Corporate Ownership and Control

Journal Information
ISSN / EISSN : 1727-9232 / 1810-0368
Current Publisher: Virtus Interpress (10.22495)
Total articles ≅ 2,655
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Corporate Ownership and Control, Volume 18, pp 191-200; doi:10.22495/cocv18i3art15

Abstract:
The global financial and economic crisis of 2007 and 2008 entailed a sharp deterioration of fiscal positions worldwide; however, fiscal rules soon tightened up in different countries, and parallelly, budgetary discipline improved. A reconsideration of the fiscal policy was necessary as a sovereign debt crisis evolved as a result of the world economic crisis in several countries of the European Union and the eurozone. The study starts at the government debt map of the old member states of the European Union, to which the Hungarian financial positions outside the eurozone are compared. Then, the components of the new Hungarian public finance regulation, major measures, which resulted in an improvement in line with eurozone positions, are presented in full detail. Our study seeks to prove that because of the Hungarian public finance reforms, the fiscal course has also improved, fitting the trends of developed member states of the EU. Although earlier researches have highlighted that it was not only modified fiscal policies that contributed to the post-crisis debt consolidation process in the countries of the eurozone but also the combined effect of the real interest rate and real growth policy. The uniqueness of the study lies in the regulatory instruments, with which the country – positioned in a socialist planned economy, then demonstrating a weak fiscal discipline and sunk in a fiscal crisis even before the global economic crisis of 2007 and 2008 – has consolidated its positions.
Timothy Gordon Bryan, Mark A. McKnight, Robert Houmes
Corporate Ownership and Control, Volume 18, pp 175-190; doi:10.22495/cocv18i3art14

Abstract:
This paper empirically examines the relationship between conservatism and earnings management in chemical and allied products manufacturers via an analysis of the allowance for doubtful accounts and bad debt expense. Data used in the study included total accounts receivable, the total allowance for uncollectible accounts, total assets, and other firm-level data from the COMPUSTAT database of North American firms for companies with the standardized industry code (SIC) of 28 which represents chemical and allied products manufacturers. Chemical and allied products manufacturers were deemed an ideal target for the study because the industry typically has large balances in accounts receivable and allowance for doubtful accounts. Bad debt expense and write-offs were also used; these were obtained from the firms’ forms 10K Schedule II filed with the Securities and Exchange Commission (SEC) during the study period from 2005-2017. Analysts reports were also used, as obtained from Bloomberg for each firm. Results from subsequent regression analyses indicate that firms utilized excessive conservatism within the allowance for doubtful accounts to manage earnings to achieve earnings goals throughout the study period.
Corporate Ownership and Control, Volume 18, pp 161-174; doi:10.22495/cocv18i3art13

Abstract:
Most studies on corporate governance testing the relationship or correlation between ownership structure (OS), dividend policy (DP), and financial performance (FP). Little attention has, however, been paid to the direction of the causal relationship between financial performance and corporate governance variables (such as OS and DP). This study fills that gap by examining the direction of causality using the bootstrap panel Granger non causality tests to analyze panel data on selected listed firms in an emerging economy, namely, Tunisia. Based on a sample of 154 firm-year observations during the period 1996–2017 and using both Kónya’s (2006) and Dumitrescu and Hurlin’s (2012) approaches, results show the existence of both unidirectional and bidirectional significant causal link between the pair of used variables. These findings agree with earlier studies that found that causality runs from some corporate governance measures to financial performance, from the latter to the former, or in both senses
Jules Roger Feudjo, Gisèle Kakti, Félix Zogning
Corporate Ownership and Control, Volume 18, pp 149-160; doi:10.22495/cocv18i3art12

Abstract:
This article proposes to understand strategic decision-making within family businesses (FBs), with particular emphasis on the role of the different stakeholders in this decision-making. For this, we carried out a qualitative casuistic study. The convenience sampling method enabled us to constitute a sample of eight cases of FBs, with which we conducted semi-structured interviews. Thematic data analysis was made with the content of these interviews. The results obtained show that the decision-making process is not identical within the FBs. However, it remains a power play controlled directly and at different levels by the founding shareholder and indirectly by the members of his nuclear family. This process differs from the model of Fama (1980) and Fama and Jensen (1983) either by the size of the process and the intertwining of roles (Model 1) or by the level of involvement of the nuclear family in the process (Model 2). This article highlights the permanent involvement, formal and/or informal, of the family in the decision-making process and the need to encourage the establishment of a code of governance specific to these FBs
Kashika Arora, Areej Aftab Siddiqui
Corporate Ownership and Control, Volume 18, pp 136-148; doi:10.22495/cocv18i3art11

Abstract:
Micro, small and medium enterprises (MSMEs) the forerunners of the Indian economy equipped with the greatest potential of growth and employment opportunities are the focus of this paper. By examining firm-level data for years 2007-2008 and 2017-2018, this paper captures the simultaneous expenditure on insurance premium and export earnings on the technical efficiency of firms. On applying stochastic frontier production function, results reveal that Indian MSMEs although being labour intensive have high average technical efficiency in the two comparative years. Results also indicate that factors such as firm size, age, ownership, technological imports both embodied and disembodied, expenditure on R&D, and export guarantees contribute to the technical efficiency of MSMEs. The top 25 percent of efficient MSMEs in 2017-2018 rely more on exports, have higher forex earnings with higher expenditure on marketing & advertising, and expenditure on export guarantees. This thus warrants a further improvement in technical efficiency through access to financial services, skilled labour, training of labour, enhancing and attracting foreign investment for operational collaborations, and incentives for easier and risk-free penetration in the world market
, Amos Sodjahin, Hamadou Boubacar
Corporate Ownership and Control, Volume 18, pp 120-135; doi:10.22495/cocv18i3art10

