Rebecca Stratling

General Meetings: A Dispensable Tool for Corporate Governance of Listed Companies?

The current Company Law Review by the Department of Trade and Industry and the Myners Report on Institutional Investment both identified the annual general meeting (AGM) of public companies as one of the instruments of corporate governance that seems to fail its purpose. Based on responses to the DTIs consultation document Company General Meetings and Shareholder Communication the paper explores arguments for and against AGMs and investigates proposals for the reform of AGMs.

The influence of the venture capitalist's governance activities on the entrepreneurial firm's control systems and performance

Venture capitalists (VCs) contribute to entrepreneurial firms by engaging in governance activities, such as providing services and monitoring the entrepreneurial firms operations and performance. This study examines the role and influence of the VCs governance activities on 93 Dutch entrepreneurial firms. Results suggest that while the VCs governance activities may help to stimulate the use of the entrepreneurial firms control systems, they also moderate the relationship between the entrepreneurial firms use of control systems and its financial performance. It appears in particular that cost control systems contribute positively to the entrepreneurial firms financial performance when the VC provides service activities. However, the use of cost control systems tends to be negatively related to the entrepreneurial firms financial performance when the VC is highly focused on monitoring.

The impact of contracts on trust in entrepreneur–venture capitalist relationships

Venture capitalists (VCs) increasingly rely on elaborate formal contracts and incentivization through share ownership to manage their relationships with the entrepreneurial firms in which they invest. This study analyses the impact of a high degree of such ‘neoclassical contracting’ on entrepreneurs’ trust in their VC backers. The results from a sample of 86 Dutch entrepreneurial firms indicate not only that a high degree of neoclassical contracting tends to erode entrepreneurs’ trust in their VCs, but also that the use of more informal, relational contracting fails to moderate the negative association between a strong focus on neoclassical contracts and trust. However, entrepreneurs do welcome some level of monitoring, which highlights the enduring tension between trust and control, and the need for VCs to strike a productive balance.

How to Overcome Shareholder Apathy in Corporate Governance – The Role of Investor Associations in Germany

Investor apathy by private retail investors and highly diversified institutional investors is often blamed for poor managerial accountability and control of majority investors. Attempts to encourage shareholder activism tend to focus on large institutional investors and ignore retail investors. However, in Germany associations of private retail investors play an increasingly important role in organizing collective shareholder action and defining minority shareholder interests. The German example highlights a possible alternative to the US and UK model of shareholder activism, which is dominated by institutional investors.