Editorial

• Date: 01 July 2015
• Published date: 01 July 2015
• DOI: http://doi.org/10.1111/corg.12121

Editorial

Corporate Governance, Institutions and Industry

Regulation

Praveen Kumar and Alessandro Zattoni*

Corporate governance literature and studies have tradi-

tionally advanced our understanding of the antecedents

and the effects of governance mechanisms within the same

country, typically in an Anglo-American environment. This

approach helped us gain signif‌icant knowledge and insights

on the corporate governance of widely held companies

operating in an eff‌icient and liquid capital market, a regula-

tory environment protecting the investors, and a nationalcul-

ture characterizedby high individualism,low power distance,

and high risk orientation. However, despite its many merits,

this approach did not contribute signif‌icantly to increase our

knowledge on the governance of companies with concen-

trated shareholding that operate in low investor protection

environments and in different national cultures (e.g., Zattoni

& Judge, 2012).

Corporate Governance: An International Review was created

and developed to provide signif‌icant contributions to the

advancement of our knowledge on international corporate

governance phenomena. In fact, the mission of the journal is

to create an intellectual space where scholars from several

countries and from different disciplines can contribute to the

developmentof a global understanding of comparativecorpo-

rate governance. This means that scholars submitting their

work to the journal should try to contribute to the develop-

ment of a sound and comprehensive theoretical framework

that can both rigorously explain corporate governance phe-

nomena and provide effective indications for practitioners in

different national settings (Zattoni & Van Ees, 2012).

The papers published in this issue take this challenge seri-

ously and explore corporate governance by combining f‌irm-

level and country-level perspectives at the same time (Kumar

& Zattoni, 2013). Forexample, the f‌irst paper –with data from

28 home countries –highlights that f‌irms have a tendency to

cross-list in countries with weaker investor protection than

their home market, and shows that this pattern is mostly

due to the behavior of family f‌irms. The second study –with

data from two European countries –shows that better

governed companies are characterized by higher voluntary

and mandatory risk disclosure, but also reports signif‌icant

differences between UK and Italian companies. Finally, the

third study –with data from 29 countries –underlines that

some key cultural variables have a signif‌icant impact on the

disclosure on internal controls and that this relationship is

mediated by investor protection. These three studies contri-

bute to advance ourunderstanding of the role playedby both

corporate governance mechanisms and(formal and informal)

institutions –including their interactions –on the managers’

decisionsto cross-list or to disclose relevantinformation for in-

vestors. As such, they contribute signif‌icantly to the growing

literature on bundles of governance mechanisms (e.g., Aslan

& Kumar, 2014; Schiehll, Ahmadjian, & Filatotchev, 2014),

and particularly to that on corporate governance and inves-

tors’information (Kumar & Zattoni, 2014).

The fourth studyopens a new and interesting perspectiveas

it focuseson the role played by industryregulation in different

countries. In particular, it shows that differences in the regula-

toryregimecanhaveanimpactonboththesensitivityofCEO

compensation to f‌irm performance, and on CEO entrench-

ment. This paper has the merit of adding a third element of

interest for governance scholars, namely industry regulation

and its impacton the effectivenessof governance mechanisms.

As such, it underlines the relevance of multi-level Hierarchical

Linear Modeling (HLM) methods to capture the inf‌luence

of a set of variables on corporate governance phenomena

(e.g., Judge et al., in press).

Turning to the papers published in this issue in moredepth,

the f‌irst studydeveloped by Chung, Cho, and Kim contributes

by addressing an interesting topic in corporate governance

and IPO research, nanely whether the choice of cross-listing

is guided by the search for stronger investor protection than

in the home market. To advance our knowledge on this issue,

the authors collected data on cross-listing of f‌irms from 28

home countries toward nine destinations in the period

between 1994 and 2008. The two competitive hypotheses

(i.e., to cross-list either to commit to transparency and high

governance standards or to avoid the cost of complying with

more stringent accounting and governance standards) have

been tested on a f‌inal sampleof 1,201 cross-listings.The statis-

tical analysis controls for both f‌irm-specif‌ic and destination-

specif‌ic variables that can affect the cross-listing. The results

© 2015 JohnWiley & Sons Ltd

doi:10.1111/corg.12121

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Corporate Governance: An International Review, 2015, 23(4): 305–306