ALBERT

Notizen: The Federal Communications Commission rule making for low power FM radio was widely reported as an instance where Congress sharply rebuked a regulatory agency for enacting rules too favorable to entrants. Theories of bureaucratic control generally agree that when such events occur, policy differences of Congress and the agency must be large. Because rival policy positions are quantifiable in this case, the preferences of Congress and the Commission can be directly evaluated. While the distance between the policy position of the Commission and Congress appear large, they signified a negligible increment in competition when compared to a benchmark efficient policy. A financial event study supports this interpretation, as radio broadcaster's equity values were not materially affected by either events in Congress or the Commission. Thus, even marginal differences may prompt a costly intervention by Congress to ostensibly discipline an agency.

Notizen: Despite extensive research on political activity on the part of corporations, clear and consistent findings remain elusive. We identify three reasons for this failure. First, most of the empirical literature on corporate political activity simply studies the wrong phenomena by examining political action committees rather than lobbying more generally. Second, the literature studies an excessively narrow sample of organizations that might engage in lobbying, focusing almost always on extremely large corporations, which inevitably attenuates variance on many of the variables hypothesized to influence engagement in political activity. And third, prior work is rarely attentive to the diversity of corporate activities, narrowly conceptualizing vital aspects of the business context that might influence decisions to engage in political activity. Based on this critique, we develop and test new models of corporate political activity, finding that the diversity of the economic context within which firms work and firm size matter a great deal, if in ways somewhat different from those reported in prior work.

Notizen: The article takes a political economy perspective on the current harmonization of accounting standards. It argues that the process not only signals a major shift in the mode of governance (towards private authority), but also in the substance of what is being governed. In political-economic terms, the most significant change which the International Accounting Standards Board (IASB) brings to accounting is an increased reliance on market values in the form of so-called Fair Value Accounting (FVA). The FVA paradigm represents a financial perspective on business operations. This perspective is matched by the process and structure of the institutions that govern international accounting standard setting, particularly the IASB and the European Financial Reporting Advisory Group which advises the Commission of the European Union on the adoption of IASB standards. A network analysis of the different committees and working groups of these two institutions demonstrates that financial sector actors wield substantially more influence than other categories of business actors within the governance of international accounting standard setting.

Notizen: Phyllis Thompson reviews Kenneth Kiple's A Movable Feast: Ten Millennia of Food Globalization.

Notizen: Daniel J. Sargent reviews Zbigniew Brzezinski's Second Chance.

Notizen: This article starts by highlighting the significance of two forms of authority--private and technical authority--that are becoming increasingly important relative to public authority, which traditionally has been considered the only relevant form of authority in international affairs. It then suggests that public, private and technical authority are related to one another not by the erasure of one by another, but rather through a process of politicized functional differentiation. Functional differentiation involves the transformation of multi-functional units into a set of more autonomous units that are related to one another in specific limited ways. The article explores differentiation between and within each of the three types of authority in the globalization of accounting, and the role of power as well. It challenges the view that globalization necessarily involves a centralized exercise of power or an elimination of differences.

Notizen: Why do some countries institutionalize a social program compensating the unemployed while others do not? My main argument is that the choice to have an unemployment insurance program is a function of 1) the distribution of unemployment risks within a country and 2) political processes through which demands for insurance are realized. The distribution of industrial-specific risks and workers' employment status are the driving force in shaping workers' demands. In developing countries, these demands are more likely to be realized under democratic regimes. An event history model for 102 developing countries from 1946 to 2000 is used to test the arguments.

Notizen: This paper examines the motivation and impact of corporate diversification in Chinese listed firms. We find that in local government owned-firms there is a non-linear relationship between the level of firm diversification and state ownership. As state ownership increases from zero, the level of diversification decreases. After state ownership reaches a certain level, the level of diversification increases as state ownership increases. There is no evidence that ownership is related to corporate diversification in non-state-owned firms or central government-owned firms. We also document that diversification is negatively related to firm performance in local government-owned firms. However, there is no evidence that diversification is negatively related to the firm performance in non-state-owned firms or central government-owned firms. Our findings suggest that agency problems are responsible for local government owned-firms taking value-reducing diversification strategies.

Notizen: In the last decade, few countries have figured prominently as cases of late-late developers that achieved worldwide success with their Information Technology (IT) industries. This paper focuses on the Israeli case and argues that uniquely in that group, and in contradiction to the model proposed by late development theories, Israel's competitive advantage in the IT industries, is in Research and Development (R&D). The paper's main arguments are that (a) the declared aim of Israel's industrial policy has been to develop a "science-based" industrial system similar to what we see in Israel today; (b) however, these policies, focused on diffusion and not on creation of capabilities, were successful only because of the existence of an already sophisticated and extensive R&D capability in the universities - markedly different from other Newly Industrialized Countries. Looking at the present the paper concludes that the same operational model that led Israel's IT industry to success might now be undermining its future growth.

Notizen: We know from observation that some democracies intervene deeply in their domestic economies while others adopt a more laissez faire approach. Can we explain these differences solely with ideology, or are other political influences also at work? I argue in this paper that elected leaders sometimes opt for hefty economic regulation purely to generate sources of patronage that can be used to maintain their political positions. Leaders are most tempted to take this approach, I contend, when their political parties are not stably linked to sources of electoral support. Unstably linked governing parties will tend to have very short time horizons, focusing on the immediate objective of avoiding massive vote losses in the next election. As a result, they will be less concerned with the potential future damage that a patronage-based policy may inflict on the national economy. I find support for this argument with a close examination of Indian economic policy under Indira Gandhi. Prime Minister Gandhi, I contend, increased the Indian state's control over trade, industrial production, and credit allocation just as the Congress Party's linkages to the electorate were destabilizing.

Notizen: In this paper we analyze the distribution of pay and changing trends of inequality in Argentina and Brazil, illuminating the specific winners and losers, by region and by economic activity (sector). In both countries we find that inequality rose in the neoliberal period, but that it declined following the severe crises of neoliberal policy, in 1993 in Brazil and in late 2001 in Argentina. This period of post-neoliberalism is characterized in both countries by a decline in the economic weight of the financial sector and a recovery of the position of the civil service. In both countries, the rise in inequality leading to the crisis produced an increase in the relative position of the major metropolitan centers; this positional advantage also declined modestly in the post-crisis recovery period.

Notizen: Recent work suggests that the most fruitful approach to accounting for variations in interest system diversity of any type lies in understanding variations in interest system density (Lowery, Gray and Fellowes 2005). We build on this insight by examining the sources of variation in the substantive diversity of health interests in the American states, focusing on how the densities of several sub-guilds of health interest organizations vary in their responses to changes in the sizes of the constituencies that give rise to them and variations in the policy and political energy supporting their mobilization. We discuss the concept of interest system diversity in the first section of the paper, highlighting its multiple meanings and the limits of prior research. This is followed by a close empirical examination of 14 sub-guilds of state health interest organizations. We conclude by discussing the inherent difficulties of understanding interest system diversity.

Notizen: The introduction to the special issue develops a systematic and theoretically grounded framework for assessing business power in global governance. It is shown that power is said to have shifted from the world of states to the world of business. However, in order to evaluate such a claim first a differentiation of power in its instrumental, structural, and discursive facets is necessary. It is furthermore explained that the strength of such a three-dimensional assessment is that it combines different levels of analysis and considers actor-specific and structural dimensions and their material and ideational sources. Following a short introduction to the more empirical articles is provided summarizing their commonalities and differences.

