Advancing the Corporate Governance Research Agenda

• Author: Hicheon Kim,Ruth Aguilera,Chris Florackis
• Date: 01 May 2016
• DOI: http://doi.org/10.1111/corg.12167
• Published date: 01 May 2016

Editorial

Advancing the Corporate Governance

Research Agenda

Ruth Aguilera, Chris Florackis*and Hicheon Kim

INTRODUCTION

The last few decades have witnessed an explosion of

research on corporate governance from a wide array of

academic fields including finance, accounting, man agement,

economics, and sociology (Aguilera, Desender, Bednar, &

Lee, 2015; Aguilera & Jackson, 2010; Filatotchev & Boyd,

2009). This rising academic interest in corporate governance

has been in part triggeredby corporate scandals,public outcry

on lavish executivecompensation (Dorff, 2014),and perceived

irresponsibility of some big banks and corporations in recent

years. Nonetheless, there are some enduring reasons why

corporate governance has attracted substantial interest in

diverse academic fields. Corporate governance plays a

fundamental role in allocating resources and responsibilities

within and across firms, thereby affecting strategic choices as

well as value creation and distribution within individual

organizations, alliances, and even across countries. As such,

understanding the behavioral and strategic choices and the

ultimate performance of organizations, alliances, and

countries requires an intimate knowledge of the governance

dimensions involved.

Moreover, corporate governance is socially constructed in

terms of how it is perceived and legitimately accepted, which

in turn reflects and influences the institutional logics

1

embedded in corporate goals and controls (Aguilera et al.,

2015). As thesenorms and beliefs of what acceptablecorporate

behavioris often differ widelyacross industries,countries, and

regions, and they tend to evolve over time, so do the notion

and practices of corporate governance. Thus, the study of

norms and practices on corporate governance at a given

period of timein a country often entails morethan addressing

questions oncorporate governance frompurely economic and

legal perspectives, and necessitates insteada broader attention

to societal norms, cultural attributes, and ethical values.

Despite the complexity of issues around corporate gover-

nance, a disproportionate share of prior work has been

conceptualized and guided by agency theory (Shleifer &

Vishny, 1997). Since the seminal publication by Berle and

Means (1932) recognizing the alienation of ownership from

control and its concomitant agency conflicts, a great number

of studies in the tradition of agency theory have focused on

designing governance mechanisms necessary to prevent the

manifestation of agency conflicts and to ensure that the

firm operates in the best interests of shareholders. However,

thevalidityofsomeoftheirfindings and subsequent

recommendations have been challenged as the assumptions

and theoretical foundations underlying agency theory may

be too narrow or even invalid (Aguilera & Jackson, 2003;

Davis, Schoorman & Donaldson, 1997; Roberts, McNulty, &

Stiles, 2005).

More recent work has sought to relax the assumptions

behind agency theory in order to enrich our understanding

of corporate governance, particularly as we expand outside

the premises of the shareholder value maximization

governance model which has characterized the Anglo-Saxon

world. We discuss three fruitful implications of the relaxation

of agency assumptions.

First, early work on agency theory tends to assume away

the significance of the identity of owners, relying on

ownership concentration as an indicator of agency conflicts

or of monitoring effectiveness. However, research on the

relationship between ownership concentration and perfor-

mance fails to produce consistent findings (Dalton, Daily,

Certo, & Roengpitya, 2003). Morck, Wolfenzon, and Yeung

(2005) emphasize the potential conflicts between controlling

shareholders and minority shareholders.

Studiesin management also developthis idea of “conflicting

voices”and “principal-principal conflicts”to recognize that

different owners may have different preferences and time

horizons, and that there may even be conflicts of interests

among different owners (Connelly, Tihanyi, Certo, & Hitt,

2010; Desender, Aguilera, Crespi, & García-cestona, 2013;

*Address for correspondence: Chris Florackis, University of Liverpool, Management

School, Department of Economics, Finance and Accounting; Tel. +44 (0)1517953807;

Email: c.florackis@liv.ac.uk

© 2016 JohnWiley & Sons Ltd

doi:10.1111/corg.12167

172

Corporate Governance: An International Review, 2016, 24(3): 172–180