Corporate governance, firm performance and executive pay: A comparison of defense and non-defense firms

The new challenge is to review the behavior of the proprietary system and its relationship with the company; the objective is to fill the great void left by the agency's theory, giving greater consideration to the interests of the company itself, as the bearer of its own expectations and needs, even independent of the ownership system. The possible considerations that arise from it, therefore, must not be limited to studying the relationship between Principal and Agent, but between Principal-Agent-Firms. In this new perspective, research on Corporate Governance must more consider the interest of the firm. In this issue of Corporate Governance and Organizational Behavior Review, the trends highlighted welcome these new considerations. The debate is still on the basic stage, but hopefully, it can contribute to the start of a change of mind.

Editorial: New guidelines in corporate governance studies – Initial signs of reducing the limits of the agency’s theory

Falco¹

2019

Governance structure and cost of debt

Derbali¹,

Jamel²,

Chenguel³

et al. 2020

The purpose of this paper is to examine if creditors take account of the firm’s governance attributes to decide the cost of debt. Using a sample of 486 US firms over the period 1998-2017, we synthesized governance in six factorial axes. We have demonstrated that the quality audit (independence, frequency of meetings, auditor’s reputation, there is a charter) and financial expertise (percentage of financial experts and ownership of institutional investors) are informative tools creditors that provide information on the quality and reliability of financial reporting. They affect negatively and significantly the cost of debt. Moreover, creditors appreciate the presence of independent directors on the board and reduce the cost of debt required. Furthermore, the independence of the nomination and compensation committees prove irrelevant attributes of governance perspective because creditors do not reduce their risk of the agency. However, the attributes of the board (the size, the number of meetings, the existence of specialized committees, and meetings) are misunderstood by creditors that will increase the interest rate. In addition, the cost of debt increases with the concentration of managerial ownership and majority shareholders. Similarly, attributes reflecting the managerial entrenchment (duality of CEO tenure) are positively correlated to the cost of debt.

Governance mechanisms, family dynamics, and sustained performance: Insights from family firms

Trebicka,

Tartaraj

2023

This study investigates governance dynamics in family firms, examining the relationship between governance mechanisms, family dynamics, and sustained performance. Combining qualitative interviews and a survey of 242 family firms, we tested hypotheses involving effective governance mechanisms, well-managed family dynamics, adoption of best practices, and successful challenge navigation. Findings supported these hypotheses. Family firms with effective governance showed better-sustained performance. Managed family dynamics correlated with improved governance outcomes. Adoption of best practices aligned with enhanced financial performance, reduced agency conflicts, and improved access to resources. Successful challenge navigation was associated with greater long-term sustainability and success. The results provide actionable insights for family firms, highlighting the importance of governance strategies. Future research could explore specific governance mechanisms’ impacts and the role of family culture. This study contributes to understanding governance dynamics’ influence on family firm performance, offering guidance for effective governance in family-owned businesses. Beyond practical insights, this study holds theoretical implications, advancing our comprehension of the intricate interplay between governance, family dynamics, and performance in family firms (Camisón-Zornoza et al., 2020; Gómez-Mejia et al., 2011).