Master-Arbeit Univ. St. Gallen, 2006.

Master-Arbeit Univ. St. Gallen, 2007.

Corporate Governance and in particular, the role of the board of directors, have been placed at the centre of attention due to the recent well-publicized corporate scandals (Adams, Hermalin,&Weisbach, 2009). In South Africa, both the King II and recently published King III reports emphasise the importance of the board of directors, as being the crucial aspect of the South African corporate governance system (Institute of Directors, Southern Africa, 2002, 2009).The aim of this study was to determine the relationship between corporate governance and company performance. This was achieved by defining six specific characteristics of the board of directors in relation to corporate governance (independent variables of board independence, CEO-Chairman duality, staggered boards, board size and the presence and composition of the board remuneration committee), as well as identifying five company performance measures (dependent variables of net profit margin, return on equity, return on assets, share price and dividend payout).In reviewing the available literature, it was found that there is a lack of an appropriate and publicly available corporate governance measurement tool in South Africa. The Delphi technique was used to garner the views of four experts in the corporate governance field, in order to obtain their views as to what constitutes the research selected independent variables. The emergent themes from these interviews guided the measurement of these board variables and empirical testing against the selected company performance measures using the 21 Consumer Goods Companies listed on the Johannesburg Stock Exchange with published financial statements over the time period commencing on 01 January 2006 and ending on 31 December 2010.The overall results of this study indicate that the vast majority of board selected variables relating to corporate governance had a positive relationship with company performance. Of the six independent variables selected for testing, board independence, board size and composition of the board remuneration committee were found to have statistically significant relationships with the dependent variables of company performance, while the presence of a board remuneration committee indicated a moderate relationship (with only return on assets and net profit margin indicating a significant relationship) and staggered boards revealed no statistical significant difference.The relationship between CEO-Chairman duality and company performance could not be assessed, due to the sector data set revealing only one instance in which this duality existed. / Dissertation (MBA)--University of Pretoria, 2013. / Gordon Institute of Business Science (GIBS) / unrestricted

In Essay 1, we examine the departure of independent directors among 525 Taiwanese publicly listed firms with independent directors on the board between 2002 and 2006. We find that the accounting restatements is positively associated with the number (and the rate) of departures in the firm. This result implies that deteriorating financial reporting quality is related to the departures, which is consistent with Srinivasan's (2005) finding among the U.S. firms. We also find the number (and the rate) of departures is positively associated with shares owned by controlling families. Our findings support the independent directors’ role for intense monitoring based on agency theory. The results also support Anderson and Reeb’s (2004) result based opinion that that independent directors can protect minority shareholders’ interest by hindering dominant or family shareholders’ opportunistic or expropriation behaviors. In essay 2, we examine if there are significant associations between firm performance and (1) directors’ shareholdings, (2) directors’ family shareholdings, and (3) independent directors’ career affiliations in 2,164 Taiwanese publicly listed firms between 2002 and 2006. After addressing for possible endogeneity and controlling for firm specific variables, we find a positive association between CEO’s shareholding and firm performance. Consistent with agency theory and incentive effect, this result indicates that CEOs have control over firms’ operation and have incentive to maximize firms’ value. Also, we find a negative association between firm performance and non-executive directors’ shareholdings. This result, which is consistent with the entrenchment effect, implies that the possibility of expropriating minority shareholders’ interest may increase with shares owned by non-executive directors. However, we find that the non-executive directors’ family shareholding is positively related to firm performance, which implies that non-executive directors may be motivated by their family members to improve firm value. The results also imply that the majority-minority agency problem (Villalonga and Amit, 2006) can be reduced when director’s family welfare is at stake. In addition, consistent with skill matching theory (Jovanovic, 1979), we find a positive association between independent director’s career affiliation of executive officer and firm performance, which implies that independent directors who are executives are likely to improve firm performance.

