International Journal of Corporate Governance http://www.inderscience.com/browse/index.php?journalID=260&year=2012&vol=3&issue=1 Inderscience Publishers Ltd en-uk International Journal of Corporate Governance 1754-3037 1754-3045 © 2012 Inderscience Publishers Ltd editor@inderscience.com https://www.inderscience.com/images/files/coverImgs/ijcg_scoverijcg.jpg http://www.inderscience.com/browse/index.php?journalID=260&year=2012&vol=3&issue=1 http://www.inderscience.com/link.php?id=45279 We present a model of N-player contracting with transaction costs and endogenous property rights. Ex ante agreed surplus sharing can be altered ex post, after irreversible investments in production (characterised by the generalised Cobb-Douglas production function). The actual surplus sharing is determined ex post, after each player has chosen a costly action to alter the surplus sharing in his favour, thus incurring transaction costs. We demonstrate that when one player chooses the ex ante contract, each player's equilibrium share increases in his productivity and transaction cost parameters. We contrast our model with property rights theory (PRT) where ex ante contracts are not enforceable ex post. N-player costly contracting
Kjell Hausken; Galina A. Schwartz
International Journal of Corporate Governance, Vol. 3, No. 1 (2012) pp. 1 - 18
We present a model of N-player contracting with transaction costs and endogenous property rights. Ex ante agreed surplus sharing can be altered ex post, after irreversible investments in production (characterised by the generalised Cobb-Douglas production function). The actual surplus sharing is determined ex post, after each player has chosen a costly action to alter the surplus sharing in his favour, thus incurring transaction costs. We demonstrate that when one player chooses the ex ante contract, each player's equilibrium share increases in his productivity and transaction cost parameters. We contrast our model with property rights theory (PRT) where ex ante contracts are not enforceable ex post.

]]> 10.1504/IJCG.2012.045279 International Journal of Corporate Governance, Vol. 3, No. 1 (2012) pp. 1 - 18 Kjell Hausken; Galina A. Schwartz Faculty of Social Sciences, University of Stavanger, 4036 Stavanger, Norway. ' Department of Electrical Engineering and Computer Sciences (EECS), University of California, Berkeley, 337 Cory Hall, MC 1774, Berkeley, CA 94720-1774, USA contracts transaction costs endogenous property rights surplus sharing generalised Cobb-Douglas production function ex ante ex post property rights theory PRT conflict production investment N-player contracting. 2012-02-04T23:20:50-05:00 3 1 1 18 2012-02-04T23:20:50-05:00 http://www.inderscience.com/link.php?id=45280 This paper examines a new facet of the auditor-client relationship, the extent to which the auditor's portfolio of audited clients' industries matches its client's portfolio of business segments which I refer to as the auditor-client compatibility. The paper examines how compatibility affects audit quality and consequently the auditor's governance effectiveness. Using a sample of clients of big auditing firms, I empirically examine the effect of compatibility on earnings quality proxied by absolute discretionary accruals as a manifestation of audit quality and in turn corporate governance effectiveness. I document a negative relation between compatibility and discretionary accruals suggesting that compatibility contributes to effective governance. This result holds for several robustness checks. The study introduces a new measure of industry specialisation: compatibility. It also highlights how the multi-segment nature of companies has auditing and governance implications, a dimension that has been relatively ignored in the auditing and corporate governance literatures. Auditor-client compatibility and corporate governance effectiveness: an empirical analysis
Ahmed M. Abdel-Meguid
International Journal of Corporate Governance, Vol. 3, No. 1 (2012) pp. 19 - 45
This paper examines a new facet of the auditor-client relationship, the extent to which the auditor's portfolio of audited clients' industries matches its client's portfolio of business segments which I refer to as the auditor-client compatibility. The paper examines how compatibility affects audit quality and consequently the auditor's governance effectiveness. Using a sample of clients of big auditing firms, I empirically examine the effect of compatibility on earnings quality proxied by absolute discretionary accruals as a manifestation of audit quality and in turn corporate governance effectiveness. I document a negative relation between compatibility and discretionary accruals suggesting that compatibility contributes to effective governance. This result holds for several robustness checks. The study introduces a new measure of industry specialisation: compatibility. It also highlights how the multi-segment nature of companies has auditing and governance implications, a dimension that has been relatively ignored in the auditing and corporate governance literatures.

]]> 10.1504/IJCG.2012.045280 International Journal of Corporate Governance, Vol. 3, No. 1 (2012) pp. 19 - 45 Ahmed M. Abdel-Meguid Department of Accounting, The School of Business, The American University in Cairo, New Cairo, Cairo, 11835, Egypt auditor-client compatibility industry specialisation corporate governance audit quality earnings quality auditing. 2012-02-04T23:20:50-05:00 3 1 19 45 2012-02-04T23:20:50-05:00 http://www.inderscience.com/link.php?id=45281 This study seeks to understand the effect of transactional and relational governance mechanisms on opportunism induced by the buyer supplier exchange's ties. Using panel data of 386 Tunisian export companies between 2003 and 2008, the analysis shows that transactional as well as relational governance mechanisms are negatively related to the opportunistic behaviour of the customer. In order to focus on internal corporate characteristics, the level of debt and the size of the buyer are controlled. The findings support the role of contracts as formal governance tool in reducing inter-firm opportunism which corroborates transaction cost economics. They also confirm some main notions in social exchange theory. The role of trust as relational mechanism in governing the buyer-supplier relationship has been verified. Finally, the results of this paper sustain the complementarity view toward relational and transactional governance mechanisms. Governance mechanisms and buyer supplier relationship in Tunisian exporting SMEs
Meryem Bellouma
International Journal of Corporate Governance, Vol. 3, No. 1 (2012) pp. 46 - 59
This study seeks to understand the effect of transactional and relational governance mechanisms on opportunism induced by the buyer supplier exchange's ties. Using panel data of 386 Tunisian export companies between 2003 and 2008, the analysis shows that transactional as well as relational governance mechanisms are negatively related to the opportunistic behaviour of the customer. In order to focus on internal corporate characteristics, the level of debt and the size of the buyer are controlled. The findings support the role of contracts as formal governance tool in reducing inter-firm opportunism which corroborates transaction cost economics. They also confirm some main notions in social exchange theory. The role of trust as relational mechanism in governing the buyer-supplier relationship has been verified. Finally, the results of this paper sustain the complementarity view toward relational and transactional governance mechanisms.