Notizen: In 1998, the domestic steel industry in the United States devised and executed a complex and sophisticated effort to achieve an effective non-market response to a sudden, persistent, and damaging surge of imported steel. This campaign lasted until 2002, when President George W. Bush invoked Section 201 of the U.S. trade laws to impose tariffs on imports of most steel products. This case of the steel industry's trade policy campaign provides an opportunity to examine selected models of protection-seeking industries and lobbying to ask why and how the steel coalition achieved this extraordinary governmental response. These questions are explored though a descriptive case of the steel industry's protection-seeking campaign followed by a comparative examination of previous models of protection-seeking firms, and lobbying to achieve protectionist policies. A comparison with selected models of the determinants of protection-seeking and factors affecting lobbying strategies show that most, almost all, were present in the steel case. In fact, a meta-strategic approach that transcends the customary understanding of lobbying is suggested in a complex policy environment. Such an environment can be characterized by: the need to influence multiple governmental entities - legislative, regulatory, executive; the desire for multiple outcomes with varying levels of specificity - laws or resolutions, administrative rulings, policy choices; interactions between different levels and branches of government; employment of coordinated interrelated lobbying techniques; and simultaneity of these factors.

Notizen: Compensation hypothesis, which has established a link between trade openness of countries and levels of government spending, has been widely accepted in the literature on trade policy and international globalization. However, the nature of the distribution effects produced by trade is likely to determine the existence of more or less redistribution demands from the median voter, and therefore government growth. In this paper I hypothesize that the effects of trade openness on redistribution demands are not homogeneous between countries, and I argue that they depend both on the type-of-factor endowment of the economy and the size of the sectors more likely to be affected by trade. I test this hypothesis with ISSP data for 23 countries, both with a country level and an individual level analysis. The results show that redistribution demands issued from trade openness of the median voter of a country are largely conditional on GDP per capita and size of potential loser sectors such as manufacturing: while trade has a negative effect on pro-redistribution preferences in "poor" and/or in "low manufacturing" countries; it positively affects pro-redistribution preferences in "rich" and/or in "high manufacturing" countries. Additionally, I empirically observe that the size of the loser sector plays a more important mediating role than the type-of-factor endowment of the economy.

Notizen: This article traces the ascent of the International Accounting Standards Committee (IASC) from an obscure group with little influence in the early 1970s to a pre-eminent position as global accounting standard-setter in 2001. I argue that the rise of the IASC can be explained by several factors, including the IASC's ability to build legitimacy through technical expertise, to embed itself in a network of international organizations, and to benefit from rivalries among developed and developing countries and among European and American regulators. But the most important reason for the IASC's success is that its core values aligned strongly with the interests of the most powerful regulator--the US Securities and Exchange Commission.

Notizen: This study examines the relationships between deregulation, business strategy (low cost, differentiation, and scope), size, and firm performance in the U.S. airline industry based on archival data for the Major, National, and Large Regional air carriers in the U.S. from 1972 to 1995. Cross-sectional time series regression analysis shows that deregulation had a significant impact on the strategic choices made by airlines. Results also support a significant relationship between business strategy and firm performance. Further, the study found that firm size moderates the environment-business strategy relationship and the business strategy-firm performance relationship, thereby supporting the salience of firm size as a contingency variable in strategy studies.

Notizen: Rulings made by the World Trade Organization (WTO) dispute settlement body have, since the organization's creation in 1995, significantly advanced global economic liberalization. The response of business has been varied and far from uniformly supportive of the WTO agenda. The reason stems from the fact that adjusting to liberalization measures is easier in some industries than in others. The response is premised on the strategic alternatives available within an industry. Through examining antidumping (AD) elements of the European Union (EU) trade policy regime in the context of two European industries - chemicals and textiles - we find that both are under severe competitive pressure, due to WTO-induced market liberalization. However, the responses taken by companies within the respective industries are very different. We suggest that while WTO activity catalyzes industry evolution, the form of that adjustment is highly industry specific. In the case of textiles, the disaggregation of the industry value chain allows for a variety of product and locational adjustment strategies. In contrast, the chemicals industry is nationally based, reliant on intellectual property for competitive advantage and structurally limited in its ability to adopt a wide range of adjustment strategies. Therefore, in the absence of alternative strategy options, EU chemical companies lobby for rule harmonization in the WTO.

Notizen: In recent years programs of private regulation have spread from North America and Europe to developing countries around the world. Though central to debates over public versus private international governance, little is known about the actual operations of these programs, especially in developing countries where weak state regulation has failed for decades to control environmental degradation. This paper assesses the effectiveness in Argentina of two prominent global private environmental regulatory programs--the chemical industry's Responsible Care® program and the Forest Stewardship Council. Argentina presents an intriguing country case because, despite conditions and policies that should support such programs, their implementation there has been stunted when compared against other regional cases. A focus on the demand and supply factors that shape these programs in Argentina reveals that market demand is a necessary but insufficient condition for regime effectiveness. Supply-side factors such as industry characteristics, public policies, and the institutional culture of firms significantly influence program implementation. Some transnational corporations helped export these program to Argentina; however, many others have shown opposition or disinterest, stifling program development. Also, feckless and unstable state agencies have created an institutional environment unfavorable even for private initiatives aimed at bypassing government interference.

Notizen: This paper examines the interplay between leading international and American accounting authorities over the span of a critical four-year period, 2001-2005. Historically, US regulators and private-sector accounting institutions have taken a cautious approach to International Financial Reporting Standards (IFRSs), citing the superior rigor and overall quality of their own Generally Accepted Accounting Principles (GAAP). During the past four years, however, the Securities and Exchange Commission (SEC) and the Financial Accounting Standards Board (FASB) have each become markedly receptive to the International Accounting Standards Board's (IASB) efforts to harmonize accounting standards worldwide based on IFRSs. Why? This paper offers an explanation that highlights the role of the high-profile American corporate scandals (2001-2002) in precipitating a shift in US accounting authorities' views of the optimal form of accounting rules, an issue that has stood in the way of trans-Atlantic accounting standard convergence. Prior to the accounting scandals, the highly-detailed rules that are characteristic of US GAAP were widely seen to be the most effective form of accounting rule. Since 2002, a normative shift has taken place such that the SEC now endorses objectives-oriented rules that are conceptually aligned with the principles-based standards promulgated by the IASB. The analysis is framed by insights from contemporary International Relations theory which emphasize the influence of scope conditions on patterns of governance.

Notizen: Why do different industrial democracies employ different processes in determining trade policy and different models of capitalism? Two variables account for the nature of the decision-making process for trade policy. First, the level of inter-industry factor mobility determines if class or sectoral coalitions predominate. Second, the size of policy coalitions depends on which branch of government dominates trade policy. Legislatures favor minimum winning coalitions, while executives favor maximal coalitions. These two variables condition different patterns of coalition making: partisan, pluralist, corporatist, and interventionist. I illustrate this theory analyzing the development of policymaking concerning trade in France and Sweden.

Notizen: This paper explores the East-West dichotomy of outsourcing in the European Union in the context of its 2004 eastward enlargement. The purpose of the study is to shed light on the connection between outsourcing and the causal logic of regional integration. The conventional view is that the transfer of business operations from Western Europe to low-cost locations to the east represents a process of outsourcing West-European jobs which deprives the EU core of growth opportunities to the exclusive benefit of the new members from Eastern Europe. This analysis posits the systemic functions of EU outsourcing as a mechanism of economic homogenization in the regional market along its three principal dimensions: investment, commodity trade, and labor mobility. At the macro-level, outsourcing complements capital movements and trade, and acts as a substitute for labor mobility. Keeping labor mobility "down" is the main value added of EU outsourcing. Empirically, its relevance to the regional market is established in an input-output framework of relationships with indicators of economic convergence (homogenization effects) and labor mobility (substitution effects) in the EU. Positive correlations with indices of business synchronization and weak negative correlations with measures of labor supply and wages suggest that outsourcing fits well both with strategies fostering market integration and those counterbalancing the politically sensitive labor mobility in the EU. There is no significant evidence to suggest that, at the aggregate level, outsourcing has independent substitution effects with regard to unemployment rates and wages in Western Europe. The geographic expansion of EU integration, therefore, is not a proxy for losses of social welfare in the West. The paper concludes that as the cost efficiency and resource allocation functions of outsourcing facilitate the homogenizing dynamics of regional integration, it is likely to become increasingly subsumed under EU-level regulation and monitoring in a trade-off between the regional interest and domestic sectoral concerns.

