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Stakeholder-Oriented Corporate Governance and Sustainable Corporations
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Stakeholder-Oriented Corporate Governance and Sustainable Corporations

A special issue of Sustainability (ISSN 2071-1050). This special issue belongs to the section "Economic and Business Aspects of Sustainability".

Deadline for manuscript submissions: closed (15 March 2023) | Viewed by 31006

Special Issue Editor

Dr. Hideaki Sakawa

E-Mail Website
Guest Editor
Graduate School of Economics, School of Economics, Nagoya City University, Nagoya, Japan
Interests: corporate governance; corporate finance; international business; financial accounting
Special Issues, Collections and Topics in MDPI journals

Special Issue Information

Dear Colleagues,

National-level corporate governance differences are important to consider when attempting to explain firm-level corporate governance practices (Aguilera and Jackson, 2003). Under stakeholder-oriented corporate governance, the goal of firms is to balance the interests of all stakeholders, which lies in contrast to shareholder-oriented corporate governance (Jackson, 2005). After several crises (e.g., the global financial crisis), the importance of long-term orientation—one feature of stakeholder-oriented corporate governance—is being re-evaluated (van Essen et al., 2015). On the other hand, there remain research gaps regarding whether stakeholder-oriented corporate governance is a key to solving severe agency problems. Thus, it is crucial to reveal how the feature of stakeholder-oriented corporate governance is helpful to solve any kind of agency problems and contribute to the realization of sustainable corporations and societies.

There is an increasing need to assess the mechanisms of stakeholder-oriented corporate governance from the view of maintaining sustainable corporations. Recent studies reveal that family control is not necessary the source of exploitation in a stakeholder-oriented corporate governance (Sakawa and Watanabel, 2019). The agency problems due to the complexity of business groups such as Keiretsu do not emerge at the stage of IPOs (Sakawa and Watanabel, 2020). In addition, MNEs favor their important stakeholders to adopt international accounting standards in a stakeholder-oriented system (Sakawa. Watanabel, and Gu, 2021). These studies are examples which align with the concept of this Special Issue.

The differences between shareholder-oriented and stakeholder-oriented corporate governance is an important topic in the context of globalization. There is a great deal of room for further research assessing the features of stakeholder-oriented governance from the view of single-country study or comparative study. Thus, this Special Issue will focus on empirical and case studies which try to reveal the role of stakeholder-oriented corporate governance mechanisms.

References.

Aguilera, R. V., & Jackson, G. The cross-national diversity of corporate governance: Dimensions and determinants. Acad. Manag. Rev. 2003, 28, 447–465.

Jackson, G. Stakeholders under pressure: Corporate governance and labour management in Germany and Japan. Corporate Governance: An Int. Rev. 2005, 13, 419–428.

Sakawa, H., & Watanabel, N. Family control and ownership monitoring in stakeholder-oriented corporate governance. Manag. Decis. 2019, 57, 1712–1728.

Sakawa, H., & Watanabel, N. IPO underpricing and ownership monitoring in Japan. Asian Bus. Manag. 2020, 19, 480–503.

Sakawa, H, Watanabel, N., Gu, J. The internationalization and voluntary adoption of international accounting standards by Japanese MNEs. Manag. Int. Rev. 2021, Article in Press.

Van Essen, M., Strike, V. M., Carney, M., & Sapp, S. The resilient family firm: Stakeholder Outcomes and Institutional Effects. Corp. Gov.: An Int. Rev. 2015, 23, 167–183.

