in Western Ghana

JOURNAL OF TRAVEL MEDICINE, Issue 1 2009
Subhash C. Arya
No abstract is available for this article. [source]

Escaping the "Time Bind": Negotiations of Love and Work in Jayne Ann Krentz's "Corporate Romances"

THE JOURNAL OF AMERICAN CULTURE, Issue 2 2010
Erin S. Young
First page of article [source]

Sustainable entrepreneurship in SMEs: a case study analysis

CORPORATE SOCIAL RESPONSIBILITY AND ENVIRONMENTAL MANAGEMENT, Issue 3 2010
Cheryl Rodgers
Abstract Sustainability is oft thought of as the privilege of the large corporate , with sufficient funds to invest in anything from effective green Public Relations (PR) to improving its carbon footprint. What is perhaps less well-understood and documented is the range of activities undertaken by small and medium enterprises (SMEs), including very small entrepreneurial start-ups, some of which base their entire business rationale on sustainable principles. This paper uses a case study approach to explore the modus operandi of ecopreneurship and draws on both primary research and secondary data to develop and explore sustainable entrepreneurship in this sector. Preliminary findings suggest that ecopreneurial SMEs are looking to other goals alongside financial ones and are prepared to go to significant lengths to achieve such goals. Monetary measures are not, of course, entirely absent, but are very strongly conditioned by the ecoconscious nature of the business. In short, sustainability imperatives remain paramount. Copyright © 2010 John Wiley & Sons, Ltd and ERP Environment. [source]

Corporate,community relations in Nigeria's oil industry: challenges and imperatives

Corporate socially responsible (CSR) practices in the context of Greek industry

BIOETHNIC CONSCRIPTION: Genes, Race, and Mexicana/o Ethnicity in Diabetes Research

CULTURAL ANTHROPOLOGY, Issue 1 2007
MICHAEL J. MONTOYA
This article is an examination of academic, corporate, and state-funded alliance of molecular, biological, computer, and clinical scientists who are conducting research into the genetic epidemiology of type 2 diabetes. Because type 2 diabetes affects human groups differently, researchers use ethnic and racial taxonomies to parse populations and social history to rationalize their categorical choices. In a process termed "bioethnic conscription," the social identities and life conditions of DNA donors are grafted into the biological explanations of human difference and disease causality in both objectionable and constructive ways. Bioethnic conscription is presented as an ethnographically sound alternative to the either,or proposition of the (R)ace,no race debate within biomedicine and anthropology. [source]

Capitalism and Climate Change: Can the Invisible Hand Adjust the Natural Thermostat?

DEVELOPMENT AND CHANGE, Issue 6 2009
Servaas Storm
Some say the world will end in fire, Some say in ice. From what I've tasted of desire I hold with those who favor fire. But if it had to perish twice, I think I know enough of hate To say that for destruction ice Is also great And would suffice. (Robert Frost, ,Fire and Ice', New Hampshire,1923) ABSTRACT Can climate change be stopped while fossil fuel capitalism remains the dominant system? What has to be done and what has to change to avoid the worst-case consequences of global warming? These questions are debated in the six contributions which follow. This introduction to the debate sets the stage and puts the often widely diverging views in context, distinguishing two axes of debate. The first axis (,market vs. regulation') measures faith in the invisible hand to adjust the natural thermostat. The second axis expresses differences in views on the efficiency and equity implications of climate action. While the contributions do differ along these axes, most authors agree that capitalism's institutions need to be drastically reformed and made fundamentally more equitable. This means a much broader agenda for the climate movement (going beyond carbon trading and technocratic discussion of mitigation options). What is needed for climate stability is a systemic transformation based on growth scepticism, a planned transition to a non-fossil fuel economy, democratic reform, climate justice, and changed global knowledge and corporate and financial power structures. [source]

Hybrid Branch Plants: Japanese Lean Production in Poland's Automobile Industry

ECONOMIC GEOGRAPHY, Issue 3 2008
Tomasz Majek
Abstract This article examines hybrid branch plants created by an interaction of the routines and conventions of the parent company with those of local institutions. We argue that hybridization is a search for an appropriate mix of practices that ensure viability in local circumstances, rather than necessarily the transfer of established "best" (parent-company) practices. Conceptually, hybridization is interpreted as learning-based (and bargaining) processes that are inherent in the evolution (internationalization) of firms in which alternative trajectories are possible. Empirically, the article examines the recent transfer of lean production to Poland's automobile industry and comparatively and qualitatively analyzes four hybrid branch plants in terms of six dimensions of shop-floor and factory management. Given the explosion of Japanese foreign direct investment in recent decades, its competitive strengths, and the importance that Japanese firms attach to learning processes, lean production is an important case study for hybridization. The four cases illustrate different types of hybrid behavior with different consequences for corporate and local performance. [source]

"Offshoring": How big an issue?

