Zugl.: Zürich, Univ., Diss.

As the topic itself might advice, this diploma thesis examines the issue of governance of a real company, TQM -- Holding s.r.o. The fundaments of this thesis are the management in the mentioned organization and the ownership structure of said organization, as well as its administrative bodies and their activities. The thesis examines whether the organizational and ownership structure of the company are well chosen in the sense that the company is able to operate effectively for both its future development and the satisfaction of its customers. The analysis aims, among others, to find out what competencies were passed on the managers by the owners -- and what competencies the owners have refused to delegate, i.e. in what way the owners might take part in managing the company.

While previous research has primarily focused on post-Merger & Acquisition (M&A) effects, influential factors, which trigger cross-border M&A transactions and whether the level of industry concentration play a key role in making the decision, have been largely neglected in research. This study aims to close this gap in research and investigates the influence of industry concentration on cross-border M&A decisions, including effects of profitability and corporate governance. The studied sample consists of 1105 companies across 48 countries, whereas 533 undertook cross-border M&A transactions across 40 countries. A logistic regression was used to predict the probability of cross-border M&A transactions. The study analyzed the effects on both the complete sample and on M&A companies only. The results indicate that large companies are more likely to undertake cross-border M&A with companies from a different industry in order to spread their level of risk. However, MNCs, which undertake transactions, are less likely to perform more transactions within one year. Over the time of observation the analysis revealed that market share did not change and thus, industries are not getting more concentrated in general, indicating that markets remain competitive. Multinational companies (MNCs), which have a higher market position and are more profitable, are less likely to undertake corporate restructuring, which was partially supported in this analysis. For both samples the findings do not support that the interaction between industry concentration and corporate governance have an influence on cross-border M&A. These findings increase the understanding of the role of industry concentration, profitability and corporate governance and that they do not play a crucial role in making cross-border M&A decisions.

Research report to the SBL, Unisa, Midrand. / The research project aimed to establish whether corporate governance is important to investors from a value perspective. The implications and recommendations for further research were provided.

In the recent years, there have been many reports on the prevalence of corruption in the Department of Justice and Constitutional Development. Corruption impacts negatively on the image of organisations since it erodes public trust and delegitimises such organisations. Therefore, good corporate governance practices should be adopted to prevent corruption. The purpose of this study was to analyse the governance system of the Department of Justice and Constitutional Development with the view to identifying shortcomings in the system.

The political and economic pressures for transformation in South Africa have been documented in an array of policies, pieces of legislation, regulatory and statutory frameworks, and also in governance codes for both public and private companies. Specifically for the mining industry, the Mining Charter comprises of transformation targets and measurement criteria that are presented in a scorecard to be achieved by the mining industry by 2014. Additionally, the King reports on governance have specific requirements that listed companies must meet in terms of employment equity and demographic representation to achieve board diversity and independent boards. The aim of this study was to report on the board transformation status in the mining industry, as well as the progress that has been made towards meeting transformation targets. The 2011 annual reports were used to capture profiles and composition of board of directors in Johannesburg Stock Exchange (JSE) listed mining companies. Interviews were used to gain insight on the transformation status, initiatives undertaken and challenges of transformation in the mining industry. The research findings from the analysis of board members demographic and career profiles shows that little has been achieved to ensure equal representation and diversity on the boards of directors. Further analysis of the status of transformation by JSE listed mining companies to realise transformation, shows that transformation in the mining industry is still a major challenge. Whilst some initiatives have been undertaken and some progress has been made, this study reveals that the barriers to transformation in the South African mining industry are racial issues and tensions based on colour, the lack of skills caused by the education system, a war for talent, a lack of mentorship and no stakeholder engagement between the mining industry and government / Business Management

