Global Corporate Governance Colloquia (GCGC) 2017
- 02 - 03 June 2017
- Tokyo University, Japan
Click here to read the event summary report
Videos of the presentations are available on www.gcgc.global
The aim of the conference series is to attract current research papers of the highest scholarly quality in the field of corporate governance. The conferences are primarily ‘academic to academic’ events with some participants from industry and the public sector including the practitioner partners of GCGC and other invited panelists. The current practitioner partners are the European Investment Bank (EIB), Zurich Insurance Group, and Japan Exchange Group (JPX).
Attendance at this event was by invitation only. Researchers were invited to submit recent papers or extended abstracts and selected papers were presented at the conference. In addition, there were two panel discussions involving participants from industry and the public sector.
02 June - Day 1
Registration & Introduction
Weclome - Hideki Kanda (University of Tokyo)
Session 1 - Curtis Milhaupt (Columbia Law School)
Common Ownership, Competition and Top Management Incentives
We show theoretically and empirically that executives are paid less for their own firm’s performance and more for their rivals’ performance if an industry’s firms are more commonly owned by the same set of investors. Higher common ownership also leads to higher unconditional total pay. We exploit quasi-exogenous variation in common ownership from a mutual fund trading scandal to support a causal interpretation. These findings challenge conventional assumptions in the corporate finance literature about the objective function of the firm.
Shareholders and Stakeholders around the World: The Role of Values and Culture in Directors’ Decisions
We present first evidence about individual and institutional factors that guide board members of public companies around the world in addressing the fundamental strategic problem of dealing with shareholders and stakeholders. In a sample comprising nearly nine hundred board members from some fifty countries of origin, we confirm that these corporate leaders hold a principled, quasi-ideological stance towards shareholders and stakeholders, dubbed shareholderism. This stance associates with a personal value profile that emphasizes self-enhancement values and is also compatible with entrepreneurship. We further find that such shareholderism stances correlate with cultural orientations of egalitarianism and mastery that, respectively, reflect a societal view of all people as moral equals and endorse assertive change and domination of the physical and social environment. Our data further suggest that board members’ handling of such strategic dilemmas may be determined by legal factors. Although we do not observe a broad effect of the general style of the legal system as reflected in its legal origin, more specific rules that provide for social security and protect employees may be related to shareholderism.
Session 2 - Allen Ferrell (Harvard University)
Adapting to Radical Change: The Benefits of Short-Horizon Investors
We show that following large permanent negative shocks, firms with more short-term institutional investors suffer smaller drops in sales, investment and employment and have better long-term performance than similar firms affected by the shocks. To do so, these firms increase their R&D and advertising expenses, differentiate their products from those of the competitors, conduct more diversifying acquisitions, and have higher executive turnover in the aftermath of the shocks, suggesting that they put stronger effort in adapting their business to the new competitive environment. Endogeneity of institutional ownership and other selection problems do not appear to drive our findings.
This paper is part of the ECGI Working Paper Finance series, click here to acces the paper page