This dissertation presents the results of three experimental research studies investigating factors within the executive compensation process and the effects these factors have on the pay-for-performance paradigm. The first study examines the influence of individual anchoring and the effects of private versus public decisions upon compensation awards by subjects role-playing as either an outside CEO or a non-CEO director. Research results show that subjects anchor to personal pay levels, CEO subjects shield the focal CEO from declining compensation when performance is below average, and that this phenomenon is mitigated when the individual director-subject decision is deemed to be made public. The shielding of compensation is consistent with Social Comparison Theory in that the CEO-subjects identify to and protect the CEO by limiting negative compensation awards of the CEO, and thus, representing an agency cost. The second study examines affect as an influencing factor on individual decision makers in the compensation setting process. Results are consistent with Prospect Theory in that, in the absence of a tangible payoff, personal affect is the outcome monitored and used by individuals in the decision process in the determination of a gain or loss. Using personal pay and personal performance as anchors for subjects role-playing as directors on the compensation committee, results indicate that subjects make decisions to maximize (minimize) positive (negative) affect in compensation awards to the focal CEO. The findings suggest that although individual anchors may interact and add to the complexity of the decision process, the outcomes are consistent with Prospect Theory. The third study examines group decision making as compared to individual decisions when making compensation awards. Results show that in a committee of individuals where a majority of beliefs is present, group polarization occurs and the compensation results are exaggerated as compared to the individual beliefs. The findings also suggest, though, that the appointment of a leader as chair of the committee, either in the majority or minority view, has a moderating effect on the group outcome. These results highlight the potential for agency costs in the group decision process that may be found in the executive compensation-setting environment. Overall, these results add to the knowledge of factors affecting executive compensation. These studies provide evidence that individual anchors, individual performance, individual affect, and the group decision process may add to agency costs and be contributing factors in the imperfection of the pay-for-performance paradigm. / Ph. D.

