Marc Goergen

Insiders are subjected to trading bans or close periods before earnings announcements. However, directors with multiple board seats can still trade in their other firms in “broad daylight,” assuming these other firms are not subject to trading bans. We find evidence that private information about one firm can generate insider trading profits in other firms, evidenced by a positive correlation between the stock market reactions in the close and traded firms. In turn, this link is stronger for firms that are in a friendly relationship. Importantly, we find that institutional investors observe the trades and then mimic these trades in the connected firms that are subject to trading bans. This newly documented type of insider trading calls for regulators to extend trading bans to all firms on whose boards a director sits.

Purpose: This short reflective paper based on my keynote speech that I delivered at the 2024 African Accounting and Finance Association's (AAFA) Annual Conference at the University of Zimbabwe, Harare, aims to explore how specific boardroom characteristics influence sustainable corporate governance. It seeks to demonstrate that traditional "best practices" in corporate governance are highly context-dependent and may not be universally beneficial, particularly in emerging and entrepreneurial environments such as those found in Africa. Design/methodology/approach: This reflective paper draws on a synthesis of prior empirical and theoretical research by the author and others to examine the roles of CEO duality, board independence, and board diversity (gender and age) in shaping sustainable governance. The discussion is enriched through a series of contextualised research insights, with a focus on applicability to both developed and emerging market settings.Findings: This reflective paper finds that board characteristics such as CEO duality, independence, and diversity do not have uniformly positive or negative effects on firm performance or sustainability. Instead, their effects depend on the organisational context, including firm size, industry type, ownership structure, and market volatility. For instance, CEO duality can be positively perceived in innovative or volatile environments, while board independence may be undermined by hidden social or structural ties. Gender and age diversity may also generate value depending on the governance environment and firm lifecycle stage. Originality/value: This reflective paper provides a critical reflection on the universal application of corporate governance codes. It emphasises the need for flexible and context aware governance frameworks, particularly in African and emerging market contexts where entrepreneurial activity and early-stage firms are more prevalent. It challenges one-size-fits-all assumptions embedded in many governance codes and encourages policymakers and boards to adapt governance designs to their specific contexts.

While the prevailing perspective on executive leadership has emphasized the effectiveness of a unified command structure, family firms frequently adopt shared leadership structures, such as dyads, triads, or larger co-CEO constellations. Given the widespread use of such structures in family firms, it becomes imperative to understand how family involvement in the firm shapes the dynamics of co-CEO constellations and their implications for firm outcomes. Drawing upon the socioemotional wealth (SEW) perspective, we propose that the salience of extended SEW concerns increases the costs associated with a shared leadership structure. These elevated costs, in turn, result in adverse environmental, social, and governance (ESG) outcomes. Our empirical analysis, based on panel data from 76 Italian firms listed on the Milan Stock Exchange during 2003–2020, suggests that family firms employing a co-CEO structure tend to exhibit lower ESG performance, while a positive relationship emerges in nonfamily firms. We theorize and find empirical support that the negative effect for family firms stems from family-induced cognitive diversity, manifested via the inclusion of both family and nonfamily members or family members from different generations in the co-CEO constellation. Importantly, we identify a key mitigating factor: when one of the co-CEOs also holds the position of the board chair, the negative impact of the co-CEO structure on ESG performance is mitigated and even turns positive. These findings advance our understanding of how family involvement in the shared leadership structure shapes a firm’s ethical orientation, having important implications for the governance of family firms.

This is the definition of ‘Dividend policy’ in the book ‘Elgar Encyclopedia of Corporate Governance’. With 163 authoritative entries providing definitive explanations and critiques of the fundamental principles and practices of corporate governance, this timely Encyclopedia is a comprehensive overview of the economic, political, social, legal and environmental impacts of corporations across the globe.

This is the definition of ‘Insider trading’ in the book ‘Elgar Encyclopedia of Corporate Governance’. With 163 authoritative entries providing definitive explanations and critiques of the fundamental principles and practices of corporate governance, this timely Encyclopedia is a comprehensive overview of the economic, political, social, legal and environmental impacts of corporations across the globe.