The CGIO organises its research team into 3 broadly defined research units based on the interest and expertise of its researchers. The researchers are experts in their individual areas and their work appear regularly in leading and prestigious publications. Below is a selection of recent research highlights, for a complete set of publications please click go to the profiles of individual researchers here.
Xiangxiang Sun, Lawrence Loh, Zhangwang Chen, Xiaoliang Zhou
Local governments restrict cross-regional flows of factors and products for achieving the purpose of profit, which lead to market fragmentation. China’s domestic market is fragmented, leading to the situation that market boundaries are demarcated. We use the relative price method to measure market fragmentation and find that market fragmentation is indeed a serious problem in China. This study evaluates the ecological efficiency using the bootstrap DEA method that takes air and water pollution into account and investigates the effect of market fragmentation on ecological efficiency based on the system GMM approach by employing data from a panel of 29 provinces in China during the period 2000-2015. The results indicate that there are differences in ecological efficiency among provinces. The market fragmentation has negative impact on ecological efficiency, which shows market fragmentation significantly inhibits the improvement of ecological efficiency. The similar findings are confirmed by a series of robustness tests, which include the alternative indicator and sub-sample regression. Based on the above findings, the central government should reduce market fragmentation, promote market integration, increase the efficiency of resource allocation, and improve environmental quality.
Xiang Xiang Sun, Lawrence Loh, Zhangwang Chen
There is a lack of studies on whether market distortions inhibit the ecological efficiency. This study introduces the ecological
efficiency based on the bootstrap-data envelopment analysis (DEA) method as the indicator of environmental performance in
China, uses the transcendental logarithmic production function to calculate factor price distortion, and further identifies whether
the factor price distortion has a negative impact on the ecological efficiency using the system generalized method of moments
(GMM) method. Meanwhile, institutional quality is considered a threshold variable to examine the relationship between factor
price distortion and ecological efficiency based on the threshold model. The result shows that factor price distortion significantly
inhibits the improvement of ecological efficiency. Moreover, institutional quality is considered to be the threshold of factor price
distortion affecting ecological efficiency. Further investigation of heterogeneity effect suggests that the inhibitory impact of factor
price distortion on ecological efficiency is more significant in the central and western regions. This study provides a supplement
to the study on environmental performance from the perspective of factor distortions and expands the framework of the influence
mechanism of factor price distortion affecting ecological efficiency.
Xiangxiang Sun, Lawrence Loh
The Chinese government is committed to sustainability governance to alleviate the shortage of energy and the imbalance between ecological environment and economic development. This paper evaluates and analyzes the sustainability governance performance of China.
A bootstrap data envelopment analysis (DEA) is proposed to evaluate sustainability governance performance of 30 provinces based on ecological efficiency in China from 1998 to 2015. The results indicate that the ecological efficiency of China significantly improved as a whole, which is related to the decline in sulphur dioxide emissions. Among these provinces, Jiangsu, Liaoning, and Inner Mongolia exhibited the highest values, while Gansu, Chongqing, and Sichuan had the lowest values. The 30 provinces were divided into four sub-areas.
The average ecological efficiency of the eastern area was the highest, followed by the northeast area. Compared to the east area, northeast area, and central area, we find that west area obviously falls behind. As such, the results provide helpful guidance to improve ecological governance performance.
Lawrence Loh, Mai Huong Nguyen
This study examined the relationship between board gender diversity and corporate governance and the implications for a company’s financial performance. It used a combination of a publicly available data of director profiles, company corporate governance scores from the Singapore Governance and Transparency Index (SGTI), and company financial performance indicators obtained from Bloomberg.
For the financial performance indicators, both return on equity (book measure) and
Tobin’s Q (hybrid measure) were considered. The relationship between board gender diversity and corporate governance score was analysed, and that between these variables and financial performance was investigated as well. Both relationships were tested empirically with ordinary least squares (OLS) regression models.
Board gender diversity was found to have a positive and statistically significant impact on corporate governance score. Corporate governance score was found to have a positive and statistically significant impact on company financial performance, whereas no such effect by board gender diversity on company financial performance was found.
This appears to suggest that board gender diversity has an indirect effect on financial performance, acting through its intermediate effect on corporate governance scores. The exception to this is the effect of the fraction of female independent directors on Tobin’s Q, which was positive and statistically significant, which seems to suggest that companies should pay more attention to the number of female independent directors on their boards.
Meibo Hu, Lawrence Loh
This paper aims to investigate the relationship between board governance and sustainability disclosure in Singapore. Regression analysis is performed using cross-sectional data of Singapore-listed companies to examine the relationship between sustainability disclosure and various board governance factors, including board capacity, board independence, and board incentive.
The findings show the presence of significant associations between board governance and sustainability disclosure. In terms of board capacity, companies with larger board sizes and a higher number of board meetings are more likely to practice sustainability reporting, and their reporting qualities are higher.
For board independence, the percentage of independent directors positively impacts the firm’s reporting probability and quality on sustainability in Singapore. For board incentives, the practice of long-term incentives for executive directors can significantly improve both the probability and quality of sustainability reporting.
The study adds to the literature on corporate governance and sustainability disclosure. It provides empirical evidence and guidance for firms and policy-makers in Singapore and beyond on how sustainability disclosure can be improved through robust board governance.