O objetivo principal da pesquisa foi investigar quais fatores motivaram empresas brasileiras de capital aberto a adotarem o Comitê de Auditoria como parte integrante de sua estrutura de Governança Corporativa. Como complemento, investigou-se a associação entre características das companhias, como Liquidez, Porte e Emissão de ADR\'s, e a adoção ou não de comitês de auditoria. Para tanto, foi selecionada uma amostra de 100 companhias, extraídas de um universo de 420, com maior volume de negócios entre abril de 2009 e março de 2010. Para esse grupo, foi submetido um questionário a fim de coletar informações referentes à estrutura geral dos comitês de auditoria, bem como informações sobre os motivos que as levaram a implantar o referido comitê. O índice de respondentes foi de 32%. Para analisar os dados dos questionários, a pesquisa foi dividida em duas partes inter-relacionadas. Na primeira, buscou-se interpretar os resultados provenientes do questionário utilizando-se de técnicas estatísticas simples, com o intuito de descrever os resultados. Na segunda, estudou-se as associações entre características das companhias e a opção de elas adotarem ou não o comitê de auditoria em suas estruturas de governança corporativa. A Análise de Correspondência (ANACOR) foi empregada nessa parte. Em relação à primeira parte, pelas respostas das próprias companhias, os principais determinantes para a adoção do comitê de auditoria foram: i) apoiar as atividades do Conselho de Administração; ii) atender à legislação norte-americana - SOX; iii) atender à Resolução do Conselho Monetário Nacional / Banco Central do Brasil; e iv) incrementar o sistema e as práticas de governança corporativa. Em relação aos resultados da segunda parte, de forma geral, os resultados sugerem que empresas com alta liquidez estão fortemente associadas com a adoção de comitês de auditoria e empresas com baixa liquidez estão associadas à ausência de comitês em sua estrutura de governança. Outro resultado obtido foi com relação ao porte das companhias. Pela ANACOR, foi possível verificar a associação de comitês de auditoria e outros comitês do conselho a empresas de médio e grande porte, com uma maior aproximação entre empresas de médio porte. Por fim, observou-se que empresas que emitem ADR\'s cujos níveis de exigências são mais baixos (ADR\'s Nível 1 e Regra 144-A) estão associadas com a ausência de comitês, enquanto que as empresas que emitem ADR\'s Nível 2 e 3, estão associadas com a adoção de comitês em suas estruturas de governança corporativas, mas não necessariamente o comitê de auditoria. Esse resultado pode ser explicado pela flexibilidade existente na legislação norte-americana que possibilita às empresas optarem pela adaptação do Conselho Fiscal às normas da Securities and Exchange Commission. Todavia, é necessário salientar as limitações inerentes à pesquisa. A primeira importante limitação é com relação à amostra, tendo em vista que as companhias não foram selecionadas aleatoriamente, e sim pelo volume de transações. Logo, há um viés de seleção na amostra, cujo resultado direto é a impossibilidade de generalização dos resultados. Em seguida, cabe salientar que as definições apresentadas na pesquisa também podem ser criticadas, tendo em vista que o conceito de governança corporativa está limitado às características do comitê de auditoria. As técnicas estatísticas também podem ser criticadas, pois as análises descritivas e ANACOR não permitem afirmar haver causalidade entre as variáveis estudadas. / The main objective of this research was to investigate which factors motivated Brazilian public companies to adopt the Audit Committee as part of its Corporate Governance organizational structure. Additionally, it was investigated the association between characteristics of companies, such as Liquidness, Size and Issuance of ADRs, and the adoption or lack of audit committees. For this purpose, a sample of 100 companies were selected, drawn from a universe of 420, with higher trade volume between April 2009 and March 2010. For this group, a questionnaire was sent to collect information regarding the overall structure of audit committees, as well data related with the reasons which led them to establish such a committee. The rate of respondents was 32%. To analyze the data, the research was divided into two interrelated parts. In the first session, the results were analyzed based on simple statistical techniques, in order to describe the results. In the second session, the results were analyzed based on associations between the companies\'characteristics as well as the option to adopt them with regards the Audit Committee in their corporate governance organizational structures. The Correspondence Analysis (ANACOR) was used in this session. Based on the survey results of the first session, the main determinants for the adoption of the Audit Committee are: i) to support the Board of Directors activities; ii) to comply with USA SOX law; iii) to comply with the Resolution established by National Monetary Council / Central Bank of Brazil; and iv) to enhance the best practices of Corporate Governance. Moreover, the results of the second session, in general suggested that the companies of high liquidness are strongly associated with Audit Committees adoption while the companies of low liquidness are associated with the absence of committees in its organizational structure. Another result was related to the size of the companies. As per ANACOR, it was possible to verify the association between the Audit Committees and other board of directors committees with companies from middle to large size with slightly trend to middle size companies. Finally, it was observed that companies with ADR\'s launch which requirement levels is low (ADR\'s level 1 and Rule 144-A) are associated with the absence of Audit Committees while the companies with ADR\'s launch with high requirement level (ADR\'s level 2 and 3) are associated with the adoption of its committees on corporate governance structures, but not necessarily the audit committee. This result can be explained for the flexibility of U.S. law that allows the companies to opt for the adaptation of Fiscal Council to the rules of Securities and Exchange Commission. Notwithstanding is necessary to highlight the limitation inherent in this research. The first important limitation is related to the sample used, considering that the companies were not selected randomly, but by the volume of transactions. So there is a selection bias, whose offer the impossibility of generalizing results. Furthermore, it is important to highlight that the presented definitions in the survey could be criticized considering that the Corporate Governance concept is limited by characteristics of the Audit Committees. The statistics techniques could also be criticized once the descriptive analysis and ANACOR couldn\'t guarantee the causality between the study variables.

