Value Creation and Value Capture in Corporate Governance Essay Example for Free

Value Creation and Value Capture in Corporate Governance Essay Abstract We have followed the value-based approach to investigate a major corporate governance reform affecting publically listed firms in China. The regulations required that, in each firm, the owners of non-tradable shares (block shareholders) negotiate with the owners of tradable shares (minority shareholders) to determine the compensation paid to the latter for allowing non-tradable shares to trade on the stock market. If such an agreement is not obtained, the firm is forbidden to use equity refinancing in the future. The present study emphasizes the joint effect of value creation and value capture in determining the level of compensation, and finds that firms that expect to generate higher returns from future investments but face greater constraints in seeking non-equity-based financing tend to issue higher levels of compensation. This joint effect is further moderated by factors related to investment returns and corporate governance. The empirical evidence lends strong support to theoretical predictions. This study has important implications for corporate governance in emerging markets, and the application of the value-based approach to corporate governance research in general. Keywords: Value-Based Approach, Corporate Governance, Liquidity Reform, Bargaining, China *Contact: Nan Jia, Marshall School of Business, University of Southern California, Email: [emailprotected], Tel: 213-740-1045; Yongxiang Wang, Marshall School of Business, University of Southern California, Email: [emailprotected], Tel: 213-740-7650. Acknowledgements: We would like to thank Olivier Chatain, Gabriel Natividad, Victor Bennett, and Joanne Oxley for their helpful comments. 1. Introduction Value creation and value appropriation are central to the question of how economic actors cooperate in value-producing activities and then compete to divide the value created – a phenomenon that is fundamental to business strategy (MacDonald and Ryall, 2004; Gans, MacDonald, and Ryall, 2008; Chatain and Zemsky, 2011). To address this question, a rapidly growing body of research supports a value-based approach based on formal modeling (Brandenburger and Stuart, 1996, 2007; MacDonald and Ryall, 2004). The value-based approach has proven to be powerful tools for advancing our understanding of a wide range of topics in strategic management, such as market competition (MacDonald and Ryall, 2004; Gans et al., 2008), firms’ resource advantages (Lippman and Rumelt, 2003), buyer-supplier relationships (Chatain and Zemsky, 2007; Chatain, 2011; Jia, forthcoming), firms’ sustainable competitive advantages (Adner and Zemsky, 2006), social network positions (Ry all and Sorenson, 2007), and team organization (Bennett, 2012). What has escaped researchers’ attention so far is to employ the value-based approach to advance our understanding of corporate governance issues. As one of the most investigated field in strategic management, corporate governance research focuses on how various governance structures align the incentives of all types of stakeholders (Daily, Dalton, and Rajagopalan 2003; Walls, Berrone, and Phan, 2012). Although theoretically speaking, inherent to many corporate governance issues is the tension between value creation and value capture, as stakeholders design corporate governance arrangements essentially both to incentivize all parties to work hard to increase the overall firm value, and to assist their competition with other stakeholders regarding sharing the value created (e.g., Tirole, 2001, Jensen, 2001), most strategy research has given overwhelming attention to the latter effect of competing over value appropriation, often called â€Å"stakeholder opportunism† (v. We rder, 2011). In particular, the research of firm governance in emerging markets has predominantly placed opportunism and misappropriation of minority shareholders center-stage, and appropriately so, as rampant expropriation of minority shareholders generates inefficiencies and stalls economic growth (Morck, Stangeland, and Yeung, 2000; Morck, Wolfenzon, and Yeung, 2005). We believe, however, that stronger protection of minority shareholders also requires incorporating the value creation perspective, to more closely link corporate governance to obtaining cooperation of all shareholders in assisting firms’ business operation in the future, instead of treating the bargaining between stakeholders merely as a zero-sum game. The following example of a major corporate governance reform in China clearly shows how focusing on expropriation in a zero-sum game alone fails to reach the insights that can be achieved by the value-based approach. Prior to 2005, all firms listed in China’s stock ma rket had two types of shareholders: owners of tradable shares and owners of non-tradable shares. Both types of shareholders enjoy the same voting rights and the same cash flow rights. The only difference between these shareholders is embodied in their names: tradable shares can be traded freely on the stock market, while non-tradable shares cannot be traded on the stock market. Tradable shares are typically held by minority shareholders including individuals and institutional investors, and non-tradable shares are typically held by block shareholders, such as other business firms and the state. The 2005 reform was orchestrated by the CSRC (China Securities Regulatory Commission, China’s SEC-equivalent) to make all non-tradable shares tradable. In it, the CSRC stipulates that, for every firm, the non-tradable shareholders negotiate with the tradable shareholders to determine the compensation received by the latter (from the former1) in exchange for enabling non-tradable shares to trade on the stock market. The failure to reach such an agreement prohibits the firm from refinancing in the stock market. Absent the value creation perspective, viewing this ownership reform as the shareholders competing only to appropriate a larger share of a fixed â€Å"pie† makes it very difficult to explain why powerful, large shareholders are willing to compensate minority shareholders. 2 Moreover, students of corporate governance in emerging markets are well versed with how block shareholders expropriate minority shareholders, and thus may expect limited compensation paid to the latter. However, such explanations are incomplete. Through the lens of the value-based approach, we argue that the reform enables competition to create as well as to appropriate value. Reaching an agreement to reform the ownership structure increases a firm’s value in the future, as it provides the firm with access to equity refinancing to fund future investments. Therefore, non-tradable shareholders’ compensation for the minority shareholders in the reform should depend on their share of the firms’ expected returns from using equity refinancing to fund business operations in the future. We show that, the compensation for tradable shareholders (minority shareholders) include some of the value that non-tradable shareholders (block shareholders) expect to gain from the firm’s future investment, because the compensation reflects how much minority shareholders could hold up the block shareholders from creating more value through future investments. Using a formal model and then corroborating it with empirical evidence, we show that non-tradable shareholders are more willing to compensate tradable shareholders to reform the ownership when the firm is more effective in investments but face greater constraints with regard to alternative financing.

