ALBERT

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: "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.

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

Notes: 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.

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

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

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: In 2002, the German Corporate Governance Code was adopted. This paper examines the overall acceptance of the Code recommendations and identifies its critical standards that receive comparably less agreement among German listed companies. The study is based on the compliance declarations of 408 firms listed at the Frankfurt Stock Exchange. The findings indicate a significantly high level of Code conformity which can be expected to increase in the future. Comparative analyses reveal that company size is positively associated with the extent of Code compliance. Neuralgic norms concern the personal liability and compensation of the board members, the staffing of the boards, the structure of the supervisory board and accounting requirements.

Notes: This study aims at investigating the impact of the roles, structure and process of boards on performance of Turkish companies. Drawing on the data obtained from a sample of 386 mostly small and non-listed stock ownership companies, it was found that the separation of chairman and general manager positions has significant positive impact on firm performance. From the board roles of control, service and resource acquisition, firm performance was found to be positively related only to the level of adoption of resource acquisition role. It was also found that the effectiveness, information access and performance evaluation attributes of boards are positively and significantly associated with firm performance.

Notes: In this study we contribute to the literature by re-examining the effect of control and ownership of controlling shareholder on corporate valuation, and determining which particular mechanism for enhancing voting rights would achieve the negative entrenchment effect. We take Taiwan listed companies, where the ownership concentration structure is similar to that in East Asian countries, as our sample. We find the corporate value is higher when the largest shareholder owns more cash flow rights (ownership), supporting the positive incentive effect. The negative entrenchment effect becomes evident when the largest shareholder's cash flow rights are less than the median. Therefore, if the cash flow rights owned by the largest shareholder are greater than the median, the positive incentive effect will restrain the negative entrenchment effect. In family-controlled companies, the corporate value will conspicuously decrease if the largest shareholder enhances their voting rights through cross-shareholding, deeply participates in management or controls most board of directors.

Notes: In this paper we analyse the evolution of the direct and ultimate ownership structure of a large sample of UK non-financial listed firms over the last decade. Our data show that while outsider ownership is relatively stable over time, managerial ownership shows a sharp decreasing trend and it is significantly lower in the presence of a large outside controller. Nonetheless, while average shareholding by executives confirms the decreasing trend, the opposite holds for non-executive directors. In addition, while average board size is rather constant in time, the proportion of non-executives is steadily increasing in time. As far as ultimate ownership is concerned, our data show that the existence of complex ownership structures in the UK is far from being negligible. We document that more than 10 per cent of the firms are owned via a complex structure and the degree of divergence between cash flow and control rights for these firms is around 11 per cent at the 10 per cent cut-off. Our data also suggest that the presence of complex structures is decreasing in time at any cut-off level. In addition, we report a decreasing trend over time of “widely held” firms. Finally, we show preliminary evidence of a negative impact of the divergence between cash flow and control rights on firm value.

Notes: This paper argues that the deeply rooted cause of poor corporate governance practices in China's state-owned banks is the discretion enjoyed by policy makers to re-optimise their policy choices when they deem necessary and the consequent moral hazard leading to opportunistic behaviours of bank managers. By examining the case of Bank of China Hong Kong (BoCHK), the paper suggests that international listing can provide an effective mechanism to mitigate the consequence of discretionary policies and managerial opportunism at home because the company is now disciplined and regulated by a more developed capital market outside the home jurisdiction. It shows that BoCHK's IPO preparation and first two years of listing on Hong Kong Stock Exchange (HKSE) have induced in-depth corporate restructuring and noticeable improvement in governance practices.

Notes: In recent years, the debate about the efficiency of corporate governance mechanisms has focused on the activity of the corporate boards of directors. This paper analyses the effect of the size of the board, its composition and internal functioning on firm value in a sample of 450 non-financial companies from ten countries in Western Europe and North America. The econometric method combines uniequational regression analysis with simultaneous equations in order to control for the possibility of board size and composition endogeneity. The results show a negative relationship between firm value and the size of the board of directors. This relation holds when we control for alternative definitions of firm size and for board composition, the board's internal functioning, country effect and industry effect. We find no significant relationship between the composition of the board and the value of the firm. These results are consistent with previous relevant papers and show that companies with oversized boards of directors have poorer performance both in countries where internal mechanisms of governance dominate and in countries where external mechanisms are predominant.