Abstract:
This study examines how the structure of shareholder ownership (i.e., management, external blockholders, and board ownership) affects the presence of women on boards of directors. The results of an analysis of a sample of listed Canadian companies for the period 2007-2015, controlling for endogeneity, indicate that the proportion of women sitting on a firm’s board of directors is influenced by its shareholding structure, thus, supporting the view that the two governance mechanisms of gender diversity and shareholder structure can substitute for each other. The results also show that there is a curvilinear relationship between a company’s ownership structure and the proportion of women on its board of directors and audit committee. Indeed, findings show that as the concentration of company ownership increases, the proportion of women on boards of directors decreases to a threshold, following which we observe an increase in the proportion of women sitting on boards of directors and particularly on audit committees
Corporate Ownership and Control, Volume 18, pp 104-119; doi:10.22495/cocv18i3art9

Abstract:
The comprehension and the explanation of the research and development (R&D) investment behaviour are done within the framework of a reflection on corporate governance. This investment does not contribute to creating value only if it is framed by governance mechanisms which role is to keep organizational, agency, or transaction costs as low as possible. In this context, we try to determine whether an integrating model exists; one that measures the simultaneous effect of the characteristics of the board of directors on R&D and the firm performance in an international context. Our model seeks to identify whether the dominance of inside directors and the dual structure influence the level of R&D investment, the mediating variable, and hence the firm performance. Our empirical study was carried out on a total sample of 509 firms divided between 165 American firms, 173 Japanese firms, and 171 French firms over the period 2014 to 2019. The findings of the mediation analysis according to the approach of Preacher and Hayes (2004, 2008) show the significant role of mediation by R&D investment between, on the one hand, the dominance of inside directors and duality, and on the other hand, the firm performance. Differences in the configuration of board of directors (BD) in different countries thus lead to different attitudes to the fulfillment of the control task and the R&D investment decision, value creator
Arash Faizabad, Mohammad Refakar, Claudia Champagne
Corporate Ownership and Control, Volume 18, pp 86-103; doi:10.22495/cocv18i3art8

Abstract:
This paper reviews the literature on the quality of corporate governance practices in the oil and gas exporting developing countries (Russia, Venezuela, Nigeria, the MENA, and the GCC countries). We investigate if the internal and external governance mechanisms function efficiently in these countries. The findings of the reviewed literature show that the quality of corporate governance practices in the countries of our focus is not efficient at internal and external levels. Regarding the internal mechanisms, weak governance mechanisms originate from low transparency levels and give rise to poor voluntary disclosure in the firms. However, some internal mechanisms are more efficient in some of these countries as presented in the conclusion section. Regarding the inefficiency of external mechanisms, all the studied countries share common characteristics with respect to weak legal systems, inefficient law enforcement infrastructures, and low levels of protection for properties, investors, and shareholders especially the minority ones
Corporate Ownership and Control, Volume 18, pp 75-85; doi:10.22495/cocv18i3art7

Abstract:
Our study aims to demonstrate the importance of managerial discretion to corporate governance research and deepen our understanding of managerial discretion. Adopting theoretical frameworks and definitions from 93 conceptual and empirical studies on managerial discretion and corporate governance, we argue that extant studies have presented explicit empirical and theoretical definitions of managerial discretion; and have proved the validity, reliability, and replicability of the concept. We argue that corporate governance scholarship cannot move forward without managerial discretion as it provides shareholders and board of directors’ essential guidance on how much freedom in decision-making is to be granted to top managers by deeming the different dimensions of the internal and external environment into consideration. We reinstate our original argument that corporate governance research is not better off without managerial discretion. We also provide a new vantage for corporate governance and managerial discretion scholars to distinguishing between the latitude of actions and latitude of objectives
Shih-Nien Lee, Tzu-Ching Weng, Hsin-Yi Huang
Corporate Ownership and Control, Volume 18, pp 66-74; doi:10.22495/cocv18i3art6

Abstract:
As a healthcare organization, hospitals should professional service to their clients. Therefore, hospitals have obligation to improve overall service quality. In exploring the relationship between hospital budget control and organizational effectiveness, the hospital’s management staff has rich professional medical knowledge, they still have not received the training of general corporate organization and the management technology of corporate management. To improve the effectiveness of the organization, managers in hospitals should have enough experience in management control and rely on peer control. Therefore, internal control is a management process that integrates various management control and evaluation measures within the hospital, this study believes that the management staff of medical institutions should use common standards to evaluate the degree of a hospital operation, management efficiency, and medical quality. An internal control system can be simultaneously built and implemented by the topmost level of management in a hospital. It involves the commercial and business experiences related to an organization’s control, financial, and other systems. It regularly and effectively ensures compliance with management policies while safeguarding assets as well as the completeness and accuracy of safety records. Internal control is an indispensable aspect of the governance norms and methods of many companies. The hospital can also achieve value enhancement and sustainable existence through the continuous operation of the internal control system designed, and the supervision of external audit firms.
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