The effectiveness of e-corporate governance: an exploratory study of internet voting at shareholders’ annual meetings in France

DOIhttps://doi.org/10.1108/CG-04-2019-0116
Pages673-702
Date30 April 2020
Published date30 April 2020
AuthorSonia Abdennadher,Walid Cheffi
Subject MatterCorporate governance,Strategy
The effectiveness of e-corporate
governance: an exploratory study of
internet voting at shareholdersannual
meetings in France
Sonia Abdennadher and Walid Cheffi
Abstract
Purpose E-corporategovernance or the use of technologiesand information systems (ISs) in corporate
governance, is still a subject that is too seldom addressed in business research. This paper is at the
intersection between twofields of research (corporate governance and the managementof ISs), which
are interdependent in ways that are still unexplored. The paper analyzes the implications of internet
voting (IV) at shareholders’annual meetings (SAM) for the corporate governance of listed companiesin
France, in particular for the relationship between executives andshareholders. Most of the studies that
have dealt with IV at SAM have focused on techno-legal issues and were often conductedby business
law researchers. The purpose of this paper is to investigate the implications of the new voting system
throughthe prism of corporate governance.
Design/methodology/approach The authors proceededby triangulation of methods. This qualitative
study is based on observations,interviews and documentary analysis. It assessed the IV implicationsfor
both theissuing companies and the shareholders.
Findings The new voting system brings undeniable competitive advantage to the issuing company
and facilitates shareholders’ activism, yet it has serious risks both for the corporations and for certain
categoriesof the shareholder. Interestingly, the authors proposean original and field-grounded typology
that distinguishesthe risks and benefits associated withIV in relation to executives’ attitudes.
Social implications The paper shows that the resolvingof identified deficiencies with IV development
could contributeto the alignment of companies’ interests with thoseof shareholders. Moreover, the study
calls for policymakers to appoint an official body to regulate the practical implementation of the new
systemand to prevent its dissemination being held hostageto the executives’ willingness.
Originality/value An original aspect of this research lies in the effective operationalization of the
constructs of corporate governance effectiveness with a view to examining corporate governance as a
set of technologicallymediated practices. Moreover, this study emphasizesthe key role of the construct
of ‘‘executives’ willingness’’ in facilitating/impeding IV diffusion. This underlies their attempts to reverse
the corporategovernance relationship.
Keywords Corporate governance, Internet voting, Shareholders’ annual meeting, Executives,
Technology intermediation, Listed companies, Shareholders, Annual meeting
Paper type Research paper
1. Introduction
Over the past decade, technology-intermediated corporate governance has gained much
attention from both regulators and shareholders’ associations. Recent regulations and
debates on corporate governance modernization often refer to new technologies as key
drivers in this endeavor. However, the extant research on corporate governance and
management is sparse when it comes to examining the implications of using new
Sonia Abdennadher is
based at the Higher
Colleges of Technology,
Sharjah, United Arab
Emirates. Walid Cheffi is
based at the United Arab
Emirates University, Al-Ain,
United Arab Emirates.
Received 6 April 2019
Revised 22 November 2019
Accepted 30 March 2020
DOI 10.1108/CG-04-2019-0116 VOL. 20 NO. 4 2020, pp. 673-702, ©Emerald Publishing Limited, ISSN 1472-0701 jCORPORATE GOVERNANCE jPAGE 673
technologies such as virtual meetings, webcasts, smart apps and internet voting (IV)
(Hoffmann and Aeschlimann, 2017). The latter has been considered by commentators as
the most promising way to rejuvenatecorporate governance.
Based on internet technology, IV is an information system (IS) providing shareholders with
an additional tool, to exercise their voting rights at shareholders’ annual meetings (SAM)
(Lattemann, 2005;Van der Burg and Prinz, 2006;Lui, 2015). E-corporate governance or
using ICTs such as IV within the scope of corporate governance remains a rarely examined
topic in academic research (Lattemann, 2005;Hoffmann and Aeschlimann, 2017;Lafarre,
2017). Studies focusing on the effects of internet-voting systems in terms of corporate
governance are scant. IV has mainly been studied in the field of public administration
(Dawes, 2008;Vassil et al.,2016;Gibson et al.,2016;Warkentin et al.,2018), and IV at
SAMs has mostly been examined by business law researchers (Van der Elst and Lafarre,
2019;Lafarre, 2017). Given the recent financial situation and governance crises at both
national and international levels, there is now much interest in investigating the use of IV at
SAMs. Studies are required to examine the new practices likely to have significant
implications in terms of shareholders’ voting rights, financial transparency and executives’
social responsibility.
The study of the IV provides a new perspective on the modernization of corporate
governance systems (Tylecote and Ramirez, 2006). This paper aims to evaluate the
implications of this new voting system for corporate governance, in particular for the
relationship between executives and shareholders. It focuses on the effects of IV for
corporations in France, which have adopted the system, as well as those thinking about
adopting it in the near future.
The theoretical contribution of this study is multi-fold. First, it addresses the gap in the
literature dealing with the effectiveness of corporate governance, as the study of the effects
of IV, one of the most promising technologies, surprisingly remains ignored by researchers.
This can add to the literature on the effectiveness of corporate governance as a set of
technologically mediated practices (Lattemann, 2005;Hoffmann and Aeschlimann, 2017).
Second, the paper aims to provide an analysis of the implications of IV from an integrative
perspective that combines the viewpoint of the investors with that of the executives. This
perspective prevents a partial portrait because of the likely convergences/divergences
between the two protagonists in terms of the risks and benefits resulting from the adoption
of the new device. Third, this study focuseson what could be the main factor in moderating
the implications of IV for corporate governance, particularly in regard to the relationship
between executives and shareholders. Such a relationship is regarded by commentators as
the most consequential socialrelationship that executives have with any of the stakeholders
(Conelly et al., 2016). Fourth, the study concentrates on what is at stake with IV, that is, the
conduct of the SAM and its outcomes. A few studies have recently called for a careful
examination of the deployment of SAM, as there may be signs that issuers’ executives are
taking evasive actions (Li and Yermack, 2016;Li et al., 2018). Fifth, given the double-hat of
IV at SAM, which is a new IS in corporate governance (Yang et al., 2007; Rose, 2012), the
paper explores the constructs of corporate governance effectiveness together with the
constructs of the trade-off between the benefits and risks of new IS. Such a holistic
approach is recommended by a number of authors to provide richer insights into the
evaluation of the effectiveness of corporate governance (Aguilera et al.,2008;Filatotchev
and Boyd, 2009). Practically,the paper offers some managerial recommendations for taking
full advantage of IV.
The rest of the paper is divided into five sections. Section 2 reviews the literature on
corporate governance effectiveness and the effects of technological intermediation; Section
3 covers the methodology deployed for this research; Section 4 presents the findings;
Section 5 discusses the findings;and Section 6 concludes the paper.
PAGE 674 jCORPORATE GOVERNANCE jVOL. 20 NO. 4 2020

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