Gender and management on Spanish SMEs: an empirical analysis

Few studies have investigated the presence of women on the boards of directors of companies. Those that have been done have focused on large firms. In this study we analyzed the gender diversity of a sample of Spanish small and medium enterprises. These firms are of great importance in terms of their number, the employment they provide, and their sales. Furthermore, there is an open debate in Spain about gender equality after the passing of several laws against gender discrimination. We found that women's presence on boards generates a negative impact on firm performance and this result may be due to less risky strategies implemented by women directors. This finding is interesting because it sheds light on how women can affect the functioning of a board. We also found that family firms and firms with a financial institution as the main shareholder tend to have more women on the board. Finally, we show that firms with less debt, more assets, and larger boards have more women as directors.     

Who's the Boss at the Top? A Micro‐Level Analysis of Director Expertise,Status and Conformity Within Boards

In this paper we address how director expertise impacts a director's social status and conformity within the board. Our results, derived from two unique multi‐source datasets of peer ratings on director status and conformity of non‐executive directors from Dutch organizations, indicate that industry‐specific expertise and financial expertise differently impact directors’ social status and influence within the board. We find that directors’ individual performance orientation – the motivation to demonstrate expertise – acts as an important contingency for expertise to increase directors’ status within the board. Additional analyses using archival data and interviews with non‐executive directors substantiate our findings and provide additional insight into the dynamics operating within boards. This study extends existing research on boards of directors and provides unique micro‐level insights into the boardroom dynamics that connect director expertise to director status and conformity within boards.     

Environmental attitude in the board. Who are the “green directors”? Evidences from Italy

Board members' attitudes towards environmental protection are an important antecedent of how companies define and implement sustainability initiatives, but little is known about directors' attitudes and the factors associated with these. Using survey data on Italian board members, the research sought to explore the relationships between these individual's personal attributes, especially those related to their roles on boards, and their attitudes towards environmental protection. The findings suggest that female directors, directors with financial background, and independent directors are positively related to attitudes towards environmental protection. In the financial sector, younger board members and risk committee members show stronger environmental attitudes. The results could be of interest to policymakers because the board member attributes identified may require a stronger regulatory focus in order to achieve public policy's environmental protection objectives and to governance bodies in terms of defining board committees' composition and selecting “green directors” oriented towards environmental issues.     

A THEORY OF GOVERNING THE PUBLIC'S BUSINESS: Redesigning the jobs of boards,councils, and commissions

The job of the board of directors is the least developed element in enterprise, whether public, business, or nonprofit. Incorporating insights from Mill, Hume, and the social contract philosophy of Rousseau, as well as the servant-leadership concept of Greenleaf, the author's Policy Governance® model constitutes a theory of governance applicable to any governing body. The model enables public boards to govern by making public values explicit, crafting the expression of those values for practical managerial effect. The new governance model compels radical change in the way boards conduct their business. One effect is more authoritative boards and more empowered management simultaneously; another is greater integrity in the relationship between the public and its boards.     

Outside Directors on Korean Boards: Governance and Institutions

Drawing on institutional theory, this study examines the factors that pressured Korean firms to appoint outside directors to their boards. While this practice could be considered to be a management innovation in Korea, in the Anglo‐American corporate governance system it has long been used as one of several mechanisms to mitigate agency costs between management and shareholders. As such, this response by Korean firms, following the 1997–98 currency crisis in Asia, could be seen as an example of corporate governance convergence on the Anglo‐American model, where higher levels of outside director representation on the board are the norm. We examine the antecedents of having a higher proportion of outside directors on Korean boards. Our findings indicate that larger firms that are under stricter control by the government have higher representation of outside directors on the board. We also find a positive and significant relationship between the proportion of outside directors and business group affiliation, poor prior firm performance, higher levels of debt and foreign ownership.     

Corporate social and environmental disclosure as a sustainable development tool provided by board sub-committees: Do women directors play a relevant moderating role?

The aim of this research is to examine the impact of three audit committee characteristics on corporate social and environmental responsibility (CSR) disclosure: the existence of an audit committee, audit committee independence, and audit committee financial expertise. Moreover, this research analyzes the moderating effect of board gender diversity between these audit committees' attributes and CSR reporting. The results of analyzing 13,178 firm-year observations of non-financial companies show that the presence of an audit committee and audit committee financial expertise are positively associated with CSR disclosure. However, a higher proportion of non-executive directors in audit committees has a negative effect on the disclosure of CSR information. These findings suggest that some audit committees' features play an important role in ensuring the reporting of environmental, social, and economic information. Our evidence also indicates that the presence of female directors on boards increases the positive impact of financial expert membership of audit committees on CSR disclosure, while women directors moderate any negative effect of the percentage of independent directors on audit committees on CSR reporting by increasing the latter. In addition, female directors moderate the positive impact of the existence of an audit committee on the disclosure of CSR information by reducing the latter.     