ECONOMIC OUTLOOK, Issue 3 2004
Grant Colquhoun
Spurred by the political debate in the US and several high-profile corporate moves, "offshoring" has become a lively topic of discussion. This paper by Grant Colquhoun, Keith Edmonds and David Goodger tries to put recent developments in context and argues that "offshoring" should be seen as part of a long-standing and largely beneficial trend of international specialisation. In the short term at least, the transfer of service sector activities abroad is likely to involve relatively small numbers of jobs when compared to overall UK employment and labour market turnover. However, specific areas , such as call centres, back office functions and software programming , are expected to be increasingly affected, impacting upon regions of the UK with heavy exposure to those activities and giving rise to adjustment costs. In contrast, retailing, hotels and catering and personal services could well benefit from the move of low value-added jobs abroad. Overall, the impact of "offshoring" on the UK economy in terms of output and productivity should be positive. [source]

Legal Diversity and Regulatory Competition: Which Model for Europe?

EUROPEAN LAW JOURNAL, Issue 4 2006
Simon Deakin
In the European context, harmonisation of corporate and labour law, contrary to its critics, has been a force for the preservation of diversity, and of an approach to regulatory interaction based on mutual learning between nation states. It is thus paradoxical, and arguably antithetical to the goal of European integration, that this approach is in danger of being undermined by attempts, following the Centros case, to introduce a Delaware-type form of inter-jurisdictional competition into European company law. [source]

Corporate Domesticity and Idealised Masculinity: Royal Naval Officers and their Shipboard Homes, 1918,39

GENDER & HISTORY, Issue 3 2009
Quintin Colville
This article explores the interrelationship of masculine identity and corporate domesticity through the example of Royal Naval officers and the quarters they occupied on board ship during the 1920s and 1930s. Through a case study of a surviving warship, it establishes the linkages of this environment to a wider upper-middle-class world of public school common rooms, gentlemen's clubs and family homes. It analyses the role of this shipboard domesticity in defining the idealised and class-specific persona of the naval officer: constructed through foregrounding approved qualities (such as dutifulness, restraint and self-discipline), and suppressing characteristics considered problematic (for instance, introspection, individualism and intellectualism). The article also evaluates the tensions generated by these impersonal and unreachable standards, and the simultaneous ability of the naval home to support corporate and individual behaviours at odds with the officer ideal. The final section explores the gendered nature of these spaces. It argues that while the shipboard home was essentially a male one, the dynamic it engineered between rival ,male' and ,female' domesticities was invariably relational. Officers' communal quarters were routinely used to support and intensify oppositional understandings of masculinity and femininity. Nonetheless, attempts to dispute these boundaries and to internalise feminised qualities of sentiment, attachment and dependency can be detected in the privatised domesticity of the cabin. [source]

Making a profit , and a difference: HP invents an organization to drive sustainability

GLOBAL BUSINESS AND ORGANIZATIONAL EXCELLENCE, Issue 3 2004
Walt Rosenberg
More companies are realizing that doing well and doing good are not mutually exclusive. The merger of Hewlett-Packard and Compaq has produced an innovative organizational model for addressing corporate, social, and environmental responsibility (CSER). HP's CSER group integrates these seemingly disparate functions and relies on influence rather than control to make sustainability a way of life at HP. © 2004 Hewlett-Packard Development Company, L.P. [source]

The network of global corporations and elite policy groups: a structure for transnational capitalist class formation?