Notizen: Both policymakers and scholars have expressed concern that trade has increased inequality in advanced industrialized countries (AICs). We argue that the impact of trade on inequality depends on the availability of public goods, such as educational opportunities, that allow displaced workers to upgrade their skills and adjust to trade. The provision of public goods, in turn, depends on political institutions: institutions that unify budgetary powers promote public-good spending while institutions that separate budgetary powers discourage it. Trade should thus increase inequality more (reduce inequality less) in countries with a high separation of budgetary powers. We test and find support for these hypotheses with a cross-sectional time-series analysis of fourteen AICs. Our results imply that trade can improve aggregate welfare without worsening economic inequities, but only if governments adopt complementary policies that facilitate human capital formation and labor-market adjustment.

Notizen: A prominent variant of the compensation hypothesis rests on the premise that increased trade exposure heightens domestic economic volatility, prompting demands for compensation via generous systems of transfers and services. Economic theory suggests that because the expansion of international trade entails integration into larger, deeper, more stable markets, and may entail risk diversification, it may actually promote rather than reduce stability. By the same token, however, economic theory also suggests that smaller economies should experience greater levels of volatility than larger economies, and thus also greater levels of insecurity. The evidence presented here suggests that the level of domestic economic volatility in the developed economies, during the latter half of the twentieth century, may indeed have been driven by the size and depth of markets. And critically, for these countries international trade integration may have eased rather than accentuated domestic economic volatility.

Notizen: The concluding article to the special issue critically reflects on arguments and analysis presented in the preceding articles. It argues that globalisation, new forms of private authority and the increased power of transnational business have not generally weakened the state, but rather advanced a business-oriented transformation of statehood. To understand this transformation the article first provides a very short overview of the state-globalisation debate. Subsequently, it deals more explicitly with the state theoretical debate. In particular, it brings together neo-Marxist and post-Weberian conceptualisations in order to address both the social nature of the state and the particular forms and processes by which it is interactively embedded in the economy and society. After an outline of the transformation of statehood and the strategic options for non-state actors, the article concludes with some critical remarks on the future of democratic politics.

Notizen: The rentier-state literature pays little attention to the initial political conditions that shape the way an oil-rich country develops its resources. One of the key causal mechanisms linking oil wealth and regime type is the relationship between foreign investors and host governments. Especially in the developing countries that depend on international financing and expertise, the role of foreign capital in fashioning the balance of power in the political system and thereby the distribution of oil wealth becomes ever more important. As the experiences of Azerbaijan and Russia in the 1990s demonstrate, among oil-rich states in the developing world, those with authoritarian regimes tend to fare better in terms of attracting FDI in the oil sector than states with democratizing (or hybrid regimes). The durability of some authoritarian regimes in the developing world is partly a function of this external legitimation from foreign investors.

Notizen: Scholars of business associations have recently learned a great deal about how associations contribute to development, but much less about the origins of such developmental associations. This essay introduces and assesses a new political explanation for the origins of 'developmental associations.' Conventional wisdom holds that developmental associations must be able to rise above political and collusive pressures and establish autonomy from states. Yet, I argue that these associations' developmental capacities emerge as a result of active state support by key actors, and in response to challenges and threats posed by competitive business organizations. Developmental associations emerge and acquire their capacities as they confront internal threats from other associations, as well as utilize the opportunities presented by the national state and international channels. In this view, functional or organizational capacity is not enough, rather, developmental business associations, must exhibit political capacity--that is the ability to manage the political environment, and respond to the structure of opportunities and threats. This explanation views developmental business associations as political organizations seeking power as well as offers a historically sensitive analysis of transformation of business politics in reforming India.

Notizen: We are currently witnessing the evolution of global accounting standards, as developed by the International Accounting Standards Board (IASB). This is a remarkable development, not only because accounting standards are relevant for all business operations. Whereas accounting standard-setting has previously been a task of national authorities, the process will now be managed internationally by a London-based organisation whose parent foundation is a private company incorporated in the US state of Delaware and mainly financed by the Big Four accounting firms. Furthermore, the US appear to be willing to accept foreign standards that are quite different from their own Generally Accepted Accounting Standards (GAAP). This does not only contradict a widespread perception that equals globalization with Americanization, but also offers a remarkable contrast to US unilateralism in other policy fields. Finally, we are also amidst a major change in the substance of accounting standards, as indicated by a shift from historic cost to fair value accounting within the work of the IASB. This special issue of Business and Politics is devoted to a systematic explanation of these developments, drawing on concepts from International Relations, International Political Economy and Systems Theory.

Notizen: Democratic consolidation was the top priority of re-democratized Argentina and Brazil. Regional integration was also part of this goal from two perspectives: from the outside, through a treaty that diminished the scope for political manoeuvring by the military and increased international support for the incumbent administrations, and; from within, through encouragement of a proactive role for business in integration that would give it democratic legitimacy, while, at the same time, exercising democratic practices. Argentine and Brazilian political classes expected to combine these two aspects but soon had to face business reluctance. Government-business relations in the construction of Mercosur reflected government attempts to balance the trade-off between the approaches from without and from within. Although business was largely excluded from the strategic formulation of integration, in a democratic context, governments have to accommodate societal interests. This occurred through a significant overlap between powerful business interests and the executive's plans. The achievement of integration helped consolidate democracy and the choices made by political elites drove forward the democratic process.

Notizen: In the study of corporate political activity in the United States, scholars have consistently relied on samples comprised entirely or principally of large firms. While scholars have raised the issue of bias in these samples, there have been no systematic examinations of the consequences for causal inference. We address this issue directly by comparing the results of comprehensive models that examine corporate lobbying using both large-firm and randomly-generated samples. We find that while there are some notable differences, they are certainly not so large as to lead us to question fundamentally the results of decades of scholarship. In short, the results generated using a random sample lead to causal inferences largely consistent with those in the theoretical and empirical literature. In particular, firms' resources and interactions with government condition both their decisions to lobby and the level of their activity.

Notizen: The auto industry is usually considered to be a global industry. Yet the majority of passenger cars are still manufactured and sold in industrialised states where its largest firms are headquartered. The central claim made is that despite the auto industry being comprised of multinational corporations, there are clear national differences in the motivations firms cite for environmental initiatives. US firms are more focused on traditional material factors, especially market forces. However, German and Japanese firms are more focused on social concerns and internally-driven strategies. They have more normative, non-market rationales for their environmental initiatives. By analysing what firms themselves say motivates them to improve the environmental performance of their products, via a qualitative analysis of recent environmental reports by German, US and Japanese firms, as well as interviews conducted with key personnel, the conclusion reached is as follows. While the question of 'greenwashing' versus real commitment to reduce the environmental impact of the industry's products remains relevant, the institutional basis of capitalist relations in their home state (i.e. their home state's variety of capitalism) suggests different nationally appropriate and conducive paths to environmental commitments.

Notizen: Environmental policies of providers of international finance - namely the World Bank, export credit agencies, and Equator Principles banks - provide interesting cases within which to study the power of business not as only an input to the political process or as a constraint on politics, but also as a conduit for both state and non-state actors.This paper shows how targeting financial actors has allowed NGOs to transform their rather weak discursive power base into instrumental power over business actors in other sectors. NGOs have channeled their power through states, consumers, and financial institutions; this has allowed them to augment discursive power over their targets with additional indirect, yet more immediate, forms of structural and instrumental power. As a consequence of both direct and indirect NGO pressure, financial institutions have adopted environmental policies. This article posits a theoretical explanation of the underspecified power relationships in NGO strategies that allow NGOs to exploit weak links in commodity chains for their campaigns.This paper argues that financial institutions wield considerable structural power through their ability to control access to finance. It is particularly this power base which has made them prime targets for NGOs campaigning for the greening of infrastructure development projects. As a consequence of NGO pressure, financial institutions have adopted environmental policies which in turn have provided the World Bank and Equator banks with additional sources of discursive power.