Prof. Dr. Hideaki Sakawa
Guest Editor

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Keywords

  • corporate governance
  • globalization
  • stakeholder
  • sustainability

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Published Papers (7 papers)

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Research

33 pages, 2823 KiB  
Article
Exploring the Multidimensional Perspective of Retail Investors’ Attention: The Mediating Influence of Corporate Governance and Information Disclosure on Corporate Environmental Performance in China
by Zhenjie Wang, Jiewei Zhang and Hafeez Ullah
Sustainability 2023, 15(15), 11818; https://doi.org/10.3390/su151511818 - 1 Aug 2023
Cited by 13 | Viewed by 2984
Abstract
In the dynamically evolving global environment, enterprises grapple with an intricate web of social, environmental, and technological changes that demand heightened environmental efficiency and sustainability-oriented strategies. This study investigated the influence of retail investor attention on corporate environmental performance as well as the [...] Read more.
In the dynamically evolving global environment, enterprises grapple with an intricate web of social, environmental, and technological changes that demand heightened environmental efficiency and sustainability-oriented strategies. This study investigated the influence of retail investor attention on corporate environmental performance as well as the roles of corporate governance and information disclosure quality in Chinese publicly traded companies from 2008 to 2019. The empirical evidence reveals a positive association between retail investors’ attention and corporate environmental performance. The quality of corporate governance significantly affects environmental performance, while information disclosure quality exhibits a negative correlation. The study’s findings provide valuable insights for policymakers looking to improve corporate environmental efficiency. They suggest incorporating retail investor attention as a strategy for Chinese publicly traded firms to enhance their environmental performance. Overall, this study highlights the importance of corporate governance practices, information disclosure quality, and retail investor attention in achieving optimal environmental performance. Full article
(This article belongs to the Special Issue Stakeholder-Oriented Corporate Governance and Sustainable Corporations)
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29 pages, 309 KiB  
Article
Profitability or Longevity? Cross-Country Variations in Corporate Performance
by Ryoichi Arai and Shinichi Hirota
Sustainability 2023, 15(10), 8307; https://doi.org/10.3390/su15108307 - 19 May 2023
Viewed by 3376
Abstract
The previous literature shows that firms’ purposes and behaviors vary across countries, but few studies have empirically examined whether firm performance varies across countries. This study compares the performance of the world’s largest corporations across 47 countries. Using the data for firms listed [...] Read more.
The previous literature shows that firms’ purposes and behaviors vary across countries, but few studies have empirically examined whether firm performance varies across countries. This study compares the performance of the world’s largest corporations across 47 countries. Using the data for firms listed in the Fortune Global 500 from 1973 to 2020, we explore whether there are cross-country variations in two dimensions of corporate performance: profitability and longevity. We find significant variations in both profitability and longevity across countries. We also observe that firms in some countries are highly (less) profitable but less (more) likely to survive for a long time. We regress profitability and longevity on country-level institutional factors: financial systems, laws, and national cultures. We find that (i) a market-based (bank-based) financial system is positively (negatively) related to a firm’s profitability, but negatively (positively) related to its longevity; (ii) common law (civil law) is positively (negatively) related to the profitability of a firm, but negatively (positively) related to its longevity; and (iii) high individualism, low uncertainty avoidance, and low long-term orientation are positively related to profitability, but negatively related to longevity. These results suggest that a country’s formal and informal institutions significantly affect a firm’s purpose, behavior, and performance. Full article
(This article belongs to the Special Issue Stakeholder-Oriented Corporate Governance and Sustainable Corporations)
27 pages, 719 KiB  
Article
Does Integrated Reporting Affect Real Activities Manipulation?
by Yuji Shirabe and Makoto Nakano
Sustainability 2022, 14(17), 11110; https://doi.org/10.3390/su141711110 - 5 Sep 2022
Cited by 1 | Viewed by 4229
Abstract
Integrated reporting (IR) by firms is intended to improve not only the quality of information available to external parties, but also internal managerial decision making. IR is considered useful to address the short-term orientation of firms caused by pressure from short-term oriented shareholders. [...] Read more.