Eroticism and Mortality in Shakespeares Sonnet 73 Essay -- Sonnet ess

Eroticism and Mortality in Shakespeare's Sonnet #73 William Shakespeare's sonnet cycle is famous with its rich metaphorical style.   The depth of each sonnet comes from its multilayered meanings and images, which are reinforced by its structure, sound, and rhythm.   Sonnet #73 provides an excellent example.   This sonnet shows the speaker's agony over human mortality and, moreover, his/her way of coping with it in an effective way.   The speaker, especially in terms of his cognizance of time, experiences dramatic changes in two ways: (1) from time measured by quantity to time as quality,   (2) from cyclical time to a linear one.   These changes, manifested by a set of images (autumn, twilight, glowing), enable him/her to embrace his/her mortality as an essential element of a human being.   This double structure of the sonnet achieves its richness by its sub-level imagery based on eroticism, which has been one of the most common cures for the inevitability of one's own death throughout human history. A clear contrast exists between the first two quatrains and the third quatrain in terms of the speaker's understanding of time.   In the first and second quatrain, the speaker perceives time as a   quantitative entity.   "That time of" one's life, in the first quatrain, is not called 'autumn' but described as "yellow leaves, or none, or few"(1-2).   This quantifiable image presents time as if it can be taken away one by one.   It alludes that death would come as the drop of the last leaf of a tree.   Furthermore, the process of getting old and dying happens in a sadistic way.   Time seems to tear off one's life which strives to cling to the boughs "which shake against the cold,/ Bare ruined choirs"(3).   The cold wind, which stri... ...According to him, death means one's discontinuity, but through reproductive activities, one can obtain the continuity of his being.   (Georges Bataille.   Death and Sensuality: A Study of Eroticism and the Taboo.   Walkner and Company: New Yor, 1962.   Originally printed with a different title, L,Erotisme, in 1957.) Works Cited and Consulted Booth, Stephen, ed. Shakespeare's Sonnets. New Haven: Yale University Press, 1977. Duncan-Jones, Katherine, ed. Shakespeare's Sonnets. London: Arden Shakespeare. Georges Bataille. Death and Sensuality: A Study of Eroticism and the Taboo. Walkner and Company: New York, 1962. Longman Dictionary of Contemporary English 3rd ed. Longman: Essex, England: Longman Group Ltd. 1995 Shakespeare, William. "Sonnet 73." The Complete Works of Shakespeare. Ed. David Bevington. 3rd. ed. Glenview, IL: Scott Foresman, 1980.

Cultural Assimilation and American Music Artists

good afternoon everyone, today i am going talk about the impact of americanization, First of all i will talk abiut some background of americanization and then i will talk about the positive and negative impact of it. what does americanisation mean? The word, of couse has many meanings,definitions and descriptions. the impact and influence of the US on the culture, politics,business practices and technology of other countries. Nowadays, people view America in the form of a role model and a leader in influencing other countries and have their culture blended in. deals, traditions, and ways of life. Do you notice that American culture has gradually assimilated into our society? Have you ever thought of how Americanization affects our daily life? However, it can be argued that the American culture domination poses a threat to culture diversity. Ranging from Hollywood, popular music, fast food to Disney cartoons, the world in which we live in would be imbued with less local colour. Unique festivals and rites celebrated by people of different culture round the world which filled the world with vibrancy are on the verge of extinction.In addition, americanisation can also have other downsides,American culture has affected the mentality of Asians; such as increase in the number of abortion rates, illegitimate children and the surge in the number of single parents in there. Traditionally, were very conservative and the abovementioned problems were uncommon and condemned. This shows that the American culture has indirectly affected the mentality of Asians; although people generally disapprove of single parenting and abortion, the statistics prove otherwise.The spread of American media including TV, film and American music artists, has been the main component of Americanization of other countries. American TV shows are broadcast around the world. Many of the shows are broadcast through American broadcasters and their subsidiaries such as HBO Asia, CNBC Europe, Fox Channel and CNN International. All of what is known as the â€Å"big four† American broadcasters have international distributors, for example HBO broadcasts to over 20 countries. Many of these distributors broadcast mainly American programming on their TV channels.

