It is an honor and a privilege for us to take on this new role and responsibility as editors-in-chief (EICs) of Corporate Governance: An International Review. After 20 years of existence, the journal is in good shape: it is now considered the premier outlet for corporate governance research. We celebrated the twentieth anniversary with a conference at the Judge Business School on corporate governance bundles a few months ago, where we met all the previous EICs of the journal (namely, Bob Tricker, Chris Mallin, and Bill Judge). We learned a lot from them, through their speeches and through personal conversations with them. Bob Tricker explained why he decided to launch a journal on corporate governance; Chris described how she moved the journal forward; and Bill provided us with a lot of suggestions and insights on how to lead the journal and take it to the next level.
CGIR has improved considerably both in term of rigor and relevance under Bill Judge's leadership. He created a strong and well-reputed editorial board that includes six associate editors, 33 editorial review board (ERB) members, 24 advisory board members, and two screening editors. The results from this strong editorial board under Bill's leadership have been very impressive. Just to mention a few: (1) the number of submissions is now steady at over 400 per year; (2) the impact factor of the journal is around 2.0 (it was 2.8 in 2011, and is 1.89 in 2012); (3) the turnaround cycle is under 2 months; (4) the journal has recently been listed amongst finance journals in the Social Sciences Citation Index.
The articles published in this issue are an example of the style and the quality of the journal. In the first article, Jansson explores the Swedish media as governance mechanisms using an institutional and symbolic perspective. The author uses a qualitative analysis of articles published in the Swedish press covering two governance scandals involving Skandia and ABB. The study contributes to the governance literature by showing that the prevailing institutional logic of the media is an important variable for understanding their functioning as governance mechanisms. The study also indicates that the media support different sets of norms in different governance environments.
In the second paper, Elsilä, Kallunki, Nilsson, and Sahlström use unique data on the personal wealth of CEOs of Swedish listed firms to address a major gap in the large literature on the incentive effects of CEO compensation. While theoretically, performance incentives of CEO compensation should depend on the proportion of compensation to the CEO's total wealth, the paucity of data on CEO wealth has limited the empirical tests of one of the most important issues in corporate governance. This paper provides novel evidence and insights on this issue.
In the third paper, Alon examines the implications of the widespread adoption of the International Financial Reporting Standards (IFRS), which is an important aspect of the effort to bring uniformity to corporate governance standards, on organizations in transitioning or emerging economies; the adoption of IFRS can engender institutional complexity in these countries because of conflicts with existing institutional structures and logic. Focusing on the specific institutional context of Russia, and using a unique dataset, the paper emphasizes that new standards co-existed with existing standards, and analyzes factors that allow firms to deal with the co-existence of “dual” institutions.
In the fourth paper, McNulty, Florackis and Ormrod explore a timely and relevant topic: the relationship between board processes and firm financial risk. The article uses primary data collected through a questionnaire survey directed to company chairs of UK nonfinancial companies. By investigating social-psychological dynamics of collective board behavior, the authors provide a theoretical and empirical contribution to the understanding of board processes and effectiveness in controlling financial risks.
In the fifth paper, Liao and Hsu examine an important issue regarding board structure and performance that has received relatively little attention, namely, the determinants and performance consequences of common membership of directors across committees (such as the audit and compensation committees). Using archival data from the US, the paper finds that common memberships are more likely in firms with poor governance and limited expertise, but are not driven by demand for higher coordination across committees.
In the last article, Aerts, Cheng and Tarca analyze the relationship between earnings management and management's use of earnings explanations. The study is based on archival data from listed companies in four countries characterized by different regulatory environments for management commentary. The results indicate that the type of explanation significantly affects the relationship between performance explanation and earnings management, and that this effect is more pronounced in a mandatory institutional regime where regulatory and litigation costs are higher.
Taken together, these articles represent clear examples of the value of the journal for corporate governance scholars and practitioners. The authors come from several disciplines and research traditions (management, accounting, finance, sociology), build their studies on different theoretical frameworks (institutional, social-psychology, agency), use different methods (qualitative, quantitative, mixed methods), explore different phenomena (media, board processes, earnings management) in different national contexts (Sweden, UK, US, Canada, Australia, Russia). This international and interdisciplinary conversation, based on rigorous methods and applied to relevant governance issues, is the main asset of the journal that we want to preserve and nurture.
Our objective is to continue to develop the journal along the lines developed by our predecessors and to take it to the next level. In a nutshell, we want to continue to develop the reputation of the journal as the premier outlet for publishing rigorous and relevant corporate governance research, while also seeking to enhance its visibility in the business research and policy communities. With this editorial, we want to present our view of the future of the journal.