Corporate Strategy, Ownership and Governance
Session 1 - Skills Workshop: Data for Research in Corporate Strategy and Governance
- Forms of data in management research:
1. Primary data
• Participant observation
• Experimental results
• Field interviews
• Survey results
2. Archival/secondary data
• Private archives
• Commercially-Available archives
- Levels of analysis in management research:
1. Micro - when individuals are analysed.
2. Macro - aggregates of individuals (e.g. organisations, communities, provinces,
countries, etc.).
- From an academic perspective governance is about:
• The ways in which suppliers of finance to corporations assure themselves of getting a
return on their investment.
• The determination of the broad uses to which organisational resources will be
deployed and the resolution of conflicts among the myriad participants in
organisations.
• The structure of rights and responsibilities among the parties with a stake in the firm.
- In a nutshell, governance is about the relationships and structures which ultimately
determine corporate performance.
- Key elements of governance:
• Shareholders & (other) stakeholders (focus on ownership data)
• Management (focus on governance data)
• Board of directors (focus on governance data)
• Interests alignment tools (e.g. compensation) (focus on governance data)
• Rules: composition and organisation of the board; financial reporting, risk
management, and audits (focus on CG compliance data)
- In terms of management and board of directors, there are a few data sources:
• WRDS: a platform that gives access to multiple data sets, incl. BoardEx, ISS,
Execucomp, and People Intelligence.
• Orbis (former Bureau van Dijk, currently Moody's)
Page 1 of 25
, Corporate Strategy, Ownership and Governance
- Core themes in CSOG and CSG:
• Financial
• Strategy
• Ownership
• Governance
Session 2 - Corporate Strategy and the Theory of Firm Boundaries
- From a legal perspective, firms are one of the most important economic institutions of
modern capitalism (next to property, markets, contracts, for example).
- Firms are considered as entities separate from the individuals that own and run them:
or incorporated firms: i.e. corporations.
- A corporation is a legal construction: corporations cannot exist without the law
enabling us to create them.
- Five legal characteristics of publicly listed companies (PLCs):
- Why do firms exist? Transaction costs, which are the costs associated with the use of
the market/price mechanisms for exchange. It is sometimes cheaper to organise
exchange within the firm through managerial direction and authority. Yet, there are also
governance costs of organising exchange through authority within the firm. The balance
of transaction and governance costs need to be accounted for to secure the most
efficient form of exchange.
Page 2 of 25
, Corporate Strategy, Ownership and Governance
- The sweat spot of transaction cost theory (TCT) can be determined on a function:
- In TCT, the unit of analysis is transactions and governance structures. Transactions, which
differ in their attributes, are aligned with governance structures, which differ in their
costs and competencies, in a discriminating (mainly, transaction-cost-economising) way.
A functional explanation:
- Yet functional explanations are problematic as they turn the causal order upside down,
and, they assume a generic causal feedback loop (evolution, market competition). Thus,
we consider transactions and governance structures in terms of a causal model:
Page 3 of 25
Session 1 - Skills Workshop: Data for Research in Corporate Strategy and Governance
- Forms of data in management research:
1. Primary data
• Participant observation
• Experimental results
• Field interviews
• Survey results
2. Archival/secondary data
• Private archives
• Commercially-Available archives
- Levels of analysis in management research:
1. Micro - when individuals are analysed.
2. Macro - aggregates of individuals (e.g. organisations, communities, provinces,
countries, etc.).
- From an academic perspective governance is about:
• The ways in which suppliers of finance to corporations assure themselves of getting a
return on their investment.
• The determination of the broad uses to which organisational resources will be
deployed and the resolution of conflicts among the myriad participants in
organisations.
• The structure of rights and responsibilities among the parties with a stake in the firm.
- In a nutshell, governance is about the relationships and structures which ultimately
determine corporate performance.
- Key elements of governance:
• Shareholders & (other) stakeholders (focus on ownership data)
• Management (focus on governance data)
• Board of directors (focus on governance data)
• Interests alignment tools (e.g. compensation) (focus on governance data)
• Rules: composition and organisation of the board; financial reporting, risk
management, and audits (focus on CG compliance data)
- In terms of management and board of directors, there are a few data sources:
• WRDS: a platform that gives access to multiple data sets, incl. BoardEx, ISS,
Execucomp, and People Intelligence.
• Orbis (former Bureau van Dijk, currently Moody's)
Page 1 of 25
, Corporate Strategy, Ownership and Governance
- Core themes in CSOG and CSG:
• Financial
• Strategy
• Ownership
• Governance
Session 2 - Corporate Strategy and the Theory of Firm Boundaries
- From a legal perspective, firms are one of the most important economic institutions of
modern capitalism (next to property, markets, contracts, for example).
- Firms are considered as entities separate from the individuals that own and run them:
or incorporated firms: i.e. corporations.
- A corporation is a legal construction: corporations cannot exist without the law
enabling us to create them.
- Five legal characteristics of publicly listed companies (PLCs):
- Why do firms exist? Transaction costs, which are the costs associated with the use of
the market/price mechanisms for exchange. It is sometimes cheaper to organise
exchange within the firm through managerial direction and authority. Yet, there are also
governance costs of organising exchange through authority within the firm. The balance
of transaction and governance costs need to be accounted for to secure the most
efficient form of exchange.
Page 2 of 25
, Corporate Strategy, Ownership and Governance
- The sweat spot of transaction cost theory (TCT) can be determined on a function:
- In TCT, the unit of analysis is transactions and governance structures. Transactions, which
differ in their attributes, are aligned with governance structures, which differ in their
costs and competencies, in a discriminating (mainly, transaction-cost-economising) way.
A functional explanation:
- Yet functional explanations are problematic as they turn the causal order upside down,
and, they assume a generic causal feedback loop (evolution, market competition). Thus,
we consider transactions and governance structures in terms of a causal model:
Page 3 of 25