GLOBAL NETWORKS, Issue 1 2003
William K. Carroll
This study situates five top transnational policy,planning groups within the larger structure of corporate power that is constituted through interlocking directorates among the world's largest companies. Each group makes a distinct contribution towards transnational capitalist hegemony both by building consensus within the global corporate elite and by educating publics and states on the virtues of one or another variant of the neo,liberal paradigm. Analysis of corporate,policy interlocks reveals that a few dozen cosmopolitans , primarily men based in Europe and North America and actively engaged in corporate management , knit the network together via participation in transnational interlocking and/or multiple policy groups. As a structure underwriting transnational business activism, the network is highly centralized, yet from its core it extends unevenly to corporations and individuals positioned on its fringes. The policy groups pull the directorates of the world's major corporations together, and collaterally integrate the lifeworld of the global corporate elite, but they do so selectively, reproducing regional differences in participation. These findings support the claim that a well,integrated global corporate elite has formed, and that global policy groups have contributed to its formation. Whether this elite confirms the arrival of a transnational capitalist class is a matter partly of semantics and partly of substance. [source]

Re,Balancing Modern Concepts of University Governance

HIGHER EDUCATION QUARTERLY, Issue 3 2002
Michael Shattock
The paper considers the corporate,dominated and the academic,dominated forms of university governance, and the extent to which the position of these models has fluctuated over time. It argues that it is now time to move back to the concept of ,shared governance', but that this requires some reform of academic decision,making and that the corporate and the academic sides need to create machinery to realise effectively their respective contributions to university governance. [source]

Collaborative Research: Policy and the Management of Knowledge Creation in UK Universities

HIGHER EDUCATION QUARTERLY, Issue 2 2001
David Smith
Collaboration in research activity is now the rule not the exception. It is encouraged by government, funding bodies and research councils. However, the concept of collaboration is difficult to define. It occurs at many different levels, driven by a complex research system-policy dynamic. Three different models of collaboration , inter-personal, team and corporate , are identified, each with their own rationale, structure, benefits and costs. The paper examines the institutional implications of these models. It argues that institutions and individual researchers conceptualise and operationalise research collaboration in different ways. Although vital to institutional mission, collaborative research is rarely mapped by senior managers with any precision. In general, institutional approaches to the management of collaborative research lag behind the policy rhetoric. The paper concludes with an overview of the key dilemmas for institutional strategists and policy makers posed by the shift towards more collaborative approaches to research. [source]

Schemes of arrangement as a corporate rescue mechanism: The Singapore experience,

INTERNATIONAL INSOLVENCY REVIEW, Issue 1 2009
Tracey Evans Chan
This paper reviews the use of schemes of arrangement (SOA) in Singapore as a corporate rescue mechanism, and argues that a number of features have contributed to its emergence as a de facto debtor-in-possession regime. It also offers some suggestions on how this organic process can be further enhanced without unduly prejudicing the interests of stakeholders. Copyright © 2009 John Wiley & Sons, Ltd. [source]

The interaction between corporate rescue and labour legislation: lessons to be drawn from the South African experience

INTERNATIONAL INSOLVENCY REVIEW, Issue 1 2005
Anneli Loubser
One of the main advantages of a successful corporate rescue is that it prevents or at least limits the job losses caused by a business failure. For this reason, labour legislation which is designed to protect the employees of a company in the event of its winding-up, should take cognisance of the effects such legislation may have on any rescue attempts. As the recent experience in South Africa has shown, ignoring corporate rescue in legislation dealing with labour law in the context of the winding-up of a company may have the unintended effect of seriously hampering any corporate rescue attempt. Copyright © 2004 John Wiley & Sons, Ltd. [source]

The Australian corporate rescue regime: bold experiment or sensible policy?

INTERNATIONAL INSOLVENCY REVIEW, Issue 2 2001
Colin Anderson
This paper takes its title from a paper given by the Honourable Justice Robert Austin, of the Supreme Court of New South Wales, to a conference on Key developments in Corporate Law and Equity in March 2001. In that speech he described Australia's corporate rescue regime as a "bold experiment". This paper suggests that this is not a justified description and further that it is unlikely to end in the foreseeable future. The paper consists of a broad outline of how the system operates in Australia. It provides some commentary on the more significant features of the operation of Part 5.3A of the Corporations Law and considers suggestions that have been made in respect of reform of the legislation. The paper goes on to consider how the regime has been used since its introduction showing it is now the most widely used form of insolvency administration. The paper then examines briefly some of the attempts at evaluation of the regime. It concludes by suggesting that at this stage there is inadequate information to be conclusive as to the procedure's success or otherwise in fulfilling its aims of providing better returns to creditors. It is argued first, that the wide use of the procedure suggests that it is unlikely to be fundamentally altered in the near future. A further conclusion is that there is some soundness in the approach that the legislation takes in having less court control and a greater role played by the insolvency practitioner. [source]

