An Annotated Bibliography on Corporate Governance
Introduction
The subject of corporate governance is highly valued in discussions that pertain to the leadership of business and non-business organizations and specifically the application of ethics to the same. The main reason why corporate governance is so valued in this context is the fact that it greatly helps the different individuals in the organization to apply ethics in their different capacities. This helps to maintain the integrity through a top down approach where the organizational ethics are applied downward from the top management to their subordinates. Another reason why corporate governance is increasingly becoming an important issue is the amount of value that it adds to the organization in the eyes of its customers or other publics served. As a result of this, the area of study has also attracted the attention of scholars who have then conducted research into the same. This exercise therefore entails an annotated bibliography which takes into account several academic articles that have been published following research into the area.
Salman, F,. and Siddiqui, K (2013) Corporate Governance in Pakistan: From the Perspective of Pakistan Institute of Corporate Governance. The IUP Journal of Corporate Governance, Vol. XII, No. 4
The purpose of this article was to highlight the role of Pakistan’s government body that has been charged with ensuring corporate governance is upheld in the country’s organizations. The body is known as the Pakistan Institute of Corporate Governance or PICG in short. Its role is highlighted in light of the increasing number of Corporate Governance Issues in the country. The PICG seeks to improve the country’s overall corporate governance through encouraging institutions of higher learning to formulate courses that focus on corporate governance. The body does this with the hope that the country’s future business leaders will have internalized the principals of corporate governance. The research was mainly conducted by means of an interview that was administered on the current president of the PICG Mr Fuad Azim Hashimi to form the basis of analysis of this matter. From the exercise it was found that for the better part, corporate governance was being taken lightly as more of a checklist- fulfilling exercise in Pakistan and even at this level, improvements were realized in the corporate scene.
Cheung, Y., Stouraitis, C. and Tan, W. (2010) Does the Quality of Corporate Governance Affect Firm Valuation and Risk? Evidence from a Corporate Governance Scorecard in Hong Kong International Review of Finance, 10:4, 2010: pp. 403–432 DOI: 10.1111/j.1468-2443.2010.01106.x
The authors of this article were drawn from The Hong Kong Baptist University’s school of Business as well as the City University of Hong Kong’s Department of Economics and Finance.
The research project entailed the constructed of an index of corporate governance based on data detailing the operations of several Hong Kong firms during the years of 2002 to 2005. What this then did was to effectively compare the degree to which corporate governance was being practiced in these firms. The aim of this analysis was to find out if the quality of corporate governance had a direct or indirect impact on the risk and valuation of these firms. From the study it was found out that concentrated ownership structures were detrimental to the firms in terms of their valuation and risk. This is because of a lesser degree of corporate governance being applied to them. At the same time, the study uncovered the fact that such firms stood to have the greatest benefit if corporate governance was applied to them. The study was concluded by an affirmation of the significance of corporate governance in the future success of a company through reduced risk as well as heightened earnings on stocks.
Aytekin, I, Miles, M. and Esen, S. (2013) Corporate Governance, a Comparative Study of Practices in Turkey and Canada. The IUP Journal of Corporate Governance, Vol. XII, No. 2
The first author Aytekin is a Research Assistant at the Yildirim Beyazit University ‘s School of Management, in Ankara Turkey. Miles is an assistant professor at the Telfer School of Management in Canada’s University of Ottawa. Bartin is also an assistant professor at the School of Business in the University of Bartin, Turkey. The aim of this study was to conduct an analysis of Turkey’s Corporate governance since the year 2006. A comparison was to be made with the state of Corporate Governance in Canada which has for the better part been lauded as the best the world has ever seen. The study showed that Turkey had demonstrated great improvements in its Corporate Governance particularly in the adaptation of modern approaches to Corporate Governance. In the global financial crisis of 2008-2009, Turkey performed remarkably well with respect to Corporate governance while Canada seemed to suffer setbacks in the same area. In the view of the researchers, business entities need to prioritize the workability and coordination of the boards they form.
Yosef, S. and Prencipe. A. (2013) The Impact of Corporate Governance and Earnings Management on Stock Market Liquidity in a Highly Concentrated Ownership Capital Market Journal of Accounting,Auditing & Finance 28(3) 292–316.
The author Sasson Bar Yosef works in the Department of Accounting at Boconi University in Italy. This article also focuses on business entities that are not owned by individuals. The article was focused on the impact that Earnings management and Corporate Governance have on the liquidity of different markets. The market liquidity in this instance was measured through bid-ask spreads as well as trade volumes. The first fact established by this study is that business enterprises that have high non-institutional ownership also tend to have increased Bid-asks and lower volumes being traded. Firms that have better corporate governance have higher trade volumes and lower B-As. What the study concludes is the positive impact that Corporate Governance has on the performance of firms.
Harford, J., Mansi, S. A., & Maxwell, W. F. (2012). Corporate governance and firm cash holdings in the US. In Corporate Governance (pp. 107-138). Springer Berlin Heidelberg.
The three researchers who contributed to this article are all sourced from the Schools of business in the University of Washington, Virginia Tech and the Southern Methodist University. The study employed Governance metrics that were formulated from inside ownership and anti-takeover provisions. Through this information, the study found out that the cash reserves of companies with weaker corporate governance had significantly smaller cash reserves. The explanation for this is found in the approach that these firms have to future financial obligations. In an effort to avoid having so many of these obligations, these firms choose to repurchase the dividends rather than give them to shareholders. Managers who are weakly controlled were found to be more likely to spend the money rather than hold on to it in the US market.
Nini, G., Smith, D. C., & Sufi, A. (2012). Creditor control rights, corporate governance, and firm value. Review of Financial Studies, 25(6), 1713-1761.
In this study, it was found out that company policies seeking to reduce the risk of a takeover have the potential of making the management of the firm slacken. This is often carried out through an approach known as business combination or BC laws. in short. The researchers abide by the principle of competition having the effect of mitigating the slack exhibited by management. Consequently, it was observed that companies that operate in a competitive environment experienced minimal drops in their performance whereas those from less competitive markets experience significant reductions in their operational performance. This was mainly measured using the stock prices.
Bebchuk, L. A., & Weisbach, M. S. (2010). The state of corporate governance research. Review of Financial Studies, 23(3), 939-961.
This article was the result of a concerted effort between the Review of Financial Studies Journal and the National Bureau of Economic Research. It is comprised of a compilation of seven articles that were submitted in a meeting that brought together participants in the NBER Corporate Governance project. Each one of these seven articles is based on a modern concept that is currently being applied to corporate governance. The article then discusses the importance of each of these research areas highlighted in the papers. The position of shareholders in the dynamics of corporate governance is also discussed in this analysis of the articles.
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