Notes: Books reviewed: J.A. McCahery, T. Raaijmakers and E.P.M. Vermeulen, The Governance of Close Corporations and Partnerships, Oxford: Oxford University Press, 2004, ISBN 0 19 926435 X 
Reviewed by Dr Stephen Copp 
Bournemouth Law School Laixiang Sun, ed., Ownership and Governance of Enterprises. Recent Innovative Developments, New York: Palgrave Macmillan, 2003, ISBN 1-4039-1633-0 
Reviewed by Dr Silvia Gómez 
University of Oviedo, Spain Claire Marston, A Survey of European Investor Relations, Edinburgh: The Institute of Chartered Accountants of Scotland, 2004, ISBN 1 904574 08 4 
Reviewed by John Holland 
Glasgow University

Notes: In the context of agency theory (Jensen and Meckling, 1976. Journal of Financial Economics, 3, 305–360), how insider stock ownership relates to firm performance is explored in this paper. The relevant performance measure used is total factor productivity. Insiders are classified into executives, board members and blockholders so as to facilitate a detailed study. Five-year (1996–2000) panel data of 333 Taiwanese listed electronics firms are examined. It is observed that total insider ownership remains steady while the executive-to-insider holding ratio increases significantly. In terms of the effect on total factor productivity, neither the total insider ownership nor the board-to-insider holding ratio shows any influence on productivity. However, productivity first decreases then increases with the executive-to-insider holding ratio, forming a U-shaped relationship. The results indicate that stock ownership of top officers in high-tech firms should be encouraged to enhance productivity.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: This study examines the relationship between the voluntary disclosure of information about corporate governance practices and the intention to raise external finance. This relationship is examined by using corporate governance disclosures in the annual reports of Australian companies in 1994. Data from this year are used because in subsequent years Australian Stock Exchange regulations influenced listed companies to make disclosures about their corporate governance practices. Regression analysis indicates that the voluntary disclosure of corporate governance information is positively associated with the intention to raise equity capital, but not with the intention to raise debt capital.

Notes: We examine the impact of ownership concentration on firm performance using panel data for firms listed on the Budapest Stock Exchange, where ownership tends to be highly concentrated and frequently involves multiple blocks. Fixed-effects estimates imply that the size of the largest block increases profitability and efficiency strongly and monotonically, but the effects of total blockholdings are much smaller and statistically insignificant. Controlling for the size of the largest block, point estimates of the marginal effects of additional blocks are negative. The results suggest that the marginal costs of concentration may outweigh the benefits when the increased concentration involves “too many cooks”.

Notes: The board of directors plays an important role in solving the agency problem between shareholders and management. This paper investigates the relationships between ownership and board structure with the diversification strategy of large Japanese firms. The results show that corporate nominee directors are associated with lower levels of product diversification of their investee firms. This suggests that nominee directors in large Japanese corporations see themselves representing specific interests and therefore investors should pay attention to board composition in order to assess the level of protection they can expect to receive. Even without any apparent agency problem with management, there remains a potential “principal-principal” problem.

Notes: Transition economies face a fundamental dilemma. They need to develop financial markets, and yet they lack the ingredients it takes to do so. Recipes for legal governance mechanisms that have worked elsewhere, including reactive law enforcement by courts and proactive law enforcement by regulators, may not help in the short to medium term. Using evidence from stock market development in China and Russia, this paper suggests that at least in the short term, administrative governance may be a viable alternative to legal governance in emerging stock markets.

Notes: Does the class of shareholdings matter for corporate performance? To answer the question, the paper starts by classifying shareholdings of Chinese publicly listed companies on the basis of the principle of ultimate ownership. A state-dominant shareholding structure is found, in that 81.6 per cent of companies are identified as ultimately controlled by the state. In contrast to our identified shareholdings, the Chinese official shareholding classification is ambiguous for the identification of ultimate controllers of public corporations, which in turn has misled many previous studies in assessing the impact of shareholding classes on performance. Based on our newly established shareholding classes, we undertake a nested performance comparison between these different classes and find significant evidence from the Chinese data that the class of shareholdings does matter for company performance. The least inefficient shareholding class is the holding companies that are wholly listed and have focused industrial business through the state indirect control of the downstream public corporations. This finding provides ground for us to think more about how the corporate control mechanism could be further improved in China's current corporate governance reform.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: Corporate governance reforms have been motivated to a considerable degree by concerns about the possible malfunctioning of the executive remuneration determination process in large firms. It is not clear, however, how effective these reforms have been in altering pay-setting procedures in the direction of aligning executive and shareholder interests. This paper reviews some initial evidence and suggests that a mixed picture emerges. It appears that reforms have been more successful in reducing executive tenure – and hence pay-offs in the event of failure – than they have been in linking rewards to performance for continuing executives. It is clear, however, that reforms have facilitated the role for institutional shareholders in approving remuneration packages.

