Download or read book Are Independent Directors Effective Monitors In Taiwan A Theoretical Analysis written by Cheng-Fong Chou and published by . This book was released on 2014 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: About a decade ago, Taiwan introduced the institution of independent directors, which has long been advocated as a good corporate governance practice in the United States of America (“U.S.”). At the time, the concept of independent directors then was a whole new legal idea in Taiwan that fundamentally changed the original intention behind the internal corporate governance system in the Taiwan Company Act in which supervisors were supposed to address oversight and to take action against the board of directors and managers. Traditionally, the U.S. corporate conventional wisdom argues that independent directors benefit companies in some aspects, but it is also believed that they could face some inherent limitations while carrying out their monitoring tasks. The most serious issue is how to ensure an independent director has true independence from management. In addition to the limitations that U.S. independent directors normally face, Taiwanese independent directors also encounter other constraints arising from characteristics of Taiwan's business environment. This article argues that independent directors in Taiwan have few chances to rid themselves of the controlling shareholders' influence. Even in the absence of such powerful shareholders, they would still encounter other difficulties in carrying out the monitoring tasks such as insufficient information. This article concludes that as a result, Taiwanese independent directors will function in a very limited way, and can hardly be effective monitors for Taiwanese companies under the current business and legal environment in Taiwan.
Download or read book Are Independent Directors Effective Corporate Monitors An Analysis of the Empirical Evidence in the USA and Canada written by Brian Y. Lai and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis explores whether independent directors in the USA and Canada are effective in holding management accountable by: (1) analyzing how the policy of relying on independent directors developed and operates; (2) introducing the main theoretical critiques of independent directors' monitoring effect; and (3) examining whether empirical studies in the field of management science and financial economics support the policy in both countries of relying on independent directors as corporate monitors. Empirical evidence shows that boards with a majority of independent directors, in some circumstances, were associated with better firm performance (in the post-SOX period) and fulfilled certain board tasks effectively in the United States. Canadian studies, however, have not shown a positive association with improved firm performance. Audit committees composed entirely of independent directors have been effective in ensuring the quality of financial reporting in the United States, but this effect has not been found in Canada. Compensation committees composed fully of independent directors neither constrained the level of executive compensation nor tied CEO pay to firm performance in either country. US firms with an audit committee member who had accounting expertise, rather than financial analysis or supervisory expertise, were associated with a higher quality of financial reporting, while Canadian firms with an audit committee member who has financial expertise, instead of financial literacy, were associated with a similar effect. Studies also showed that independent directors perform better in certain circumstances. Based on empirical evidence, US regulators should consider: (1) changing the current mandatory requirements for an independent board and a completely independent compensation committee to a comply-or-explain requirement; (2) narrowing the qualification of a financial expert to an individual who has accounting expertise; and (3) recruiting independent directors who have two or fewer outside directorships, hold more of the corporation's shares, have lower cost of acquiring corporate information, and have no social connections with the CEO. In Canada, weak evidence of the monitoring effectiveness of independent directors supports the existing comply-or-explain approach. Canadian regulators may only need to require or recommend that at least one audit committee member has financial expertise, instead of only financial literacy.
Download or read book Are Independent Directors Effective Corporate Monitors An Analysis of the Empirical Evidence in the USA and Canada written by Brian Lai and published by . This book was released on 2016 with total page 548 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis explores whether independent directors in the USA and Canada are effective in holding management accountable by: (1) analyzing how the policy of relying on independent directors developed and operates; (2) introducing the main theoretical critiques of independent directors' monitoring effect; and (3) examining whether empirical studies in the field of management science and financial economics support the policy in both countries of relying on independent directors as corporate monitors. Empirical evidence shows that boards with a majority of independent directors, in some circumstances, were associated with better firm performance (in the post-SOX period) and fulfilled certain board tasks effectively in the United States. Canadian studies, however, have not shown a positive association with improved firm performance. Audit committees composed entirely of independent directors have been effective in ensuring the quality of financial reporting in the United States, but this effect has not been found in Canada. Compensation committees composed fully of independent directors neither constrained the level of executive compensation nor tied CEO pay to firm performance in either country. US firms with an audit committee member who had accounting expertise, rather than financial analysis or supervisory expertise, were associated with a higher quality of financial reporting, while Canadian firms with an audit committee member who has financial expertise, instead of financial literacy, were associated with a similar effect. Studies also showed that independent directors perform better in certain circumstances. Based on empirical evidence, US regulators should consider: (1) changing the current mandatory requirements for an independent board and a completely independent compensation committee to a comply-or-explain requirement; (2) narrowing the qualification of a financial expert to an individual who has accounting expertise; and (3) recruiting independent directors who have two or fewer outside directorships, hold more of the corporation's shares, have lower cost of acquiring corporate information, and have no social connections with the CEO. In Canada, weak evidence of the monitoring effectiveness of independent directors supports the existing comply-or-explain approach. Canadian regulators may only need to require or recommend that at least one audit committee member has financial expertise, instead of only financial literacy.
