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Purpose – The purpose of this paper is to examine the relationship between country-level governance and ethical behaviour of firms in African countries in the period 2009-2012. Design/methodology/approach – It uses a broad set of country-level governance ratings by the World Bank and data on ethical behaviour of firms by the World Economic Forum’s report on Global Competitiveness. Full data of a total of 39 African economies out of the 54 (including two disputed) economies over the sample period were obtained for this analysis. Findings – The authors find a statistically significant and positive relationship between country-level rule of law, regulatory quality, control of corruption and democracy, and firm ethical behaviour of firms in African economies. This implies that improvement in country-level rule of law, regulatory quality, control of corruption and democracy tends to be associated with sound ethical behaviour of firms in African economies. However, the authors did not find any statistically significant relationship between country-level accountability, political stability, outsider model of governance and ethical behaviour of firms. Practical implications – As a continent that is yet to fully discover its potential, the practice of good governance is particularly germane, as this may not only help ensure sound ethical standards of corporations, but may also aid the continent to attract foreign investors, which will beneficially impact economic growth and development of African economies. In this respect, efforts by governments across the continent to ensuring good governance are laudable. One possible way is to ensure an effective and transparent enforcement of laws to stimulate compliance in a specifically clear-cut manner by crafting costs for non-compliance (for instance, legal costs, investigation cost, imprisonment, dent to image and fines). Originality/value – This paper reinforces the belief that the existence of country-level good governance could provide and enhance cohesive and internally consistent ethical standards of companies.

We study how US chief executive officers (CEOs) invest their deferred compensation plans depending on the firm's profitability.By looking at the correlation between the CEO's return on these plans and the firm's stock return, we show that deferred compensation is to a large extent invested in the company equity in good times and divested from it in bad times. The divestment from company equity in bad times arguably reflects CEOs' incentive to abandon the firm and to invest in alternative instruments to preserve the value of their deferred compensation plans. This result suggests that the incentive alignment effects of deferred compensation crucially depend on the firm's health status. K E Y W O R D S corporate distress, deferred compensation, executive compensation J E L C L A S S I F I C AT I O N G32, G34

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Regions are first-level local administrations in Italy. Since 2003, regions have extensively used over-the-counter (OTC) derivatives. Since the use of these derivatives is not clearly regulated, derivatives have been employed to hedge outstanding debt and its costs, but there is evidence that derivatives have also been used to pay current expenses. This study empirically investigates the dynamics the debt of Italian Ordinary Statute Regions and the impact of OTC derivatives during the 2007-2012 period, and the results show that derivatives-as measured by negative market value-have a positive and statistically significant relationship with debt.