Service on a Stigmatized Board,Social Capital,and Change in Number of Directorships

This article seeks to develop a nuanced understanding about the relationship between service on a stigmatized board and reduced opportunities for future directorships on other boards by examining the moderating effects of different dimensions of director social capital on this relationship. Evidence based on a unique sample of firms with boards that were viewed as being stigmatized by a group of corporate governance experts suggests that while serving on a stigmatized board is related to a reduction in future number of directorships held, this relationship is significantly mitigated for directors of upper‐class origins. However, social capital related to affiliations with other elite institutions does not appear to mitigate reduction in future number of directorships held by outside directors who serve on a stigmatized board. Implications and future directions in research on class‐based influence in the corporate community and stigmatization and devaluation of elites associated with corporate failures are discussed.     

Board of directors’ effects on financial distress evidence of family owned businesses in Lebanon

The objective of this paper is to determine the managerial governance characteristics related to financial distress companies. The boards failed to accomplish their monitoring duties, which seemed to be one of the main reasons behind the actual financial distress and bankruptcy that swept the companies across the planet. Through the analysis of a sample of 178 Lebanese non listed and owned family firms, the results showed that the boards (that have a higher proportion of outside directors) are less inclined to face a financial distress than the boards with a lower proportion. Besides, a different conclusion proves that the board’s size and financial distress are directly linked. The paper highlights the extent to which financial distress is associated with corporate governance from a Euro Mediterranean country. It would be a source of education to Lebanese investors who excessively go for short-term returns and of help for regulatory authorities in the framework of making policies on corporate governance reformation.     

Antecedents of New Director Social Capital

Prior research shows that firms benefit from the social capital of their boards of directors but has not explored the antecedents of new director social capital. We argue that firms can attract directors with social capital by offering more compensation. We also argue that more complex firms (firms with a greater scale and scope of operations) are more attractive to such directors because of the greater experience and exposure that such directorships provide. Similarly, we argue that firms with high‐status directors on their current boards will be more attractive to directors with social capital. We analyse the social capital of new outside directors added to boards of semiconductor firms between 1993 and 2007. Surprisingly, we find no support for the hypothesis that higher compensation is associated with adding directors with high status or board ties. However, firm complexity is associated with the ability to add new directors who have social capital, and the status of current board members is associated with the ability to add new directors who also have high status.     

Do Women Leaders Promote Sustainability? Analyzing the Effect of Corporate Governance Composition on Environmental Performance

In this study, we investigate the impact women leaders have on the corporate environmental strategies of organizations. Using a dataset of all Fortune 500 CEOs and boards of directors for a ten‐year period, we examine several aspects of gender in leadership on environmental strategy. Specifically, we test the impact of women CEOs, the proportion of women on the BOD, the number of interlinks women board members hold, and the interactive and cumulative effects of women CEOs and gender diverse boards. Findings suggest that firms characterized by gender diverse leadership teams are more effective than other firms at pursuing environmentally friendly strategies. This study contributes to research on corporate governance and environmental performance by showing how the gender composition of leaders affects corporate practice. Copyright © 2015 John Wiley & Sons, Ltd and ERP Environment     

Women on the board and executive tenure

The participation of women in top‐level corporate boards is subject to intense public debate. Countries are considering binding quotas to increase the share of women on boards or have already implemented such rules. Although research on board diversity suggests positive effects on corporate governance and firm performance, the mechanisms through which these benefits materialize remain mostly speculative. This study focuses on boards of directors in a large sample of listed companies in 15 European countries and finds that female representation on nonexecutive boards is associated with reduced turnover, an increase in tenure, and also a higher performance‐turnover sensitivity of executives.     

Insider Trading, Earnings Management and Corporate Governance: Empirical Evidence Based on Hong Kong Firms

We document positive association between earnings management and insider selling after the fiscal year‐end for Hong Kong firms. This positive association is especially evident before the 1997 Asian Financial Crisis. Our findings suggest that Hong Kong executives manage reported earnings to maximize their private benefits from insider selling. Additionally, we find that a higher proportion of independent directors (INED) on corporate boards moderate the positive association between insider selling and earnings management. Stricter monitoring of earnings management by INED is especially evident when no member of the family with majority ownership is present on corporate boards as a director. This suggests that the presence of family members with majority ownership on corporate boards significantly reduces INED's monitoring effectiveness. Our findings suggest that strict regulations are needed to control insider trading, and independence of corporate boards is important for monitoring of earnings management associated with insider trading. Furthermore, appointment of family members with majority shareholdings should be avoided to enhance independence and to monitor effectiveness of corporate boards.     

