Corporate Governance

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    Developing a tool to understand corporate culture from the outside

Developing a tool to understand corporate culture from the outside

Since May 2016, we have led an academic research project to develop a new approach to measuring corporate culture. This research has produced the Unobtrusive Corporate Culture Analysis Tool (UCCAT).

UCCAT is a theoretically based and scientifically tested methodology for analysing and benchmarking corporate culture. Uniquely, rather than gathering employee interviews and questionnaires to assess culture, UCCAT analyses publicly available […]

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    Uber: How inappropriate comments can take on unforeseen significance

Uber: How inappropriate comments can take on unforeseen significance

The widely reported resignation of Uber board member, David Bonderman, following his words at an all-hands staff meeting in June 2017 offers an exemplary case of controversy in corporate ethics and culture.

I revisit the event to analyse how these remarks were treated as ethically accountable conduct, and how such conduct takes place and is seen to happen within workplace […]

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    Rupert Murdoch’s Sky bid: why Ofcom should review the deal

Rupert Murdoch’s Sky bid: why Ofcom should review the deal

In December 2016, Rupert Murdoch’s 21st Century Fox reached an agreement in principle to buy satellite broadcaster Sky. After Fox formally notified the European Commission of its bid on 3 March, Culture, Media and Sport Secretary Karen Bradley has said that she is ‘minded to’ refer the deal to Ofcom on the grounds of media plurality and commitment to broadcasting standards.

Karen Bradley will […]

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    How boards perform their dual role as supervisors and advisors of management

How boards perform their dual role as supervisors and advisors of management

The board of directors forms an integral part of a firm’s governance mechanisms. Yet, how boards perform their dual role of supervisor and advisor of corporate management is difficult to observe from outside of the company. To open this black box, we survey 130 non-executive directors in various emerging markets to obtain detailed information about the inner workings of […]

The elephant (and the donkey) in the boardroom

Firms governed by politically conservative boards of directors pay their CEOs more money than do firms with more liberal-leaning (the ideological left in the US) boards. That’s the conclusion of our new study on the impact of political ideology in the boardroom. We also find an ideological disparity in the degree to which directors weigh recent firm performance when deciding […]

The business value of appearing on The New York Times

The New York Times building, by Haxorjoe, under a CC-BY-SA-3.0 licence
Firms that are more visible in the press are better governed and more profitable. But investors underestimate the value of visibility and could profit from investing into high-visibility firms.

In our study, ‘The Value of Visibility’, we analyse 90 years of The New York Times’ coverage of more than 22,000 publicly listed US […]

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    Time to retire the stereotype of bankers as reckless anti-heroes

Time to retire the stereotype of bankers as reckless anti-heroes

Arkham City Joker, by greyloch, under a CC-BY-SA-2.0 licence

Imagine a world where financial institutions are characterised by pay proposals that break the cycle of pay inflation; by traders enjoying long careers within one organisation and by senior management adopting a pragmatic attitude to risk. My guess is that you can’t.

It’s difficult to think of bankers as anything other than the stereotype […]

Navigating the new anti-money laundering normal

Money laundering, by The Preiser Project, under a CC-BY-2.0 licence
A series of recent news events have highlighted the continued focus of global regulators on money laundering and compliance failures at international financial institutions — and made it clear this focus is only likely to intensify in the months ahead. This makes it more crucial than ever that institutions have the […]

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    Exporters to countries that value CEO power will have more powerful CEOs

Exporters to countries that value CEO power will have more powerful CEOs

Silicon Valley from above, by Patrick Nouhailler, under a CC-BY-SA-2.0 licence
Corporate governance scholars have long argued that a board of directors can serve a legitimising role for their organisation. But strong CEO power, in their view, can be de-legitimating because of its non-compliance with “good governance” principles.
By legitimacy, in corporate governance terms, we mean that there is a perception that […]

Experts on corporate boards: more is not always better

RDECOM Board of Directors holds meeting, by U.S. Army RDECOM, under a CC-BY-2.0 licence
Expectations on corporate boards are on the rise, and directors who are experts in the company’s home domain are, understandably, in high demand. Because those experts can more fully grasp all the ins and outs of difficult decisions, organisations with more experts in their boards should in […]

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    Network analysis shows offshore finance as a complex network of ownership ties

Network analysis shows offshore finance as a complex network of ownership ties

The EU made a move in August to force Apple to pay €13 billion in unpaid taxes. The episode has quickly become emblematic of the EU’s fight against corporate tax avoidance, a dispute which intensified in the aftermath of the 2009 financial crisis. As Europeans see it, this is about the need to provide a level playing field between […]

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    Shareholder committees can restore responsible company ownership

Shareholder committees can restore responsible company ownership

For capitalism to work, the holders of capital (i.e. shareholders) need to exercise a measure of control and oversight over the companies they own. Without this, directors may simply run corporations in their own interests. For example, Shareholders today often merely rubber stamp recommendations for Director nominations and have a very limited formal role in setting executive pay. Symptoms of […]

Why whine about wining and dining?

Annual US expenditures on business entertainment likely exceed $40 billion. Such “wining and dining” is often viewed with suspicion, as a way for one entity to influence another’s decision makers improperly. Indeed, such concerns often lead governments and other organisations to limit what kinds of meals and other gifts employees can receive (consider, e.g., 5 Code of Federal Regulations […]

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    Shareholders’ votes on CEO pay focus mostly on top-line figures

Shareholders’ votes on CEO pay focus mostly on top-line figures

We examine the impact of enhanced executive remuneration disclosure rules on the voting pattern of shareholders under UK regulations. The key findings are that shareholders guide their vote by top line salary only, and appear to disregard the remaining – substantial – body of information provided to them.

Our paper can be seen against a backdrop of numerous policy initiatives […]

CEOs strategically time news releases for their own benefit

More and more firms seek to set long-term incentives for their managers. One way to do so is to restrict executives from selling stock and options for a certain period, typically three years. When such stock and options finally become available (“vesting”), many executives are eager to sell.

One easy way to boost short-term stock prices is to release news. Even […]

CEO pay packages are based on old, out-of-date assumptions

According to the popular French economist Thomas Piketty, one of the main factors contributing to the growing inequality in the western world is inflated rates of executive pay.

Whilst executive pay is frequently the subject of furious political and ethical debate, it too remains a difficult topic for the organisations employing top managers. Despite the fact that it would certainly […]

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    Good corporate social performance may lead to higher credit ratings

Good corporate social performance may lead to higher credit ratings

Does corporate social responsibility (CSR) or Corporate Social Performance (CSP) really pay off or is it just a waste of corporate resources? In our research, we empirically examine whether superior performance in CSR results in lower credit risk, measured by credit ratings and zero-volatility spreads (z-spreads).

Until now, only a limited number of studies have investigated the CSR-CFP relationship with […]

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    The state of gender representation on corporate boards around the world

The state of gender representation on corporate boards around the world

Although women have increasingly achieved equality in some domains, there are vast differences in their participation at the highest echelons of the corporate world: boards of directors. In the EU, women hold 17.8 percent of board directorships; in the US, they represent 19.2 percent of S&P 500 board directors. Recently, several countries have taken proactive steps to introduce quotas (hard law) that […]

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    Where do multinationals fit in global efforts to adapt to climate change?

Where do multinationals fit in global efforts to adapt to climate change?

Climate change is widely recognized as one of the critical global challenges on the political agenda and is not a new topic for the boardrooms of multinational corporations (MNCs) either. Ahead of the upcoming climate change summit in Paris in December governments and companies are pledging emission reduction targets and are working on new initiatives to lower their carbon […]