Corporate governance has received increased attention from both regulators and researchers in recent years resulting in highlighting the significance of the internal audit function (IAF). Another transformative force on the IAF has been the dissemination of enterprise resource planning (ERP) systems which have an impact on the legitimacy of the IAF if it is not suitably adapted. However, there is insufficient knowledge about the adaptations of the IAF which are required if it is to maintain its essential role in governance. This thesis extends our knowledge by exploring and theorising the adaptation of the IAF after ERP introduction. This thesis uses institutional theory as a lens through which to investigate how the IAF responds to the external governance pressures and the internal pressures of the control logic following the introduction of an ERP system. Data were gathered from two listed companies in the food and beverage sector and two large banks operating in Egypt, where one of each pair is an international company and the other is a national company. Interviews and focus groups were conducted with all stakeholders in addition to careful analysis of a number of internal and external documents related to the ERP and the IAF. The study finds that governance pressures related to the IAF determine the legitimisation criteria for the IAF. There is little coercive governance pressure on the IAF in Egypt. However, international companies with operations in Egypt have introduced normative governance pressures as a result of their compliance with stock exchange rules in other jurisdictions. Therefore, mimetic behaviour has helped in transferring the IAF response to ERP implementation. ERP systems carry new control logics based on some interlinked assumptions, which have affected the IAF. The ERP system’s control logic is aligned with the corporate governance goals and objectives, but further alignment is needed to make the best use of the ERP system in enhancing internal control. The introduction of an ERP system produces uncertainty about the IAF’s activities, which motivates it to adapt by changing its practice and structure. The changes in the IAF are dependent on the strategic response adopted by the auditors, which range from acquiescence to defiance. These responses were found to change over time. The differences in responses result in different outcomes for the IAF adaptation. In the international companies the implementation of an ERP system motivates the IAF to be integrated and have a comprehensive scope, whereas in the national companies change was resisted and the role of the IAF was significantly diminished. The IAF’s legitimacy maintaining strategies depend on the coercive and normative governance pressures, which give directions about how to maintain legitimacy. This study offers an explanation of how information systems contribute to the IAF’s professional stability or change and of how macro-governance pressures can bind micro-IAF practice within organisations.

This thesis examines the effect of a responsible investment index (FTSE4Good) on corporate social responsibility (CSR). In the first study I investigate the impact of the FTSE engagement reinforced by the threat of exclusion from the index on companies’ improvements in environmental management. The results show that FTSE involvement doubles the probability that a company will meet stricter environmental management requirements within the three-year period 2002 to 2005. Both the dialogue and the exclusion threat stimulate compliance but the dialogue appears to be more effective where the perceived threat of exclusion is higher. The engagement effect persists for at least five years and is positively related to low concentrated ownership and to domicile in a coordinated market economy. In the second study I examine FTSE4Good’s effect on the probability that a company will implement strong countering bribery practices within the two-year time period 2007 to 2009. The results demonstrate that the combined effect of engagement and exclusion threat is significant in promoting compliance and the two act independently. Stronger anti-bribery provisions are positively associated with companies based in liberal market economies, with better internal governance and higher reputational concerns related to ethical controversies. In the third study I investigate FTSE4Good’s impact on companies’ compliance with climate change criteria. The results show that the index is able to stimulate compliance and the dialogue appears to contribute more than the exclusion threat. I also find that the likelihood of the company adopting the required practices is negatively associated with concentrated ownership and with strong internal governance. Finally, the results offer some evidence that compliance is related to subsequent reduction in greenhouse gas emissions. These studies contribute to the understanding as to how different CSR areas are promoted or discouraged by the managers and the owners, and how the institutional environment influences this. The results are consistent with engagement via a responsible investment index being an effective means of large-scale collective monitoring by institutional investors. The findings are also relevant for policy makers who wish to promote active ownership.