The Influence of Board Monitoring,Executive Incentives,and Corporate Strategy on Employment Stability

This study examines the effects of corporate governance and diversification strategy on organizational employment stability. Calls for reform in the governance of public corporations have led to the adoption of practices that render senior executives more accountable to shareholders. However, the extant corporate governance literature suggests that mechanisms which make managers more accountable to shareholders might introduce a short-term bias to top managers’ decision-making. Arguing that employment stability reflects a long-term decision-making orientation, results of this study show that firms with boards comprised of a greater proportion of independent, or “outside,” directors have lower levels of aggregate employment stability. In contrast, findings indicate that more diversified firms tend to have higher levels of aggregate employment stability.     

How do the ownership structure and board of directors' features impact earnings management? The Spanish case

This paper examines how the ownership structure and board of directors' features determine the managerial opportunistic behavior exemplified in the management of accounting earnings. This study contributes to the literature by investigating the relationship of firm‐level and country‐level corporate governance systems on the earnings management in the Spanish corporate sector. Results reveal that the varying efficiency of the corporate governance systems is reflected in the way in which accounting discretion is performed. We found evidence that earnings management is reduced as the voting rights of the controlling shareholder increased and that there is an inverse U‐shaped relationship between insiders' ownership and the earnings manipulation. Regarding the board characteristics, we observe that larger, independent boards, those with a larger proportion of female members, and those with an audit committee compounded by a greater proportion of outside independent directors oversee managers more efficiently, constraining their capacity to manage earnings. To the contrary, board duality increases the likelihood of opportunistic manipulation of financial reporting. We found that when the institutional environment improves in the Spanish context, the discretionary power of the corporate sector to overstate the financial statements is reduced. The findings prove the necessity of reinforcing the rules and regulations toward a more transparent disclosure of the financial statements.     

Entrepreneurial orientation and firm performance in family SMEs: the moderating effects of family,women, and strategic involvement in the board of directors

Entrepreneurial success in family SMEs is largely determined by the knowledge, skills, and new ideas contributed by board directors, the most important actors in the formulation of corporate strategy and decision making. The composition of family SME boards has traditionally been homogeneous, as such boards usually comprise male family members. Boards’ contributions, however, depend on their level of diversity and strategic involvement. This study analyzes the moderating effects of two main sources of board diversity in family firms, family involvement level and gender diversity, as potential means of enhancing family firms’ success when exploiting entrepreneurial initiatives. This study also explores whether these two potential moderators depend on the strategic involvement of the board directors. Based on a sample of 230 Spanish family firms, we found that the link between entrepreneurial orientation and performance is stronger in firms with lower levels of family involvement and higher levels of gender diversity in the board. Moreover, the board’s high strategic involvement may strengthen the positive impact of gender diversity and change the moderating influence of family involvement from negative to positive.     

Shareholder wealth effects when an officer of one corporation joins the board of directors of another

Officers of large corporations, having demonstrated expertise in managing complex organizations, would appear to be ideal additions to the boards of directors of other corporations. Shareholder wealth effects are examined for 124 announcements in which an officer of one public corporation joins the board of directors of another. The results indicate that the values of nonfinancial firms that send directors to other firms decline significantly, while those of financial senders increase significantly. Receiving firms of both types do not gain. The results suggest that for nonfinancial firms the added duties of an outside directorship distract corporate officers from managing their own firms or are signals to the market that managers are available to other firms. For financial senders, the benefits of networking appear to strongly outweigh any drawbacks. Cross-sectional regressions suggest that prediction errors are higher for receiving firms if they have performed poorly prior to the announcement and less negative for sending firms if they have performed well prior to the announcement. Abnormal returns are negatively related to the size of the sender, adding support for the notion that busy executives are less valuable as outside directors.     

