Corporate dividend policy,minority shareholders right and equity value of firm: Evidence from Singapore

The purpose of the paper is to find out empirically whether an ideal business environment coupled with adequate legal protection provides an enabling mechanism for the minority shareholders to extract dividend from the firms and, as a consequence, whether the equity value of the firms gets impacted by dividend policy. The study (a) employs Tobit model on a sample of FTSE ST companies of Singapore to show the relation between dividend and minority shareholders base and, then (b) sought to explore the relation between equity value and dividend policy in the backdrop of strong legal protection for minority shareholders through OLS and 2 SLS regression models. The study empirically demonstrates a positive relation between the dividend payout and minority shareholders base indicating that, in a civil law origin country with strong corporate governance code ensuring investors protection and property right, the minority shareholders can extract dividend from the firms that, in turn, has a favourable impact on equity valuation. Consistent with the “outcome” and “catering model,” the findings of the study indicate that the overall business environment and legal protection enable minority shareholders to assert their cash flow rights with positive valuation implication. The paper objectively reveals how superior business environment, good governance and property right impact inter‐play between dividend payout, minority shareholders base and valuation of a civil law country.     

The long‐term development of organised business and its implications for corporatism: A cross‐national comparison of membership,activities and governing capacities of business interest associations, 1980–2003

Internationalisation of markets and the demise of Keynesianism have made business more independent of associational action. Membership density and ‘corporatist’ involvement in wage bargaining and public policy have declined only modestly, while the capacity to govern members has dwindled significantly. This development is driven by the way in which large firms and the state relate to business associations. Large firms still have a vital interest not only in associational action, but also in integrating their smaller counterparts. Stated‐based support for multi‐employer bargaining, as established in most countries, buttresses business associations. By equipping the associations with an encompassing grip on the labour market, this support prompts governments to involve them in public policy. Since encompassing labour market regulation enables the associations to impose negative externalities on unaffiliated businesses, it provides them with a strong selective incentive for membership. The significant decline of the associations' governing capacity emanates from pressures of their large members to reduce costs of association. The implications of this development for interest intermediation are twofold. Given the strong decay of union power, the resilience of corporatism strongly hinges on the continued strength of organised business and on its state‐sponsored engagement in bargaining. At the same time, leeway for compromising has been restrained by the significant decline in the governing capacity of organised business. This decline echoes an ever‐growing predominance of large firms in business associations, while economic internationalisation exacerbates interest conflicts between larger and smaller firms. To the extent that this configuration of interest and power weakens the ability of business associations to integrate the mass of small firms, it develops into the new Achilles heel of corporatism.     

Large firms as political actors: A comparative analysis of the chemical industry in Britain,Italy and West Germany

Large firms as political actors are compared in the chemical industry in three countries. In West Germany, co‐ordinated action through the industry associations is important, but firms are developing their own political capabilities. In Italy links with political parties are important, but the operating environment of firms has become less politicised. Britain conforms more to a ‘company state’ model, with the government relations divisions of firms playing a key role. The greatest divergence between the three countries is in terms of relationships with political parties. In general, there is a trend towards greater convergence in government‐business relations in the industry in the three countries, internationalisation being a key factor.     

Small firm membership in national trade associations

• Business associations play a significant role in private–public interactions by aggregating company interests and relating these to political decision makers. Associations are particularly important for smaller firms, which generally do not have the resources to pursue political strategies independently. This paper discusses the question of what the motives are for small and medium‐sized firms to maintain their membership in national trade associations at a time when the European business environment is undergoing profound changes. Using the example of the Netherlands, it is argued that associational membership is determined foremost by political considerations. The implication of this conclusion is that national business associations continue to perform an important function in mediating business–government relations. Despite the internationalization of public decision making, these organizations remain important intermediaries for corporate public affairs.
• 1 We would like to thank two anonymous referees for their helpful comments and suggestions.

Copyright © 2005 John Wiley & Sons, Ltd.     

Restraining auto imports: Does anyone win?