Download or read book How Public Regulation Changes Corporate Governance Practice The Corporate Board Reform in Taiwan written by Lauren Yu-Hsin Lin and published by . This book was released on 2016 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt: This chapter takes the example of the legal transplantation of US-style independent directors into Taiwan and explores how public regulation affects (or does not affect) corporate governance practice. Taiwan's corporate law traditionally follows a two-tier board system where the board of directors is the decision-making institution and the statutory supervisor is the monitoring institution. However, most statutory supervisors of Taiwanese public companies have long been controlled by the controlling shareholders and failed to act as corporate monitors. Since 2002, Taiwan has gradually introduced independent directors into corporate boards in order to strengthen the internal governance of public companies.As of September 2011, 43.92 per cent of the companies listed on the Taiwan Stock Exchange (TSE) had at least one independent director on their board. In other words, 56.08 per cent of TSE-listed firms chose not to have any independent directors. Only 6.8 per cent of TSE-listed companies had established audit committees to replace statutory supervisors. In summary, few Taiwanese public companies have made a complete switch to the US-style board structure. The majority of firms have stayed with the original structure and preferred not to have independent directors on their boards. This chapter focuses on companies that, whether voluntarily or not, introduce independent directors onto their boards and assesses the effectiveness of these new independent directors.
Download or read book Can Independent Directors Effectively Monitor Controlling Shareholders written by 黃虹 and published by . This book was released on 2019 with total page 137 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Cambridge Handbook of Shareholder Engagement and Voting written by Harpreet Kaur and published by Cambridge University Press. This book was released on 2022-09-15 with total page 1013 pages. Available in PDF, EPUB and Kindle. Book excerpt: All over the world, companies play an important role in the economy. Different types of stakeholders hold the reins in these companies. An important class are the shareholders that finance the activities of these companies. In return, stakeholders have a say on how these companies should be organized and structure their activities. This is primarily done through voting and engaging. These mechanisms of voting and engaging allow the shareholders to decide significant aspects of the company structure, from who governs it to how much directors are paid. However, how shareholders vote and engage and how far their rights stretch are organized differently in different countries. This pioneering book provides insights into what rights these shareholders have and how the shareholders of companies in nineteen different jurisdictions participate in corporate life through voting and engaging. Comparative and international in scope, it pays particular attention to how jurisdictions align and differ around the world.
Download or read book Independent Directors in Asia written by Dan W. Puchniak and published by Cambridge University Press. This book was released on 2017-11-02 with total page 638 pages. Available in PDF, EPUB and Kindle. Book excerpt: The rise of the independent director in Asia is an issue of global consequence that has been largely overlooked until recently. Less than two decades ago, independent directors were oddities in Asia's boardrooms. Today, they are ubiquitous. Independent Directors in Asia undertakes the first detailed analysis of this phenomenon. It provides in-depth historical, contextual and comparative perspectives on the law and practice of independent directors in seven core Asian jurisdictions (China, Hong Kong, India, Japan, Singapore, South Korea, Taiwan) and Australia. These case studies reveal the varieties of independent directors in Asia, none of which conform to its original American concept. The authors develop a taxonomy of these varieties, which provides a powerful analytical tool for more accurately understanding and effectively researching independent directors in Asia. This new approach challenges foundational aspects of comparative corporate governance practice and suggests a new path for comparative corporate governance scholarship and reform.