What have we learnt about board gender diversity as a business strategy? The appointment of board subcommittees

This paper explores whether a board's gender diversity influences the voluntary formation of its board subcommittees. Female board directorship may become a business strategy for firms if it affects the appointment of board subcommittees. We hypothesize that the voluntary creation of board subcommittees is affected by the presence of female directors on boards; the presence of independent, executive, and institutional female directors; and the proportion of shares held by female directors on boards. Board gender diversity has been measured as a proportion and with Blau's index. The results show that independent female directors are positively associated with the likelihood of voluntarily setting up all or some of the committees and a supervision and control committee. The presence of executive female directors negatively influences the probability of forming all or some of the committees, an executive committee and a supervision and control committee. The percentage of shares held by female directors has a positive effect on the voluntary creation of an executive committee. The findings also report that women directors and institutional female directors do not contribute to the voluntary creation of board subcommittees. Our evidence shows that female board directorship impacts the demand of internal control mechanisms such as board subcommittees, suggesting that firms should take it into account as a business strategy. The main implications derived from this research are relevant for Spanish policymakers and researchers because board gender diversity may play a significant role in the decision‐making processes of firms and may influence firms' outcomes.     

Do Boards of Directors Influence Corporate Sustainable Development? An Attention‐Based Analysis

Following the attention‐based view of the firm (ABV), boards of directors’ link to corporate sustainable development (CSD) could be dependent upon certain attention structures: valuation of environmental stimuli, rules of the game and the players. Studying a sample of large Australian firms, the findings indicate that the proposed attention‐directing structures do appear to be linked to CSD in a manner consistent with the ABV. Specifically, creating awareness through scanning efforts links boards to CSD. Stakeholder debate, as a boardroom rule, is also significantly associated with CSD. Furthermore, as a so‐called ‘player’ on the board, women directors have a moderating effect on the relationships between environmental scanning, stakeholder debate and CSD. The findings are discussed along with limitations and directions for future research. Copyright © 2018 John Wiley & Sons, Ltd and ERP Environment     

The adoption of outside boards by small private US firms

The research issue motivating the present study is concerned with why some small private firms adopt an ‘outside board’ (i.e. larger boards in which the majority of directors are neither managers of the firm nor relatives of the Chief Executive Officer (CEO)) and others do not. This issue is addressed by investigating whether differing contextual conditions distinguish adopters from non-adopters of outside boards. The authors consider the adoption of an outside board to be one part of a larger organizational life-cycle process in which organizations implement more ‘professional management’ structures and practices in response to their evolving internal and external contexts. The authors examine simultaneously three contextual pressures that commonly confront small private firms as they develop over time- firm growth and larger size, the succession of the CEO, and the diffusion of equity to individuals outside the firm- to determine which of these are salient in explaining the presence of an outside board. Logistic regression results (3070 respondents toa cross-industry mail survey) indicate that outside boards are more likely when more equity is held by individuals outside the firm, CEOs are older and CEOs do not intend to implement an intra-family transition of leadership. The results suggest that firms adopt outside boards primarily to satisfy the desires of external owners, and only secondarily for the service and resource benefits that outside directors provide.     

Do Board's Corporate Social Responsibility Strategy and Orientation Influence Environmental Sustainability Disclosure? UK Evidence

The environmental implications of corporate economic activities have led to growing demands for firms and their boards to adopt sustainable strategies and to disseminate more useful information about their activities and impacts on environment. This paper investigates the impact of board's corporate social responsibility (CSR) strategy and orientation on the quantity and quality of environmental sustainability disclosure in UK listed firms. We find that effective board CSR strategy and CSR‐oriented directors have a positive and significant impact on the quality of environmental sustainability disclosure, but not on the quantity. Our findings also suggest that the existence of a CSR committee and issuance of a stand‐alone CSR report are positively and significantly related to environmental sustainability disclosure. When we distinguish between firms with high and low environmental risk, we find that the board CSR/sustainability practices that affect the quantity (quality) of environmental sustainability disclosure appear to be driven more by highly (lowly) environmentally sensitive firms. These results suggest that the board CSR/sustainability practices play an important role in ensuring a firm's legitimacy and accountability towards stakeholders. Our findings shed new light on this under‐researched area and could be of interest to companies, policy‐makers and other stakeholders. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment     

