In this study, we empirically test the predictions that the family pay discount documented in the literature for U.S. firms does not hold in a business group setting and that this is attributable to the lack of monitoring by other family members. We find evidence consistent with these predictions using Korean data. First, family executives receive higher compensation than non-family executives (i.e., the family pay premium) in business group firms (chaebols). Second, we find that the pay offered to family executives tends to be high when the proportion of shares held by other family members is low, which is typically the case in business group firms.
An important issue in evaluating corporate governance is how to measure it. In prior work on emerging markets, we have advocated measuring firm-level governance using country-specific indices, tailored to each country’s laws and institutions. An alternate approach, used in commercial indices, is a “common index,” which uses the same elements across all countries, without assessing which elements make sense in which countries. We compare our own country-specific indices for Brazil, India, Korea, and Turkey (BIKT), whose power we have established in prior work, to the best available commercial indices covering emerging markets, from Asset4 and Thomson Reuters. We find that the commercial indices have important limitations in how they are constructed, including vague, subjective definitions of some elements, limited scope for the aspects of governance they cover, and including elements which reflect firm outcomes rather than governance. We further find that the Asset4 and Thomson Reuters indices have no power to predict firm value in a panel data framework with firm fixed effects. One possible reason: we find elsewhere that disclosure (beyond country-mandated minimums) is the governance aspect that most consistently predicts firm market value, yet neither index addresses disclosure.
We study an agency problem in private universities — the conflict between controlling families and other stakeholders. We investigate whether universities over which controlling families have disproportionately significant power relative to the amount of funds they contribute, that is, universities with high expropriation risk, are associated with lower outside donations and poor quality. Using a sample of Korean private universities, we find that measures of family control in excess of monetary contributions are negatively related to the level of outside donation and measures of university quality. We also find that universities at which the controlling family exerts disproportionate control are more likely to face disputes between the controlling family and other stakeholders. Finally, we show that our results are not driven by reverse causality.
This study was conducted to empirically analyze the factors that influence employees' intention to participate in ESG management in relation to the introduction and activation of ESG management(environmental, social, and governance) in SMEs. For this purpose, the causal relationships between entrepreneurial orientation, approval goals, expertise, attitudes, subjective norms, perceived behavioral control, and employees' participation intentions about ESG management were analyzed among white-collar employees in Korean SMEs. We tested the mediating effects of attitudes and subjective norms on the relationship between entrepreneurial orientation and approval goals and employees' participation intentions about ESG management, respectively, and demonstrated the moderating effect of perceived behavioral control on the relationship between attitudes and subjective norms and employees' participation intentions about ESG management. The results of this empirical study, which are 276 employees of SMEs included with ventures and startupss in Korea are as follows. First, entrepreneurial orientation, approval goals, and expertise positively influenced attitudes, subjective norms, and perceived behavioral control toward ESG management engagement, respectively. Second, attitudes and subjective norms toward ESG management engagement had partial mediating effects on the relationship between entrepreneurial orientation and participation intentions about ESG management and the relationship between approval goals and participation intentions about ESG management, respectively. Third, we demonstrate that perceived behavioral control moderates the relationship between attitudes toward ESG management engagement and participation intentions about ESG management and the relationship between subjective norms toward ESG management engagement and participation intentions about ESG management. Fourth, as the level of attitude toward ESG management engagement increases, participation intentions about ESG management increases, regardless of whether perceived behavioral control is high or low. Fifth, contrary to the fourth point, as the level of subjective norms toward ESG management engagement increased, participation intentions about ESG management increased proportionally for those with high perceived behavioral control, but inversely for those with low perceived behavioral control. Finally, the implications of the study, limitations of the study, and directions for future research are presented.
