An Empirical Study of Value Creation Criteria: Case of Iran

-- Ghodratallah Talebnia, Mahdi Salehi,
Hashem Valipour and Zahra Yousefi

Investors, creditors and managers always look for an on-time and reliable performance measuring index, with the goal of evaluating value creation. The aim of this study is to arrive at economic and accounting measures which would indicate the value created by the firms in Iran. After reviewing the literature, hypotheses indicating the relationship between the selected measures and value creation were formulated. Then the hypotheses were tested by analyzing the performance of 92 companies listed in the Tehran Stock Exchange (TSE) for the financial years 2004-2008. The results of the study reveal that there is a meaningful relation between accounting measures like Return on Investment (ROI) and Earnings Per Share (EPS) and shareholder value creation.

© 2010 IUP. All Rights Reserved.

The Influence of Foreign Ownership on Capital Structure of Non-Financial Firms: Evidence from Istanbul Stock Exchange

-- Meltem Gurunluand Güner Gursoy

This paper investigates the effects of foreign ownership on firm's capital structure. It is expected that there will be an increase in favor of more leverage with lower cost of debt due to the increased ability of firm's access to new external funds on more favorable terms after Foreign Direct Investment (FDI). The vast amount of studies in corporate governance literature mostly concentrates on the relationship between ownership structure and firm performance. However, this study contributes to the literature by examining the effects of ownership structure (more specifically foreign ownership) on capital structure which has well-proven determinants, such as tangibility or collateral values of assets, size, profitability, growth, earnings volatility, non-debt tax shield, uniqueness and industry classification. In this study, the authors test the determinants of capital structure in a developing country's conjecture with her different market imperfections and information asymmetries by using data of Turkish non-financial firms. A multivariate regression analysis is conducted applying step-wise regression for the model construction by using pooled data set of 143 non-financial firms listed in the Istanbul Stock Exchange (ISE) over the period from 2007 to 2008, consisting of 286 firm-year observations in total. It is found that foreign ownership is significantly negatively related to long-term leverage. The results show that size (sales), tangibility, capital expenditure ratio, profitability and liquidity are also significant determinants of long-term leverage.

©2010 IUP. All Rights Reserved.

Satyam Fiasco: Corporate Governance Failure and Lessons Therefrom

-- J P Singh, Naveen Kumar, Shigufta Uzma

The concept of Corporate Governance (CG) is, now, more than a decade old in India. However, the inadequacy and inefficacy of the governance framework in the country has been espoused by the massive corporate disasterSatyam. The fiasco has brought into limelight the inherent shortcomings in the present corporate regulatory system that has been benchmarked on the CG structure of the United States (US) and United Kingdom (UK). In this backdrop, this article makes an effort to look at events that precipitated the Satyam fiasco and the loopholes in the system that enabled the fraud to occur. The present study also proposes to provide insights into the legislature in formulating provisions for curbing such corporate mishaps that obliterate investor confidence, particularly so when our country is desperate to draw on foreign capital to propel its economic growth.

© 2010 IUP. All Rights Reserved.

Corporate Social Responsibility:A Developmental Tool for India

-- Anupam Ghosh, and Chhanda Chakraborti

After discussing the various changes that the concept of Corporate Social Responsibility (CSR) has undergone since its inception, this paper focuses on a relatively new proposal by the United Nations (UN) called `Global Compact' (GC) and `Millennium Development Goals' (MDGs) to reshape Corporate Social Responsibility (CSR) as a tool for national and international development and its applicability in the Indian context. This study also critically analyzes the CSR initiatives adopted by Tata Steel Ltd in the light of this approach to CSR as a developmental tool. The data analysis is based on auditor's annual report and the CSR reports of Tata Steel Ltd. Rural Development Society (TSRDS) from 1990 to 1998 (post liberalization in India). The analysis ends with the conclusion that Tata Steel Ltd's CSR activities implicitly follow the MDGs of the UN as a developmental tool for Jharkhand. These CSR activities (which are well-structured following the MDGs) act like tools for development and try to fill the developmental gaps of the Government.

© 2010 IUP. All Rights Reserved.

Whistleblowing: A Survey of Literature

-- Siddhartha Dasgupta and Ankit Kesharwani

Corporate whistleblowing can play a crucial role in protecting shareholder interests. When an employee of an organization makes public, any illegal or illegitimate act of the organization, undesirable public scrutiny, legal action and regulatory act may result. Regardless of an enormous increase in whistleblowing activities in organizations recently, little research has been done about the types of organizational wrongdoings, the whistleblowing process, what distinguishes whistleblowing from organizational loyalty, and what are the various laws to protect whistleblowers from organizational retaliation. This paper first highlights the relevant literatures regarding the types of whistleblowing and the whistleblowing process. Second, it discusses about how organizational loyalty differs from whistleblowing. Next, this paper discusses about the reasons and the motivations of the whistleblowers. Finally, it emphasizes the consequences of whistleblowing and what are some of the various laws to protect the whistleblowers.

©2010 IUP. All Rights Reserved.