Teresa M. Pergola and Gilbert W. Joseph
This study aims to test empirically the relationship between board equity ownership and corporate governance on earnings quality of for‐profit corporations, to help practitioners…
Abstract
Purpose
This study aims to test empirically the relationship between board equity ownership and corporate governance on earnings quality of for‐profit corporations, to help practitioners enhance corporate governance practices.
Design/methodology/approach
The study examines two competing theories of equity ownership (convergence of interests and management entrenchment) to explain how board members react to owning the firm's stock and whether governance impacts their behavior. In a sample of 499 publicly traded firms, a governance index was calculated and the relative power of equity ownership and governance was regressed on reported earnings quality.
Findings
The results support the management entrenchment theory. Both independent and insider board members become entrenched, negatively impacting reported earnings quality and the strength of the governance structure. However, effective governance using a composite of mechanisms moderates the effects of entrenchment.
Research limitations/implications
The effect of individual governance variables on earnings quality is not identified. The reader should not generalize the results of this research to other types of organizations, such as not‐for‐profit or governmental entities. The authors studied for‐profit, publicly held firms where directors act as agents of the stockholders and corporate governance is tasked with the responsibility to monitor management and improve investor confidence in reported earnings quality. The authors acknowledge that in other types of entities, the governance culture and objectives may be different and the results of this study may not apply.
Practical implications
The results provide insight regarding the motivations and behavior of board members and the impact of stock ownership on their actions. Stronger governance controls are needed within the entrenchment range of stock ownership. Firms should not rely on oversight by independent board members to control insider board members. A composite of governance mechanisms can moderate negative behavior.
Originality/value
The results challenge commonly held beliefs that independent board members and board members who own stock will perform their fiduciary duty. This means that governance mechanisms should address all board members, not just specific types and that equity ownership must be very high before it can be relied upon as effective.
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I SUPPOSE that anyone writing anything on Gilbert and Sullivan ought to begin by stating where he stands in regard to the works of this extraordinary pair. For ‘G. & S.’ is…
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I SUPPOSE that anyone writing anything on Gilbert and Sullivan ought to begin by stating where he stands in regard to the works of this extraordinary pair. For ‘G. & S.’ is curious. It can perhaps be likened to cricket in that people tend either passionately to love it or as passionately to loathe it; neutrality is encountered relatively seldom. So let me say straight away that I come into the former category. H.M.S. Pinafore and all the other operas in the series have given me enormous pleasure for as long as I can remember, and I hope and believe they will continue to do so in the future.
President, Charles S. Goldman, M.P.; Chairman, Charles Bathurst, M.P.; Vice‐Presidents: Christopher Addison, M.D., M.P., Waldorf Astor, M.P., Charles Bathurst, M.P., Hilaire…
Abstract
President, Charles S. Goldman, M.P.; Chairman, Charles Bathurst, M.P.; Vice‐Presidents: Christopher Addison, M.D., M.P., Waldorf Astor, M.P., Charles Bathurst, M.P., Hilaire Belloc, Ralph D. Blumenfeld, Lord Blyth, J.P., Colonel Charles E. Cassal, V.D., F.I.C., the Bishop of Chichester, Sir Arthur H. Church, K.C.V.O., M.A., D.Sc., F.R.S., Sir Wm. Earnshaw Cooper, C.I.E., E. Crawshay‐Williams, M.P., Sir Anderson Critchett, Bart., C.V.O., F.R.C.S.E., William Ewart, M.D., F.R.C.P., Lieut.‐Colonel Sir Joseph Fayrer, Bart., M.A., M.D., Sir Alfred D. Fripp, K.C.V.O., C.B., M.B., M.S., Sir Harold Harmsworth, Bart., Arnold F. Hills, Sir Victor Horsley, M.D., F.R.C.S., F.R.S., O. Gutekunst, Sir H. Seymour King, K.C.I.E., M.A., the Duke of Manchester, P.C., Professor Sir Wm. Osler, Bart., M.D., F.R.S., Sir Gilbert Parker, D.C.L., M.P., Sir Wm. Ramsay, K.C.B., LL.D., M.D., F.R.S., Harrington Sainsbury, M.D., F.R.C.P., W. G. Savage, M.D., B.Sc., R. H. Scanes Spicer, M.D., M.R.C.S., the Hon. Lionel Walrond, M.P., Hugh Walsham, M.D., F.R.C.P., Harvey W. Wiley, M.D., Evelyn Wrench.