Notizen: Research on conflict in resource-rich countries suggests that resource extraction companies contribute to tension but not development. In recent times, public-private partnerships (PPPs) have flourished, in which set up regulation is not against business but in joint cooperation with corporate actors. Yet PPPs are criticized for serving business self-interest and increasing business power rather than the common good. The paper takes the Kimberley Process and the diamond industry as an example to examine the multi-faceted nature of business power when this PPP was negotiated. The core of the argument is that realist-informed perspectives about business power in PPPs and constructivist accounts emphasizing socialization and social learning processes only tell one part of the story. While demonstrating that the diamond industry acted as a both a socializing and socialized agent, the analysis of the different facets of power shows that structural and discursive power were crucial elements in making socialization happen in the first place.

Notizen: By analyzing the interaction between a business firm and multiple government institutions (including a regulatory agency, an executive and a bicameral legislature), we develop predictions about how firms target their political strategies at different branches of government when seeking more favorable public policies. The core of our argument is that firms will target their resources at the institution that is 'pivotal' in the policy-making process. We develop a simple framework, drawing on the political science literature, which identifies pivotal institutions in different types of political environments. We find empirical support for our thesis in an analysis of how U.S. accounting firms shifted their political campaign contributions between the House and Senate in response to the threat of new regulations governing auditor independence during the 1990s.

Notizen: This investigation of accounting standard setting as a case of business power in global governance links together three facets of power. First we examine the discursive power of international accounting standards in the ongoing process of financialization, which we break into two dynamics centered on profit and control. We argue that the selection of accounting paradigms does not concern measurement accuracy but is rather a choice of perspectives between finance and production when presenting economic reality as numbers. Drawing on evidence from the contestation between Rhenish capitalism and the financial perspective, we then explain why, despite the overwhelming structural power of finance, instrumental power exercised in political lobbying over accounting standards can still have considerable success.

Notizen: This paper applies an economic approach to empirically investigate differences in inward foreign direct investment (FDI) patterns between East Asia and Latin America and discusses the implication of regional trade arrangements. International production/distribution networks in East Asia effectively utilize the new economic logic of fragmentation, agglomeration, and optimal internalization and seem to greatly contribute to economic development. The paper examines statistical data for international trade as well as the activities of Japanese and U.S. multinational enterprises (MNEs) and argues that international production/distribution networks, particularly in machinery industries, are extensively developed in East Asia while remaining immature in Latin America.The impact of regional trade arrangements is substantially different depending on whether international production/distribution networks have already been developed or not. Our findings suggest that the impact of FTAA on FDI in Latin America by East Asian MNEs could be either positive or negative, depending on the content of FTAA and accompanying policies. If differentials between intra-regional tariffs and MFN-based tariffs are kept large, import-substituting FDI from East Asia may stagnate or even decrease. With a proper policy package to nurture international production/distribution networks, on the other hand, FDI from East Asia could be accelerated and contributed to deeper integration of Latin America.

Notizen: Negotiations for China's accession to the WTO provoked a debate between pessimists who believed that opening the economy would lead to a flood of imports and a de-nationalization of manufacturing industry, and those who believed that it would spur rationalization of state-owned enterprises, lock in domestic reforms, attract foreign investment, and open the way for trade expansion. The industry most frequently mentioned as endangered was motor vehicles, where an awkward combination of Stalinist central planning with localized autarky had resulted in a proliferation of inefficient producers. With the partial exception of two investments by Volkswagen, initial joint ventures in assembly operations failed miserably.China's commitments on joining the WTO banned (or at least complicated) many of the most important industrial policy tools it had used to promote the auto industry since the opening to joint ventures in the early 1980s--including performance requirements, high tariffs, and numerical quotas. After accession in 2001, tariffs fell steadily while output and foreign investment soared. The Chinese government moved towards a lighter-handed but more effective form of industrial policy that reduced top-down planning while expanding market incentives and scope for managerial freedom. Rather than destroying industrial policy for the auto industry, WTO accession constrained and disciplined it. When foreign auto firms and their governments pushed for more aggressive protection of trademarks and other intellectual property rights under the WTO, the Chinese government initially stalled. Continuing pressure then tilted the balance of state policy toward promotion of independent design, whether by state-owned enterprises testing the boundaries of their joint ventures with foreign multinationals, or by audacious smaller firms purchasing foreign designs and technology to complement inexpensive local parts and assembly, thereby creating the conditions for the emergence of a more competitive industry.

Notizen: In recent years, International Political Economy literature on "politics beyond state" has emphasized the role of non-governmental organizations (NGOs) in broader policy processes, both national and international. In addition to their impact on states, NGOs influence the policies of non-state actors such as firms via public and private politics. Dissatisfied with the progress firms have made in response to public regulation, NGOs have sponsored private authority regimes in several issue areas and pushed firms to participate in them. Across the world, the contest between NGOs and firms has provoked substantial behavioral and programmatic change--including widespread participation in these private authority regimes--among firms seeking to escape NGO pressures. Using firm-level data, this paper examines why direct targeting has not led firms in the U.S. forest products sector to participate in an NGO-sponsored private authority regime, the Forest Stewardship Council. This global regime has been adopted widely in Europe, but U.S.-based forestry firms have tended to favor a domestic industry-sponsored regime, the Sustainable Forestry Initiative. Our analysis suggests that the desire of firms to maintain control over their institutional environment in light of hostile relations with NGOs has led US-based firms to favor the Sustainable Forestry Initiative.

Notizen: Jiangsu and Zhejiang are of two of China's most prosperous and dynamic provinces. This paper first presents a factual account of two empirical phenomena: 1) FDI has played a more substantial role in the economic development of Jiangsu than in Zhejiang, and 2) ownership biases against domestic private firms in Jiangsu were more substantial than in Zhejiang. The paper hypothesizes that there is a connection between these two empirical phenomena. Specifically, ownership biases against domestic private firms increase preferences for FDI because FDI provides a measure of relative property rights security. Thus a biased domestic private firm has an incentive to move its assets and/or future growth opportunities to the foreign sector. The paper uses two private-sector surveys--one conducted in 1993 and the other in 2002--to provide an empirical test of this hypothesis. Our analysis shows, controlling for a variety of firm-level attributes and industry and regional characteristics, those private firms which perceive ownership biases to be more severe are more likely to form joint ventures with foreign firms.

Notizen: This paper applies the insights of obsolescing bargaining theory to a situation in which a host country interacted with both multinational corporations and an international organization, the World Bank. Drawing on resource curse literature and the Rubinstein bargaining model, we demonstrate the continued usefulness of obsolescing bargaining theory by explaining why the World Bank had to renegotiate its initial bargain with Chad in the Chad-Cameroon Oil Pipeline Project. The paper explores how specific bargaining parameters changed over time in this case and suggests how resource curse dynamics and their impact on domestic politics might be particularly relevant for bargaining between host countries and international actors. The case study serves as a warning to international financial institutions and corporations alike with regard to the ways in which obsolescing bargains can arise in the contemporary global political-economy.

Notizen: During the second half of the twentieth century, Christianity underwent an epochal transformation from a predominantly Western religion to a world religion largely defined by non-Western adherents in Africa, Asia, and Latin America. Broadcast media, spearheaded by American evangelical missionaries, played an important role in the globalization of Christianity. After WWII, conservative Protestant missionaries from the United States established a ``far-flung global network" of radio stations around the world with the avowed purpose of proselytizing the entire globe. In Liberia, American missionaries organized Station ELWA, the first evangelical station in Africa. The medium of radio proved well suited to the ``universal" mission of American evangelicals, particularly after the expansion of worldwide ownership in transistor radios during the 1960s. Yet the success of missionary radio stations such as ELWA rested on an extensive process of translation into local customs and practices. Between 1954 and 1970, ELWA officials and workers constructed transmission platforms, political relations, language services, receiver distribution campaigns, and community networks. These constructs functioned as the crucial grids through which the ``universal" meaning of evangelicalism was produced at the grass-roots level. As the history of ELWA in Liberia makes clear, American evangelical broadcasters acquired converts only by adapting their gospel message to fit particular churches, cultures, and contexts across the globe. Localizing missionary radio required the appropriation of indigenous cultural capital, the transposition of national partners, and the active agency of audiences on the ground.

