A Tribute to Denis and McConnell


This final issue of 2009 wraps up a largely successful year at CGIR. Our number of submissions and article downloads continues to break historical records, our acceptance rate is now almost under 10 per cent, and we published two very interesting and important special issues earlier in the year. Unfortunately, our impact factor declined due to the publication of a large number of previously-accepted articles back in 2007, but we are confident that this decline will be temporary and our scholarly impact will continue to climb in the future. Overall, our future looks bright.

Before discussing the articles in this particular issue, I would like to acknowledge the fantastic contributions of two of our first Associate Editors – Professors Shaomin Li and Brian Boyd – who will be stepping down from their editorial duties by year-end. Both have amazing scholarly records, provided wise counsel on the journal, demonstrated high quality and timely recommendations on many articles, and continue to both be wonderful friends and colleagues. I will miss working with them, but I know that whatever they apply their time and talents to will be of high quality. The inter-disciplinary field of international corporate governance owes these two distinguished scholars a debt of gratitude.

By way of introduction, I would like to introduce two new Associate Editors who are going to help guide the journal into the future. First, let me introduce Ruth Aguilera, an Associate Professor in the Department of Business Administration at the University of Illinois at Urbana-Champaign. She also serves as a Fellow for the Center of Professional Responsibility at that same institution. Ruth has served capably on our editorial review board since its inception in July, 2007. She has authored three different publications in our journal, and has published widely in some of the top scholarly outlets over her relatively short career. In addition, she currently serves on three editorial boards (Academy of Management Perspectives, Journal of International Business Studies, and Strategic Management Journal), and she recently stepped down from the editorial boards for the Academy of Management Review and Organization Studies. I am confident that Ruth will help CGIR attain new heights in scholarly excellence.

Also, allow me to introduce to you our second new Associate Editor, Eduardo Schiehll. Professor Schiehll is an Associate Professor of Accounting at HEC Montreal. He has a distinguished record of publication in general, and corporate governance in particular. Notably, he won our “Reviewer of the Year” award back in 2008, which is quite an achievement given the broad range of dedicated scholars who routinely provide timely and high quality reviews for CGIR. I am confident that Eduardo will continue with his commitment to excellence in the future, and that we will all benefit from his leadership in the journal.

As can be seen in Table 1, I classified each article in this issue according to the four primary governance mechanisms identified by Denis and McConnell (2003). Notably, most of the articles published in this issue address multiple governance dimensions. For example, our lead article by Chen, Huang, and Chen examined the governance antecedents and effects of merger and acquisition activity across nine Asian economies. They controlled for board of director characteristics, and examined how ownership, legal environment, and the market for corporate control influence domestic versus cross-border acquisitions. In this meso-level study, they find that board structure, ownership type, and the market for corporate control all influence merger and acquisition activity in these Asian economies. Notably, they point to some unique information asymmetries in Asian economies that drive cross-border M & A.

Table 1. 
Summary of the Literature in this Issue of CGIR
Boards/Overall & committeesHuang, Lobo and Zhou – Board structure influences creation of governance committee; governance committee associated with less earnings management
Taylor and O'Sullivan – Nonprofit boards do better when balance local representation with business expertise on their boards
Burns, Kim, and Prescott – Board structural configurations may influence TMT strategic capabilities
Barroso et al. – Board structural configurations appear to interact with TMT composition to influence strategic change
OwnershipChen, Huang, and Chen – Ownership type (family versus state) in Asian firms may influence external financing options
Setia-Atmaja – Ownership concentration appears to moderate the board-firm performance relationship
Legal/InstitutionalHuang, Lobo, and Zhou – Firm ownership is associated with creation of governance committee Chen, Huang, and Chen – Asian governance environments on the Pacific Rim pose unique information asymmetries
Market for corporate controlHuang, Lobo, and Zhou – Previous lawsuits may influence creation of governance committees
Chen, Huang, and Chen – Asian ownership patterns influence domestic versus cross-border M&A activity

The O'Sullivan and Taylor article is an empirical examination of non-profit boards for sporting organizations in the United Kingdom, a common law country with a robust developed economy. While the focus of this study is on board structure within the non-profit sector, the authors indirectly raise some interesting insights with respect to who the owners of non-profit sports teams are. They suggest that the owners of non-profit sporting organizations are the financial stakeholders, and recommend that future boards be less representative of local communities and more focused on the financial duties and obligations of these clubs.

Next, the study by Setia-Atmaja examines how various governance mechanisms influence firm value within Australia, another common law economy with a developed economy. Professor Setia-Atmaja finds that the ownership structure and dividend policy of the firm moderates the board structure-firm performance relationship. Specifically, the relationship between board structure and firm performance is strongest for closely held firms. This implies that board structure and ownership structure interact within developed economies.

Huang, Lobo, and Zhou then seek to better understand what the antecedents and effects of forming a governance committee are for firms within the United States, a third common law economy examined in this issue that is the largest in the world. This study reminds us that much of the work performed by corporate boards is done within committees, and that governance committees are a relatively new but important feature of many corporate boards. Interestingly, however, only 50 per cent of all NYSE-listed firms had a governance committee as of 2001, so these authors seek to determine what the antecedents might be to help us understand why a firm would create a governance committee. They find that board size, board independence, and number of board meetings are positively associated with the creation of governance committees, negatively associated with insider ownership and takeover vulnerability, and positively associated with previous class-action securities lawsuits. In addition, they find that the presence of a governance committee is negatively associated with earnings management practices, an indicator of proper corporate governance.

The final two articles deal with the board's strategic role within the firm. Professors Burns, Kim, and Prescott provide an interesting conceptual argument for how the board of directors can influence the strategic capabilities of the top management team. They also identify four strategic configurations of the board's strategic role, and they postulate when and where these configurations might work best after considering various environmental contingencies. They provide examples of these arguments from cases throughout the world, suggesting that these propositions may apply to any type of economy. Clearly, these ideas need to be empirically examined to learn if this is the case.

Our final article by Professor Barroso and colleagues empirically examined the interaction between board structure and top management team characteristics to ascertain how these two groups interact to yield strategic changes for a group of firms in Spain. They find that when there is a synergy between these two groups, strategic change was more likely for the sampled firms. They conclude that their research documents a universally beneficial role for a board that is actively involved in charting the strategic direction of the firm in a civil law country that is highly developed.

In sum, these articles all provide individual insight into particular corporate governance behaviors and structures throughout the world. In addition, the research study authored by Denis and McConnell provides an interesting organizing framework from which to consider this body of research. I commend these articles to you, and encourage all our readers to reflect deeply on what a global theory of international corporate governance might look like.