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Which Monitors Monitor the Most? Dual-Stock Structure and Corporate Governance
Hoje Jo,Young Sang Kim 한국재무학회 2007 한국재무학회 학술대회 Vol.2007 No.04
We examine the effects of several corporate governance and monitoring mechanisms on the choice of dual-class status and firm performance of dual-class firms. Employing 736 firms that implemented dual-class and 7,027 single-class firms during the period 1996-2002, we find that dual-class firms tend to be larger, higher director ownership and institutional ownership, lower blockholdings, and smaller fraction of independent outside directors on their board than those of single-class firms. In addition, we observe that dual-class firms are followed by smaller number of security analysts. After correcting for endogeneity bias, our regression results show that firms with higher analyst coverage and lower wedge, measured as the difference between voting rights and cash flow rights, are strongly associated with Tobin’s q. In contrast, blockholders’ ownership, board independence, and institutional ownership play a relatively insignificant role in enhancing Tobin’s q. We interpret our results to mean that security analysts are the most effective monitoring mechanism that influence both the dual-class choice and firm performance. Our results are not attributed either to the difference in firm size or to an industry effect.
Corporate Social Responsibility and Stakeholder Governance Around the World
Hoje Jo,Moon H. Song,Albert Tsang 한국재무학회 2013 한국재무학회 학술대회 Vol.2013 No.08
In this paper, we examine the impact of stakeholder governance on corporate social responsibility (CSR) around the world to determine whether CSR is employed as a mechanism to mitigate conflicts of interest between managers and diverse stakeholders, or used as managerial perquisites. To examine this relation properly, we not only employ a large and extensive sample of international firms, but also control for endogeneity by using dynamic panel generalized method of moments (GMM), propensity score matching, and difference-in-difference approach. Our results suggest that stakeholder governance positively influences firms’ CSR engagement with a greater magnitude than board governance after controlling for endogeneity and other confounding factors of traditional corporate governance mechanisms, firm characteristics and national factors. Stakeholders’ influence in CSR engagement is more prevalent when investor protections and board governance are relatively weak.
CEO Power and Firm Performance: A Test of the Life-Cycle Theory
Hoje Jo,Maretno A. Harjoto 한국증권학회 2009 Asia-Pacific Journal of Financial Studies Vol.38 No.1
We examine the effects of corporate governance and monitoring mechanisms on the choice of board leadership structure and the value and performance of a firm according to the firm’s life-cycle changes. Employing a large and extensive sample during the 1995- 2005 period, we find that the board leadership choice is associated with governance characteristics including board independence, managerial entrenchment, and CEO abilities measured by CEO age and CEO tenure after controlling for various firm characteristics. In addition, after correcting for the endogenous treatment effect, our results show that while CEO dualities--i.e., CEO-chair of the board or CEO-nomination committee member- - or CEO pluralities--i.e., CEO-chair of the board, and a chair or a member of the nomination committee--positively influences firm value and performance in firm’s early stage, CEO duality or CEO pluralities adversely influences firm value and operating performance in firm’s late stage. These results are supportive of the life-cycle theory, suggesting that CEO power concentration is beneficial in firms’ early stage, but harmful in firm’s late stage at which firms require check-and-balance as opposed to dictatorship. In addition, the impact of external monitoring by institutional ownership on firm value and performance is more effective than those of independent board and blockholders’ ownership while the impact of Sarbane-Oxley Act on firm performance is not significant.
Controversial Industries, Regional Differences, and Risk : Role of CSR
Hoje Jo,Hakkon Kim,Kwangwoo Park 한국재무학회 2016 한국재무학회 학술대회 Vol.2016 No.05
Controversial industry sectors, such as alcohol, gambling, tobacco, and firearms, have suffered organizational legitimacy problems for a long period of time. This paper examines whether corporate social responsibility (CSR) activities reduce the level of risk for firms in controversial industries over the long term in an attempt to seek organizational legitimacy around the world. Using data covering 32 countries, this study finds that both the systematic and total risk for firms in controversial industries are generally higher than those for firms in uncontroversial industries due to their inherent harmful image. We then show that controversial industry firms’ engagement in CSR initiatives and policies has a substantial risk-decreasing effect, and that might increase the probability of obtaining and maintaining the social license to operate. The documented effect of CSR on firm risk, however, is more pronounced for firms in Europe and North America than in the Asia-Pacific region, suggesting differential CSR-risk association in different region. These results are significant and robust even after potential endogeneity problems are mitigated. Our results further show the longterm impact of controversial industry firms’ CSR engagement on firm risk, which is more pronounced in firms under highly developed financial system for each region. We interpret that our results are supportive of the “harmful image”, “social license to operate”, “differential recognition”, and “long-term risk reduction” explanations.
Corporate Environmental Responsibility and Financial Performance Around the World
Hoje Jo,Hakkon Kim,Bong-Soo Lee,Kwangwoo Park 한국재무학회 2013 한국재무학회 학술대회 Vol.2013 No.11
This paper examines how environmental costs affect the corporate financial performance (CFP) of manufacturing firms around the world. We maintain that by effectively investing in corporate environment responsibility (CER), executives can decrease their firms’ environmental costs, thereby enhancing CFP. We label this argument as the ‘slack resources’ hypothesis. We find that countries in the Asia-Pacific region have the greatest variation between their return on assets (ROA) and environmental cost-adjusted ROA. This comes at the expense of rapid economic development in the emerging economies in the region. We also find that conventional industries such as the basic resources and the food and beverage industries have substantially high levels of total environmental costs, whereas the opposite holds true for the technology and telecommunication industries. Our results suggest that the reduction of environmental costs is related to higher firm performance. We also identify dynamic relations between these two variables. Lowering environmental costs tends to precede the enhancement of ROA by at least two years. Overall, our findings are supportive of the slack resources hypothesis.