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Emerging Markets Corporate Governance Research Network Newsletter, November 2013

In our 13th issue you will once again find the latest research papers, opinions pieces, news and upcoming events. There are stimulating articles on impact of corporate governance on bank capitalization strategies all around the world, compensation disclosure in Brazil, impacts of corporate governance on the performance of Singaporean companies and more. We also share with you videos of keynote speeches from Stanford Directors' College 2013. As always, we present stimulating reports, news and events.



CG Insight Series - Are Women Decision Makers More Risk Averse Than Their Male Counterparts?


Dr. Renee Adams is Professor of Finance and Commonwealth Bank Chair in Finance at the University of New South Wales’'Australian School of Business. Her research explores the intersection of gender, corporate governance and company performance. This is an abbreviated version, read the full interview here.



The most interesting piece on corporate governance I read recently was...


...A  study by Uri Gneezy, Kenneth L. Leonard, and John A. List about gender differences in competition and how societal structures impact them. The study compares a female-dominant society in India - the Khasi - and a male-dominant society in Tanzania - the Maasai. It reveals that men are twice as competitive as women in the patriarchy, while women are more competitive than men in matrilineal societies. This is an interesting finding because it demonstrates that men and women are not biologically engineered to act differently. More...



Right now, I am working on...


...A study demonstrating that there are fewer differences between male and female corporate board members in their approach to risk than the existing body of economic literature suggests.  There’s been a lot written about this idea of the “Lehman Sisters.” The theory is that if financial institutions like Lehman Brothers had more women on their boards then the financial crisis never would have happened because women tend to be less prone to taking risks.


While this notion has gotten a lot of play, my co-author and I argue that it’s incorrect. In fact, we posit that women at the top who have gotten there on their own merits act in ways that are quite similar to their male counterparts when it comes to risk taking. More...



I think the most relevant CG research topic for emerging markets now is...


...How to create a stronger talent development pipeline for women. If talented women aren’t participating in the workforce, or aren’t advancing, that’s a big problem.  Of course, how to do this is the real challenge. And I’m not convinced that quotas are the answer.  What bothers me about the push to enact gender quota policies is that it’s an easy cop out. Dictating to companies that they have to put more women on their boards might yield more people, but that’s not to say that they will be the best appointments. We really have to figure out the reasons WHY there aren’t as many women in top positions and address the root causes.


Read the full interview





How Does Corporate Governance Affect Bank Capitalization Strategies?
Deniz Anginer, Asli Demirguc-Kunt, Harry Huizinga, and Kebin Ma

The authors investigate how corporate governance and executive compensation affect bank capitalization strategies for an international sample of banks. They find that strong governance is associated with lower bank capitalization. Boards of intermediate size, separation of CEO and chairman roles and absence of anti-takeover provisions derive this result. Furthermore, executive options and stock wealth invested in the bank are associated with better capitalization except just before the crisis in 2006. In 2006, they are associated with lower capitalization, which suggests that potential gains from taking on more bank risk outweighed the prospect of additional loss.


Non-Compliance in Executive Compensation Disclosure: The Brazilian Experience
Cristiano M. Costa, Fernando Caio Galdi, Fabio Y. S. Motoki, and Juan Manuel Sanchez

This article examines why certain Brazilian firms do not comply with a recent executive compensation disclosure regulation, and the repercussions of their non-compliance. The authors argue that degree of criminality in the state in which the firm is headquartered (a proxy for security-related costs) in addition to the level of CEO compensation determines this non-compliance. The non-compliance firms suffer from higher bid-ask spread and lower trading volume.


A Dynamic Estimation of Governance Structures and Financial Performance for Singaporean Companies
Tuan Nguyen, Stuart Locke, and Krishna Reddy

This article is a unique study on Singaporean firms in the sense that it uses a dynamic panel setting and system GMM methodology. The authors argue that internal corporate governance structures matter a lot in Singapore, where the market for corporate control is relatively poor.


Does Corporate Social Responsibility (CSR) Improve Credit Ratings? Evidence from Geographic Identification
Pornsit Jiraporn, Napatsorn Jiraporn, Ardisak Boeprasert, and Kiyoung Chang

This article investigates the links between Corporate Social Responsibility (CSR), credit ratings and geographical characteristics. Although it is based only on firms with US headquarters, it may have implications for developing countries as it considers impacts of geographical characteristics. The authors find that socially responsible firms are associated with higher credit ratings in general. In fact, an increase in CSR by one standard deviation improves the firm’s credit rating by as much as 4.5 percent.


