National governance system, corporate ownership, and roles of outside directors: a corporate governance bundle perspective

Yoshikawa, Toru, Zhu, Hongjin, and Wang, Pengji (2014) National governance system, corporate ownership, and roles of outside directors: a corporate governance bundle perspective. Corporate Governance: an international review, 22 (3). pp. 252-265.

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View at Publisher Website: http://dx.doi.org/10.1111/corg.12050
 
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Abstract

Research Questions/Issues: We explore why and how the different combinations of governance practices at national level, such as the legal system, conduct codes, and capital markets, and at firm level, such as various types of controlling shareholders, enable or constrain outside directors to engage in their monitoring and resource provision roles. Building upon such analysis, we develop a new taxonomy of corporate governance systems according to the different configurations of a set of interdependent governance characteristics, including national governance mechanisms, identity of block shareholders, and functions of outside directors.

Research Insights: This study enriches the growing body of research on governance complementarity and substitution by highlighting the role of bundles of governance practices in influencing directors' engagement in governance behavior, and consequently advancing our understanding of variation in corporate governance systems across and within countries.

Theoretical/Academic Implications: This paper demonstrates that the roles of outside directors depend on the interaction between a bundle of governance mechanisms rather than any individual mechanisms. The paper also goes beyond the traditional governance models based on the national context and highlights that interdependencies of corporate governance practices play an important role in explaining the diversity and variation of corporate governance arrangements across firms in both industrialized economies and emerging markets.

Practitioner/Policy Implications: This paper provides insights to policymakers by suggesting that not all the governance bundles are conducive to managerial monitoring and resource provision by outside directors.

Item ID: 30549
Item Type: Article (Research - C1)
ISSN: 1467-8683
Keywords: Outside directors, types of controlling shareholders, national governance systems, corporate governance bundles
Date Deposited: 17 Jul 2014 02:25
FoR Codes: 15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1503 Business and Management > 150303 Corporate Governance and Stakeholder Engagement @ 100%
SEO Codes: 91 ECONOMIC FRAMEWORK > 9104 Management and Productivity > 910402 Management @ 100%
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