Lawrence Loh, Thomas Thomas, Wang Yu
As sustainability reporting has emerged as one of the most critical issues in the business world, this research aims to investigate the relationship between sustainability reporting and firm value based on listed companies in Singapore. We use an established sustainability reporting assessment framework and test how both the adoption and quality of sustainability reporting are related to a firm’s market value. Empirical results suggest that sustainability reporting is positively related to firm’s market value and this relationship is independent of sector or firm status such as Government-linked companies and family businesses.
Dan W, Puchniak, Lan Luh Luh
At first blush, the rise of independent directors in Singapore provides a straightforward example of a successful legal transplant from the West to Asia. In 2001, Singapore implemented a UK-inspired Code of Corporate Governance, which required the adoption of American-style independent directors on a “comply or explain” basis. Shortly thereafter, an overwhelming 98% of Singapore-listed companies reported full compliance. This, combined with Singapore’s world-leading economic success, ostensibly confirmed the Anglo-American-cum-global conventional wisdom that American-style independent directors are required for good corporate governance.
Using hand-collected data from 245 codes of corporate governance from 87 jurisdictions, this article reveals, however, that Singapore’s supposedly conventional legal transplant of American-style independent directors was, in fact, highly unconventional. We empirically demonstrate that the widely held belief that the American concept of the independent director has been transplanted around the world is a myth. We argue, however, that Singapore’s highly unconventional and seemingly illogical decision to transplant American-style independent directors into its concentrated controlling-block shareholder environment was the product of strategic regulatory design (not ignorance) and was surprisingly effective.
Sea-Jin Chang, Jungwook Shim
Using long-term data on Japanese family firms, this study explores when the transition from family to professional management leads to better performance. In order to avoid endogeneity bias, we employ propensity score matching and difference-in-differences techniques. We find evidence that firms that transition from family to professional CEOs outperform those that maintain family leadership. This performance improvement is more pronounced when families maintain high ownership control but leave no family legacy behind, when the transition moves from non-founder family managers to professionals, and when professional managers graduated from elite universities.
Chung Chi-Nien, Hongjin Zhu
This study examines how political ties with rival political parties can affect a firm’s strategic decisions. Focusing on a firm’s portfolio of ties in addition to dyadic ties, we offer a novel contingency model that specifies how the influence of political ties on strategy varies across different forms of government in democratic emerging economies. We propose that when political parties differ substantially in competitive status (i.e., under united government), a diverse portfolio could induce the dominant political party to use punitive tactics toward the focal firm and make it difficult to achieve strategic goals. However, when political parties have a similar competitive status (i.e., under divided government), a diverse portfolio could benefit the firm by producing tertius gaudens advantages and political flexibility. Such a portfolio effect of political ties tends to be mitigated by the firm’s internal resources and capabilities. An investigation of how the political ties maintained by Taiwanese business groups affected unrelated diversification from 1998 through 2006 offers an initial attempt to reveal the role of ties to competing political parties in shaping firm strategy and highlights the trade-offs that politically connected firms confront when they exploit opportunities and mitigate risks arising from underdeveloped political and market institutions.
Marleen Dieleman, Yi Rong Loh, Ye Jun Lee
Sheng Siong was the third-largest supermarket chain in Singapore. Its chief executive officer co-founded it with his two brothers in 1985. Sheng Siong’s business model was well suited to cater to the price-sensitive and more traditional customer segment in Singapore, with a dominant presence in suburban areas called “heartlands.” It also had a unique corporate philosophy, which was influenced by the personal values of its founding family. However, the market became increasingly saturated, competitors were aggressive and costs were rising. The key question was whether Sheng Siong’s original competitive advantage was sustainable and how it could grow.
R.Greg Bell, Igor Filatotchev, Ruth V. Aguilera
This article investigates stock market responses to different constellations of firm-level corporate governance mechanisms by focusing on foreign initial public offerings (IPOs) in the United States. We build on sociology-grounded research on financial market behavior and use a “nested” legitimacy framework to explore US investor perceptions of foreign IPO value. Using a fuzzy set theoretic methodology, we demonstrate how different combinations of monitoring and incentive-based corporate governance mechanisms lead to the same level of investor valuation of firms. Moreover, institutional factors related to the strength of minority shareholder protection in a foreign IPO’s home country represent a boundary condition that affects the number of governance mechanisms required to achieve high value perceptions among US investors. Our findings contribute to the sociological perspective on comparative corporate governance and the dependencies between organizations and institutions.
The chief executive responsible for the Indonesian railways, a state-owned enterprise, is under pressure to show profits, but he also needs to balance widely diverging stakeholder expectations that include inexpensive transportation and excellent customer service. The government subsidizes the railway’s passenger travel segment and has capped its fare prices, which has turned the railway’s mainstay into a loss-making business. The chief executive wonders how to best trade off the different stakeholder expectations. He needs to develop a plan to present to the minister for State-Owned Enterprises.
Swee Sum Lam, Ruth Seow Kuan Tan, Glenn Wee
Policy risk, and not information asymmetry, explains the cross-sectional underpricing of privatized initial public offerings. The issuer governments of high policy-risk issues tend to retain a large equity stake and underprice more, with underpricing increasing in retained equity. While the issuer government’s retained equity is an observable signal for policy risk, we find that the quality of a country’s bureaucratic machinery is a more intuitive and practical measure of policy risk. Policy risk also explains the absence of a systematic relation between the initial returns on privatized and private initial public offerings.