Notes: This paper studies the relationship between corporate leverage and the ultimate corporate ownership structure, particularly the separation of cash flow rights and control rights. We empirically disentangle the three potential effects of the divergence of control rights from cash flow rights on corporate leverage, i.e. the non-dilution entrenchment effect, the signalling effect of debt and the reduce-debt-for-tunnelling effect. Our evidence from the East Asian corporations mainly supports the notion that controlling shareholders with relatively small ownership share tend to increase leverage out of the motive of raising external finance without diluting their shareholding dominance. The separation of cash flow rights and control rights contributes to the risk-taking tendency of the large controlling shareholders in capital structure choice. We argue that the risky capital structure choice serves as one potential channel through which weak corporate governance contributes to the severity of corporate value losses during the Asian financial crisis.

Notes: This paper uses an in-depth case study in southern Jiangsu to document the last wave of privatisation of Chinese rural enterprises, showing that throughout the economic reforms, particularly at the village level, local cadres and corporate leaders dominated the publicly owned enterprises, from which they benefited disproportionately. It was these same local institutions based on village cadres’ social networks that controlled the entire process of privatisation, leaving nothing to the free market or open competition. Those who positioned themselves in the village administration and enterprises are the same group of specific families and individuals who run the private corporations today. It goes without saying that workers and ordinary villagers have been disenfranchised in this property rights transformation.

Notes: The market, not the regulator, attempts to enforce upon listed companies the “principles” of the UK Combined Code. Even though audit committees feature in the UK Code only at the level of discretionary “provisions”, almost all listed companies have audit committees. The responsibilities of audit committees in the UK and China are broadly similar, though UK guidance gives their audit committees a bigger role with respect to risk management and operational control. In China the market and the regulator are more closely aligned with the State, which is thus more influential in determining compliance with their corporate governance Code.

Notes: Newly privatised firms can often fall between the cracks, being at the same time more risky than SOEs and less profitable/competitive than private firms. A well-designed corporate governance regime is an important tool to make the transition period shorter and less painful. After reviewing the partially or wholly privatised European telecom sector, the paper proposes eight lessons for policy makers in charge of designing privatisation. First, where the State remains an important owner after partial privatisation, it should organise its shareholding function to pursue exclusively shareholder value objectives. Second, any privatisation-related asymmetries between control and cash-flow rights among shareholders should be limited in time and scope. Third, while some minority shareholder power, such as direct shareholder nomination and cumulative voting are welcome, the board needs to develop its own cohesiveness and culture. Fourth, the board should be actively and effectively involved in the development and validation of the company's strategy and the control of major transactions. Fifth, the privatised firms should strive to list in a market with high and credible disclosure requirements. Sixth, privatised firms should focus on developing a disclosure culture, especially as regards non-financial disclosure. Seventh, the board should conduct a regular, thorough and independent evaluation of the CEO, based on a set of criteria and yearly objectives agreed at the beginning of each exercise.

Notes: Past literature in board research has centred on board structure and company performance. Over the years, empirical studies do not reveal a conclusive relationship between these two variables (Dalton and Daily, 1999. Across the Board, March, 28–32). Until recently, the literature on board processes has been sparse. The reason for insufficient empirical work on board processes possibly is due to the difficulty of gaining access to boards. In this paper, we propose a conceptual model and tested the model on publicly listed companies in Singapore. Based on a sample of 212 company responses and 299 directors, we conclude that board structure does not affect board process while board process is related to board performance. In terms of individual parameters, effort norms, cognitive conflict and the presence and usage of skills are positively related to board roles and board transparency. Also, affective and process conflicts are negatively related to board roles and board transparency. Finally, board process does not mediate the relationship between board structure and board performance.