Contrasting approaches of corporate and association meeting planners: how the hospitality industry should approach them differently

INTERNATIONAL JOURNAL OF TOURISM RESEARCH, Issue 1 2007
Rex S. Toh
Abstract Using survey data, this paper examines the different goals and constraints facing corporate and association meeting planners (AMPs). It next shows how these differences produce 11 different concerns and behaviours. For instance, increased pressure for ethical behaviour and financial transparency has forced corporate meeting planners to focus attention on reducing meeting costs and to choose easily accessible and convenient properties for meetings. On the other hand, associations focus on the interests of their members and strive to comport with group norms, and therefore plan enjoyable family-friendly meetings, often at relaxed and upscale locations. This paper outlines seven different ways in which the hospitality industry should approach corporate and AMPs. Copyright © 2007 John Wiley & Sons, Ltd. [source]

Downturn Credit Portfolio Risk, Regulatory Capital and Prudential Incentives,

INTERNATIONAL REVIEW OF FINANCE, Issue 2 2010
DANIEL RÖSCH
ABSTRACT This paper analyzes the level and cyclicality of bank capital requirement in relation to (i) the model methodologies through-the-cycle and point-in-time, (ii) four distinct downturn loss rate given default concepts, and (iii) US corporate and mortgage loans. The major finding is that less accurate models may lead to a lower bank capital requirement for real estate loans. In other words, the current capital regulations may not support the development of credit portfolio risk measurement models as these would lead to higher capital requirements and hence lower lending volumes. The finding explains why risk measurement techniques in real estate lending may be less developed than in other credit risk instruments. In addition, various policy recommendations for prudential regulators are made. [source]

Taxes, Leverage, and the Cost of Equity Capital

JOURNAL OF ACCOUNTING RESEARCH, Issue 4 2006
DAN DHALIWAL
ABSTRACT We examine the associations among leverage, corporate and investor level taxes, and the firm's implied cost of equity capital. Expanding on Modigliani and Miller [1958, 1963], the cost of equity capital can be expressed as a function of leverage and corporate and investor level taxes. Based on this expression, we predict that the cost of equity is increasing in leverage, and that corporate taxes mitigate this leverage-related risk premium, while the personal tax disadvantage of debt increases this premium. We empirically test these predictions using implied cost of equity estimates and proxies for the firm's corporate tax rate and the personal tax disadvantage of debt. Our results suggest that the equity risk premium associated with leverage is decreasing in the corporate tax benefit from debt. We find some evidence that the equity risk premium from leverage is increasing in the personal tax penalty associated with debt. [source]

Private Equity, Corporate Governance, and the Reinvention of the Market for Corporate Control

JOURNAL OF APPLIED CORPORATE FINANCE, Issue 3 2008
Karen 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]

Corporate Cash Policy and How to Manage it with Stock Repurchases

JOURNAL OF APPLIED CORPORATE FINANCE, Issue 3 2008
Amy Dittmar
At the end of 2004 total U.S. corporate cash holdings reached an all-time high of just under $2 trillion,an amount equal to roughly 15% of the total U.S. GDP. And during the past 25 years, average cash holdings have jumped from 10% to 23% of total corporate assets. But at the same time their levels of cash have risen, U.S. companies have paid out dramatically increasing amounts of cash to buy back shares. This article addresses the following questions: What accounts for the dramatic increase in the average level of corporate cash holdings since 1980? And why do some companies keep so much cash (with one fourth of U.S. firms holding cash amounting to at least 36% of total assets) while others have so little (with another quarter having less than 3%)? Why do companies pay out excess cash in the form of stock repurchases (rather than, say, dividends), and what explains the significant increase in repurchases (both in absolute terms and relative to dividends) over time? The author begins by arguing that cash reserves provide companies with a buffer against possible shortfalls in operating profits,one that, especially during periods of financial trouble, can be used to avoid financial distress or provide funding for promising projects that might otherwise have to be put off. Such buffers are particularly valuable in the case of smaller, riskier companies with lots of growth opportunities and limited access to capital markets. And the dramatic increase in corporate cash holdings between 1980 and the present can be attributed mainly to an increase in the risk of publicly traded companies,an increase in risk that reflects in part a general increase in competition, but also a notable change over time in the kinds of companies (smaller, newer, less profitable, non-dividend paying firms) that have chosen to go public. At the other end of the corporate spectrum are large, relatively mature companies with limited growth opportunities. Although such companies tend to produce considerable free cash flow, they also tend to retain relatively small amounts of cash (as a percentage of total assets), in part because of shareholder concern about the corporate "free cash flow problem",the well-documented tendency of such companies to destroy value through overpriced (often diversifying) acquisitions and other misguided attempts to pursue growth at the expense of profitability. For companies with highly predictable earnings and investment plans, dividends provide one means of addressing the free cash flow problem. But for companies with more variable earnings and less predictable reinvestment, open-market stock repurchases provide a more flexible means of distributing cash to shareholders. Unlike the corporate "commitment" implied by dividend payments, an open market stock repurchase program creates what amounts to an option but not an obligation to distribute funds. The value of such flexibility, which increases during periods of increased risk and uncertainty, explains much of the apparent substitution of repurchases for dividends in recent years. [source]

