Article information:To cite this document: Sébastien Deschênes Miguel Rojas Hamadou Boubacar Brigitte Prud'homme Alidou Ouedraogo , (2015),"The impact of board traits on the social performance of Canadian firms", Corporate Governance, Vol. 15 Iss 3 pp. 293 -305 Permanent link to this document: http://dx.
We examine shareholder initiated social policy proposals' capacity to exert pressure on management to force it to adopt the suggested changes in policy. We show that social proposals, filed under the U.S. Securities and Exchange Commission's Rule 14a-8, have a more limited capacity to change corporate social policy than it has been previously reported. However, the capacity to exert pressure on firms can be substantially higher for some types of filers, notably pension funds and mutual funds. The analysis also suggests that the capacity to influence management is higher for some types of issues presented in the resolution, such as those related to board diversity, energy and environment, and international labor Miguel Rojas is a PhD candidate (Finance) Université du Québec a Montréal, Québec, Canada. He is also the corresponding author for this article. and 9600 Garsington Road, Oxford OX4 2DQ, UK. and human rights. We also provide suggestions explaining why shareholder activism is a persistent practice despite its limited results.
Purpose – The purpose of this article is to examine if certain board characteristics have an impact on the total remuneration of top management and the ratio of stock-based remuneration to total top-management remuneration. Design/methodology/approach – The study draws on data from the largest public Canadian companies, the constituents of the TSX/60 index. The study controls for firm size and profitability. Findings – The authors concludes that total remuneration of top management is directly linked to board-member total remuneration and the board average number of director-tenure years. The study also shows that the ratio of stock-based to total top-management remuneration is positively affected by the percentage of independent directors, total remuneration of board directors, the ratio of stock-based remuneration of directors to their total remuneration and the average number of tenure years of the board of directors. Practical implications – If regulators are determined to curb the excesses in top-management remuneration by means of promoting boards with certain characteristics, they should implement measures facilitating the control of directors’ remuneration and tenure, to discourage cronyistic behavior. Good corporate governance requires that the board act as a counterbalance to top management, ensuring that a substantial percentage of top-executive total compensation is variable, and not fixed. According to our findings, the boards that are the most likely to hold managerial avoidance of variable pay in check are those favoring director independence, variable director remuneration and longer director tenures. Social implications – The present article examines specifically the latter aspect, namely, the role of board characteristics (independence, size, compensation, board director ownership and tenure, etc.) in the determination of top-management compensation. This relationship is important because it allows us to further the analysis of corporate governance. If the above-mentioned traits of boards have a meaningful relationship with the compensation of the top management, one might conclude that certain practices in the composition of boards could influence good corporate governance practices. This is relevant for regulatory agencies, for investors and for corporations. Originality/value – The article adds to the extant literature in a number of ways. Firstly, it considers the role of the traits of the board in the determination of the compensation of the top-management teams, and not only of the chief executive officer, as is the focus of previous literature. Secondly, the article focuses on the power interplay between boards and managers, and, more particularly, on the ability of boards to be an effective mechanism of corporate governance. Finally, the article examines the potential impact of board traits in the determination of top-management compensation in the context of Canadian firms, a subject that has received less attention from academic research, which has mostly concentrated on analyzing the issue in the US context.
We compare the traits of companies receiving social policy shareholder resolutions with those of a set of matching firms. We show that targeted firms tend to be much larger and riskier, less profitable and less socially performing than their counterparts. The five largest investors in firms receiving social proxies tend to hold a lower stake in those firms vis‐à‐vis the matching firms. Firms in both samples, however, are not statistically different in terms of percentages of shares held by institutional and insider investors. We provide possible explanations for our results.
This article argues that financial repression played a key role in the emergence of credit unions (CUs) in Costa Rica, along with other institutional factors. Credit unions took advantage of the opportunity to serve borrowers whose requests had been refused by banks. Given the sweeping reforms of the Costa Rican financial system aimed at reducing the scope of financial repression, this article poses the question of how those reforms impacted the competitiveness of CUs. Previous literature suggests that financial reform may lead to concentration in the financial sector, and not to the promotion of a more competitive environment. This article presents data showing that CUs in Costa Rica exhibited an enhanced ability to gain market share and also provides an explanation for the observed trend.RÉSUMÉL’article soutient que la répression financière avec d’autres facteurs institutionnels a joué un rôle clé dans l’émergence des coopératives financières (CF) au Costa Rica. Les CF ont profité de l’occasion pour servir les emprunteurs dont les demandes avaient été refusées par les banques. Compte tenu des réformes radicales du système financier costaricien, visant à réduire l’étendue de la répression financière, l’article pose la question de l’incidence de ces réformes sur la compétitivité des CF. La littérature précédente suggère que la réforme financière peut conduire à une concentration du secteur financier et non à la promotion d’un environnement plus compétitif. Notre article démontre que les CF du Costa Rica présentent une capacité à accroître leurs parts de marché. Nous fournissons une explication de la tendance observée.
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