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.

Recent Highlights


Independent Directors in Singapore: Puzzling Compliance Requiring Explanation

Lan Luh Luh

Abstract

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.

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When Does Transitioning From Family To Professional Management Improve Firm Performance?

Sea-Jin Chang, Jungwook Shim

Abstract

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.

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Portfolios of Political Ties and Business Group Strategy in Emerging Economies: Evidence from Taiwan

Chung Chi-Nien, Hongjin Zhu

Abstract

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.

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Sheng Siong Supermarket: Building and Sustaining Competitive Advantage

Marleen Dieleman, Yi Rong Loh, Ye Jun Lee

Abstract

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.

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Corporate Governance and Investors’ Perceptions of Foreign IPO Value: An Institutional Perspective

R.Greg Bell, Igor Filatotchev, Ruth V. Aguilera

Abstract

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.

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Balancing Stakeholder Interests at the Indonesian Railways

Marleen Dieleman

Abstract

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.

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Initial Public Offerings of State-Owned Enterprises: An International Study of Policy Risk

Swee Sum Lam, Ruth Seow Kuan Tan, Glenn Wee

Abstract

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.

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Collaboration Opportunities

At CGIO, we aim to deliver thought leadership, centred in Asia, with a global influence that contributes to organisational excellence and sustainability. As a research centre, we welcome collaboration opportunities and support from companies, trusts, foundations and individuals. If you are interested in research collaborations or funding our research efforts, please contact Ms Verity Thoi, Manager: Verity.Thoi@nus.edu.sg