This paper compares and contrasts the corporate governance Models of Germany, the UK, France and Italy, and weighs their individual strengths and weaknesses.
Executive pay became a much discussed issue during the recent global financial crisis. Substantial research has been done in the United States and United Kingdom, while research in Australia is still limited, especially in terms of using... more
Executive pay became a much discussed issue during the recent global financial crisis. Substantial research has been done in the United States and United Kingdom, while research in Australia is still limited, especially in terms of using the data for the financial crisis. This paper will investigate the relationship between Australian executives’ remuneration and their companies’ performance during the global financial crisis. Two approaches were used to examine the relationship: firstly, an investigation of the pay-for-performance relationship that existed during the global financial crisis; and secondly, checking the robustness test by using one year before-and-after data. The sample is taken from the Top 200 companies from the Australian Stock Exchange (ASX) list for 2007 and 2008. In order to achieve a better understanding of this relationship, a conceptual model has been developed. Results show that Australia’s business reward system is quite effective because executives’ remuneration were reduced by their respective companies when they underperformed during this particular crisis.
Overall, this study concludes that there is a positive and significant relationship between executives’ remuneration and company performance during the global financial crisis, with higher sensitivity to market-based performance measures than accounting-based performance measures.
Empirical evidence indicates that companies that reduce information asymmetry by increased voluntary disclosures achieve several benefits, such as lower cost of capital, improved pricing, and liquidity of their shares. Despite the... more
Empirical evidence indicates that companies that reduce information asymmetry by increased voluntary disclosures achieve several benefits, such as lower cost of capital, improved pricing, and liquidity of their shares. Despite the possibility of such benefits, many studies report varying degrees of voluntary disclosure behaviour that is attributable to various factors. Recent studies indicate that investors’ investment horizon has a significant effect on actions taken by management. Companies with predominantly short-horizon investors spend less on research and development, invest in shorter-term projects that are less profitable than longer-term projects, and are more likely to manipulate earnings to meet short-term earnings expectations. This study investigates whether investors’ investment horizon has an effect on the quality of companies’ information environment. Long-horizon investors should be familiar with their investee company’s risks and rewards, using both their own internal information gathering processes and the cumulative information disclosed by management over time. Moreover, over the course of a long-term relationship, they can become familiar with management’s capability to deliver long-term sustainable returns. Long-horizon investors should therefore be less concerned with short-term fluctuations of earnings and management’s public explanations and disclosures thereof. I hypothesise that higher (lower) proportions of long-horizon investors are associated with lower (higher) quality voluntary disclosure. The shareholder familiarity hypothesis was tested in this study, using an ordinary least squares regression. Voluntary disclosures were observed via the channel of companies’ websites. A checklist was compiled of best practices for online investor relations, and content analyses were conducted on the websites of 205 companies listed on the Johannesburg Stock Exchange. Shareholder familiarity was proxied by shareholder stability, measured over nine years. The stability measure was lagged by one year to create a temporal difference between the shareholder profile and disclosure behaviour. I found that companies with a profile of unstable investors that are larger, younger, dual-listed and have a Big4 auditor have higher quality online investor relations practices. The hypothesis of a negative association between shareholder familiarity and voluntary disclosure quality is therefore accepted. This study extends the theory on information asymmetry and voluntary disclosure by providing evidence supporting the argument that investor horizon is a predictor of voluntary disclosure quality. The dictum of more is better does not hold in all scenarios. It is important for financial directors and investor relations officers to establish the investment horizon profile of their respective companies’ shareholders before they embark on extensive disclosure programmes.
Executive remuneration has been the subject of close scrutiny, huge public outcries and criticisms in the recent past in South Africa. This has invariably attracted unprecedented research interest across different sectors of the economy.... more
Executive remuneration has been the subject of close scrutiny, huge public outcries and criticisms in the recent past in South Africa. This has invariably attracted unprecedented research interest across different sectors of the economy. Various studies on executive remuneration versus corporate performance have been conducted across South African companies with no finite consensus. This study joins the debate with the hope of reaching common understanding on the relationship between the two variables. The study seeks to investigate the relationship between CEO remuneration and company performance on the Johannesburg Stock Exchange Listed (JSE) Companies from 2010 to 2015. In particular, the focus of the study was to determine if these two constructs were correlated and aligned with the corporate governance principles. The study, employed a deductive methodological approach, based on a longitudinal, descriptive quantitative design. Purposive sampling technique was used to select the...
Empirical evidence indicates that companies that reduce information asymmetry by increased voluntary disclosures achieve several benefits, such as lower cost of capital, improved pricing, and liquidity of their shares. Despite the... more
Empirical evidence indicates that companies that reduce information asymmetry by increased voluntary disclosures achieve several benefits, such as lower cost of capital, improved pricing, and liquidity of their shares. Despite the possibility of such benefits, many studies report varying degrees of voluntary disclosure behaviour that is attributable to various factors. Recent studies indicate that investors’ investment horizon has a significant effect on actions taken by management. Companies with predominantly short-horizon investors spend less on research and development, invest in shorter-term projects that are less profitable than longer-term projects, and are more likely to manipulate earnings to meet short-term earnings expectations. This study investigates whether investors’ investment horizon has an effect on the quality of companies’ information environment. Long-horizon investors should be familiar with their investee company’s risks and rewards, using both their own inter...
This study empirically investigates whether shareholders of corporations that are publicly held and traded in Saudi Arabia’s capital market are engaged as the owners of the corporations in which they have invested their wealth?. We... more
This study empirically investigates whether shareholders of corporations that are publicly held and traded in Saudi Arabia’s capital market are engaged as the owners of the corporations in which they have invested their wealth?. We conducted a content analysis of the annual reports and financial statements of 62 such corporations to discern the tone of the top management and board of directors. The study finds that the board of directors and top management both situate shareholders as owners. Financial statements and annual reports are prepared in line with the proprietary view of the firm. Nevertheless, there is a need to improve corporate reporting in Saudi Arabia in terms of company risks and related mechanisms. Because analysis was limited to 62 companies and no inferences were made regarding the texts, the findings must be generalized with caution. Saudi Arabia’s corporate reporting might be improved by addressing the risks companies face and related approaches to risk management. This study may be replicated for Saudi corporate reports in the years following the IFRS adoption with an eye for comparing the results of the two periods to further examine the nuances of corporate communications with shareholders.