The conventional wisdom suggests that import restraints help the protected domestic industry at the expense of consumers. In the longer term, however, trade restraint may encourage foreign firms to adopt new and more threatening business strategies, such as upgrading the quality of their products or moving plants to the United States. If these long-term dynamic effects of restraint are considered, trade restraints may prove harmful to the domestic industry as well as consumers.     

Compliance costs,regulation, and environmental performance: Controlling truck emissions in the US

When explaining regulatory policymaking and the behavior of regulated business firms, scholars have supplemented economic models by emphasizing the role of public‐regarding entrepreneurial politics and of normative pressures on firms. This article explores the limits of such entrepreneurial politics and “social license” pressures by examining regulation of emissions from diesel powered trucks in the US. We find that the economic cost of obtaining the best available control technology – new model lower emissions engines – has: (i) limited the stringency and coerciveness of direct regulation of vehicle owners and operators; (ii) dwarfed the reach and effectiveness of the governmental programs that subsidize the purchase of new less polluting vehicles; and (iii) elevated the importance of each company’s “economic license”– as opposed to its “social license”– in shaping its environmental performance. The prominence of this “regulatory compliance cost” variable in shaping both regulation and firm behavior, we conclude, is likely to recur in highly competitive markets, like trucking, that include many small firms that cannot readily either afford or pass on the cost of best available compliance technologies.     

Turning around local economies: Managerial strategies and community assets

Nontraditional “invisible” sources of growth are identified through a case study of a diversified industrial region in Massachusetts. Firm-specific managerial strategies are found to be an important element in the determination of economic growth. Customized and hybrid firms characterize major departures from the product-cycle model in which product specialization and service specialization attached to traditional products allow them to avoid productcycle maturity. The interaction of these business strategies with invisible community factors such as labor force quality and the labor-management environment significantly influences local economic growth. These findings indicate the importance of targeting development efforts at the firm as opposed to the industry level and the need to better utilize local invisible factors as a basis for boosting local economic growth.     

The restructuring process in central and Eastern Europe: Business strategies for EC companies

The completion of the EC Single Market and the opening of Central and Eastern Europe constitute major changes in the European business environment which challenge companies to develop new business strategies. The Single Market will be one marketplace, but Central and Eastern Europe has to be treated completely differently, in some respects on a country‐by‐country basis. Based on personal interviews with Eastern European business people, this article describes and analyses the opportunities for EC companies. On the basis of this analysis a business strategy for Central and Eastern Europe is outlined.     

THE DOCTRINE OF STRICT LIABILITY: AN ALTERNATIVE APPROACH TO CONSUMER PROTECTION REGULATION

Using a legal system of strict liability allowing contributory negligence as a valid defense provides an alternative to consumer protection regulation. In addition, the strict liability system allows rapid and responsive compensation to injured individuals. Corporate uncertainty as to future costs and business environment are substantially reduced, thus allowing firms to make accurate and rational long-term, strategic plans. This paper presents the basic functional constructs required for developing a viable regulatory framework using strict liability and then looks at an example where it could be employed. The scenario deals with an environmental pollution and protection problem. In the example, a strict liability system allowing for a defense of contributory negligence is shown to be conceptually more efficient and desirable than the existing regulatory system and negligence liability procedures.     

The Sisyphus’s Rock of Prosperity and Disparity in the Global Economy: Giovanni Arrighi and Apple Inc’s Tax Avoidance Strategies from Obama to Trump

The global value chain (GVC) perspective assumes that business firms’ occupation of high value-added nodes in the global production network can promote their countries’ socio-economic development. However, I argue that society-wide benefits that may follow from firms’ profit-maximizing activities are often ephemeral. Over time the middle class can shrink, and economic inequality can increase even when firms continue to move up to higher value-added niches and garner huge profit. I illustrate this disjunction between business activities and societal development with Apple’s strategies of tax avoidance and reduction from the Obama to the Trump administration. I then draw on the theoretical framework that Giovanni Arrighi sets out in The Long Twentieth Century and ideas from The Myth of Sisyphus by Albert Camus to analyze the Apple case. As my analysis makes clear, the flawed assumption of the GVC perspective reveals its practitioners’ failure to recognize that within global capitalism, permanent and sustained societal affluence is unlikely, and what exists instead is a constant alternation between prosperity and disparity.     