]]> 10.1504/IJCG.2012.045281 International Journal of Corporate Governance, Vol. 3, No. 1 (2012) pp. 46 - 59 Meryem Bellouma University of Economics and Management (Nabeul), 12 Avenue, Doha 2083 Cité la Gazelle, Tunisia corporate governance transactional governance mechanisms relational governance mechanisms opportunism buyer-supplier relationship Tunisia exports exporting SMEs small and medium-sized enterprises transaction cost economics TCE debt level buyer size social exchange theory. 2012-02-04T23:20:50-05:00 3 1 46 59 2012-02-04T23:20:50-05:00 http://www.inderscience.com/link.php?id=45282 This study analysed how a new Korean Government regulation influenced the public enterprise board's structures, processes, and decision-making. Furthermore, this research examines factors influencing board's decision-making. To undertake these board studies, meeting minutes which had been recorded in stenographic form were used. The analyses demonstrated that the number of directors increased after enacting the regulation, especially the percentage of outside directors, as did the annual number of board meetings. However, board meeting attendance rate and the number of decisions with amendment did not change. The number of agenda items, both reporting and decision-making types increased. Governance change and its impact on board decision-making
Jong Seop Shin; Soo Wook Kim; Hyun Jung Kim
International Journal of Corporate Governance, Vol. 3, No. 1 (2012) pp. 60 - 83
This study analysed how a new Korean Government regulation influenced the public enterprise board's structures, processes, and decision-making. Furthermore, this research examines factors influencing board's decision-making. To undertake these board studies, meeting minutes which had been recorded in stenographic form were used. The analyses demonstrated that the number of directors increased after enacting the regulation, especially the percentage of outside directors, as did the annual number of board meetings. However, board meeting attendance rate and the number of decisions with amendment did not change. The number of agenda items, both reporting and decision-making types increased.

]]> 10.1504/IJCG.2012.045282 International Journal of Corporate Governance, Vol. 3, No. 1 (2012) pp. 60 - 83 Jong Seop Shin; Soo Wook Kim; Hyun Jung Kim Korea Expressway Corporation, 293-1 Geumto-dong, Sujeong-gu, Seongnam-si, Gyeonggi-do, South Korea. ' College of Business Administration, Seoul National University, 1 Gwanak-gu, Seoul, South Korea. ' College of Business Administration, Seoul National University, 1 Gwanak-gu, Seoul, South Korea corporate governance governance change board of directors public enterprises government regulation outside directors board decision making Korea board meetings attendance rate agenda items. 2012-02-04T23:20:50-05:00 3 1 60 83 2012-02-04T23:20:50-05:00 http://www.inderscience.com/link.php?id=45283 The purpose of this study is to understand the factors influencing the adoption and independence of nomination committees. Previous literature identifies potential substitutability and complementarity between corporate governance arrangements that may be beneficial from the perspective of outsiders (e.g., Rediker and Seth, 1995), but our work suggests that similar complementarities may be identified from the perspective of firm insiders. Probit analysis of data from the annual reports of UK public companies from 1998 through 2002 reveals that the shareholdings of substantial shareholders are positively related to the selection of non-executive members to the nomination committee, but that these shareholdings are negatively related to the use of nomination committees in the first place. Coupled with the participation of over 40% of UK CEOs on the appointment committees of their own firms, these results suggest that some appointment committees are used to limit the influence of substantial shareholders on future board appointments. A study of the incidence and independence of nomination committees
Suwina Cheng; Bruce A. Rayton
International Journal of Corporate Governance, Vol. 3, No. 1 (2012) pp. 84 - 104
The purpose of this study is to understand the factors influencing the adoption and independence of nomination committees. Previous literature identifies potential substitutability and complementarity between corporate governance arrangements that may be beneficial from the perspective of outsiders (e.g., Rediker and Seth, 1995), but our work suggests that similar complementarities may be identified from the perspective of firm insiders. Probit analysis of data from the annual reports of UK public companies from 1998 through 2002 reveals that the shareholdings of substantial shareholders are positively related to the selection of non-executive members to the nomination committee, but that these shareholdings are negatively related to the use of nomination committees in the first place. Coupled with the participation of over 40% of UK CEOs on the appointment committees of their own firms, these results suggest that some appointment committees are used to limit the influence of substantial shareholders on future board appointments.

]]> 10.1504/IJCG.2012.045283 International Journal of Corporate Governance, Vol. 3, No. 1 (2012) pp. 84 - 104 Suwina Cheng; Bruce A. Rayton Department of Accountancy, Lingnan University, 8 Castle Peak Road, Tuen Mun, Hong Kong. ' University of Bath School of Management, Claverton Down, Bath BA2 7AY, UK boards of directors nomination committees demographics board composition agency theory corporate governance firm insiders annual reports UK public companies shareholdings United Kingdom committees. 2012-02-04T23:20:50-05:00 3 1 84 104 2012-02-04T23:20:50-05:00