Bangladesh reformed its corporate governance by adopting Bangladesh Corporate Governance Guidelines-2006 (the BCGG-2006 hereafter) due to pressures from international financial institutions (IFIs). However, there is huge controversy in prior literature regarding the IFIs’ suggested reform initiatives. The thesis asks specific research questions: RQ1. Do institutional investors and bankers in Bangladesh perceive that the level of compliance with the BCGG-2006 by the investee or borrowing company influences the investment and lending decisions respectively? RQ2.1. To what extent is the BCGG-2006 implemented in form rather than in substance? RQ2.2 Is there a relationship between the nature of compliance with the BCGC-2006 and firm performance? RQ3.1. To what extent does reported compliance with the BCGG-2006, as reported in annual reports, overstate underlying compliance with the BCGC-2006? RQ3.2 Does the overstatement of compliance reported in annual reports lead to a different relative ranking of a firm’s corporate governance structure? RQ3.3 What factors influence the overstatement of compliance with the BCG-2006 in annual reports? To investigate RQ1, an inductive approach is taken and data are collected by using semi-structured interviews of investment managers and credit rating analysts. In order to examine the remaining RQs, a deductive approach is taken and data are collected: (1) by using a structured survey questionnaire addressed to company secretaries or CFOs; and (2) from annual reports and stock exchanges. With respect to RQ1, this study finds (1) strong evidence that institutional investors and bankers perceive limited impact of corporate governance mechanisms recommended by the BCGG-2006 on investment and lending decisions respectively. In order to theorise the above findings, two theories: agency theory and the theory of path dependence are contrasted. Using a grounded theory coding, this study finds that (1) companies are locked in the path of control by sponsor families and sponsor families then impede the implementation of the BCGG-2006 and (2) institutional investors and bankers lock themselves in the path of name-based and relationship-based investment and lending practices which deters consideration of corporate governance mechanisms introduced by the BCGG-2006. Very few interviewees provide an explanation consistent with the agency theory. This evidence thus points more to the theory of path dependence than to agency theory. In relation to RQ2.1, this study finds that local privately-owned companies and government-owned companies either do not comply or comply in form but not in substance with the BCGG-2006, while subsidiaries of foreign multinational companies comply in form and in substance with the BCGG-2006. The relative strength of path dependence in local privately-owned companies and government-owned companies and subsidiaries of foreign multinational companies explains these results better than agency theory. The evidence with respect to RQ2.2 provides an indication that the nature of compliance with separation of the chairman and CEO, board independence and audit committee does not have an association with firm performance in case of local privately-owned companies. However, the evidence in relation to RQ2.2 provides an indication that the nature of compliance with the corporate governance mechanisms introduced by the BCGG-2006 makes a difference in firm performance in subsidiaries of foreign multinational companies. With respect to RQ3.1, it is found that companies overstate compliance with the BCGG-2006 in annual reports. With respect to RQ3.2, this study finds that the rank of a firm’s corporate governance is different when comparing compliance with the BCGG-2006 as reported in annual reports with compliance with the BCGG-2006 as stated in the survey. With respect to RQ3.3, it is found that overstatement of compliance is more pronounced with respect to less-observable provisions of the BCGG-2006, is positively associated with control by sponsor families and is negatively associated with control by institutional investors. This evidence is again more consistent with the theory of path dependence and institutional logic than agency theory. The findings of this thesis suggest that corporate governance researchers in developing countries should consider the role of path dependence rather than agency theory exclusively. This thesis also makes a methodological contribution by investigating overstatement of compliance with the BCGG-2006. The findings of this study may also assist regulators in developing countries and the IFIs in formulating future governance guidelines for developing countries.

Thesis (MBA)--Stellenbosch University, 2015. / ENGLISH ABSTRACT: Corporate governance codes such as King III are focussing on IT governance due to the strategic nature of IT systems and the impact security breaches or failure of IT systems can have on a company’s sustainability. The convergence of Operational Technology (OT) and IT brings about both risks and opportunities for OT systems, while further entrenching their strategic nature within organisations. These systems are therefore key to the sustainability of an organisation and this necessitates the extension of sound governance not only to IT but also to OT. In many organisations, due to the previously closed or proprietary nature of OT systems, no governance controls or frameworks have traditionally been needed or put in place for OT systems. The aim of this research was to explore whether the lack of OT governance controls or framework within OT reliant organisations could be addressed by adapting and implementing leading IT governance models for OT systems due to the convergence between traditional IT and OT. The research methodology employed was a literature review followed by the selection and adaptation of a leading IT governance framework for OT governance. Additional data regarding OT incidents was gathered from the author’s own organisation and documented as mini case studies to determine if OT governance could have mitigated or minimised the impact of the documented OT incidents. The research showed that IT and OT are converging on two fronts, firstly due to integration between IT and OT and secondly due to the sharing of common technologies at a hardware, software and network layer. The research also indicated that the security risks facing IT continue to grow in number and sophistication. By extension, due to the technology convergence, these risks are now extending to OT systems, adding to the risks already facing OT systems. Leading corporate governance codes are espousing holistic governance to ensure the sustainability of an enterprise. Certain codes such as King III from South Africa have specifically called out IT governance as a key element of a holistic governance practice. Due to the convergence between IT and OT as well as the increasing risk, the lack of governance in OT can have a material impact on the sustainability of an OT reliant enterprise, necessitating the extending of governance to cover not only IT but OT as well. The research showed that a leading IT governance framework such as COBIT 5 can be applied to OT with little or no adaptation firstly due to the closeness between IT and OT brought about by the convergence between IT and OT, and secondly due to the way that COBIT 5 has been developed to serve as an overarching governance framework that can be adapted and applied by Enterprises to suit their unique requirements, one of which could be OT governance.