Notes: Purpose - This paper examines the actual and desired use of performance measures for management and external reporting purposes, as well as perceived impediments to their effective use. Design/methodology/approach - A total of 334 senior administrators in Canadian municipalities participated in this survey study. Findings - Somewhat more efficiency measures than effectiveness measures have been used for various purposes. However, greater use was perceived desirable than actually occurred, particularly for effectiveness measures. A significant increase in the use was expected in the near future especially for effectiveness measures. Internal and external verification of measures was considered important by both internal and external auditors. Although the study also identified impediments to the development and meaningful use of performance measures, performance measurement appears to have been accepted as a useful managerial tool and have significant future potential. Research limitations/implications - The results are limited by the survey method. Practical implications - The results can provide guidance to public-sector administrators and professionals for planning and decision making purposes and to professional bodies and regulatory agencies for developing comparative performance reporting standards. Originality/value - Using the descriptive and normative perspectives, this study provides new evidence in the Canadian context. It concludes that, although the mandatory performance measurement and reporting requirements for municipalities in Canada lag those in the UK, the USA, and Australia, a significant degree of usage occurred voluntary in Canadian municipalities.

Notes: Purpose - Local authorities use events and festivals within their region to help achieve a diverse range of economic and social objectives. However, the success of these events, which can take up a substantial amount of the tourism, leisure or arts and cultural budget is rarely assessed in a systematic and objective manner. This article describes the importance of measuring the impacts of such events Design/methodology/approach - The methods for assessing the success of local authority events are trialled through the use of a case study involving two events organised by Blackburn with Darwen Borough Council. Findings - An evaluation of the methods, after conducting the case study, indicates that the techniques produced robust data that was valuable in planning future events and in securing funding. The relative simplicity of the methods used will help to ensure that similar evaluations can be carried out in-house for little cost for future public events. Originality/value - This article sets out practical guidelines for undertaking the measurement and evaluation of some of the major impacts of local authority events. Similar methods can be used by other public sector organisations involved in hosting public events.

Notes: Purpose - Since the early 1990s there has been a growth in local authorities of risk management. However, despite a range of different strategies, initiatives and practices the issue of financing the risks to which authorities are exposed has remained problematic. The traditional dependence on the commercial insurance market has proved to be a flawed strategy. This paper aims to analyse an alternative risk financing strategy which has been successful in local authorities in other countries, that of risk pooling. Design/methodology/approach - The paper analyses the rationale behind risk pools, investigates the legislative environment that appears to make these acceptable to central government and evaluates the likely benefits to local authorities of their adoption. Findings - The paper finds that the perceived main legislative barrier to risk pools may no longer exist. Given that, there is a strategic, financial and operational case to be made for at least exploring the possibility of risk pooling. The experience from the USA would suggest that pools can have an important role to play in risk financing, and evidence now exists that a number of UK local authorities are actively pursuing pool formation. Practical implications - The development of risk pools is likely to result in a significant reduction in the use of conventional insurance by local authorities. The evidence would suggest that this will be beneficial, but this is subject to the proviso that actuarial, financial and managerial practice within pools is rigorous. Originality/value - This is an under-researched area, with almost no extant UK-relevant academic, or indeed practitioner, literature. The paper adds to the understanding of public sector risk management and financing for both academic and practitioner audiences.

Notes: Purpose - This paper aims to explore the topic of leadership as perceived and described by public library leaders. In particular, the paper seeks to investigate the reported impact of public library leaders on their followers. The study aims to develop an understanding of the perceptions of current leaders in the field of public librarianship. Design/methodology/approach - A total of 30 top-level public librarians from Ireland, the UK, and the east coast of the USA were selected for inclusion in this study. A review of the relevant literature was used to design an interview guide which was used to conduct structured in-depth face-to-face interviews. Findings - The findings illustrate that the leaders believe that followers are motivated by example from their leaders. The interviewed librarians highlight the role played by followers, whom they see as the foundation of public library service. The librarians argue that a partnership approach between leaders and followers is necessary to formulate and to put into effect strategies and courses of action to fulfil organizational purpose and goals. Originality/value - The current study is the most in-depth study to date on this topic, drawing on face-to-face interviews with 30 public library leaders. Prior to this study, no in-depth study on the topic of leadership in librarianship has been researched and published outside of North America. As this study was undertaken in three national jurisdictions - Ireland, UK, and the USA, it is also the first transnational study on the topic.