Integrated reporting (IR) by firms is intended to improve not only the quality of information available to external parties, but also internal managerial decision making. IR is considered useful to address the short-term orientation of firms caused by pressure from short-term oriented shareholders. This study examines whether the introduction of IR discourages real activities manipulation, a form of myopic behavior. Using a large sample of Japanese listed companies, the study empirically tests the effect of IR on real activities manipulation through panel data regression analysis. We find that the introduction of IR is related to higher level of abnormal cash flows from operations, lower level of abnormal production costs, and lower level of total activities manipulation. These results generally suggest that firms tend not to engage in real activities manipulation after IR is introduced. Our results also show that while there is insignificant difference in the degree of real activities manipulation between IR and non-IR firms immediately after the introduction of IR, the degree of real activities manipulation is generally smaller in IR firms than in non-IR firms after more time has passed since the introduction of IR, consistent with the view of practitioners that IR is a continuous improvement process of internal decision making. Regarding the non-financial aspects, additional analysis shows that introducing IR is positively associated with the performance of environmental, social and governance (ESG). Our findings suggest that IR could discourage companies’ short-term oriented behavior and promote long-term value creation, which is of interest to a wide range of stakeholders. Thus, our findings provide insightful evidence for researchers, practitioners, and policy makers interested in the role of IR in stakeholder-oriented corporate governance mechanisms. Full article
(This article belongs to the Special Issue Stakeholder-Oriented Corporate Governance and Sustainable Corporations)
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20 pages, 327 KiB  
Article
Political Connections, Ownership and Within-Firm Pay Gap
by Fang Fang, Tingbo Duan and Kun Li
Sustainability 2022, 14(14), 8763; https://doi.org/10.3390/su14148763 - 18 Jul 2022
Cited by 1 | Viewed by 2653
Abstract
The difference in wages between executives and employees reflects the class conflict in corporate governance. To investigate the political factors within the practice of corporate governance related to employees, this paper empirically tests the relationship among political connections, ownership and within-firm pay gaps. [...] Read more.
The difference in wages between executives and employees reflects the class conflict in corporate governance. To investigate the political factors within the practice of corporate governance related to employees, this paper empirically tests the relationship among political connections, ownership and within-firm pay gaps. We take the A-share listed companies on the Shanghai and Shenzhen Stock Exchange as the example, design hypothesis tests and examine the effects of political connections on the pay gap in two distinctive groups of companies, the state-owned enterprises (SOEs) and the non-stated-owned enterprises (non-SOEs). The overall result indicates that political connections increase the average salary of executives and decrease the average salary of employees, thereby expanding the within-firm pay gap. Pay gaps in companies with political connections are 16% higher than companies without political connections. The further test results of distinguishing property rights show that in non-SOEs, political connections increase the executives’ compensation and decrease the average compensation of employees, resulting in an increase of the within-firm pay gap. Similar relationships appear in SOEs but without statistical significance. These findings expand the research on income distribution effects of political connections theoretically, and provide useful insights for SOEs’ reform and income distribution system reform in practice. Full article
(This article belongs to the Special Issue Stakeholder-Oriented Corporate Governance and Sustainable Corporations)
22 pages, 385 KiB  
Article
Examining the Role of Stakeholder-Oriented Corporate Governance in Achieving Sustainable Development: Evidence from the SME CSR in the Context of China
by Lin Zhang, Xiaochen Zhang, Jingjing An, Wei Zhang and Jingshen Yao
Sustainability 2022, 14(13), 8181; https://doi.org/10.3390/su14138181 - 5 Jul 2022
Cited by 20 | Viewed by 7529
Abstract
Corporate governance (CG) has been experiencing a shift from the antecedent shareholder-oriented system toward the recent more popular stakeholder-oriented system. To better serve the aim of sustainable development, more and more companies have initiated stakeholder-oriented practices. Increasing social responsibility behaviours demonstrate the prioritisation [...] Read more.
