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Value-added distribution to stakeholder of Spanish listed companies: a corporate governance perspective

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Abstract

Following a stakeholder corporate governance perspective, we examine whether the characteristics of boards of directors (board size, separation of Chairman and CEO roles, independent directors and board ownership) have an impact on the value-added distribution to stakeholders, who are differentiated as shareholders and other primary stakeholders (workers, creditors and government), and if these characteristics could contribute to a more equitable distribution of the value added. Considering that the main concern of the primary stakeholders is the distribution of wealth, we focus our approaches on the value-added distribution as a proxy for the primary stakeholders interests. We conduct a panel data analysis of 438 observations of Spanish listed firms during the period 2007–2012 and test various models that offer new insights into stakeholder perspectives. The results show that within the context of ownership concentration and with a unitary board system of corporate governance, the incorporation of independent directors on the Board and the separation of power (between Chairman and CEO) are important corporate control mechanisms with which to defend the interests of other primary stakeholders (workers, creditors and government). In addition, the results highlight that regulators and shareholders should be wary of excessive board ownership and oversized boards, as these may contribute to exacerbating the conflict of interests between shareholders and other primary stakeholders. These results contribute to the debate concerning the dichotomized approach of corporate governance (shareholders/stakeholders corporate governance).

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Notes

  1. Keasey et al. (1997) summarise four competing models in the current studies of corporate governance: principal-agent or finance model, the myopic market model, the abuse of executive power model, and the stakeholders’ model.

  2. Different measures have been used as a proxy for corporate value creation, e.g., accounting measures, such as return on assets (Nicholson and Kiel 2007; Jackling and Johl 2009; O’Connell and Cramer 2010; Arosa et al. 2013; Sheikh et al. 2013); return on equity (Azim 2012; Sheikh et al. 2013); a hybrid of accounting and capital market-based measures, e.g., the price-earnings ratio and dividend yield (Azim 2012); and Tobin’s Q (O’Connell and Cramer 2010; Jermias and Gani 2014).

  3. Freeman (1984) defined the concept of stakeholders as “any group or individual who can affect or is affected by the achievement of the organization´s objectives” (p. 46). For its part, Post et al. (2002) defined the same concept as “individuals and constituencies that contribute, either voluntarily or involuntarily, to its wealth-creating capacity and activities, and who are therefore its potential beneficiaries and/or risk bearers” (p. 7).

  4. Maximum allowable error: \(\varepsilon = Z\frac{1 - \alpha }{2}\sqrt {\frac{N - n }{N - 1}} \frac{pq}{n}\),

    where \(Z\frac{1 - \alpha }{2}\) is the value associated with the degree of confidence 1 − α; N is size of the population; n is the size of the sample: p is a proportion; and q is (1 − p).

  5. We follow the criterion established by the Spanish Family Business Institute. See, for example, the document entitled La empresa familiar en España (2015).

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Authors and Affiliations

  1. University of Castilla-La Mancha, Facultad de Derecho y Ciencias Sociales, Ronda de Toledo, s/n, 13071, Ciudad Real, Spain

    Elena Merino

  2. University of Castilla-La Mancha, Facultad de Ciencias Sociales, Avda. de los Alfares, 44, 16002, Cuenca, Spain

    Montserrat Manzaneque

  3. University of Castilla-La Mancha, Facultad de Ciencias Económicas y Empresariales, Plaza de la Universidad nº 1, 02071, Albacete, Spain

    Yolanda Ramírez

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Merino, E., Manzaneque, M. & Ramírez, Y. Value-added distribution to stakeholder of Spanish listed companies: a corporate governance perspective. J Manag Gov 23, 577–604 (2019). https://doi.org/10.1007/s10997-018-9429-5

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