A Theory of Corporate Scandals: Why the USA and Europe Differ

Coffee, John C.

doi:10.1093/oxrep/gri012

Cited by 263 publications

(102 citation statements)

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“…This in turn reduces managers' opportunistic behaviour in earnings management (Jensen & Meckling, 1976;Coffee, 2005).…”

Section: Family Control and Accounting Misstatementsmentioning

confidence: 99%

“…The majority of the restatement literature focuses on the US market. The US has one of the most widely dispersed ownership structures and most favourable institutional environments, which suggests that both the causes and the consequences of accounting restatements are likely to differ significantly between the US and many other countries (Coffee, 2005). China is characterized by a weak legal environment, underdeveloped but fast-growing financial markets, and a highly concentrated ownership structure, making China a good representative of many emerging markets.…”

Section: Introductionmentioning

confidence: 99%

Family Control, Accounting Misstatements, and Market Reactions to Restatements: Evidence from China

Tian

2014

SSRN Journal

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We examine the impact of family control on the likelihood of accounting misstatements and on market reactions to subsequent restatements. Using a matched-firm approach, we find that family control overall reduces the incidence of misstatements, consistent with the notion that controlling families have a greater concern for reputation than nonfamily blockholders. However, compared to nonfamily firm restatements, restatements announced by family-controlled firms trigger significantly more negative market reactions. We attribute the more negative market reactions to the greater loss in reputation and higher investor scepticism of the credibility of corporate insiders for family firms than for nonfamily firms following restatements. Disciplines Business Publication DetailsMa, L., Ma, S. & Tian, G. G. (2016) We examine the impact of family control on the likelihood of accounting misstatements and on market reactions to subsequent restatements. Using a matched-firm approach, we find that family control overall reduces the incidence of misstatements, consistent with the notion that controlling families have a greater concern for reputation than nonfamily blockholders.However, compared to nonfamily firm restatements, restatements announced by familycontrolled firms trigger significantly more negative market reactions. We attribute the more negative market reactions to the greater loss in reputation and higher investor scepticism of the credibility of corporate insiders for family firms than for nonfamily firms following restatements.

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“…Pyramidal control structure, cross shareholding, and super-voting rights allow the controlling shareholders to secure control rights without commensurate cash flow rights (La Porta et al, 1999;Claessens et al, 2000). The divergence between control rights and cash flow rights induces the pervasive problems of controllers' expropriation (Denis and McConnel, 2003;John C. Coffee, 2005). Johnson et al (2000) use the term "tunneling" to describe the transfer of resources out of firms for the benefits of controlling shareholders.…”

Section: Efficacy Of Ownership Concentration: Monitoring Vs Exproprimentioning

confidence: 99%

The Relationship between Ownership and Performance: A Review of Theory and Evidence

Hu¹,

Izumida²

2009

IBR

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This paper surveys the theoretical basis for, and empirical evidence on the relationship between ownership structure and corporate performance from two perspectives: ownership concentration and managerial ownership. We pay special attention to see reasons for discrepancies among previous empirical research, such as corporate governance environments, data issues, variable measurements, and estimation methods. General directions for future work are discussed as well.

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“…Finally, the control over Talvivaara's performance was inefficient, too late, and without direction. The realization of several risks was possible (Coffee 2005;Solomon and Solomon 2005). At the beginning of its life, Talvivaara was portrayed in the HS texts in a very positive light, with reports focusing on its providing wellbeing in Kainuu.…”

Section: Summary and Discussionmentioning

confidence: 99%

What happened at Talvivaara Five discourses of Corporate Governance

Virtanen¹

2016

Fourth International Conference on Advances in Social Science, Management and Human Behaviour - SMHB 2016

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Abstract-Talvivaara was a mining company located in Sotkamo, in the east of Finland. This is the story of what happened at Talvivaara starting from 2006 and ending with bankruptcy in November 2014. The data was gathered from Helsingin Sanomat (HS), the leading daily newspaper in Finland. The aim of this study is to explore how corporate governance (CG) of Talvivaara was constructed in the articles to public. The results show that the media built up five discourses of CG. In the governance discourse the role and behavior of the CEO was dominant. The financing discourse highlighted the fact that investors and creditors who trusted the company lost their money. The market discourse related how the company could not adapt to the changes in the global market. The nature and people discourse focused on the exploitation of the environment, workers, and local residents. The discourse labeled as controlling relate to the attempts at control by shareholders, politicians, and authorities, which was described in terms of being too late and somewhat naïve. The study contributes to previous research on fallen companies that have shown ethical reasoning to be a cause of organizational failure.

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“…According to Coffee (2005), class-action lawsuits occur more often in the United States than in other countries because of the differences in ownership structure and shareholder base. Peng and Röell (2008a) found that litigation is the primary punishment device available to shareholders in the United States and distinguishes the U.S. capital market from other markets.…”

Section: Possible Explanations and Practical Implicationsmentioning

confidence: 99%