Notizen: "The 'Logic of the Air': Aviation and the Globalism of the 'American Century' " examines the cultural history of aviation in relation to the rise of the United States as a world power. In the context of World War II, the so-called air age entailed new conceptions of American national identity and global responsibility. Aviation inspired internationalist visions of "one world" - a globe divided only by latitudes and longitudes, as depicted by the iconic logo of Pan American Airways. However, aviation also sustained the nationalist vision of an "American Century' defined by U.S. geopolitical, economic, and ideological power. The airplane promised to extend America's frontiers "to infinity," as Pan Am President Juan T. Trippe was fond of saying. Ultimately, aviation helped define a nationalist globalism that construed America's interests as the world's interests. The cultural "logic of the air" embodied the universalizing aspirations of American foreign policy, yet also signified what was exceptional about the United States; aviation both instantiated American empire and denied that it was such. The article traces this dynamic by examining both cultural representations of aviation and U.S. international aviation policy.

Notizen: A fable and a dream about the intersection of global and local culture.

Notizen: Techno-nationalism and techno-globalism are descriptive and prescriptive categories for understanding the impact of technology on society and vice versa. They reflect the underlying assumptions made by analysts of the place of technology in the world, and denote ideologies, rather than technological policies or realities. They also help us to realize that standard accounts of the nation and globalization are not as securely based as they appear. Indeed, nations and states are important in ways techno-nationalism does not capture, and the international and global dimension is crucial in ways which that techno-globalism overlooks. Yet an analysis of both terms yields building blocks to a more sophisticated appreciation of the linkages between the nation, technological innovation and globalization.

Notizen: In this paper we develop an integrated approach towards corporate governance and business ethics. Our central argument is that organisations can learn from the development of strategic planning in the 1970s and 1980s. We identify three weaknesses – a bureaucratic and formalised approach, lack of implementation and lack of integration throughout the organisation – which were prevalent in strategic planning in the past and which are potentially just as problematic for an integrated corporate governance approach to business ethics. We suggest ways these weaknesses might be avoided and provide questions for boards of directors to consider when integrating ethical concerns into their organisations’ corporate governance structures.

Notizen: This paper analyses recent corporate governance codes issued by 20 countries for evidence of convergence in corporate governance systems in Europe. The analysis shows that there has been a degree of convergence towards an Anglo-Saxon model of corporate governance as the audit committee concept is widely accepted in countries with both unitary and two-tier governance systems. Further, the latest audit committee recommendations in countries that have issued several governance codes show a strengthening of the recommendations for an audit committee over time in line with the Anglo-Saxon audit committee concept and convergence with the debate in the US and UK on issues such as the independence and financial expertise of members. However, consistent with the literature on the convergence of European corporate governance systems, at an operational level there is limited consistency in the recommended structure and role of audit committees.

Notizen: We analyse the relationship between firm value, as measured by Tobin's q, and newly released indices of effective corporate governance for a sample of 263 Canadian firms. The results indicate that corporate governance does matter in Canada. However, not all elements of measured governance are important, and the effects of governance do differ by ownership category. For the entire sample of firms we find no evidence that a total governance index affects firm performance. This is mainly because we find no evidence that board independence, the most heavily-weighted sub-index, has any positive effect on firm performance. Indeed, for family-owned firms we find that the effect is negative. In general, sub-indices measuring effective compensation, disclosure and shareholder rights practices enhance performance and this is true for most ownership types. We also find no evidence that governance practices are endogenous.

Notizen: We suggest that the equivocal empirical results of board leadership structure on firm performance have both methodological and conceptual roots. We stress that whether board leadership structure enhances or lowers performance depends on its fit with a firm's internal and external conditions, a point that has not been comprehensively addressed by the extant literature. To guide future research in this field, we develop five testable propositions and offer some suggestions on how these propositions may be empirically tested.

Notizen: This paper examines the effects of board of directors’ network characteristics on firm performance using a sample of 199 large, publicly traded Korean companies from 1990 through 1999. Two board network characteristics are discussed, namely: board network density and board external social capital. Board network density is defined as the extensiveness or the cohesiveness of contact among the members of board of directors, and board external social capital refers to the degree to which board members have outside contacts in the external environment. The test results suggest that a moderate level of board network density enhances firm value, while too cohesive a board network destroys it. It is also found that board members’ elite school networks were positively associated with firm performance.

Notizen: Under what conditions do stakeholders consent to a regime of corporate governance? We propose that consent by the governed in corporate governance cannot be satisfactorily explained without reference to the collective value of procedural fairness that underlies markets. Drawing on the social psychology of justice and the political economy of social choice, we highlight the critical role played by democratic procedures in achieving consent by the governed in modern society. This line of reasoning leads us to suggest that the evolution of corporate governance, too, can be understood in terms of Tocqueville's well-known hypothesis that democracy eventually prevails in all spheres of organised activity. Examining the historical record of institutional reform in France, Germany, the United Kingdom and the United  States,  we  find  that  corporate  governance  has  indeed  evolved  to  make  increasing  use of democratic procedures. Viewed over the long-term of two centuries of capitalist development, corporate governance is seen to have successively incorporated enfranchisement, separation of powers and representation. In conclusion, we consider the implications of basing the study of corporate governance on the question of stakeholder consent and the practice of corporate governance on the procedures of democracy.

Notizen: Recent debates on the corporate governance role of institutional investors have centred around whether they monitor their portfolio firms (exercise voice) or vote with their feet (exit). We examine these competing views in the context of how institutions’ voice vs exit role, proxied by institutional ownership levels, is associated with their portfolio firms’ earnings management in multiple settings. We extend Koh (2003, The British Accounting Review, 35, 105–128) by examining the effect of both short-term and long-term oriented institutional ownership on the extent of earnings management by portfolios firms with different incentives for earnings management. Specifically, we expect that the non-linear relation between institutional ownership and earnings management found in Koh (2003) is more likely to be present for portfolio firms with stronger incentives to meet/beat earnings thresholds. Our results suggest that transient and long-term oriented institutions co-exist and have differential effects on portfolio firms’ earnings management. Transient institutions are associated with upward accruals management, while long-term oriented institutions constrain such upward accruals management for portfolio firms that have strong incentives to do so (specifically, firms with non-discretionary earnings below prior year earnings). This suggests long-term oriented institutions can act as a corporate governance mechanism to mitigate aggressive earnings management. Overall, we find that the association between institutional ownership and earnings management is not systematic across all firms and is context dependent, suggesting complex associations between institutional ownership and earnings management strategies exist.

Notizen: Agency theorists have put forth a number of internal control mechanisms that can reduce agency problems. These different mechanisms are substitutive and thus it is thought that both the board of directors and large external shareholders can influence CEO compensation. Stewardship theory challenges the presumption of self-interest of agency theory, holding that managers view themselves as stewards of their organisation. The first objective of this paper is to study the influence of the control of the board of directors and large external shareholders on CEO compensation. The second objective is to utilise both stewardship and agency theory to analyse the relationship between control mechanisms and compensation, and to see which theory is more applicable. This paper uses the LISREL model to study the influence that the control of the board of directors and external large shareholders has upon CEO compensation, with data drawn from samples of listed manufacturing companies between the years 1997 and 1999 in Taiwan. The following conclusions are reached: (1) the paper supports the viewpoint of stewardship theory whereby the CEO acts as a steward of his/her company when he/she also holds the position of chairman of the company. (2) The findings show that CEO compensation will be high when the board's control is relatively ineffective. (3) The shareholdings of the board of directors can reinforce the degree of control from the board.

