Corporate Governance and Firm Value: The Impact of the 2002 Governance Rules

Chhaochharia, Vidhi; Grinstein, Yaniv

doi:10.1111/j.1540-6261.2007.01257.x

Cited by 584 publications

(363 citation statements)

References 43 publications

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“…As mentioned by Chhaochharia and Grinstein (2007) and Wintoki (2007), these studies suffered from identification problems -i.e., these studies identified different key dates and news items; hence their interpretation differed as to whether the U.S. SOX was likely to pass. The Japanese case provides a favorable opportunity to avoid such identification problems.…”

Section: Literature Reviewmentioning

confidence: 99%

Managerial ownership, capital structure and firm value

Ruan¹,

Tian²,

Ma³

2009

COC

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This paper extends prior research to examine the managerial ownership influences on firm performance through the choices of capital structures by using a new sample of S&P 500 firm in 2005. The empirical results of OLS regressions replicate the nonlinear relationship between managerial ownership and firm value. However, we found that the turning points had moved up in our sample compared with previous papers, which implies that the managerial control for pursuing self-interest, and the alignment of interests between managers and other shareholders can only be achieved now by management holding more ownership in a firm than that found in the previous studies. Managerial ownership also drives the capital structure as a nonlinear shape, but with a direction opposite to the shape of firm value. The results of simultaneous regressions suggest that managerial ownership affects capital structure, which in turn affects firm value. Capital structure is endogenously determined by both firm value and managerial ownership; while managerial ownership is not endogenously determined by the other two variables. As a part of good tradition we have focused on a wide international representation of contributions. We have contributions made by authors from many countries of the world both developed and developing. These are papers by authors from Japan, the USA, Spain, Australia, Taiwan, Qatar, Brazil, Denmark.In this issue we were fortunate in composing a section devoted to corporate governance in a particular region with application to Japan. This is the first time for our journal to publish the special section on corporate governance in Japan. This is a result of efforts undertaken by us to get and develop very good and future-oriented relationships with corporate governance experts from Japan. I think you will enjoy reading the papers on corporate governance in Japan.In this issue of the journal we came back to the traditional issue of corporate governance -ownership structure as a special section. Major attention is paid to the link between ownership structure and performance. Our contributors were fortunate in generating new ideas and made new findings in this way.Our strategic purpose is to develop the new concepts and practices how to overcome the financial crisis with the corporate governance toolkit including mechanisms, instruments and participants. SECTION 1. ACADEMIC INVESTIGATIONS AND CONCEPTS CORPORATE GOVERNANCE AND FINANCIAL CONTRACTING: BONDHOLDER TAKEOVER DEFENSES IN POISON PUTS 9Ai-Fen Cheng, Tao-Hsien Dolly KingBondholder governance through the use of bond covenants and the interactions between shareholder and bondholder governance mechanisms has been recently highlighted in the corporate governance literature. In this paper, we study bondholder governance mechanisms through takeover-related bond covenants (i.e., poison puts), confirm with agency theory on the characteristics of firms that are more likely to use these covenants, and emphasize the importance of bondholder governance in the overall struc...

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Section: Literature Reviewmentioning

confidence: 99%

Managerial ownership, capital structure and firm value

Ruan¹,

Tian²,

Ma³

2009

COC

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“…Although effective governance may ultimately lead to more satisfied shareholders, it is costly. For example, the organizational experience with the Sarbanes-Oxley Act (2002) has shown that (a) governmental regulations may become necessary because opportunistic managers are exceedingly reluctant to implement voluntary governance reforms that benefit shareholders and (b) the costs of good corporate governance can be very high (Chhaochharia & Grinstein, 2007;Zhang, 2007). Other evidence indicates that these costs are unlikely to be counterbalanced by improved organizational performance.…”

Section: The Prevalence Of Macrolevel Factors For Shareholder-orientementioning

confidence: 99%

Unpacking the Drivers of Corporate Social Performance: A Multilevel, Multistakeholder, and Multimethod Analysis

et al. 2015

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The question of what drives corporate social performance (CSP) has become a vital concern for many managers and researchers of large corporations. This study addresses this question by adopting a multilevel, multistakeholder, and multimethod approach to theorize and estimate the relative influence of macro (national business system and country), meso (industry), and micro (firm-level) factors on CSP. Applying three different methods of variance decomposition analysis to an international sample of 2,060 large public companies over a time span of 5 years, our results show that firm-level factors explain the largest proportion of variance in aggregate CSP as well as CSP oriented toward communities, the natural environment, and employees. These results support our hypotheses according to which CSP is not primarily driven by macrolevel or mesolevel factors, except for shareholderoriented CSP, which is relatively more influenced by country-level factors. As a whole, our findings also point to the value of subdividing CSP into its stakeholder-specific components as this disaggregation allows for a more careful examination of distinct drivers of distinct aspects of CSP.Keywords: Corporate social performance; corporate social responsibility; decomposition of variance; hierarchical linear modeling; stakeholders; variance components analysis.Abbreviations: ANOVA = analysis of variance; CSP = corporate social performance; HLM = hierarchical linear modeling; MLE = maximum likelihood estimation; NBS = national business system; REMLE = restricted maximum likelihood estimation; VCA = variance components analysis.Unpacking 2

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“…Rezaee and Jain (2006) and Zhang (2007) fi nd mixed results in their study of the aggregate US stock-market reaction to passage of the act. Chhaochharia and Grinstein (2007) compare the abnormal returns of a portfolio of fi rms that were already compliant with the act's provisions before its passage to those that were not. They fi nd a 6-20 percent abnormal return, suggesting net benefi ts to shareholders.…”

Section: Sarbanes-oxley Act and Other Securities Lawsmentioning

confidence: 99%