Transdermal antipsychotic patch formulations offer potential benefits, including improved adherence. This study investigated the striatal dopamine D2 receptor occupancy with daily blonanserin transdermal patch application.This open-label, phase II study enrolled 18 Japanese outpatients (20 to <65 years) with schizophrenia (DSM-IV-TR criteria; total Positive and Negative Syndrome Scale score <120 at screening) treated with blonanserin 8-mg or 16-mg tablets. Patients continued tablets for 2-4 weeks at their current dose and were then assigned to once-daily blonanserin patches (10/20/40/60/80 mg daily) for 2-4 weeks based on the oral dose. [11C]raclopride positron emission tomography scanning determined blonanserin striatal dopamine D2 receptor occupancy (primary endpoint). Secondary endpoints included assessment of receptor occupancy by dose, changes in Positive and Negative Syndrome Scale and Clinical Global Impressions-Severity of Illness-Severity scores, patient attitudes towards adherence, and patch adhesiveness.Of 18 patients who started the blonanserin tablet treatment period, 14 patients completed treatment. Mean D2 receptor occupancy for blonanserin tablets 8 mg/d (59.2%, n = 5) and 16 mg/d (66.3%, n = 9) was within the values for blonanserin patches: 10 mg/d (33.3%, n = 3), 20 mg/d (29.9%, n = 2), 40 mg/d (61.2%, n = 3), 60 mg/d (59.0%, n = 3), and 80 mg/d (69.9%, n = 3). Occupancy generally increased with increasing blonanserin dose for both formulations with the half maximal receptor occupancy for tablets and patches associated with doses of 6.9 mg/d and 31.9 mg/d, respectively. Diurnal variability in occupancy was lower during transdermal patch treatment than during tablet treatment. Blonanserin transdermal patches were well tolerated with no major safety concerns.Blonanserin patches (40/80 mg/d) have lower diurnal variability in occupancy than blonanserin tablets (8/16 mg/d), and patches at doses of 40 mg/d and 80 mg/d appear to be a suitable alternative for blonanserin tablets at doses of 8 mg/d and 16 mg/d, respectively. Blonanserin patches represent a potential new treatment option for patients with schizophrenia.JAPIC Clinical Trials Information registry (www.clinicaltrials.jp; JapicCTI-No: JapicCTI-121914).
This paper studies the motive of issuing floating-priced convertibles or warrants, known as death spirals, in a country where the private benefit of control is high. Using a total of 199 death spiral issuances by public firms listed in the Korea Stock Exchange during 1998-2006, we find a number of pieces of empirical evidence that are less consistent with the conventional last resort financing hypothesis, but rather consistent with the control enhancing or control transferring hypothesis. First, abnormal returns subsequent to death spiral issuance is negative, but more so in poorly governed firms. Second, operating performance of chaebol issuers are not necessarily low at the time of the issue nor does it deteriorate over time, but they still prefer to issue death spirals over traditional fixed-priced hybrid securities. Third, we do not observe subsequent changes in the controlling shareholder in more than 60% of the issuers and these firms exhibit superior operating performance at the time of the issue compared to other death spiral or non-death spiral issuers. Fourth, this same set of firms do not experience a decrease in proportional ownership by the controlling party, while family members other than the controlling shareholder experience the most pronounced increases in the number of shares held. Finally, in approximately half of these firms, at least one member of the controlling party holds hybrid securities that can later be converted into voting shares.
Well-constructed, country-specific “corporate governance indices†can predict higher firm values in emerging markets. However, there is little credible research on which aspects of governance drive that overall relationship. We study that question across four major emerging markets (Brazil, India, Korea, and Turkey). We build overall country-specific governance indices, comprised of indices for disclosure, board structure, ownership structure, shareholder rights, board procedure, and control of related party transactions. Disclosure (especially financial disclosure) predicts higher market value across all four countries. Board structure (principally board independence) has a positive coefficient in all countries and is significant in two countries. The other indices do not predict firm value. These results suggest that regulators and investors, in assessing governance, and firm managers, in responding to investor pressure for better governance, would do well to focus on disclosure and board structure.
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