Elaborate summary of all mandatory articles for the Corporate Governance part. Can be used for the Business Valuation & Corporate Governance course of the Master of Business Administration at the University of Twente. Includes all articles provided by the professor. Can also be used at other univer...
BVCG Corporate Governance Summary
of Articles
Mandatory reading (articles) provided by the professor
,Index
- Corporate governance in an international context: Legal systems, financing patterns and
cultural variables by Mintz (2005) (excl. sections: ‘a coordinated worldwide accountancy
profession’, ‘international accounting standards’, ‘recent changes in corporate
governance in the UK’, and ‘narrowing the differences in corporate governance between
the US and UK: improved corporate governance standards of the NYSE and Nasdaq’)
- Corporate governance in emerging markets: A survey by Claessens & Yurtoglu (2013)
(excl. section 5 ‘corporate governance reform’)
- Blockholder dispersion and firm value by Konijn et al. (2011)
- Does governance travel around the world? Evidence from institutional investors by
Aggarwal et al. (2011) (excl. section 5 ‘robustness and additional tests’)
- The value of independent directors: evidence from sudden deaths by Nguyen & Nielsen
(2010) (excl. section 5 ‘interpretation’ and 6 ‘alternative specifications and robustness
checks’)
- Do women directors improve firm performance in China? by Liu et al. (2014)
- A comparison of CEO pay-performance sensitivity in privately-held and public firms by
Gao & Li (2015) (excl. section 6 ‘dealing with self-selection’)
- Are all perks solely perks? Evidence from corporate jets by Lee et al. (2018)
,ARTICLE 1 – CORPORATE GOVERNANCE IN AN INTERNATIONAL CONTEXT: LEGAL SYSTEMS,
FINANCING PATTERNS AND CULTURAL VARIABLES BY MINTZ (2005)
EXCL. ‘A coordinated worldwide accountancy profession’, ‘International accounting
standards’, ‘Recent changes in corporate governance in the UK’, and ‘Narrowing the
differences in corporate governance between the US and UK: Improved corporate governance
standards of the NYSE and NASDAQ’
Duty of top corporate officials: To act carefully in fulfilling the important tasks of monitoring
and directing the activities of corporate management
- Commitment to place the interests of the corporation and its shareholders above self-
interests
- Not use one’s corporate position to make a personal profit or gain other personal
advantage
Stakeholders = those who have a vested interest in the decisions and actions of a company
1. Clients
2. Employees
3. Shareholders
4. Suppliers
5. Community
Corporate governance = the system by which companies are directed and controlled
Agency theory = shareholders receive returns only after other corporate claimants have been
satisfied
Most common approach to overcoming agency problem: Tie managerial compensation to the
financial performance of the corporation in general and the performance of the company’s
shares
Agency costs = costs that occur if the board of directors fails to exercise due care in its oversight
of role of management
Stakeholder theory = successful managers must systematically attend to the interests of various
stakeholder groups
Approaches to for corporations to act in the interests of employees
1. Employee share ownership
2. Electing employee representatives to the board of directors
3. Employee involvement in quality circles, work councils or the like
, Culture (Roberts et al.) = set of common ideas, beliefs and values that are shared by the
members of a group of individuals
Culture (Hofstede) = the collective programming if the mind that distinguishes the members of
one human group from another
Hofstede’s cultural dimensions
1. Individualism vs Collectivism
2. Large vs Small Power Distance
3. Strong vs Weak Uncertainty Avoidance
4. Masculinity vs Feminity
Individualism vs Collectivism = the relationship between individual and group
Individualism = loosely knit social relations in which individuals are expected to take
care only for themselves and their immediate families
Collectivism = tightly knit relations in which people can expect their relatives, clan or
other in-group to look after them in exchange for unquestioning loyalty
Large vs Small Power Distance = the extent to which the members of a society accept that
power in institutions is distributed unequally
Large power distance = a hierarchical order in which everybody has a place which needs
no further justification
Small power distance = strive for power equalization and demand justification for power
inequalities
Strong vs Weak Uncertainty Avoidance = the degree to which members of a society feel
uncomfortable with uncertainty and ambiguity
Strong uncertainty avoidance = societies with rigid rules, codes of belief and behavior
and are intolerant of nonconformists
Weak uncertainty avoidance = societies with a more relaxed atmosphere in which
practice counts more than principles and deviance is easily tolerated
Masculinity vs Feminity = the social implications of gender
Masculinity = preference in society for achievement, heroism, assertiveness, and
material success
Feminity = emphasizing relationships, modesty, caring for the weak and interpersonal
harmony
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