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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…
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The Relationship between Public Listing, Context, Multi-nationality and Internal CSR

This cross-country study argues that corporate social responsibility (CSR) has an internal as well as an external focus: although the internal aspect has been less carefully examined in the literature, ‘doing good’ for society necessarily involves treating employees properly. Focusing on this internal aspect of corporate social responsibility, we investigate how firm and country characteristics affect the likelihood of a firm having a CSR statement and how it impacts the way such firms treat their internal stakeholders and their staff. In particular, our paper examines employer-employee interdependence – how the existence of a CSR statement affects a firm’s investment in its staff and the downsizing of its workforce when required – according to types of firms and legal families.

The following research questions are addressed: read more

The published study is now available free of charge from here.
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Trust and Shareholder Voting

Theory as well as empirical studies suggest that voting at annual general shareholder meetings (AGMs) creates value. Indeed, voting gives shareholders a final say on major company decisions, such as appointments to the board of directors and the approval of takeover offers. It also enables shareholders to show their support the current management or to disagree with the latter. It is then somewhat surprising that, on average, voter turnout at AGMs is only about 60%. Still, the average voter turnout varies across the world with a minimum of 41% for New Zealand and a maximum of 100% for Cyprus. Moreover, the average approval rates for management-initiated proposals vary between 84% and 100%.

In a study with Peter Limbach and Simon Lesmeister, we propose the level of trust in others that prevails in a country has an effect on shareholder voting and explains differences in voting patterns across countries. The economics literature (see e.g. Zak and Knack 2001) finds that trust increases e…
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How Acquisition Performance Affects the Market for Non-Executive Directors

In the United Kingdom, successive codes of best practice in corporate governance have highlighted the important role of outside or non-executive directors in ensuring that corporations are run for the benefit of their shareholders. While the first code of best practice, the 1992 Cadbury Report, recommended that there should be a sufficient number of non-executives on the board, the 2003 Higgs Report was much more prescriptive, recommending that there should be a majority of non-executives on the board (excluding the chairman). Similarly, U.S. regulation has been emphasizing the important role of independent or non-executive directors. More specifically, the NYSE and NASDAQ listing rules require companies to have a majority of independent directors. Despite many national regulators pushing for greater non-executive presence on boards, there are few academic studies finding evidence that a greater proportion of non-executives improve firm performance or value. Indeed, most studies do n…
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CORPORATE GOVERNANCE – MODULE OUTLINE

This module is intended for advanced undergraduates in business and management, accounting, finance, or economics, and Master students. The module is delivered over a total of 24 hours of lectures with a flexible format including traditional lectures, class discussions of the end-of-chapter questions in Goergen (2018) and the multiple choice questions (see below).  AIMS OF THE MODULE This module aims to introduce you to recent developments in the theory and practice of corporate governance. The module adopts an international perspective by comparing the main corporate governance systems across the world.  LEARNING OUTCOMES OF THE MODULE On completion of the module you should be able to: Evaluate the current state of corporate governance in an international context; describe differences in corporate control and managerial power across the world; assess the potential conflicts of interests that may arise in various corporate governance environments; critically evaluate the effectivene…
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Dos and Don'ts of Approaching a Potential PhD Supervisor

Similar to most academics, I get lots of unsolicited emails from potential PhD students asking me whether I would be willing to supervise them. Hence, I thought I should put together the Dos and Don'ts of doing this. DosDon'tsEmail only potential supervisors in your area of research.Email everybody in the department or school. Start your email with "Dear Sir or Madam".Specify a topic that is of interest to you. Be as specific as possible. Ideally, you should attach a detailed research proposal to your email.State that you want to do a PhD in an area as large and vague as e.g. finance. Write that, since the age of 5, it has been your dream to do a PhD. (I didn't know what a PhD was at that age!) This is not a great start.The choice of the university is an important consideration. So is identifying a suitable supervisor. Do your research by consulting staff profiles. Choose a supervisor who is research active in your field of interest.Email a potential supervisor …
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