Nehme Azoury

Corporate governance and firms in financial distress: evidence from a Middle Eastern country

The objective of this paper is to determine the managerial governance characteristics related to financially distress companies. The failure of boards to accomplish their monitoring duties seemed to be one of the main reasons behind the actual financial distress and bankruptcy that swept companies across the planet. Through the analysis of a sample of 178 Lebanese non-listed and family owned firms, the results showed that the boards (that have a higher proportion of outside directors) are less inclined to face financial distress than the boards with a lower proportion. In addition, a different conclusion proves that the boards size and financial distress are directly linked. The paper highlights the extent to which financial distress is associated with corporate governance from a Euro Mediterranean country. It would be a source of education to Lebanese investors, who excessively go for short-term returns, and of help to regulatory authorities in the framework of making policies on corporate governance reformation.

Ownership structure and minority expropriation in Lebanon

This paper examines minority expropriation issues in the dominant presence of family ownership using longitudinal (hand-collected) data on 270 Lebanese non-financial firms between 2009 and 2012. The analysis reveals that family-related CEOs and the disparity between cash-flow rights and voting rights facilitate expropriation. However, the presence of private equity and banking firms reduces private benefit extraction. By explicitly focusing on the ownership-expropriation nexus and by promoting the development and implementation of a tailored governance code that considers Lebanese specificities, this paper makes a contribution to the growing literature on the role of corporate governance in emerging markets.

Détresse Financière et Gouvernance d'Entreprise

Resume Cet article examine la relation entre la gouvernance d’entreprise au Liban et les performances des entreprises en situation de detresse financiere. Selon la litterature financiere, la dette est percue comme etant un mecanisme disciplinaire permettant de resoudre les conflits nes de l’asymetrie informationnelle. Elle se presenterait ainsi en tant que creatrice de valeur. Toutefois, l’exces de cette derniere pourrait etre aussi a l’origine de difficultes financieres et dans le pire des cas, generatrice de faillite, voire meme destructrice de valeur. Ceci aurait donc un impact significatif sur la serenite et perennite de l’entite. Or, un role majeur du systeme de gouvernance contribuerait selon certaines etudes a la detresse organisationnelle. Dans une telle situation, un des premiers reflexes consiste a focaliser l’attention sur les caracteristiques et compositions de la gouvernance d’entreprise, lorsque les performances de celles-ci sont en plein declin et que ces dernieres se retrouvent en detresse financiere.

Redefining Corporate Social Responsibility

The relationship amid businesses and societies today is being reshaped owing to a relatively new mindset. Businesses are now aware that they are part of a system in society that interacts with different parts of other systems in that same society. Businesses are now aware that they need to work with these systems in order to successfully compete and position themselves as differentiated and distinguished entities within these systems. The chapter aims to tackle the effect of different types of social strategies adopted by businesses in the Middle East. It is very important that such strategies take into consideration their impact on society, corporate citizenship and corporate social responsibility. The trend in businesses today is to focus on the importance of business ethics and corporate philanthropy. Numerous factors are starting to take shape, relating businesses and societies to concerns such as globalization, rising power on consumers and growing unease about the corporate footprint on the environment. As a result, investing in corporate citizenship gives businesses a competitive advantage, as it shows that they are responsible leaders working to create a world that we want to do business with and live in as a society.