Does Risk Management Add Value?

JOURNAL OF APPLIED CORPORATE FINANCE, Issue 3 2005
A Survey of the Evidence
The fact that 92% of the world's 500 largest companies recently reported using derivatives suggests that corporate managers believe financial risk management can increase shareholder value. Surveys of finance academics indicate that they too believe that corporate risk management is, on the whole, a valueadding activity. This article provides an overview of almost 30 years of broadbased, stock-market-oriented academic studies that address one or more of the following questions: ,Are interest rate, exchange rate, and commodity price risks reflected in stock price movements? ,Is volatility in corporate earnings and cash flows related in a systematic way to corporate market values? ,Is the corporate use of derivatives associated with reduced risk and higher market values? The answer to the first question, at least in the case of financial institutions and interest rate risk, is a definite yes; all studies with this focus find that the stock returns of financial firms are clearly sensitive to interest rate changes. The stock returns of industrial companies exhibit no pronounced interest rate exposure (at least as a group), but industrial firms with significant cross-border revenues and costs show considerable sensitivity to exchange rates (although such sensitivity actually appears to be reduced by the size and geographical diversity of the largest multinationals). What's more, the corporate use of derivatives to hedge interest rate and currency exposures appears to be associated with lower sensitivity of stock returns to interest rate and FX changes. But does the resulting reduction in price sensitivity affect value,and, if so, how? Consistent with a widely cited theory that risk management increases value by limiting the corporate "underinvestment problem," a number of studies show a correlation between lower cash flow volatility and higher corporate investment and market values. The article also cites a small but growing group of studies that show a strong positive association between derivatives use and stock price performance (typically measured using price-to-book ratios). But perhaps the nearest the research comes to establishing causality are two studies,one of companies that hedge FX exposures and another of airlines' hedging of fuel costs,that show that, in industries where hedging with derivatives is common, companies that hedge outperform companies that don't. [source]

Private Enforcement of Corporate Law: An Empirical Comparison of the United Kingdom and the United States

JOURNAL OF EMPIRICAL LEGAL STUDIES, Issue 4 2009
John Armour
It is often assumed that strong securities markets require good legal protection of minority shareholders. This implies both "good" law,principally, corporate and securities law,and enforcement, yet there has been little empirical analysis of enforcement. We study private enforcement of corporate law in two common-law jurisdictions with highly developed stock markets, the United Kingdom and the United States, examining how often directors of publicly traded companies are sued, and the nature and outcomes of those suits. We find, based a comprehensive search for filings over 2004,2006, that lawsuits against directors of public companies alleging breach of duty are nearly nonexistent in the United Kingdom. The United States is more litigious, but we still find, based on a nationwide search of court decisions between 2000,2007, that only a small percentage of public companies face a lawsuit against directors alleging a breach of duty that is sufficiently contentious to result in a reported judicial opinion, and a substantial fraction of these cases are dismissed. We examine possible substitutes in the United Kingdom for formal private enforcement of corporate law and find some evidence of substitutes, especially for takeover litigation. Nonetheless, our results suggest that formal private enforcement of corporate law is less central to strong securities markets than might be anticipated. [source]