The politics of requesting: Strategic behavior and public utility regulation

Extant models of public utility regulation assume that regulated firms make the same rate adjustment requests regardless of the political environment they will face during the rate case. Focusing on information asymmetries, the repeated interaction between the firm and the regulatory commission, and behavioral assumptions about the goals of regulators, a new model is proposed that assumes firms strategically and rationally plan their requests to respond to political and agency, as well as standard economic factors. An implication of the new model is that the effect of political factors, such as grassroots advocacy and regulator election, should be observed in request equations rather than in award equations where they are traditionally sought. This new model is tested using data from 54 telephone rate cases. The results indicate that firms do respond strategically to political factors (especially to regulator elections), and also to agency factors (such as workload), by increasing their requests. This partially explains a puzzling result in the literature and has implications for regulatory policy, interest group behavior, democratic institutions, and public management.     

Determinants of Business Response to Government Tax Incentives for Privately Financed Termination Benefit Programs

This study examines the industry and organizational factors that determine the likelihood of business response to government tax incentives for privately financed termination benefit programs and the substitution problems confronting government programs that use tax incentives to encourage businesses to provide these benefits to their employees. It concludes that government tax incentives will likely have marginal effects on the private provision of termination benefits, especially in large firms in industries with a strong market presence from government. These programs most likely will get high participation from large firms which already provide these benefits to salaried and hourly workers resulting in high substitution effects. They also are likely to extend benefits to hourly employees in firms that already provide similar benefits to salaried workers. However, these tax incentives are likely to have very limited inducement effects on small and medium-sized firms resulting in low overall target efficiency for these programs.     

Public affairs and political strategy: theoretical foundations

During the past two decades there have been hundreds of articles published within the broad topic of business political strategy, many of them rigorous and innovative. This paper presents a review and assessment of the theoretical bases of extant research, focusing on three broad research questions: Why do firms participate in the political process? What strategies and tactics do firms employ? What are the limitations on firms' capacity for rational action in the political arena? Research in political strategy has been informed by interest group theory, collective action theory, public choice theory, transaction costs theory, game theory, resource dependence theory, institutional theory, agency theory, the behavioural theory of the firm, business strategy, and population ecology. The paper concludes with a plea to scholars to conduct research in this area which is explicitly and consistently grounded in broad theories of social science. Copyright © 2001 Henry Stewart Publications     

FIZZ, FROTH, FLAT: The Challenge of Converting China's SOEs into Shareholding Corporations

China's attempts to convert its state firms into shareholding corporations have failed to alter SOE management behavior. This article examines this failure by looking at the flotation of Tsingtao Brewery shares in Hong Kong. The article argues that for reforms to be meaningful, changes need to be made to economic, political and legal institutions by which SOEs operate. These changes, such as allowing SOE directors managerial autonomy and clarifying areas of the Company Law, create incentives for managers to run their firms as business entities responsive to market forces and responsible to their investors.     

Bureaucrats and Markets in China: The Rise and Fall of Entrepreneurial Local Government

Local government entrepreneurship in China in the reform era is argued to have been, on balance, instrumental to growth and market-oriented reform.¹ Economic factors are emphasized in explaining both its rise and anticipated decline. Undeveloped markets and established local state trading networks favored agencies of the local state in exploiting business opportunities arising from deregulation. However, market development and increasing autonomy of firms are now reducing the advantage of local government business agencies, and they face a diminished and changed role.     

Mixing business with politics: Does corporate social responsibility end where lobbying transparency begins?