O objetivo principal da pesquisa foi investigar quais fatores motivaram empresas brasileiras de capital aberto a adotarem o Comitê de Auditoria como parte integrante de sua estrutura de Governança Corporativa. Como complemento, investigou-se a associação entre características das companhias, como Liquidez, Porte e Emissão de ADR\'s, e a adoção ou não de comitês de auditoria. Para tanto, foi selecionada uma amostra de 100 companhias, extraídas de um universo de 420, com maior volume de negócios entre abril de 2009 e março de 2010. Para esse grupo, foi submetido um questionário a fim de coletar informações referentes à estrutura geral dos comitês de auditoria, bem como informações sobre os motivos que as levaram a implantar o referido comitê. O índice de respondentes foi de 32%. Para analisar os dados dos questionários, a pesquisa foi dividida em duas partes inter-relacionadas. Na primeira, buscou-se interpretar os resultados provenientes do questionário utilizando-se de técnicas estatísticas simples, com o intuito de descrever os resultados. Na segunda, estudou-se as associações entre características das companhias e a opção de elas adotarem ou não o comitê de auditoria em suas estruturas de governança corporativa. A Análise de Correspondência (ANACOR) foi empregada nessa parte. Em relação à primeira parte, pelas respostas das próprias companhias, os principais determinantes para a adoção do comitê de auditoria foram: i) apoiar as atividades do Conselho de Administração; ii) atender à legislação norte-americana - SOX; iii) atender à Resolução do Conselho Monetário Nacional / Banco Central do Brasil; e iv) incrementar o sistema e as práticas de governança corporativa. Em relação aos resultados da segunda parte, de forma geral, os resultados sugerem que empresas com alta liquidez estão fortemente associadas com a adoção de comitês de auditoria e empresas com baixa liquidez estão associadas à ausência de comitês em sua estrutura de governança. Outro resultado obtido foi com relação ao porte das companhias. Pela ANACOR, foi possível verificar a associação de comitês de auditoria e outros comitês do conselho a empresas de médio e grande porte, com uma maior aproximação entre empresas de médio porte. Por fim, observou-se que empresas que emitem ADR\'s cujos níveis de exigências são mais baixos (ADR\'s Nível 1 e Regra 144-A) estão associadas com a ausência de comitês, enquanto que as empresas que emitem ADR\'s Nível 2 e 3, estão associadas com a adoção de comitês em suas estruturas de governança corporativas, mas não necessariamente o comitê de auditoria. Esse resultado pode ser explicado pela flexibilidade existente na legislação norte-americana que possibilita às empresas optarem pela adaptação do Conselho Fiscal às normas da Securities and Exchange Commission. Todavia, é necessário salientar as limitações inerentes à pesquisa. A primeira importante limitação é com relação à amostra, tendo em vista que as companhias não foram selecionadas aleatoriamente, e sim pelo volume de transações. Logo, há um viés de seleção na amostra, cujo resultado direto é a impossibilidade de generalização dos resultados. Em seguida, cabe salientar que as definições apresentadas na pesquisa também podem ser criticadas, tendo em vista que o conceito de governança corporativa está limitado às características do comitê de auditoria. As técnicas estatísticas também podem ser criticadas, pois as análises descritivas e ANACOR não permitem afirmar haver causalidade entre as variáveis estudadas. / The main objective of this research was to investigate which factors motivated Brazilian public companies to adopt the Audit Committee as part of its Corporate Governance organizational structure. Additionally, it was investigated the association between characteristics of companies, such as Liquidness, Size and Issuance of ADRs, and the adoption or lack of audit committees. For this purpose, a sample of 100 companies were selected, drawn from a universe of 420, with higher trade volume between April 2009 and March 2010. For this group, a questionnaire was sent to collect information regarding the overall structure of audit committees, as well data related with the reasons which led them to establish such a committee. The rate of respondents was 32%. To analyze the data, the research was divided into two interrelated parts. In the first session, the results were analyzed based on simple statistical techniques, in order to describe the results. In the second session, the results were analyzed based on associations between the companies\'characteristics as well as the option to adopt them with regards the Audit Committee in their corporate governance organizational structures. The Correspondence Analysis (ANACOR) was used in this session. Based on the survey results of the first session, the main determinants for the adoption of the Audit Committee are: i) to support the Board of Directors activities; ii) to comply with USA SOX law; iii) to comply with the Resolution established by National Monetary Council / Central Bank of Brazil; and iv) to enhance the best practices of Corporate Governance. Moreover, the results of the second session, in general suggested that the companies of high liquidness are strongly associated with Audit Committees adoption while the companies of low liquidness are associated with the absence of committees in its organizational structure. Another result was related to the size of the companies. As per ANACOR, it was possible to verify the association between the Audit Committees and other board of directors committees with companies from middle to large size with slightly trend to middle size companies. Finally, it was observed that companies with ADR\'s launch which requirement levels is low (ADR\'s level 1 and Rule 144-A) are associated with the absence of Audit Committees while the companies with ADR\'s launch with high requirement level (ADR\'s level 2 and 3) are associated with the adoption of its committees on corporate governance structures, but not necessarily the audit committee. This result can be explained for the flexibility of U.S. law that allows the companies to opt for the adaptation of Fiscal Council to the rules of Securities and Exchange Commission. Notwithstanding is necessary to highlight the limitation inherent in this research. The first important limitation is related to the sample used, considering that the companies were not selected randomly, but by the volume of transactions. So there is a selection bias, whose offer the impossibility of generalizing results. Furthermore, it is important to highlight that the presented definitions in the survey could be criticized considering that the Corporate Governance concept is limited by characteristics of the Audit Committees. The statistics techniques could also be criticized once the descriptive analysis and ANACOR couldn\'t guarantee the causality between the study variables.