Corporate governance (CG) has been experiencing a shift from the antecedent shareholder-oriented system toward the recent more popular stakeholder-oriented system. To better serve the aim of sustainable development, more and more companies have initiated stakeholder-oriented practices. Increasing social responsibility behaviours demonstrate the prioritisation of stakeholders’ interests. Nevertheless, most extant research on stakeholder-oriented CG focuses on MNEs and large listed companies. Limited attention has been paid to the small and medium-sized enterprises (SMEs) sector. This study aims to fill this gap by providing empirical evidence of Chinese SME corporate social responsibility (CSR). We develop and test two hypotheses by using samples of 172 Chinese listed SMEs. Our result is distinct from most of the extant SME CG literature, given that the stakeholder-oriented CSR types have a negative impact on short-term operational profitability and expansion over a fixed period. Additionally, the government subsidy, as one of the most significant national institutions, partially moderates the relationship between stakeholder-oriented CSR and firm performance. The outcomes of this research make both theoretical and managerial contributions to SMEs’ CG systems. In the context of Chinese SME CSR, managerial stakeholder theory is a more pragmatic means to guide firms toward sustainable development than ethical stakeholder theory. Full article
(This article belongs to the Special Issue Stakeholder-Oriented Corporate Governance and Sustainable Corporations)
15 pages, 484 KiB  
Article
The Board Structure and Performance in IPO Firms: Evidence from Stakeholder-Oriented Corporate Governance
by Naoki Watanabel, Shohei Yamauchi and Hideaki Sakawa
Sustainability 2022, 14(13), 8078; https://doi.org/10.3390/su14138078 - 1 Jul 2022
Cited by 8 | Viewed by 4010
Abstract
This study investigates the internal mechanisms as an important factor for shareholders and stakeholders in initial public offering (IPO) firms with stakeholder-oriented corporate governance. Over the period of 2009–2016, we examine the role of independent directors in Japanese stakeholder-oriented corporate governance. According to [...] Read more.
This study investigates the internal mechanisms as an important factor for shareholders and stakeholders in initial public offering (IPO) firms with stakeholder-oriented corporate governance. Over the period of 2009–2016, we examine the role of independent directors in Japanese stakeholder-oriented corporate governance. According to previous research, the monitoring role of independent directors is strengthened in countries with a market-based financial system. Our empirical analyses show that independent directors do not effectively mitigate conflicts among shareholders such as IPO underpricing in a stakeholder-oriented corporate governance framework. Alternatively, accounting expertise may contribute to mitigating IPO underpricing in accordance with U.S. corporations. The participation of bank-affiliated directors in IPO firms further contributes to the mitigation of underpricing. Accordingly, these findings imply that bank ties through Horizontal Keiretsu’s bank-appointed directors are critical for mitigating conflicts among shareholders in IPO firms. These results imply that stakeholder-oriented corporate governance systems contribute to reducing conflicts among stakeholders. Full article
(This article belongs to the Special Issue Stakeholder-Oriented Corporate Governance and Sustainable Corporations)
20 pages, 347 KiB  
Article
Impact of Parent Companies and Multiple Large Shareholders on Audit Fees in Stakeholder-Oriented Corporate Governance
by Akihiro Yamada and Kento Fujita
Sustainability 2022, 14(9), 5534; https://doi.org/10.3390/su14095534 - 5 May 2022
Cited by 4 | Viewed by 3245
Abstract
This study aimed to investigate the impact of parent companies and other multiple large shareholders (MLSs) on the audit fees in Japanese firms, where stakeholder-oriented corporate governance is adopted. In such a firm, monitoring by many stakeholders can mitigate conflicts among shareholders. However, [...] Read more.
This study aimed to investigate the impact of parent companies and other multiple large shareholders (MLSs) on the audit fees in Japanese firms, where stakeholder-oriented corporate governance is adopted. In such a firm, monitoring by many stakeholders can mitigate conflicts among shareholders. However, because the key stakeholders of these firms tend to resolve information asymmetry problems through insider communication, the level of audit effort is affected not only by the audit risk from principal–principal conflicts, but also by the demands of key stakeholders. Japanese parent companies tend to spin off their departments with high growth potential and provide incentives to lower subsidiaries’ cost of capital through information disclosure. Therefore, parent companies require greater audit efforts, and consequently, audit fees are expected to be higher. However, when MLSs are shareholders of the listed subsidiary, they can obtain relevant information via private communication. Thus, the need for quality accounting information will be smaller, the level of audit effort required will be smaller, and as a result, audit fees will be smaller. The results are consistent with these expectations. This paper contributes to the sustainable growth and economic development of firms and markets and has implications for the development of effective corporate governance mechanisms. Full article
(This article belongs to the Special Issue Stakeholder-Oriented Corporate Governance and Sustainable Corporations)
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