Ownership structure and board composition: A multi-country test of agency theory predictions

Patterns of corporate governance and control differ significantly across countries because of national differences in structures of ownership and composition of boards of directors. Based on agency theory, we examine the relationship between ownership structure and the composition of the board of directors of 390 large manufacturing firms based in Japan, Western Europe and the United States. In particular, we examine how ownership concentration, bank control and state ownership affect the percentage of outside directors on the corporate boards. The results show that, consistent with predictions of agency theory, ownership structure has significant effects on board composition.     

Should Directors Have Term Limits? – Evidence from Corporate Innovation

This paper examines the effect that directors with extended tenure have on corporate innovation based on a sample of US firms from 1996 to 2006. Using the propensity-score matched-pair research design, I find that firms with a higher portion of outside directors enjoying extended tenure produce significantly fewer patents and that these patents receive fewer subsequent citations. These firms also have lower research and development (R&D) productivity and exploration intensity than their matched control firms, although I found no significant difference in their R&D investment intensity. Difference-in-differences tests based on director deaths and regulatory changes in the early 2000s suggest that the adverse effect of long director tenure on innovation performance is causal. I also find that the effect is mitigated when long-tenured directors have more years of overlap in service with CEOs, and when long-tenured directors are executives at other firms. Finally, I find that boards with extended tenure attenuate the contributions of innovation outputs to future firm value and performance. These findings shed new light on the debate over length of board tenure and provide another justification for imposing term limits on directors.     

BOARD COMPOSITION FROM A STRATEGIC CONTINGENCY PERSPECTIVE

This study examined the association between corporations’environments, strategies, and past performance and the composition of their boards of directors as measured by size and outside director representation. The environment, strategy and past performance were viewed as posing a strategic contingency; each of these sets could determine the success or failure of the company. Data on 119 Fortune 500 industrial companies for the 1983-9 period were used. Canonical analysis showed that increased uncertainty of a firm's environment, use of external growth and diversification; reliance on leverage as a means of finance, and poor past financial performance were associated with large board size and increased outside representation in subsequent years. Most important, board composition was positively associated with future measurements of corporate financial performance.     

CORPORATE BOARD SIZE, COMPOSITION AND CORPORATE FAILURES IN RETAILING INDUSTRY[1]

In recent years some activists have advanced proposals to reform corporate boards, notably their structure and process, to assure desirable corporate governance. the empirical question, however, is whether such formal board changes would guarantee good governance. This paper examines this issue by studying the differences in the board size and board composition of 21 pairs of failed and non-failed firms. the results suggest that the non-failed retailing firms, as compared to failed ones, tend to have bigger boards within the size range suggested by the activists. the differences in the percent of outsider directors and multiple offices held by C.E.O.s between the failed and non-failed firms were not significant. Implications of the results for the evaluation of board reforms are discussed.     

The impact of sustainability (environmental,social, and governance) disclosure and board diversity on firm value: The moderating role of industry sensitivity

Using a large panel data set comprising 812 listed European firms, this study investigates whether sustainability disclosure (environmental, social, and governance) and female representation on boards affect firm value. We observe a positive impact of sustainability disclosure and board gender diversity on firm value, suggesting that the best management practices, enhanced stakeholder trust, and female representation on boards improve firm value. We observe that the firms in sensitive industries achieve superior social and governance performance. We also observe that the firms with higher female representation on their boards present significantly superior environmental, social, and governance performance. Our results are robust to different firm and country specific control variables and to year‐ and country‐fixed effects.     

关于董事会战略角色的分析与研究

针对董事会参与战略,历史上出现了两个不同的主义,分别是"被动"主义和"积极"主义,文章梳理了与此相关的五大理论视角及其演进脉络。并以此为基础,识别出董事会发挥其战略角色的过程中存在的三个层次:选择战略决策;调整战略决策;调整战略的背景、程序和内容。最后,对中国上市公司构建战略型董事会进行思考,提出了建议。