Owner Type as Emerging Area of Governance Research

• Author: William Judge
• DOI: http://doi.org/10.1111/j.1467-8683.2012.00908.x
• Published date: 01 May 2012
• Date: 01 May 2012

Editorial

Owner Type as Emerging Area of

Governance Research

William Judge

Editor-in-Chief

In an earlier editorial (Judge, 2011), I argued that a global

theory of corporate governance must consider the role of

ownership structure due its powerful impact on governance

behaviors and outcomes throughout the world. In this issue,

I ref‌ine and extend that argument by considering a particu-

lar aspect of ownership structure – namely, the various types

of owners, and the varying impacts that these owners bring

to the global governance puzzle. Notably, each and every

one of the research articles in this general issue examines a

specif‌ic type of owner and, collectively, we learn much from

these f‌ive empirical studies.

Our lead article is written by Dam and Scholtens, as they

seek to understand how various ownership types are

related to corporate social responsibility ratings for f‌irms in

16 European nations. These ratings were composed of three

different components: (1) breadth of stakeholder orienta-

tion, (2) emphasis on ethical norms and procedures, and

(3) concern for the natural environment. Three types of

owners were found to be negatively related to corporate

social responsibility ratings: specif‌ically, the greater the

employee, corporate, or individual ownership stake, the

lower the corporate social responsibility rating. Just as

notable was the fact that institutional, bank, and state own-

ership stakes were unrelated to social responsibility out-

comes in this European sample of f‌irms. It is interesting to

speculate why employee, corporate, and individual owners

might be more shareholder focused than institutional,

bank, and state owners are in Europe. Clearly, we have

only begun to scratch the surface as to how and why f‌irms

govern themselves.

Kuo and Hung authored our second article, and they

focus on family ownership in Taiwanese f‌irms. They f‌ind

that family control decreases investment cash-f‌low sensitiv-

ity in high Q f‌irms, but not in low Q f‌irms. Furthermore,

excess control rights exacerbated this relationship, while

board independence dampened this relationship. In light of

the heavy reliance on family ownership in many countries,

these f‌indings are particularly noteworthy.

Our third article focuses attention on how various owners

within the Korean economy inf‌luence investments in tech-

nological innovation (operationalized as R&D intensity and

patent productivity). This fascinating study was authored by

Choi, Park and Hong. Interestingly, Park and associates did

not f‌ind that ownership concentration is systematically

related to the degree of technological innovation, but spe-

cif‌ic types of owners were. Specif‌ically, institutional and

foreign ownership were both found to be positively associ-

ated with technological innovation. However, state and

insider ownership were found to be unrelated. Thus, the

more exposed Korean f‌irms were to ownership inf‌luences

attuned to the global economy, the better the technological

innovation outcomes.

Next, Lewellyn and Muller-Kahle shift our attention to

f‌inancial f‌irms operating in the United States. They seek to

understand how CEO power might inf‌luence organizational

risk taking using a novel theoretical framework known as

approach-inhibition theory. The basic idea behind this

theory is that more powerful individuals tend to focus on

positive outcomes and take excessive risks, while less pow-

erful individuals tend to focus on negative outcomes and,

hence, avoid excessive risk taking. While they explore a

number of structural attributes surrounding the CEO, it is

instructive that the two ownership types that were explored

in this study yielded interesting f‌indings. Specif‌ically, these

authors found that the greater the outside ownership of

these f‌inancial f‌irms, the lower the risk taking. However,

CEO ownership was hypothesized to be positively associ-

ated with risk taking, but this relationship was not signif‌i-

cant for this particular sample and time period. Hence,

outside owners of f‌inancial f‌irms in the United Statesappear

to suppress risk taking – a very important f‌inding with

regard to the global f‌inancial crisis.

Finally, Huyghebaert and Wang providedour f‌ifth empiri-

cal study in this particular issue. This study focuses on

principal-principal conf‌licts within Chinese listed f‌irms.

Interestingly, they f‌ind that the greater the government

231

Corporate Governance: An International Review, 2012, 20(3): 231–232

© 2012 Blackwell Publishing Ltd

doi:10.1111/j.1467-8683.2012.00908.x