Controversy Of Vaccines And Autism - Free Essay Example

Sample details Pages: 3 Words: 804 Downloads: 2 Date added: 2019/10/31 Category Medicine Essay Level High school Tags: Vaccines Essay Did you like this example? Briefly describe the origin of the vaccines/autism controversy The origins of vaccines date all the back to the 17th century, when Buddhist monks would drink snake venom to build immunity to snake bites. Also, in 17th century china they practiced vaccination against small pox but smearing cowpox on torn skin to confer immunity against small pox. In the west, Edawrd Jenner inoculated a thirteen-year-old boy with vaccinia virus, which demonstrated how vaccinations work to build immunity against small pox. Don’t waste time! Our writers will create an original "Controversy Of Vaccines And Autism" essay for you Create order According to the Indian Journal of Psychiatry In 1998, Andrew Wakefield published a case series in the lancet, which suggested that the MMR vaccine may predispose to behavioral regression and pervasive developmental disorder in children. (The logic that the MMR vaccine may trigger autism was questioned because a temporal link between the two is almost predestined: both events, by design (MMR vaccine) or definition (autism), occur in early childhood) (Indian Journal of Psychiatry).  Ã‚   Where does the evidence stand today?   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The evidence today stands that the Lancet has completely retracted Wakefields work in 2010, according to the Indian Journal of Psychiatry. The sample size that Wakefield used was a relatively small sample size of 12 children and his work was uncontrolled in design. Wakefield was later found guilty for deliberate fraud since he picked and chose the data that was most suitable for their cause (Indian Journal of Psychiatry).   Wakefield was also found guilty for ethical violations since he had conducted invasive investigations on children without the necessary ethical clearness (Indian Journal of Psychiatry). And lastly he had been found guilty for scientific misrepresentation for claiming that his sampling was consecutive when it was selective (Indian Journal of Psychiatry). What factors do you think drive the persistence of this controversy?   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   I think that there are a few factors that drive the persistence of this controversy, one is social media plays a big part. I see so many people advocating against vaccinations since they still believe vaccines are more harmful than good. My very own sister who I love greatly is one of those people. She has a 7-year-old daughter who is vaccinated but I think she blames the vaccines on all my nieces issues. My aunt who has been a pharmacist for many years is also anti-vaccine. I think the second major thing that drives this controversy is the internet. I know for my sister all she does is read articles on the internet all day long. Now she has a degree in culinary arts with no medical background, so the articles shes reading she is going to believe basically out of ignorance. Many people dont know basic physiology and basic biology, so they are more likely to be skewed by what they read on the internet and believe that It is true because they read it on the internet.  Ã‚  Ã‚  Ã‚   What are the risks of vaccine non-compliance to individuals? To the broader public?   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Some of the risk factors that are associated with vaccine non-compliant individuals is the increased risk of developing infectious diseases that once where nearly eradicated, diseases that are potentially fatal to adolescence, and the risk of spreading the disease to more vulnerable individuals. Some diseases that once were nearly eradicated are starting to reemerge due to vaccine non-compliance. In the case for pertussis, this is a bacterial infection that is on the rise among infants and teenagers. It spread through moisture droplets in the air and it is said that caregivers and parents are able to carry the bacteria that is affecting the children.   If an infant has pertussis and the parent or caregiver is attending to the child, the parent or caregiver can be helping the bacteria spread from one child to another. This puts the boarder public at risk because if a parent or caregiver came into contact with the pertussis bacteria, they are able to tran smit it to other children just by contact. If that parent or caregiver passed the bacteria to the child and that child touched their nose or mouth, they just inoculated the bacteria to themselves.   How can one highlight the importance of vaccines and address patient concerns while honestly acknowledging both the limitations and risks of vaccination? One can highlight the importance of vaccines through education. Properly educating parents on the risks of vaccine non-compliance is essential to the health and well-being of their child. Taking in consideration for the parents concerns about vaccinations, one can still educate the parents about their concerns while addressing the importance of vaccines. And being honest with parents on the possible risks of the vaccinations is also important. I think that addressing the negative stigma that is attached to vaccines is key for the parents decision on whether or not to vaccinate their child. Parents deserve to know the truth about vaccines and not what their neighbor or what Facebook has said.