Notes: Purpose - Decision making in networks is multilateral and interaction-based and is often contrasted with unilateral decision making in a hierarchy. The purpose of this paper is to examine whether unilateral interventions can nevertheless be functional in networks. Design/methodology/approach - A large number of empirical studies into decision making in networks were consulted to examine whether they featured unilateral interventions and, if so, what the roles of these interventions were. Prior to this, the author outlines theories on decision making in networks and the dysfunctions of unilateral interventions. Findings - Six strategies were found in which unilateral interventions proved effective in network-like decision making. Unilateral action may be used to influence other actors' perceptions of the win-win game, to change the pattern of interdependencies, as a follow-up to failed interaction, if room is offered simultaneously, if there is a critical mass of winners and to de-hierarchize decision making. These unilateral strategies were found to be embedded in interaction-based, network-like decision making. In some cases, they stimulated a process of interaction; in other cases, they resulted from a process of interaction. Practical implications - The strategies show that decision making in networks benefits from the intelligent use of unilateral action. Originality/value - The paper goes beyond the dichotomy between network and hierarchy and demonstrates that, on the interface of networks and hierarchies, there are many possibilities of developing strategies that - although unilateral - are network-contingent.

Notes: Purpose - To provide a critique of the strategies that the UK Government employed at that time of the closure of the countryside during the foot and mouth disease (FMD) and their subsequent effects upon leisure and tourism providers. The work evaluates the sector's responses to the FMD crisis and considers their significance and influence in relation to the strategies deployed. Possible alternative strategies are presented which both government and industries can consider. Design/methodology/approach - The complete sector of tourism and leisure providers within the market town of Keswick was surveyed twice over a two-year period. The initial survey was undertaken in 2002 and the second survey occurred in 2004. Keswick is situated in the northern sector of the English Lake District National Park, which is situated within the county of Cumbria. This area was seen to be the most affected by the foot and mouth crisis both in terms of severity and duration of infection. In addition to the survey conducted, key personnel from government agencies and voluntary organisations were also interviewed using a semi-structured approach. Additional information was accessed from a FMD discussion web site. Findings - The impact of the foot and mouth crisis devastated the rural tourism and leisure industries. The governmental policy utilized was myopic in its outlook and ineffectual in that it concentrated mainly upon the consequences to, and the needs of, the farming industry. The current proposals acknowledge to some degree that the town's tourism and leisure industry are a valued part of the rural economy, but the authors question if these are effective enough. Originality/value - The originality of the study has enabled the evaluation of the strategies put in place immediately after the FMD crisis. It not only critically appraises proposed policies (i.e. limited closure of the countryside in future) but uniquely proposes a number of alternatives.

Notes: Purpose - The purpose of this paper is to consider the impact of a major initiative (the National Competition Policy) and pieces of legislation (the Local Government Act and the Local Government Finance Standards) on the internal practices of a large Australian local authority. Design/methodology/approach - A theoretical framework is developed using new public management (NPM) and neo-institutional theory literatures to explain the findings. A case study approach was applied to collect the data for the research. Findings - The findings reveal that the National Competition Policy 1993, the Local Government Act 1993 and the Local Government Finance Standards 1994 mainly have brought about significant changes to the organisation's internal management control processes, such as financial reporting, budgeting and performance appraisal. The changes brought in appeared to be coincidentally similar to NPM ideals. Furthermore, senior managers (such as the chief executive and divisional heads) played a major role in implementing new accounting technologies (activity-based costing and the balanced scorecard type performance measurement system). Research limitations/implications - Future research on public sector financial management from the outset of organisational contexts could considerably further the stock of knowledge in this area, especially given the rapid changes occurring within the public sector throughout the world. Future research may wish to extend this study by assessing how external legitimating functions become internal reality, the perceptions of reality of the organisational members, and how these perceptions change over time. Practical implications - The findings reported provide evidence to further our understanding of how the introduction of private sector styles of organisational practices into large areas of the public sector brought about significant changes in the demand for "new" financial management practices. Originality/value - The findings reported on in this paper will open a new path of research that may increase our understanding about the factors that play a role in the design of management and accounting systems in a public sector context. Further, they will help policy makers and public sector managers in their day-to-day decision-making.

