The Complexity of International Corporate Governance Research

• Author: William Judge
• DOI: http://doi.org/10.1111/j.1467-8683.2009.00764.x
• Published date: 01 September 2009
• Date: 01 September 2009

Editorial

The Complexity of International Corporate

Governance Research

This new issue contains eight excellent new studies

on international corporate governance. Accounting,

finance, and management scholars hailing from academic

institutions from all over the world offer penetrating

insights on the antecedents and effects of corporate gover-

nance in both developed and developing economies.

In the lead article by Inci, Lee, and Suk, these authors look

at the effects of capital investment on firm profitability using

pecking order theory. They examine this relationship in 40

different countries from 1988–2004 and observe that the

legal system and level of financial development of the

economy significantly influence this relationship.

In the aftermath of the global financial crisis where finan-

cial returns were pursued vigorously and financial risk was

ignored, the next two articles are very timely. First, Steen,

Brown, and Foreman use auditing theory to tease out the

governance implications of technological and business risk

within high technology firms operating in developed econo-

mies. Complementing that article, Sahnound and Zara

examine the financial risks that arise within the context of

the auditor-auditee relationship using prospect theory in

Tunisia, a developing economy. In sum, these two articles

suggest that a future theory of corporate governance must

consider both risk and return, and they both provide

insights on mechanisms to avoid unnecessary risks.

The fourth article in this issue is written by Fassin and van

Rossem. These authors remind us that effective corporate

governance does not rely exclusively on external monitoring

since some firms take their social obligations seriously and

are able to self-regulate. Specifically, they conduct field inter-

views of practitioners in an attempt to make sense of the

conceptual differences between corporate social responsibil-

ity and business ethics. Conceptual clarity is crucial for any

global theory of corporate governance and this article helps

to clarify these two inter-related concepts.

Next, Garcia-Meca and Sanchez-Balesta conduct a meta-

analysis of 35 studies examining the antecedents of earnings

management. Amongst many interesting findings, this

review article finds that constraints on earnings manage-

ment differ due to governance context. As such, this sug-

gests that a global theory of corporate governance may be

contingent on the governance environment.corg_764525

Our next two articles focus on the financial stakeholders

of the firm. Specifically, Shyu and Lee use agency insights to

explain why debt maturity varies so much across family-

controlled firms in Taiwan. Specifically, they find thatissuers

of short-term debt may be an effective external monitor of

family-controlled firms. Then, Pazzaglia, Mengoli, and Sapi-

enza seek to explain the effect of legal reforms enacted in

1998 on protection of minority shareholders in Italy. They

find that minority owners are somewhat better protected as

compared to the pre-reform period, but not to the extent

envisioned by legal reformers. This suggests that corporate

governance reform takes time and requires national persis-

tence to bring about more transparency and accountability.

Finally, Ward, Brown, and Rodriguez seek to explain the

impact of “governance bundles” within Anglo-Saxon econo-

mies. They insightfully argue that instead of looking at cor-

porate governancemechanisms in isolation of each other, we

should look at these mechanisms are complementary and

substitutable bundles of mechanisms. Using literature and

logic from the agency and stewardship perspectives, they

conceptually argue for different reactions by various gover-

nance bundles to firm performance levels that do not meet

expectations.

Across these eight articles, a wide variety of dependent

variablesand theoretical frameworks are used or developed.

This proliferation suggests that the field is making progress

in capturing the complexity of the cross-national phenom-

ena known as corporate governance. We look forward to

future research that not only captures this complexity, but

distills it down to its essence into a rigorous and relevant

global theory of corporate governance.

William Judge

Editor in Chief

525

Corporate Governance: An International Review, 2009, 17(5): 525

© 2009 Blackwell Publishing Ltd

doi:10.1111/j.1467-8683.2009.00764.x