Download or read book Weak Independent Directors Strong Controlling Shareholders written by Yu-Hsin Lin and published by . This book was released on 2010 with total page 203 pages. Available in PDF, EPUB and Kindle. Book excerpt: One of the most important challenges to modern corporate governance is to constrain controlling shareholders from tunneling corporate resources at a cost to non-controlling shareholders. Related Party Transactions (RPTs) have been proved by empirical studies as a major channel for tunneling. OECD has also stressed the challenge of abusive RPTs to Asian corporate governance. This dissertation serves an initial attempt to empirically assess the extent to which independent directors in Taiwan constrain tunneling. Taiwan serves as an appropriate jurisdiction for research in that private benefits agency problem is prevalent among Taiwanese public companies and that independent directors were newly introduced to Taiwan's corporate boards, which traditionally follow dual-board system. Nevertheless, the results are daunting. RPTs among Taiwanese public companies are common but rarely monitored by the board. Interview results further confirm this finding. Overall, independent directors' oversight on RPTs or tunneling is generally weak. In addition, most RPTs that are sent for board review are explicitly required by the law to do so. The law plays a decisive role in constraining RPTs. Self-regulation by firms of self-dealing transactions is rare. The value of independent directors in reconciling conflicts of interest matters has not been recognized by Taiwanese public companies. The existence of statutory supervisor, which is the traditional corporate monitors under dual-board system, further weakens the monitoring function of independent directors. Furthermore, there exists tremendous information asymmetry between independent directors and controlling shareholders, in particular, the shareholder managers. The information needed to uncover abusive RPTs is among the hardest to obtain. To overcome information asymmetry, independent directors in Taiwan generally choose to join a board with which they are familiar. The interview results reveal that independent directors generally maintain close social relationships with the controlling shareholders. Thus, there is concern that bias arising from the social ties could hinder the independence of directors. Finally, this Dissertation evaluates the effectiveness of legal transplantation of independent directors from a single board system to a dual board system. Transplantation is a long process where new legal measures grind against pre-existing local conditions. Taiwan is still in a transition period where one-third of listed companies operate under a dual board system with independent directors on the board. Independent directors were put on an advising board for some monitoring tasks while there exists another institution, the statutory supervisor, still in charge of corporate oversight. In addition, without complementary judicial deference to the decisions of independent boards, the value of independent directors to the firm greatly diminished. All these existing local conditions present challenges to the new legal device and hinder the transplantation process.
Download or read book Essays Concerning the Directors of Taiwanese Corporations written by Tsung-Che Wu and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Download or read book An Analysis of Independent Director Appointments and Firm Performance in Taiwan written by Hsin-I. Chou and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Independent Directors in Corporate Governance written by Wenge Wang and published by . This book was released on 2014 with total page 286 pages. Available in PDF, EPUB and Kindle. Book excerpt: Conventional wisdom holds that independent directors can improve corporate governance in publicly traded corporations. This author argues that independent directors may play an important role in improving corporate governance in theory but not in reality and the inefficiency of independent directors lends no benefit to sound corporate governance no matter what kind of corporate governance model is adopted, either the Anglo-American unitary model or the Chinese hybrid model. Thus, to evaluate the role of independent directors in corporate governance is the subject of this PhD project. The purpose is to find out whether a sound system of independent directors, especially in the case of Chinese practice, will lead to good corporate governance. Evaluation is carried out by way of a combined research methodology of a comparative study in corporate law between the US, New Zealand and China, where independent directors are in place in publicly traded corporations, and a meta-empirical study in corporate governance with focus on independent directors and corporate performance in Chinese listed companies. The comparative study in corporate law conducted by this research has examined the role of independent directors in corporate governance in the United States, New Zealand and China, which investigates not only the evolution and development of corporate governance and independent directors but also ownership structure, the board of directors, board independence and the supervisory board in connection with the role of independent directors in corporate governance in the targeted jurisdictions. The meta-empirical study reviews and generalizes the existing empirical evidence on the relationship between independent directors and corporate performance in Chinese listed companies. The main finding presented in this research reveals that the transplantation of independent directors from the unitary board model in corporate America into the two-tier board model in corporate China is a misfit in the form of the hybrid board model in China. This suggests that there is a need to improve the efficiency and effectiveness of the monitoring role of independent directors in corporate governance in Chinese listed companies, bearing in mind the fact that independent directors are a given in the current corporate governance system in China.
Download or read book Independent Directors and Corporate Performance in China written by Wenge Wang and published by . This book was released on 2014 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: This article reviews empirical studies on the relationship between independent directors and firm performance in Chinese listed companies. The purpose is to generalize empirical evidence on the theoretical claim that independent directors can improve firm performance by performing their monitoring role over management as expected by Chinese regulators. To fulfil this purpose, this article conducts a meta-empirical study by collecting 30 sample articles of existing empirical studies on the relationship between independent directors and firm performance in Chinese listed companies after the independent director institution has been introduced from corporate America to corporate China. The meta-empirical study is to review and generalize an integrated empirical evidence whether independent directors can improve firm performance in Chinese listed companies or not. Based on the statistical data from 30 collected sample articles, this article identifies four categories (board independence, independent directors' characteristic, background and compensation) that authors of 30 sample articles use to test the correlation between independent directors and firm performance in Chinese listed companies. From the integrated empirical evidence from 30 collected sample articles, this article finds on the whole that board independence has no significant impact on firm performance, that independent directors' characteristics and background have a controversial effect on firm performance and that independent directors' compensation has a significant positive effect on firm performance. This may suggest that independent directors may primarily play an advisory role but not a monitoring role in Chinese listed companies.