Notizen: There is a need for regional studies of women on corporate boards to capture experiences of smaller companies and to understand the nature of local resources for expanding the pool of women candidates for board seats. New findings from a statewide study of women on corporate boards are reported. The paper examines the status of women on corporate boards compared to other regions in the United States and around the world. Change efforts of governments and professional organisations for helping women overcome barriers to the boardroom are described to demonstrate the need for local knowledge in determining an effective change approach. Results from this study indicate that the local pool of women in academia and consulting has provided alternative routes to the boardroom. This knowledge can be used to direct change efforts for promoting women on boards. Practical implications are discussed for women seeking board seats and for firms seeking qualified women director candidates.

Notizen: Books reviewed: Ferdinand A. Gul and Judy S. L. Tsui, eds, The Governance of East Asian Corporations: Post Asian Financial Crisis, New York: Palgrave Macmillan, 2004, ISBN 1403944105 
Reviewed by Professor Christina L. Ahmadjian 
Hitotsubashi University

Notizen: Empirical literature on corporate governance often assumes independence among different control mechanisms. However, different studies in the Anglo-Saxon context find that control mechanisms are interrelated. The Spanish corporate governance system, unlike the Anglo-Saxon one, is characterised by the dominance of internal controls, mainly the stock ownership concentration and the board of directors. In this internal control context, we specifically analyse the possible substitution of the supervisory potential of the board outsiders by the incentive effects derived from managerial stock ownership and the supervisory role of large shareholders. Our main results show a negative relationship between the proportion of outside directors and managerial and large blockholders’ ownership stake. These findings support the substitution among internal controls and suggest that Spanish firms form an efficient conglomerate of managerial controls, in which deficiencies in a single mechanism can be compensated by the action of an alternative one.

Notizen: In Australia, as in many Western industrialised countries, women accessing corporate board positions are still the exception to the rule. This paper reports research exploring men's and women's views on the factors crucial in attaining a board position. While both groups identified the importance of a strong track record, a good understanding of business principles and business contacts in gaining board positions, we found that women also highlighted the importance of high visibility and family contacts to account for their nomination to boards. It seems that women's competence has to be widely acknowledged in the public domain or through family connections before boards, or their nominating committees, will be prepared to “risk” having a woman on the board.

Notizen: This paper presents a new, holistic approach to corporate governance, adding simultaneous value to shareholders, customers, employees and society. This new approach to directing and controlling companies integrates components of corporate governance that have historically been treated in isolation of each other in research, teaching and practice.

Notizen: Corporate governance systems develop as a result of cultural underpinnings, legal structures and different forms of financing business. This paper describes these factors in the US and UK, two examples of strong shareholder ownership patterns of financing, and Germany, a country with a tradition of strong creditor financing. Recommendations are made for best practices in governance. Although enhanced governance mechanisms is a sound goal to pursue, the results may be meaningless unless internal controls are strengthened and top management and the board of directors establish an ethical tone at the top.

Notizen: The challenge for boards is to prevent crises in the organisations they govern. Performance evaluation is a key means by which boards can recognise and correct corporate governance problems and add real value to their organisations. Our paper provides a practical introduction to board and director evaluations. We discuss the reasons for governance failures and how board evaluations can help prevent them from occurring. We then review the performance pressures facing boards and the benefits of board evaluations in meeting these pressures. Finally, we introduce our framework for a successful board and/or individual director evaluation, whatever the company type. In this framework, we suggest there are seven key questions to consider when planning a board evaluation and discuss each of these seven decision areas.

Notizen: The catastrophe caused by the failure of Enron could not compare with the damage this company would have caused if it had succeeded. The relentless emphasis on the importance of shareholder value in recent times has created the conditions for the disconnection of corporations such as Enron from their essential moral underpinnings, encouraging them to concentrate exclusively on financial performance, and to neglect not just the wider stakeholder interests of customers and employees, but the essential interests of the economies and communities in which they operate. The problem with established economic theories of corporate governance is that they misconceive the irreducible core of corporate governance, at the same time as underestimating the complexity of the phenomenon.

Notizen: Based on British legislation, the duties of directors are stated in the New Zealand Companies Act 1993. However, “good” governance is not defined within the Act. Considering the relative importance attached by boards to a variety of governance tasks, this paper evaluates directors’ perceptions of the current contribution of fellow board members to different aspects of governance practice. This evaluation is discussed in relation to the influence of board tasks and functions on actions that may be regarded as being in the interests of the company as defined by the Act. The evaluation illustrates the strategic orientation of the board, highlighting the extent to which individual directors and the board as a whole can actually influence key outcomes and, thereby, their governance contribution. The paper reports responses to findings based on a study involving 3000 directors and presents suggestions for enhancing board processes as well as possible changes in expectations that could be encapsulated in legislation.

Notizen: The Canadian Securities Administrators’ National Policy 58-201 Corporate Governance Guidelines (the “Policy”),1 released 15 April 2005, on which the author provided detailed advice, reads that:〈list style="custom"〉• “[t]he board should develop clear position descriptions for the chair and the chair of each board committee” (section 3.5);• the board should engage in an explicit two-step “competencies and skills” recruitment of individual directors (sections 3.12 and 3.14);2 and• individual directors should be regularly assessed and that these assessments should consider “the applicable position description(s), as well as the competencies and skills each individual director is expected to bring to the board” (section 3.18).The Canadian Securities Administrators, subject to receiving the required approvals, intend for the Policy to come into force in Canadian jurisdictions on 30 June 2005.This article canvasses some of the aspects in assessing board leadership.

Notizen: This study, based on a comparison of the Combined Code Guidelines for non-executive directors between listed and unlisted boards, suggests that on unlisted boards non-executive directors have a greater degree of involvement in strategic development, financial monitoring, shareholder communication and overall board contribution than on listed boards, but a lesser degree of involvement in the monitoring of management, the setting of executive remuneration, the appointment and removal of executives, and succession planning. The importance of risk analysis and induction is considered high across both sectors, although board development and independence is considered less important on unlisted boards.

Notizen: Among the many roles boards of directors perform, the monitoring role of the board has received the most attention recently, resulting in higher demands on boards and directors to be vigilant monitors. By presenting a framework to tailor the monitoring role of the board to the specific situation and needs of the company, this paper tries to overcome the negative effects of an excessive focus on control. In so far as boards are, to a certain extent, free to define their own delegation policy, this framework highlights two essential decisions of the board, namely the decision which responsibilities and authorities are delegated to management and the decision whether to delegate them to a single-headed or joint management. Some preliminary empirical findings supporting the central argument are presented, together with some suggestions for further research.

Notizen: After the emergence of the Cadbury Report in 1992, several countries in the EU, including Denmark, issued their own guidelines of corporate governance. However, whether such recommendations benefit shareholders is a controversial question. This article presents an empirical analysis of financial performance and the composition of semi-two-tier boards using a unique sample of Danish listed firms. It is shown that board size, proportion of insiders and positions held by board members in other firms do not significantly impact performance. Only the average age of the board has a significantly negative impact on performance. Thus, it is argued that board structure only plays crucial role when a firm is in financial trouble or faces a major threat – not under normal circumstances.

Notizen: Corporate governance frameworks can be perceived as institutional attempts to create a structured dialogue between companies and their shareholders and stakeholders with the purpose of paving the way for understanding the company's strategic and operational goals, including critical success factors for achieving those goals. This article focuses on the disclosure on corporate governance in Danish companies (SMEs). It also provides evidence from the literature as well as analyses of company annual reports. Furthermore, the findings open the way for a discussion on further research on corporate governance and disclosure on strategic management and transparency.

