Skip to main content

Posts

When Women Are on Boards, Male CEOs Are Less Overconfident

A number of governments (notably those in India, California, and parts of Europe) are pushing for greater female representation in the boardroom. And several studies suggest why: Having women on the board results better acquisition and investment decisions and in less aggressive risk-taking, yielding benefits for shareholders. What’s less clear is why these effects happen. See more.

The effects of women on boards are also discussed in chapter 7 of my corporate governance textbook.
Recent posts

Trust and Shareholder Voting

Voting at annual general shareholder meetings (AGMs) has been shown to be valuable. This makes perfect sense as voting gives shareholders a say on important corporate decisions, such as the composition of the board of directors and the approval of mergers and acquisitions. It also enables shareholders to express their support or dissent of the current management. Surprisingly though, voter turnout at AGMs across the world is relatively low with an average of slightly less than 60 percent of voting shares. Nevertheless, there is variation across countries with voter turnout ranging from a low of 41 percent in New Zealand to a high of 100 percent in Cyprus. In addition, the average approval rates for management-initiated proposals range between 84 percent and 100 percent, indicating that shareholders are less likely to show dissent to the firm’s management in some countries compared to others. What explains these variations across countries? ... Read more

How an Issuer’s Multiple Credit Ratings Can Affect Its IPO

While the list of prospective issuers with credit ratings is lengthy, literature is sparse on how ratings from multiple credit rating agencies (CRAs) affect the performance of a company’s initial public offering (IPO). Our research is motivated by the lack of such literature and by Sangiorgi and Spatt (2017), who argue that multiple ratings are socially optimal if the benefit of the additional rating outweighs the cost of information production. This argument aligns with the “shopping hypothesis” and “information production hypothesis” of Bongaerts et al. (2012). Under the former hypothesis, issuers “shop” for an additional rating in hopes of improving … Read more

Firms’ Rationales for CEO Duality: Evidence from a Mandatory Disclosure Regulation

The common practice of combining the roles of the CEO and chairman of the board (CEO duality) has been the topic of one of the longest debates in corporate governance. On the one side, a majority of S&P 500 firms combine the two roles. On the other side, investors and governance experts—via shareholder proposals and public campaigns—frequently pressure firms into separating the two roles, emphasizing a lack of effective managerial oversight under CEO duality. Nevertheless, most such proposals do not receive majority support, which suggests disagreement among shareholders about the value of CEO duality. Such disagreement is consistent with the inconclusive academic literature on the relation between CEO duality and firm performance (for a review, see Krause, Semadeni, and Cannella, 2014), as well as the lack of reliability of extant studies likely suffering from the non-random choice of board structures. The above discussion highlights the need for both practitioners and scholars t…

Corporate Governance Course

COURSE DESCRIPTION This is a slightly different version of the course outline I published sometime ago and which can be found here. The focus here is more on young and entrepreneurial firms - including those from emerging markets - rather than more mature businesses.
Who Should Take this Course
Corporate governance is frequently reduced to compliance and box ticking. This course will show you that corporate governance is more than this and that it can be used proactively to create value.
This course is aimed at three different constituencies. First, it is aimed at budding entrepreneurs who want to know more about designing the governance of their ventures in view of ultimately going public. Second, it is also aimed at those who aspire to a career as a non-executive director. Finally, the course should also be of interest to investors and other parties interested in how corporate control, ownership and governance vary across the world.
Course Overview
This course aims to introduce you to re…

Too Much of a Good Thing Is Not Necessarily Better

Starting with the 1992 Cadbury Report in the UK, the emphasis of most codes of best practice has been on ensuring a sufficient number of independent directors on corporate boards. Successive codes of best practice have then attempted to increase the number of independent directors even further. It is then no surprise that Spain's Iberdrola has won successive prizes for its corporate governance. Indeed, nine of Iberdrola's 14 members of its board of directors are independent directors with another three being external directors and the remaining two being executives.


So does having more independent directors on a board always mean better corporate governance? Well, not necessarily. First, the academic literature on the value consequences of board independence – with board independence typically measured by the percentage of independent directors on the board – has found little or no evidence of an effect of board independence on firm performance and value. Still, this literature…