Download or read book Asian Survey written by and published by . This book was released on 2008 with total page 560 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Do Social Ties Matter in Corporate Governance The Missing Factor in Chinese Corporate Governance Reform written by Lauren Yu-Hsin Lin and published by . This book was released on 2015 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the past decade, Asian countries have adopted various corporate governance measures with the hope that good law will facilitate capital market development. One of the measures adopted by Asian countries to revamp corporate boards is to enhance board independence by introducing the institution of independent director. Empirical studies have shown that social ties could compromise independent directors' monitoring capacity and, thus, do matter in corporate governance. Using theoretical and empirical studies, this article analyzes the effects that independent directors' social ties to corporate insiders can have on director efficacy and discusses how U.S., where the institution of independent director originated, addresses the bias of independent directors arising from such social ties.Although U.S. courts exercise ex post judicial review over the true independence of independent directors in shareholder-derivative suits, most Asian countries simply did not have such ex post judicial review in place when they transplanted the new institutional form because shareholder suits are almost unheard of in these countries. Social ties among board members are common in Taiwan and China, whose shared traditional and contemporary culture prizes harmony and interpersonal relations (guanxi). In the business world, social ties among board members further enhance collegial board culture, facilitating boards' advisory function but weakening their monitoring function. This article argues that the current Taiwanese and Chinese regulatory regimes' failure to satisfactorily address the issue of social ties, whether through ex ante regulation or ex post judicial review, strongly suggests that the legislative objective of the institution of independent directors will remain unachieved and unachievable.
Download or read book Corporate Governance and Contingency Theory written by Abdul Ghofar and published by Springer. This book was released on 2014-11-19 with total page 188 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book analyzes the determinants and effectiveness of corporate governance in an integrated model drawing on contingency theory and employing structural equation modeling (SEM). Business competition as an environmental factor and strategy as an organizational factor are important determinants of corporate governance, while organizational performance and earnings quality are two dimensions of its effectiveness. This book focuses on the relationship between corporate governance and earnings management, and shows that corporate governance is effective in improving earnings quality and reducing accounting and governance risks. The authors also question the relation between corporate governance and company performance and present results of their analysis in this book.
Download or read book War on Family Property Rights written by Ingyu Oh and published by Taylor & Francis. This book was released on 2022-12-26 with total page 141 pages. Available in PDF, EPUB and Kindle. Book excerpt: As of 2020 South Korea has 14 firms listed on the global Fortune 500, including Samsung, Hyundai, SK, POSCO and LG. The country along with Japan is also one of the only two countries in Asia that are members of the OECD and its Development Assistance Committee (DAC) simultaneously. Furthermore, Korea boasts of its membership in the seven-country 50-30 Club (countries with a population of more than 50 million and a GDP of $30,000 per capita). However, unlike its official status as one of the most developed economies in the world, it still suffers from the backward struggle between the state and the family firms over the issue of property rights and family successions. The corporate governance issue has damaged the reputation of Korean chaebols (family conglomerates) for many decades as founders, and their families had been imprisoned and/or fined for violating inheritance tax laws and related laws associated with the issue of protecting their family ties. The democratically elected governments in Korea since 1987 have tried to reform the chaebol governance structures to ease asset concentration by family members, although many of those have failed due to corruptive practices between the state and the chaebol. This book spells out the current governance problems within the chaebol, state reform policies and both success and failures of the reforms. It was originally published as a special issue of the Asia Pacific Business Review.
Download or read book The Theory of Corporate Finance written by Jean Tirole and published by Princeton University Press. This book was released on 2010-08-26 with total page 657 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Magnificent."—The Economist From the Nobel Prize–winning economist, a groundbreaking and comprehensive account of corporate finance Recent decades have seen great theoretical and empirical advances in the field of corporate finance. Whereas once the subject addressed mainly the financing of corporations—equity, debt, and valuation—today it also embraces crucial issues of governance, liquidity, risk management, relationships between banks and corporations, and the macroeconomic impact of corporations. However, this progress has left in its wake a jumbled array of concepts and models that students are often hard put to make sense of. Here, one of the world's leading economists offers a lucid, unified, and comprehensive introduction to modern corporate finance theory. Jean Tirole builds his landmark book around a single model, using an incentive or contract theory approach. Filling a major gap in the field, The Theory of Corporate Finance is an indispensable resource for graduate and advanced undergraduate students as well as researchers of corporate finance, industrial organization, political economy, development, and macroeconomics. Tirole conveys the organizing principles that structure the analysis of today's key management and public policy issues, such as the reform of corporate governance and auditing; the role of private equity, financial markets, and takeovers; the efficient determination of leverage, dividends, liquidity, and risk management; and the design of managerial incentive packages. He weaves empirical studies into the book's theoretical analysis. And he places the corporation in its broader environment, both microeconomic and macroeconomic, and examines the two-way interaction between the corporate environment and institutions. Setting a new milestone in the field, The Theory of Corporate Finance will be the authoritative text for years to come.