Notizen: The aim of this paper is to distinguish between different roles of boards of directors in companies and to fit the theoretical debate into a framework for better understanding. A simple framework, constructed from the literature, is used to distinguish between the archetypes of roles from a two-dimensional perspective. The paper includes a preliminary qualitative study of Icelandic companies with the aim of testing the framework and exploring the roles of boards in Iceland. The study shows that boards have various roles or patterns of roles and that the roles can change with change of circumstances.

Notizen: Books reviewed:Jay Lorsch, Leslie Berlowitz and Andy Zelleke, eds, Restoring Trust in American Business, Cambridge MA: MIT Press, 2005, ISBN 0-262-74027-3 
Reviewed by Bob MonksJulian Roche, Corporate Governance in Asia, Oxford and New York: Routledge, 2005, ISBN 0-415-33975-8 
Reviewed by Bob Tricker 
Honorary Professor University of Hong KongMark Hirschey Kose John and Anil K., Makhija, eds, Corporate Governance, Advances in Financial Economics Volume 9, Amsterdam: Elsevier, 2004, ISBN 0-7623-1133-9 
Reviewed by Guy Liu 
Brunel Business School & 
Sichuan University Business School, China

Notizen: This study examines the behavioural biases of Japanese institutional investors and discusses implications for their role in corporate governance, based on the findings of a questionnaire survey of fund managers carried out in 2003. Statistical analysis of the survey results reveals a short-term bias in fund managers’ investment time horizons, herding and self-marketing to improve the appearance of portfolio performance under the pressure either of customers or of institutional restraints. We conclude that institutional investors’ behaviour contradicts their role as shareholders.

Notizen: The paper discusses to what extent Parmalat's failure can be considered a particularly Italian case. The main characteristics of Parmalat's corporate governance structure are compared and contrasted with those prevailing among Italian listed companies as well as with the highest corporate governance standards in Italy. Empirical evidence seems to confirm the lack of a monitoring structure in making corporate insiders accountable in the presence of a corporate governance system characterised by a controlling shareholder. The role of the ownership and control structure (with special regard to the controlling shareholder's role) and of the board of statutory auditors have Italian traits and might suggest that the Parmalat case is a particularly Italian scandal. However, Italian corporate governance standards were not completely at fault in the Parmalat case. Parmalat's corporate governance structure failed to comply with some of the key existing Italian corporate governance standards of best practice, such as the presence of independent directors and the composition of the internal control committee. Besides, the role of the external auditor as well as the internal control committee as non-effective monitors seem to put Parmalat into the global argument case, not very different, mutatis mutandis, from other corporate scandals.

Notizen: In recent years there has been some debate and uncertainty about the legality of private briefings of some market participants with the management of listed companies in the UK. The Myners (2001) and Higgs (2003) Reports have suggested an increasingly active role for institutional shareholders. However, the message from the Financial Services Authority in its role as the United Kingdom Listing Authority has been that private briefings may be unlawful. This article explores the meaning and scope of the legal rules on insider dealing and market abuse under the Financial Services and Markets Act 2000, the Criminal Justice Act 1993 and those parts of the Listing Rules that govern such briefings. The extent to which such rules apply to various types of meeting between corporate managers and other market participants, such as institutional investors, and the information provided in those meetings, will also be examined. The paper concludes that the mismatch between the apparent legal position and the policy objective of the Government of increasing institutional shareholders’ activism requires a resolution.

Notizen: This paper examines how different control mechanisms relate to one another in the Spanish corporate governance system. We propose a new empirical approach that consists of analysing control mechanisms according to the non-linearity of the value-ownership relation, and emphasising entrenchment and expropriation phenomena. Our evidence contributes to understanding the role played by several control mechanisms in the Spanish corporate governance system, which largely differs from the US one. Our results show that control mechanisms (especially insider ownership, debt and dividends) are used in a complementary way by Spanish firms. Additionally, this complementarity is only observed when the interests of managers and owners converge, but not when there are controlling owners whose interests need not coincide with those of minority shareholders. Therefore, entrenchment and expropriation effects do influence the relationship among control mechanisms.

Notizen: Post 1992 Cadbury Committee report developments in UK corporate governance provisions are reviewed. The role of institutional investors, and the financial sector as a whole, in corporate governance is considered. Practices in “Continental Europe”, the UK and the US are contrasted, along with the roles of banks, strategic investors (“insiders”), institutional investors (“outsiders”) and capital markets. To be effective, capital markets must be efficient and competitive and auditing must be reliable. Current EU and US reform proposals are compared and prospects for convergence in corporate governance procedures assessed.

Notizen: In the UK there has been a recent debate over the role of the independent non-executive director, with that debate resulting in changes to a revised Code applicable to companies reporting after 1 November, 2003. This article reflects on an aspect of the proposed changes that was ignored, namely changes to the legal duties and liabilities of non-executive directors. This appears to have been a missed opportunity in seeking to enhance the effectiveness of independent non-executives and their contributions to enhancing corporate governance. This paper considers enhancing the governance role of non-executive directors by introducing “gatekeeper liability”.

Notizen: We analyse the corporate governance of professional football clubs operating in England's Premier and Football Leagues. Good corporate governance is essential if clubs are to be managed effectively and to survive in the difficult economic circumstances surrounding the football industry. The past couple of years have been especially testing, as Football League clubs have had to deal with the aftermath of the collapse of the ITV digital contract. Our analysis reveals that while there are some noticeable improvements in governance standards, many clubs would benefit from following best practice guidelines on information disclosure, the appointment of directors, board composition, induction and training of directors, risk management and consultation with stakeholders. Despite improvement in some areas over the past three years, standards of corporate governance in football clubs are significantly below those of listed companies as a whole and there is thus considerable need for improvement.Corporate governance in the UK is regulated by Company Law and by codes of corporate governance such as The Combined Code (CC) and The OECD Principles. Whereas compliance with company law is obligatory, compliance with best practice codes of corporate governance, such as the CC, is voluntary in the sense that companies listed on the London Stock Exchange must either comply with the code or else explain any instance of non-compliance in their Annual Report. The rationale for this self-regulatory process is that good corporate governance brings benefits to companies in terms of engendering the trust of investors and improving corporate performance. Firms will therefore find it in their own best interests to comply with the code unless there is a good reason not to do so which can be explained to shareholders in the company's statement of compliance. Since the CC was first introduced, the degree of compliance, as measured by the proportion of companies adopting best practice, has increased considerably, representing a welcome improvement in governance standards.In this paper we present results from our annual survey of FA Premier and Football League clubs, and our analysis of corporate governance statements published by listed clubs, to provide an assessment of the state of corporate governance of professional football clubs. On the basis of this analysis we make a number of recommendations for how the corporate governance of professional football clubs might be improved in the future.

Notizen: Books reviewed:Pat Sucher and Katarzyna Kosmala MacLullich, A Comparative Analysis of Auditor Independence in Economies in Transition, ICAS Research Report, Edinburgh: The Institute of Chartered Accountants of Scotland, 2004, ISBN 1 904574 07 6 
Reviewed by Professor David Citron 
Cass Business SchoolMartin Hilb, New Corporate Governance: Successful Board Management Tools, Berlin: Springer, 2005, ISBN 3-540-21399-6 
Reviewed by Bob Garratt 
Board Performance Ltd, London 
Visiting Professor, Cass Business SchoolHoward Gospel and Andrew Pendleton, Corporate Governance and Labour Management: an international comparison, Oxford: Oxford University Press, 2005, ISBN 0199263671 
Reviewed by Charles B. Shrader 
Iowa State UniversityThomas Clarke, Theories of Corporate Governance – the philosophical foundations of corporate governance, New York: Routledge, 2004, ISBN 0-415-32308-8 (hb), 0-415-32307-X (pb) 
Reviewed by Dr Bob TrickerRichard Calland and Guy Dehn, eds, Whistleblowing Around the World. Law, Culture and Practice, London: ODAC/PCaW 2004, ISBN 1919798560 
Reviewed by Gerald Vinten 
Paris Graduate Management SchoolAnna Grandori, ed, Corporate Governance and Firm Organization: Microfoundations and Firm Organization, Oxford: Oxford University Press, 2004, ISBN 0-19-926976-9 
Reviewed by Dr Andy Zelleke 
The Wharton School, University of Pennsylvania

Notizen: The term “corporate governance”, and all that it implies, is now in everyday use in Germany. This is due to the enormous changes Germany has experienced in recent years, in international business, international finance and in German industrial structures. This contribution deals with recent changes in the German system of corporate governance. After a short historical review, the major elements of the international context that form the background for changes in Germany are discussed. This is followed by an explanation of the German Corporate Governance Code and its role, concluding with a prospectus for further possible developments and a summary of key points.