The Structure of Corporate Boards and Private Benefits of Control: Evidence from the Russian Stock Exchange
Alexander Muravyev, Irina Berezinets, and Yulia Ilina

The authors investigate the role of board size and composition using a measure of private benefits of control (PBC) as indicator of governance problems in firms. They find a quadratic relationship between PBC and board size, implying the optimality of medium-sized (about 11 directors) supervisory boards. Interestingly, non-executive/independent directors are associated with larger PBC and thus do not seem to help improve corporate governance.


Governance and Culture: “A Class” and “B Class” shares in the People's Republic of China
Simone Kelly, Ray McNamara, and Kevin Jih

Chinese firms can issue A-shares or B-shares depending on whether the investor's currency is a foreign currency or not. Firms issuing B-shares produce reports based on International Accounting Standards, have an independent board structure, and use international recognized auditors, but firms issuing A-shares only use Chinese Accounting Standards, do not have independent boards of directors and use Chinese auditors operating under Chinese audit standards. Firms may issue both types of shares (AB-shares). These variations give the authors an opportunity to test the relevance of international governance standards. They find that corporate governance does not affect market’s reactions to earnings. Investors do not react differently to earnings announcements due to different accounting standards, board structure and audit quality. Contrary to expectations, the earnings response of AB-shares is not significantly different from that of A-shares’ earnings response.


Opinion and Commentary


Stanford University’s Rock Center for Corporate Governance hosts video clips of Gary Retelny’s and Larry Sonsini’s keynotes from Stanford Directors’ College 2013. The keynotes span topics such as board of directors, securities regulation, corporate governance ratings, financial regulation, institutional investors, securities regulation, and shareholder activism.


Practicing Corporate Governance through Corporate Disclosure?
Adrian Fong

An increase in disclosure without reciprocal assurances that such disclosures are beneficial to shareholders may not result in “better corporate governance practices”. This study concentrates on Hong Kong, and it recommends several practices which can be adopted by companies seeking to turn their disclosures into better corporate governance.


State Ownership and Corporate Governance in China: An Executive Career Approach
Li-Wen Lin

Lin investigates the legal guidelines of executive employment at China’s state-owned enterprises (SOEs) and investigates how educational, political and career attributes of the CEOs changed over the past decade.  Lin finds an orientation towards politically-bounded and firm-specific professionalism as well as some faint potential of bottom-up and competition-driven marketization.



News and Reports


InGovern announced the publication of a special report India Proxy Season 2013 Analysis that examines management and shareholder resolutions presented at annual general meetings of a universe of 585 Indian companies.  


African Corporate Governance Network is recently established with representative members from Kenya, Malawi, Mauritius, Morocco, Mozambique, Nigeria, Senegal, Tanzania, Uganda, South Africa Zambia and Zimbabwe.  ACGN aims to "advance corporate governance in Africa by strengthening country institutions in order to achieve their domestic goals for institutionalizing good corporate governance."



Events and Calls for Papers


The Seventh Annual Academic Conference on Corporate Governance will be held at Drexel University on April 25, 2014. The conference features theoretical and empirical research related to corporate governance with a slight preference to research related to work by this year's honoree, Michael S. Weisbach. The deadline for submission of papers is November 18, 2013.

Transatlantic Corporate Governance Dialogue, the Realities of Stewardship for Institutional Owners, Activist Investors and Proxy Advisors, will take place on December 3, 2013 at the Securities and Exchange Commission in
Washington DC, United States.

Call for Papers: A Special Issue and Dutch Central Bank/CGIR Workshop - Board Diversity. December 19th -20th, 2013, Dutch Central Bank, Amsterdam.

The Global Ethics Forum Conference, Equal in an Unequal World: The Value of Values in Responsible Business, is taking place in Bangalore/India from 3 to 5 January 2014.

The European Centre for Corporate Control Studies' Workshop on Governance and Control will take place at SKEMA Business School in Lille, France on March 17-18, 2014.

A call for papers by 2nd International Conference on Management, Leadership and Governance includes corporate governance in emerging economies. The conference will be held on March 20-21, 2014 in Wellesley, MA, United States.

2nd International OFEL Conference, Inside and Outside of Managerial Mind: Building the Bridges between Disciplines, will be held on April 4-5, 2014 in Dubrovnik, Croatia.



From Our Coordinator


We encourage all of our members to notify us regarding their ongoing research or the events or conferences they want to share with the Network. We also welcome other relevant information and your feedback. Please contact Mehmet Canayaz at


The Emerging Markets Corporate Governance Research Network is supported by IFC's Global Corporate Governance Forum, the leading knowledge and capacity building platform dedicated to corporate governance reform in emerging markets and developing countries. The Forum is a multi-donor trust fund facility located within the IFC Corporate Governance Group, co-founded in 1999 by the World Bank and the Organisation for Economic Co-operation and Development (OECD). For more information about the Forum's activities and publications, visit its website For more information about the EMCGN's activities, go to or contact



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