Special Conference issue "Past and Future of Corporate Governance: Practices, Reforms and Regulations" of the journal “Corporate Ownership and Control” has been published
The special conference issue of the journal “Corporate Ownership and Control” pays attention to issues of accounting and auditing, earnings quality management control, executive compensation, firm performance, shareholder voice etc. More detailed information is given below.
Adel Mohammed Sarea examines the change in earnings quality after the adoption of AAOIFI Accounting Standards in Islamic Banks of Bahrain. He hypothesizes that, adoption of AAOIFI accounting standards could lead to high level of earnings quality. However, data were collected from the annual reports of 5 Islamic banks in Bahrain during 2002-2011. The findings indicate that the change in earnings quality after the adoption of AAOIFI in Islamic Banks of Bahrain is higher due to the improvement of the quality of financial reporting.
Laura Broccardo, Francesca Culasso, Elisa Giacosa and Elisa Truant focuse on the use and the diffusion of advanced management control systems within a sample of Italian companies, both family firms (FFs) and non-family firms (NFFs). The research aims at investigating the diffusion of performance measurement systems within the sample of Italian FFs and NFFs and at analysing which kind of advanced managerial tools are more widespread. The research has been conducted using the method of questionnaire in order to photograph the state of the art in a significant number of Italian firms.
Hugh Grove and Mac Clouse develop and apply risk management procedures to enhance corporate governance, using examples of Chinese company investments. Strategy and risk should be considered together by management and boards of directors as they need to know what risks are embedded in potential or approved strategies. Strategy and risk are linked and may be viewed as two sides of the same coin. One of the fastest ways to massive value destruction is to undertake a strategy without a thorough consideration of the related risks. Well-known financial fraud prediction models and ratios are applied to an ongoing, possible fraudulent Chinese company. This paper finds potential international equity and debt investment destruction of $12.9 billion for this one company and $34.5 billion when this company’s investment losses are combined with three other ongoing possible Chinese fraud companies.
Cucari Nicola, Mazza Giuseppe, Costantini Martina and Sancetta Giuseppe examine the relationship between CEO Pay and total shareholder return, using data between 2008-2014 from Italian listed firms (FTSE MIB). They perform panel data regression analysis of CEO compensation on financial performance, and in this way refer to research made by Gigliotti (2013), but extend it considering the Total Shareholder Return instead of accounting based performance. TSR has become a crucial measure in a pay-for-performance approach for different reasons. The results indicate that there is not a significant relationship between CEO compensation and corporate performance during 2008-2014.
Salvatore Esposito De Falco, Nicola Cucari and Emanuele Sorrentino explore which variables can influence the direction of the vote and if they change depending on country, rather than considering the say on pay activism as an instrumental term in which its effectiveness depends on the ability to change the executive compensation. They focus on a sample of 120 firms in three different contexts (Italy, Australia and USA) observed in a period of three years, between 2012 and 2014. The authors find that factors affecting dissent depend on the context of analysis. In the insider system context dissent is positively correlated to the concentration of ownership, and in an outsider system context, like the American one, the variable of remuneration is positively correlated to the dissent. Instead, they find that in the Australian context, any variable is significant: this singular result could depend on the presence of “two strikes rule” that inhibits the role of other variables.
Baccouri Mouna and Fedhila Hassouna argue that despite the well-known gains of the international diversification, investors have the tendency to overinvest in domestic equities. This irrational behavior is called home bias. It is considered by Obstfeld and Rogoff (2000) as one of the six major puzzles in the international macroeconomics. The authors examine the different determinants to understand this major puzzle. Based on a sample of 564 observations (countries-years) that cover the period 2003 to 2013, they found that home bias is explained by the information asymmetry that exists between countries and their economic volatility (assessed by the growth rate of the gross domestic product).
Laura Grassi, Marco Giorgino, Simona Raimondo and Giorgio Romani give an overview on the induction process for board members with a focus on the Italian context. First, considering the limited prior academic literature, they contribute to the understanding of the induction term. Authors propose a multilevel theoretical framework that synthesizes and integrates the poor and contrasting prior literature on the definition and the attendees of the program. They posit that the process is intended for all the appointed directors as it is tailored and specific of each company, due to the peculiar environment in which the firm operates.
Shame Mugova and Paul R. Sachs review key elements of corporate governance. The authors then review the banking and manufacturing sectors in Zimbabwe with attention to the presence or absence of financial infrastructure, legal infrastructure, market challenges, supply chain and government involvement to support corporate governance structures and systems. Recommendations for policy and practice changes are recommended. The present analysis of Zimbabwe can guide research on and policy recommendations for governance in other developing countries.
Lucia Giovanelli and Federico Rotondo focuse on remuneration policies in banking, an issue that is not particularly studied in relation to its importance to financial institutions’ long-term viability and the sustainable growth of the economy as a whole. They aim to assess, through a gap analysis, the level of compliance with best practice in the remuneration policies of Italian banks prior to the implementation of new standards established as a result of CRD IV, as well as the FSB and EBA principles.
Sylvester Egwuenu, Kifordu A. Anthony and Wilfred Ukpere investigate Project Control as a technique for achieving organizational efficiency. Efficient Management of project demands that project should be executed according to specification. This further requires control in the areas of time, quality, and cost. Control enables project managers to check variances, and possible reasons for deviation. This work seeks to address the problems of operational inefficiency in terms of deviation from project cost allocation, project time allocation resulting to delay, and finally deviation from required quality.
Hugh Grove and Mac Clouse show that many of the recent Chinese cases of fraudulent financial reporting are also really corporate governance scandals involving fraud.
Talamo Giuseppina argues that, in recent years, Foreign Direct Investment has become an increasingly important feature of the globalized economy. The importance of FDI flows raises several of important questions. First of all is the question of the impact of FDI on host and home countries. Second crucial question is about FDI flows during the recent financial crisis and the role of FDI flows in promoting growth in less developed countries. Then,what can host countries do to become more attractive to foreign investors, and benefit from their activities?
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