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.     

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.     

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.     

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.     

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.     

Corporate Board Attributes, Team Effectiveness and Financial Performance

Researchers have recently begun to integrate the literatures on corporate boards and team effectiveness in an effort to better understand how boards function and impact company performance. This study identifies five attributes of high-performing teams – knowledge, information, power, incentives and opportunity/time – and argues that these attributes will promote board effectiveness, which in turn influence corporate financial performance. These relationships are investigated using combined survey and archival sources of data for 210 Fortune 1000 companies. Findings indicate that most team effectiveness attributes are associated with higher levels of board effectiveness as rated by the board directors, and that board effectiveness is significantly related to corporate financial performance.     

Boards of directors in SMEs: a review and research agenda

This paper aims at reviewing research and presenting a research agenda on boards of directors in SMEs. While most publications about boards in SMEs focus on the lack of research in the area, this paper presents some of the work that has been conducted. Publications on boards of directors during the 1990s in outlets for SME research are reviewed. Boards of directors in small and medium-sized companies are getting increased attention, but the knowledge about boards in such companies is still fragmented. This paper presents research challenges based on a holistic model of directorates in SMEs that is elaborated from previous research about directorates. The papers selected for this special issue on boards of directors in SMEs are presented in this framework.     

The Impact of the Board on Strategy: An Empirical Examination

Boards of directors are coming under increasing scrutiny, both in the wake of a number of serious corporate frauds and failures and through a more general debate about the nature of corporate governance and its role in achieving national competitiveness. Though research on boards is growing, there remains a lack of empirical studies on the perceptions of directors themselves as to their role and influence in the running of organizations, and in particular the strategic process.
This article responds to widespread calls for direct study of boards of directors by using a multi-method approach involving an in-depth examination of 51 directors of UK public companies, a survey of 121 company secretaries and four case studies of UK plcs, where multiple board members were interviewed. Through the use of a grounded methodology, this article examines the impact of boards on strategy and shows that by establishing the business definition, gatekeeping, selecting directors, and confidence building, the board influences the boundaries of strategic action. Evidence for the managerial domination of boards was slight, but the results showed support for a number of theoretical frameworks, suggesting that multiple perspectives are required to fully understand the nature of board activity.     

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.     

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.     

Why Do Board Members Receive Excess Compensation?

This paper examines compensation to the boards of directors and supervisors for a sample of 656 firms over the period 1999–2008. I find in Taiwan that about 53.21% of firms pay excess compensation to their boards and 13.72% of the boards are overpaid by more than 50%. This paper conjectures that firms reward directors and supervisors in order to retain their valuable human capital and notes a robust positive effect of excess compensation on future firm performance. Because directors and supervisors are rewarded for future success, their excess pay may not be considered all that bad. Copyright © 2015 John Wiley & Sons, Ltd.     

When Elites Forget Their Duties: The Double‐Edged Sword of Prestigious Directors on Boards

Previous research indicates that the performance effect of prestigious directors is ambiguous. Our study addresses this issue by integrating the theoretical lens of board capital and the institutional perspective. We argue that prestigious directors can bring benefits as well as costs. We claim that the emergence of these costs depends on the institutional context, specifically the institutional characteristics of the country's corporate elite circle which is characterized by the elite cohesion and the elite exclusiveness. Our empirical results with a 15‐country sample covering the period of 2005 to 2014 provide evidence for the overall existence of a positive performance effect of prestigious boards. However, our results also indicate that these beneficial effects of prestigious boards are mitigated in countries with high elite exclusiveness. Hence, under these certain institutional conditions, the elite‐favouring behaviour of prestigious directors also brings costs.     

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.     

Board Composition and Organizational Performance: Two Studies of Insider/outsider Effects

This paper presents two studies that examine the commonly held belief that corporate boards are more likely to have positive effects on organizational performance when composed of outside directors. The first study – a meta-analysis of 63 correlations – indicates that, on average, the greater presence of outsiders is associated with higher performance, but so too is the greater presence of insiders. Instead of providing evidence of a positive outsider effect, these results suggest the existence of a curvilinear homogeneity effect in which performance is enhanced by the greater relative presence of either inside or outside directors. The second study – a hierarchical polynomial regression analysis of data from 259 large US companies – confirms the existence of a curvilinear relationship between insider/outsider composition and performance measured as return on assets.