Keon L. Gilbert, Rashawn Ray, W. Carson Byrd, Joseph Richardson and Odis Johnson
There is a peculiar problem in the US that is proving to challenge core values that undergird our laws, interpersonal interactions, and challenge the civil rights of many…
Abstract
There is a peculiar problem in the US that is proving to challenge core values that undergird our laws, interpersonal interactions, and challenge the civil rights of many. American society believes in harsh sentences for committing crimes without a system for rehabilitation from crime and absent from resources from a community level to prevent crimes. As crime has declined since the 1990s, policing behavior has grown to a level that reflects a disregard for humanity resulting in police-involved shootings, also known as “justifiable homicides” or deaths by legal intervention. This peculiar problem reifies old notions of racial inferiority and racial profiling that stem from a long history of lynchings in America, and highlights a broken legal system that shows bias toward poor communities and communities not of the racial and ethnic majority. When laws support one racial or ethnic group and those with resources, other communities become invisible and subjected to state-sanctioned violence that allows some police agencies and police officers to engage in behaviors that do not reflect their training foster an overwhelming sense of fear in these communities. We have observed that when communities fear the police and the larger society disbelieves the negative interactions with police, residents have begun to capture police encounters with community members on social media. Despite the video footage that has been collected documenting abuse of power, some police have been granted impunity for their actions, which further fuels fear in these communities. What we propose are ways to frame and solve negative police encounters with communities through an understanding of: (1) racial biases; (2) racial and gender consciousness; (3) ways to provide more equitable policing practices; (4) the enforcement of legal remedies for those who abuse power; and (5) the prevention of acts of discrimination by holding individuals culpable who informally police Black males. We believe these strategies aid in addressing the historical legacy of these behaviors and moves multiple systems and disciplines toward integrated solutions to eliminate “justifiable homicides.”
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From 1782 to 1834, the English social legislation shifted from a safety net devised to deal with emergencies to a social security system implemented to cope with the threat of…
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From 1782 to 1834, the English social legislation shifted from a safety net devised to deal with emergencies to a social security system implemented to cope with the threat of unemployment and poverty. In the attempt to explain this shift, this chapter concentrates on the changed attitudes toward poverty and power relationships in eighteenth-century British society. Especially, it looks at the role played by eighteenth-century British economic thinkers in elaborating arguments in favor of reducing the most evident asymmetries of power characterizing the period of transition from Mercantilism to the Classical era. To what extent did economic thinkers contribute to creating an environment within which a social legislation aimed at improving the living conditions of the poor as the one established in 1795 could be not only envisaged but also implemented? In doing so, this chapter deals with an aspect often undervalued and/or overlooked by historians of economic thought: namely, the relationship between economic theory and social legislation. If the latter is the institutional framework by which both individual and collective well-being can be achieved the former cannot but assume a fundamental role as a useful abstraction which sheds light on the multifaceted reality in which social policies are proposed, forged, and eventually implemented.
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A considerable portion of Dr. G. S. BUCHANAN'S report on the work of the Inspectors of Foods of the Local Government Board during the year 1908–09 deals with work carried out in…
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A considerable portion of Dr. G. S. BUCHANAN'S report on the work of the Inspectors of Foods of the Local Government Board during the year 1908–09 deals with work carried out in special relation to the Public Health (Regulations as to Food) Act, 1907. A large amount of the meat consumed in this country is imported from the continent of Europe, the United States, and the colonies, and it may almost be said that the fact of our having to rely on the foreign producer for so much of our meat supply accounts for some of it being derived from diseased animals, or being in other ways unwholesome, or bearing evidence of having been prepared under conditions in which the needful sanitary precautions have not been taken.
FINANCIAL fears are only less cruel than those of war, and lead men into extravagances which they would repudiate indignantly in their cooler moments. If the doings of the Economy…
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FINANCIAL fears are only less cruel than those of war, and lead men into extravagances which they would repudiate indignantly in their cooler moments. If the doings of the Economy Committee at Manchester in relation to children's libraries, as described in the article by Mr. Lamb in our last issue, are true, we have in them an example of a kind of retrenchment at the expense of the young which we hope is without parallel and will have no imitators. Some reduc‐tion of estimates we hear of from this or that place, but in few has the stupid policy which urges that if we spend nothing we shall all become rich been carried into full effect. Libraries always have suffered in times of crisis, whatever they are; we accept that, though doubtfully; but we do know that the people need libraries.