Hans van Ees

Corporate governance in the Netherlands : An overview of the application of the Tabaksblat Code in 2004

This article examines the overall acceptance of the best practice provisions contained in the Dutch corporate governance code and identifies those that receive comparably less agreement among 150 Dutch listed companies in 2004. The findings indicate a high level of compliance with the Code. Moreover, the extent of compliance is positively associated with company size. Provisions related to the remuneration of board members, independence of supervisory board members, and requirements with respect to internal control systems stand out when it comes to non-compliance. In addition, the nature and content of the explanations provided for non-compliance are remarkably similar across companies, which may indicate symbolic compliance with the Codes best practice provisions.

Which Entrepreneurs Bribe and What Do They Get from it? Exploratory Evidence from Vietnam

This article investigates whether bribery in emerging economies matters and whether such bribery has a diminishing return to performance. Bribery allows entrepreneurs to develop and foster a network of informal relationships with public officials, and reap the accompanying benefits; but it may also have disadvantages, such as an inefficient allocation of resources. The relationship between bribery and performance was estimated using unique data derived from a survey of 606 Vietnamese entrepreneurs. We controlled for various entrepreneurial, organizational, and industrial characteristics. The exploratory results provide support for a hill–shaped non–monotonic relationship between bribery and revenues.

Liquidity and Business Investment: Evidence from Dutch Panel Data

Abstract Several recent studies have focused on the impact of liquidity on business investment. We analyze the relevance of this approach for The Netherlands. It turns out that the impact of internal funds on Dutch business investment is relatively strong. With respect to the use of criteria to classify firms on a priori beliefs concerning asymmetric information, the dividend policy, size and age of firms turn out not to be important, but the existence of organizational ties between banks and firms turns out to be very significant. In our view, the relatively large overall impact of liquidity on business investment and the relevance of the relationship between banks and firms are both evidence of the institutional features of the Dutch market for investment funds.

Investment and Debt Constraints: Evidence from Dutch Panel Data

It is generally accepted that real markets are sometimes affected by imperfections and their consequences. In contrast, the functioning of financial markets is mostly assumed to be perfect and efficient. Modigliani and Miller (1958, hereafter MM) show that in the latter case the capital structure of the firm is irrelevant for the user cost of capital and does neither affect investment nor the value of the firm. Since the publication of their seminal paper a large number of studies has pointed out that the empirical relevance of the MM-proposition is small. Financial markets suffer from several (institutional) market imperfections. In the first twenty years after the MM-publication, papers showed that distortionary taxes, transaction, bankruptcy and agency costs cause the financial structure to affect investment decisions. In recent studies the focus is directed towards information asymmetries. Agents have different sets of information. Firms know more about the quality of their investment project than, for instance, a bank. It can be shown that in such a case external funds (for instance bank credit) are more expensive than internal funds, because problems like adverse selection and moral hazard may occur. This might explain the empirical phenomenon that firms preferably use internal funds to finance Investment.1

Does group affiliation improve firm performance? The case of Chinese State-owned firms

Abstract This paper analyses the performance of state-owned business groups in China. Group affiliation can be important for economic policy evaluation since the Chinese government promotes the formation of business groups as a first step in the process of reforming state enterprises into modern corporations. The analysis applies a range of econometric techniques to a sample of 657 Chinese state-owned firms in 2005 and shows that group affiliation has a robust positive effect on performance. Group affiliation may in this respect provide a successful alternative to large-scale privatisation.

Existence and stability of conventions and institutions in a monetary economy

The example of money illustrates that the role of history is crucial in explaining the emergence and persistence of conventions and institutions. This implies that in analyzing money and monetary institutions the usefulness of the general equilibrium analysis and game theory, which both draw upon an instrumental concept of rationality, is limited. In our view a fruitful analysis of conventions and institutions has to take account of the importance of historical contingencies and the fundamental incompleteness of individual knowledge.

The Relationship Between Tenure and Outside Director Task Involvement A Social Identity Perspective

Drawing from corporate governance research and social identity theory, the authors argue that the relationship between outside directors’ time in office and outside director task involvement is more complex than generally anticipated. By using a unique multisource data set composed of peer ratings provided by fellow outside directors rating a focal director’s task involvement, this study analyzes director task involvement at the individual director level of analysis. The authors propose and empirically demonstrate that outside director tenure has an inverted U-shaped relationship with outside director task involvement that is moderated by a director’s social identification with the organization. As such, the authors demonstrate that social identification with the organization provides a critical contingency for the curvilinear relationship between outside director tenure and outside director task involvement. Findings suggest that outside directors who socially identify with the organization are more likely to grow “stale in the saddle” at lower levels of tenure. These findings provide support for the merit of analyzing outside directors at the individual level of analysis and suggest that a “one-size-fits-all” approach may not be most appropriate in assessing the effects of tenure on outside director functioning.

Firms and corruption

Corruption is not a new topic, but it has increasingly become a central policy issue around the world. Many countries, international organizations, business networks and firms have pursued anticorruption campaigns. Nonetheless, corruption persists. Although the (empirical) literature on corruption and (economic) performance at the country level has been relatively well developed, a firm�?level perspective remains a relatively underexplored area of research. The papers in this issue break new ground both by advancing our theoretical understanding of firm�?level corruption and by introducing new and promissory research methods and empirical achievements. In this introduction, we provide the points of departure for the special issue and present the contributions and added value before introducing the individual papers. We end by offering conclusions for our new field of research.

A Political Perspective on Business Elites and Institutional Embeddedness in the UK Code‐Issuing Process

Manuscript Type: Perspective Research Question/Issue: What is the role of institutional actors and business elites in the development of UK corporate governance codes? In the current paper, we explore the UK code-issuing process by focusing on the UK actors, their power and interplay. Research Findings/Insights: Our findings indicate, first, that the comply-or-explain principle, intertwined with the rich issuance of codes, reflects the diversity and permissiveness of British society and its ability to absorb contested corporate practices in a way that manages to preserve the status quo. Second, the UK business elites preserve their position in the corporate arena by using the principle of good governance, including the possibility to deviate from best practices, as an instrument of neutralizing institutional change. Third, the UK institutional and societal embeddedness gives carte blanche to elites to use corporate governance practices to serve their own interest. Theoretical/Academic Implications: By emphasizing the strategic behavior of business elites embedded in the UK institutional configuration, we offer a political perspective on the national contextuality of the code-issuing process. The worldwide diffusion of codes should not dissimulate their cross-national contested nature. Codes reflect potential redistribution of power among institutional actors and business elites as well as the struggle over corporate resources between corporate actors (i.e., shareholders and managers) in maintaining their status quo. Practitioner/Policy Implications: Practitioners should perceive codes as having different meanings depending on national contexts and national political constituencies. Codes reflect constellations of actors such as managers, shareholders, regulators and others, whose approach to codes and strategic interests are at least as important to know and understand as the verbatim content of codes.

The Impact of Personal Relationships on Bribery Incidence in Transition Economies

Prior work on corruption has largely overlooked personal relationships as an essential determinant of bribery incidence in transition economies. In these countries, relationships with public officials are instrumental in enabling transactions and lowering transaction costs, due to incoherent and ever-changing business regulations. Our study examines the impact of personal relationships on bribery incidence in Vietnam, finding that relationships with central government officials decreases the likelihood of bribery, while relationships with local government officials increases the likelihood of bribery. The results provide convincing support for the alleged importance of public-private relationships in contemporary transition economies.