Switching from a Managing to a Monitoring Function on the Board: Is a Cooling-Off Period Necessary?

-- Patrick Velte and Markus Stiglbauer

This paper addresses the question whether immediately switching from a managing to a monitoring function within a board is beneficial for a company or whether it should be regulated by a cooling-off period. On the one hand, companies have a mutual economic interest in continuously having a person’s experience within the board by switching him directly from a managing to a monitoring function. On the other hand, a cooling-off period may help to reduce the problem that is encountered when a person monitors processes and strategies which he himself has formerly developed and implemented. The analysis finds no definite evidence for or against an immediate switch from a managing to a monitoring board function. Nevertheless, the findings suggest that the effects of switching immediately from a managing to a monitoring function depend on the position subsequently taken in the board, e.g., modifications in present regulation should prohibit an opting-out when immediately serving as chairman of a monitoring body.

© 2012 IUP. All Rights Reserved.

The Role of CSR in the Governance of the ‘New Firm’: An Empirical Study
of the French Telecommunications Industry

-- Cécile Cézanne and Marianne Rubinstein

This paper seeks to show that Corporate Social Responsibility (CSR) can be used as an instrument of corporate governance, especially in what we call the ‘new firm’, which is defined as vertically disintegrated and intensive in human capital. Using Critical Resource Theory (CRT), the study advances that corporate governance has to be re-founded in order to take into account inalienable critical resources incorporated in the fundamental internal and external partners of the firm. After underlining the corporate governance issues raised by the ‘new firm’, it is argued that CSR can be useful as a means to regulate power relationships between key productive partners of the firm, beyond its legal boundaries. Based on the analysis of official reports and semi-structured interviews of the four major French operators of telecommunications, the study shows that CSR is voluntarily used by firms to maintain long-term wealth-creative employment and subcontracting relationships, through the deployment of formal and informal governance mechanisms. This analysis provides both a theoretical and a qualitative study support to challenge the shareholder value model of corporate governance. As such, it suggests new avenues of research for both the re-foundation of corporate governance literature, as well as for the comparative perspective. It also offers insights both to practitioners and policy makers interested in improving corporate governance based on the acknowledgment of the power of key employees and subcontractors. In addition, it provides examples illustrating the way executives use CSR for enhancing corporate governance mechanisms.

© 2012 IUP. All Rights Reserved.

Impact of Corporate Social Responsibility on Corporate Sustainability:
A Study of the Indian Banking Industry

-- Manisha Saxena and A S Kohli

Corporate Social Responsibility (CSR) is a tool used by the corporate to live up to the people’s demand that organizations be more responsible to the environment they operate in. This paper makes a humble attempt to examine the impact of CSR on Corporate Sustainability (CS), defined in terms of an organization’s financial performance, in the Indian banking industry. It tries to draw a relationship between CSR rating and an organization’s financial performance indicators like Profit After Tax (PAT) and Earnings Per Share (EPS) after controlling for the effect of other variables like size of the organization (defined in terms of assets) and age of the organization (defined in terms of difference between the year of establishment and year of survey). The study would find relevance as it tries to sensitize the managers in the banking sector or any other organization to probe further and deeper to understand the impact of CSR on their sustainability while taking decisions about investing in CSR areas.

© 2012 IUP. All Rights Reserved.

Prospects of CSR: An Overview of 500 Indian Companies

--Leena James

The paper examines the relationship between CSR rating and financial parameters (sales and profit before tax) and age of companies, in India. Using a quantitative methodology, the study found that profit is more correlated to CSR rating as compared to sales and age of the companies.

© 2012 IUP. All Rights Reserved.

Are Corporate Governance Systems Converging Towards a Model Based
on Shareholder Primacy and Dispersed Ownership Structure?

--Brian Ikol Adungo

The study seeks to analyze the argument whether convergence of corporate governance systems is likely to occur. Although, many scholars agree that there is a movement towards the shareholder-oriented system, the evidence in support of this view is mixed and illusory. In reality, despite globalization and competitive pressures that enhance convergence, differing corporate governance systems persist due to legal and political forces for divergence. As a result, convergence is not likely to occur. Furthermore, countries with concentrated ownership structures are not likely to converge in line with the American governance model. Therefore, it is more likely that the differences in corporate ownership and governance structure will continue.

© 2012 IUP. All Rights Reserved.