Scholars increasingly have argued that the future effectiveness and legitimacy of firms' corporate social responsibility (CSR) activities are dependent on more transparent forms of lobbying to ensure firms' policy positions are aligned with their CSR commitments. Very little empirical work, however, has systematically analyzed firms' lobbying disclosures or examined how these firms coordinate their lobbying and CSR activities. We address these empirical questions by analyzing the CSR reports of 150 corporations from Germany, the UK and the US over an 18-year period and by conducting interviews with the CSR managers of these firms. We find that corporations have become more transparent about their public policy advocacy over time, thus acknowledging that lobbying is a CSR issue. For most firms, however, this commitment to transparency appears to be largely ceremonial. Few firms disclose the specific policy positions they advocate or sufficiently coordinate the work of their lobbying and CSR units to foster greater alignment of these activities. These modest changes in lobbying transparency appear to be driven by legitimacy concerns and, in a few instances, by governance gaps firms perceive to be relevant to their future business interests.     

MANUFACTURING FIRMS' VIEWS OF GOVERNMENT ACTIVITY AND COMMITMENT TO SITE: IMPLICATIONS FOR BUSINESS RETENTION POLICY

Relationships between a variety of firm characteristics and perceptions of government are investigated. Then views about government are considered in connection with firms' commitment to their present location. One finding that is well supported is that taxes and regulations (at least for this sample and within this region) are a source of considerable dissatisfaction. Satisfaction with government services does not come near "offsetting" the displeasure with taxes and regulations. Larger firms are more likely to have unfavorable perceptions of government constraints, but more likely to have favorable views about government services. There is no evidence from this data that high tech firms differ significantly from other firms in their views about government. In regards to implications for business retention, the findings support the notion that state governments seeking to market their state to businesses located elsewhere might turn a greater proportion of attention to businesses currently residing in the state.     

Focal Points in Public Policy: Evidence from Voluntary Regulation

Numerous studies argue that law affects behavior “expressively”—such as when states create focal points that overcome the coordination difficulties firms face. We argue that governments help firms overcome coordination dilemmas by explicating a preferred strategy for firms weighing investment in voluntary regulation. Firms would prefer to coordinate on a common strategy as a way of reducing the costs of voluntary regulation and increasing its benefits. We test our hypothesis about the efficacy of focal point selection with the European Union's (EU) advocacy of the Eco‐Management and Audit Scheme (EMAS) over a rival environmental management system, International Standards Organization (ISO) 14001. EU nations have statistically significantly lower rates of ISO 14001 certification than comparable countries at least in part due to their advocacy of EMAS. These results emphasize the role the state plays in coordinating business behavior even when such policy is simply expressive.     

Greening of business: A step towards sustainability

The rising awareness of consumers regarding the adverse effects of the ever increasing ecological footprint has given rise to green consumerism. The idea is often encouraged but it can be enhanced only by a collective effort of consumers, firms, and governments. The article builds on the existing literature on green consumerism where it is, by and large, misconceived to be unidirectional—such that the burden of reducing human impressions on ecosystem falls only on the shoulders of consumers. The study reasons about the need for consumer initiatives to be supported with relevant policies and regulations from the government and through socially responsible corporate actions. The authors explore multiple dimensions of green consumerism and analyze in detail the scope and reach of green business practices in our ongoing strive to sustainability. The article highlights the actions required from the firms to make use of the opportunities provided by green consumerist ideas and the evolving consumer base. It explores the ways in which a business can adopt to become socially responsible by reaching green consumers. The article further identifies the need and impact of green marketing for eco-friendly products, to penetrate to the expanding consumer base.     

Financial systems,corporate control and capital accumulation

The rise of financial markets, backed by the revolution in information technology,has been one of the pillars of the new economy. Asset price inflation, financed by debt, has now become the driving force in capital accumulation and equity-linked markets for corporate control have significant effects on both corporate strategic management and the growth of the business sector. This paper develops a model to study these relationships. One component of the new circumstances is that an active market for control forces firms to boost their share price in response to the threat of take-over and, to maintain a minimum return on equity, they have to distribute dividends or buy back shares. As a consequence, the share of profits dedicated to financing internal growth is reduced, corporations increase their indebtedness and thereby become constrained by banks. The interplay of these multi-dimensional pressures delivers a straightforward, but nonetheless important lesson: everything else being equal, the more active the market for control, the lower the growth rate.