My master thesis deals with the position of members of the board of directors in a joint-stock company. The focus of this thesis is to deliver a complete overview of information on members of the board of directors of a joint-stock company and other aspects related to the performance of this function. The entire thesis is divided into six chapters, where the first chapter deals with the board of directors and its role in a company. Followed by a chapter on a sole fuctioning of a member of the board of directors. Subsequently the thesis deals with the agreement on performance, which steadily continues in the definition of rights and duties of members of the board of directors. Significant part of this work is dedicated to the sphere of action of the board of directors and the responsibility of its members.

The Swedish corporate law scholars have long debated whether there is something similar to the American business judgment rule (BJR) in the Swedish Companies Act (SCA). Recently, the discourse shifted to claim that the BJR exists in Swedish case law and should be introduced in the SCA in the form of a statute. However, the Swedish corporate law scholars have not investigated in much detail whether the BJR should be introduced in the SCA. An eagerness to introduce the BJR might seem bewildering due to the corporate scandals at the beginning of this century and the global financial crisis of 2008–2009. These events left corporate law scholars and those in the business community with the pressing question of whether the board of directors is sufficiently accountable, and the BJR appears to do the very opposite. In view of the foregoing, this thesis examines whether the BJR should be introduced in the SCA. This examination enables a comparative analysis of the liability rules of the board of directors in Sweden and Delaware, which is the dominant source of state corporate law in the United States. This thesis also steps outside traditional legal sources and considers other disciplines such as moral and political philosophy, sociology, and the methodology of law and economics.   This thesis finds that the BJR does not balance the values of the authority of the board of directors and the need to hold it accountable for its decisions and actions in an appropriate manner because it allows the value of authority to completely dominate. An appropriate balance between these values of authority and accountability requires that none of the values be so preeminent that any of them completely dominate. The BJR is made more critical because the Delaware courts apply it generously in favor of the board of directors and adopt an inveterate attitude in cases raising duty of care, thus, weakening the duty of care as a viable and meaningful accountability mechanism. Given these findings, this thesis concludes that the Swedish legislator should only consider introducing the BJR in the SCA if it is articulated in a different way. Alternatively, if it is given a dual function to protect both the authority of the board of directors and the need to hold it accountable for its decisions and actions. The justifications behind the BJR do not change the conclusion because they do not fully defend the existence of the BJR and the dominance of the value of authority. This thesis also considers the benefits of introducing the BJR in the SCA, but they also do not change the overall conclusion.  Instead, the conclusion is strengthened by the fact that a no liability rule can emerge when the BJR is combined with other protective devices in the SCA in the same way as it does in Delaware if the BJR is not modified or given a dual function. The no liability rule appears to deter the threat of legal liability as an effective accountability mechanism, which cannot be defended by either social norms or market forces.

The aim of this study is to investigate how inside and outside directors differ in their cognition and reasoning in regards to environmental sustainability issues. The theoretical background derives from a cognitive view and Stakeholder theory. The paper is further based on current research regarding insiders’ and outsiders’ relationship to environmental sustainability. In order to capture the cognition and reasoning of insiders and outsiders, a Think-aloud study was conducted, interviewing a total of 20 board members in the food industry. Results from this study showed that, when faced with environmental issues, outsiders are more likely to request, repeat, ponder as well as clarify the information given. Secondly, outsiders are more likely to consider a long-term perspective. Thirdly, outsiders are more likely to consider an environmental view. Lastly, both insiders and outsiders use analogical reasoning when contemplating around environmental issues. However, insiders are more likely to draw experience from their current position or company while outsiders are more likely to draw experience from outside their current position or company when solving environmental issues.