Notes: Purpose - To review the voluntary operations of Counseling Services for the Elderly, which has operated since 1972 under the National Insurance Institute of the State of Israel. Design/methodology/approach - The paper considers the elderly population and its characteristics and the gradual development of the volunteering counseling services. The characteristics of the volunteers and their motivation in this work are also discussed. The training that volunteers undergo is constantly being updated and upgraded, and details are provided that cover home visits, consultations and special projects. Findings - Currently, Counseling Services for the Elderly operates 4,278 volunteers in 21 branches across the country, supporting thousands of the elderly on a relatively low budget of less than $3 million for 2003. Originality/value - The paper presents a unique voluntary service that is fully integrated into national welfare for the elderly. The service meets the objectives of assistance to the elderly while helping to maintain and develop the quality of life of the volunteer.

Notes: Purpose - E-governance initiatives are common in most countries as they promise a more citizen-centric government and reduce operational cost. Unfortunately most of these initiatives have not been able to achieve the benefits claimed. Often the reason for this failure is a techno-centric focus rather than a governance-centric focus. The aim of this paper is to explore the necessary attributes of a governance-centric initiative under the banner "excellent e-governance" (e2-governance), and describe a methodology for ensuring such excellence in e-governance implementations. Design/methodology/approach - The paper follows a case study approach for developing the concept of excellent e-governance. It first conceptually differentiates between e-government and e-governance and describes the status of e-governance in developing countries. It then differentiates between the two approaches to e-governance: techno-centric and governance-centric. Next, the attributes of excellent e-governance are explored in detail, and illustrated by two case studies. Then, the major issues for bringing excellence to e-governance initiatives are identified. Last, a methodology under development, called "e-governance engineering", is described, which when applied to an e-governance initiative, will ensure excellence. Findings - Excellence (or governance-centricism) in e-governance requires the initiative to be effectiveness-driven and not merely efficiency-driven. This will require the initiative to be led by a "good governance" driven goal/purpose: additionally, the initiative must be outcome-focused. Practical implications - There has been a dearth of methodologies for implementing e-governance initiatives, and an increase in the number of failed e-governance projects. This paper proposes a methodology, "e-governance engineering", which aims to fill this gap and at the same time bring excellence to the e-governance initiatives implemented. Originality/value - The paper introduces the notion of "excellence" in e-governance (e2-governance), which is supposed to be the goal of all e-governance initiatives. It also introduces a methodology to accomplish this goal. It is hoped that the methodology will help public administrators and public organisations in successfully designing and implementing e-governance projects, thereby contributing to enhanced governance at optimal cost.

Notes: Purpose - The aim of this paper is to report on development and use of a survey instrument that captures qualitative, process-related data from local authority officers in New Zealand, from which is derived a rigorous and parsimonious set of critical performance measures. Design/methodology/approach - An instrument was developed utilising performance exemplars promoted by industry-respected consulting experts. New Zealand local authorities were surveyed and exploratory factor analysis used to identify what the factors represent conceptually. Profile Similarity Indices (PSIs) describe the alignment between expected and actual consultant performances. Findings - A rigorous set of five critical process-related dimensions of performance and their associated (18) scales were derived, which demonstrate the desired properties of reliability and validity. Interpretation of the Profile Similarity Indices values is provided. Research limitations/implications - Subjective data on excellent consulting practice sourced from industry-respected consultants was used rather than justifying reasons for their choice from a theoretical basis. Generalisability of results to other business and industry sectors remains to be tested. Practical implications - The derived performance measures may be used by practitioners to objectively assess management consultant performance and local authority performance (in specifying the contract). Where performance discrepancies exist, reasons and remedial actions may be determined via consideration of the individual scale items. Originality/value - There continues to be a lack of research into the practices employed by local authorities when they retain and manage their management consultants; such purchasers often experience difficulty judging what is being offered and what kinds and levels of performance are relevant and achievable. Underperformance may be due to a lack of objective and well-developed consulting performance standards. The present study examines these gaps.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.

Notes: 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.