Notizen: Germany and Japan are often seen deviating from an economic model of shareholder control and thereby as being similar by virtue of their mutual contrast with the US. Given the common challenges for bank-based and stakeholder-oriented models of corporate governance, Germany–Japan comparison seems particularly timely. This article provides an introductory overview and analysis for the Special Issue by comparing recent developments in corporate law reform, banking and finance, and employment in Germany and Japan. While rejecting arguments for international convergence, we discuss this evidence of simultaneous continuity and change in corporate governance as a potential form of hybridisation of national models or renegotiation of stakeholder coalitions in German and Japanese firms. One consequence is the growing diversity of firm-level corporate governance practices within national systems.

Notizen: Corporate Governance has become a widely discussed topic in Japan among academics and practitioners. But companies, protected under a tight system of cross-shareholding, seem slow to adopt new models accepted outside Japan. This article discusses the changes in the composition of shareholding, which together with legal changes are leading to greater awareness among Japanese companies of corporate governance as well as greater shareholder activism.

Notizen: Corporate crises and international trends in corporate governance have revealed the need for reform, and resulted in a great number of changes in corporate law. In spite of this, the existing legal framework for corporate governance in Germany presents itself reluctant to major changes. The German approach to reform has focused on the improvement of corporate monitoring by the supervisory board. It neither questions the two-tier structure, nor does it reconsider the existing representation of shareholders or other stakeholders under the current form of co-determination. The German Corporate Governance Code represents a new instrument of soft law and its recommendations are likely argued to improve the work of the supervisory board by providing detailed guidelines for corporate decision-making that express a generally accepted standard of best practice.

Notizen: The German corporate governance system has long been cited as the standard example of an insider-controlled and stakeholder-oriented system. We argue that despite important reforms and substantial changes of individual elements of the German corporate governance system, the main characteristics of the traditional German system as a whole are still in place. However, in our opinion the changing role of big universal banks in governance undermines the stability of the corporate governance system in Germany. Therefore a breakdown of the traditional system leading to a control vacuum or a fundamental change to a capital market-based system could be in the offing.

Notizen: A small but significant stream of research has emerged on how changes in corporate governance impact labour management, particularly in countries with stakeholder-oriented corporate governance. This paper briefly reviews existing empirical and theoretical literature on the links between corporate governance and labour management. Then it compares recent trends in Germany and Japan in terms of how changes in corporate governance affect the distribution of value-added, employment adjustment, pay systems and employee participation. Germany and Japan have proven able to adapt and modify their stakeholder model of employment and employee participation to changing circumstances. However, the size of the core model is getting smaller.

Notizen: Throughout the 20th century, banks have dominated Germany's financial system and also played a key role in corporate governance. Recently, however, a number of efforts have been made to increase the role of markets within this bank-based financial system, including regulatory innovations and a reform of the pension system. This article finds that, despite these changes, there are a surprising number of continuities in the structure of the financial system. The German financial system can therefore still be characterised as bank-based. Furthermore, banks have only partially withdrawn from the stakeholder system of corporate governance, and to some extent been replaced by insurance companies. An explanation for these continuities is advanced which emphasises stability in household investment behaviour and in patterns of company sector demand for finance.

Notizen: The purpose of this paper is to test hypotheses regarding the mix of bank borrowing and bonds that occur under relationship banking, thereby constructing a detailed data set on the debt structure of large Japanese firms from the late 1980s to the 1990s. We show that debt choice is affected by main bank relationships, in the sense that successful firms with strong bank ties are much more likely to issue public bonds than resort to bank borrowing.

Notizen: The purpose of this paper is to analyse whether companies’“way to pay their director” matters or not. Firstly, we fail to find a positive relationship between the performance–pay sensitivity and company performance. Thus, these results do not support our hypothesis that those companies that intensify the performance–pay sensitivity are more likely to improve their performance. In addition, this research fails to find a positive relationship between the change of pay policy and performance. These results are consistent with previous studies that directors’ pay is not designed to motivate directors to work toward shareholders’ value.

Notizen: There are good reasons for national differences in corporate governance, differences in the distributional outcomes desired and differences in motivational resources; material sticks and carrots are not the only ways of keeping top managers efficient, honest and dynamic. Yet, too often discussions of corporate governance assume the Anglo-Saxon model to be normal and others “deviant”– a notion to be challenged, but nevertheless the dominant assumption among the “reformers” of corporate governance in Japan and Germany. Most of the reforms in those two countries over the past decade have purported to be about making top managers more honest and efficient. In fact their purport has more often been to change distributional outcomes, favouring shareholders at the expense of employees.

Notizen: In this exploratory comparative study of Toyota/GM and Canon/Xerox, the author purports to explain why the 10-year performance of Toyota and Canon, despite their traditional Japanese primacy on job security, large board size and absence of non-executive directors, is superior to that of their US rivals. The author compares the key stakeholder and the board structure as well as corporate values, culture and strategy of the sample firms and concludes that higher performance is possible without resorting to US-style corporate governance, and proposes that corporate values, culture and strategy are equally vital ingredients of corporate success.

Notizen: The OECD Principles of Corporate Governance were revised in 2004 to respond to corporate governance developments including corporate scandals that further focused the minds of governments on improving corporate governance practices. Since they were first issued in 1999, the OECD Principles of Corporate Governance have gained worldwide recognition as an international benchmark for sound corporate governance. They are actively used by governments, regulators, investors, corporations and stakeholders in both OECD and non-OECD countries and have been adopted by the Financial Stability Forum as one of the Twelve Key Standards for Sound Financial Systems. The 2004 revision of the OECD Principles reflects not only the experience of OECD countries but also that of emerging and developing economies. This article shows how the revised Principles take into account recent lessons from non-OECD countries so that they continue to maintain their global relevance.

Notizen: A continuing obstacle to the success of most corporate governance initiatives is the unwillingness of the majority of institutional portfolio managers to co-operate with governance activists even to the extent of merely voting in cases where clear benefits would flow to all shareholders from a positive result. Portfolio managers have given many excuses for their lack of participation in such efforts, but upon examination, most turn out to be facile rationalisations. Institutional investors’ negative attitudes towards governance may be attributed to scepticism on the part of some individuals, but there also seem to be structural factors at work. Some are integral to corporate governance itself: the difficulty of quantifying governance information, and the longer time horizon necessary for the realisation of most governance initiatives. Others are, however, a function of the structure of the investment industry: the different backgrounds and aptitudes of most corporate governance specialists from most investment managers, reliance upon third-party consultants, a different orientation towards investment, short-termism, differing career paths and perceptions, fear of bureaucratic intervention and competition for performance compensation. It is proposed that some internal readjustment of investment management companies, coupled with a clearer commitment by senior executives at those companies to exploit governance initiatives, would be beneficial both to the cause of better corporate governance and to portfolio returns.

Notizen: The Cadbury Committee drew attention to the need for improved assurance regarding the going concern status of companies. This paper presents evidence drawn from the comments on two exposure drafts of the auditing standard SAS 130 to show that those arguing for a limitation on the “foreseeable future” were able to limit the impact of the Cadbury recommendations for both auditors and directors without attracting any significant volume of protest on behalf of users or the general interest. A model of a cooperative game between directors and auditors is used to show that this was a predictable outcome.