Home Alone: The Effects of Lone‐Insider Boards on CEO Pay,Financial Misconduct,and Firm Performance

Research summary: Corporate scandals of the previous decade have heightened attention on board independence. Indeed, boards at many large firms are now so independent that the CEO is “home alone” as the lone inside member. We build upon “pro‐insider” research within agency theory to explain how the growing trend toward lone‐insider boards affects key outcomes and how external governance forces constrain their impact. We find evidence among S&P 1500 firms that having a lone‐insider board is associated with (a) excess CEO pay and a larger CEO‐top management team pay gap, (b) increased likelihood of financial misconduct, and (c) decreased firm performance, but that stock analysts and institutional investors reduce these negative effects. The findings raise important questions about the efficacy of leaving the CEO “home alone.” Managerial summary: Following concerns that insider‐dominated boards failed to protect shareholders, there has been a push for greater board independence. This push has been so successful that the CEO is now the only insider on the boards of more than half of S&P 1500 firms. We examine whether lone‐insider boards do in fact offer strong governance or whether they enable CEOs to benefit personally. We find that lone‐insider boards pay CEOs excessively, pay CEOs a disproportionately large amount relative to other top managers, have more instances of financial misconduct, and have lower performance than boards with more than one insider. Thus, it appears that lone‐insider boards do not function as intended and firms should reconsider whether the push towards lone‐insider boards is actually in shareholders' best interests. Copyright © 2017 John Wiley & Sons, Ltd.     

How does CEO tenure matter? The mediating role of firm‐employee and firm‐customer relationships

While the direct influence of CEO tenure on firm performance has been examined in the strategy literature, the underlying channels of influence have remained largely unexplored. This article draws upon the career seasons paradigm, learning perspectives, and marketing literature to examine whether firm‐employee and firm‐customer relationships are the pathways through which CEO tenure influences firm performance. Results from the analysis of a large data set reveal that: (1) CEO tenure has a positive and linear association with firm‐employee relationship strength but an inverted U‐shaped association with firm‐customer relationship strength; (2) industry uncertainty intensifies these associations; and (3) firm‐employee and firm‐customer relationship strength mediate the effects of CEO tenure on firm performance. These findings have implications for a more balanced and nuanced view of CEO tenure. Copyright © 2013 John Wiley & Sons, Ltd.     

Measuring the Extent of Impact from Occupational Violence and Bullying on Traumatised Workers

Across the industrialised world, there is evidence that both the incidence and the severity of occupational violence and bullying are increasingly being reported over time. While there have been few substantive scientific studies in Australia, all the available evidence shows a similar increasing level of risk. It has long been assumed that those who suffer a physical assault during the course of violent events are more likely to be emotionally traumatised by the experience than are those who are merely threatened or bullied at work. However, there are no substantive data published to date. In this paper the authors aim to elucidate and quantify the extent of emotional injury/stress suffered as a result of different forms of occupational violence, based on empirical data collected during face-to-face interviewing of 800 Australian workers employed in the tertiary education, health and long-haul transport industry sectors. The authors conclude that the impact from more covert forms of occupational violence (such as bullying) can, in many instances, at least equal the emotional trauma following assaults on-the-job.     

Engaging Employees in Sustainable Development – a Case Study of Environmental Education and Awareness Training in Hong Kong

Environmental education and awareness training can help to develop and encourage a transition to a greener corporate culture. A series of environmental education and awareness training programmes of The Hongkong and Shanghai Banking Corporation Limited (HSBC) (Hong Kong) was used as a case study to assess how learning transfers through nature‐based environmental education and awareness training and to investigate the possible outcomes of providing nature‐based training to employees. Evaluation of the training outcomes, in terms of changes in employees’ environmental knowledge, attitudes and behaviour, was surveyed by using retrospective post‐ and then‐test questionnaires. Results showed that employees who joined these programmes gained knowledge and changed their values and behaviour towards the environment significantly. The study also indicated the establishment of trust in and satisfaction with the organization among employees through the training, which in turn promoted employees’ organizational commitment towards corporate sustainability. Copyright © 2015 John Wiley & Sons, Ltd and ERP Environment     

Understanding the Change–Cynicism Cycle: The Role of HR

Employee change cynicism is an unintended consequence of organizational change, which can undermine the effectiveness of change initiatives. Based on social information processing theory, we examine the impact of two human resource roles (administrative expert and strategic change agent) on the relationship between the quantity of organizational change and employee change cynicism. Using multilevel data from 1,831 employees in 70 organizations, we find employees who are exposed to more organizational change report higher levels of change cynicism. However, the strength of the organizational change–cynicism relationship is affected by the role of HR in the employees’ organizations. When HR undertakes an administrative expert role, change is more likely to generate change cynicism. When HR undertakes a strategic change agent role, change is less likely to generate change cynicism. Our results suggest that organizations need to think carefully about the role of HR during organizational change and encourage HR to adopt a strategic change agent role. © 2015 Wiley Periodicals, Inc.     

Ethical leadership and ambidexterity in young firms: examining the CEO-TMT Interface

To enrich the knowledge of the value of ethical leadership in a more entrepreneurial setting, we focus on technology-based young firms and theorize through the lens of CEO-TMT interface whether and how founder-CEOs’ ethical leadership influences young firms’ ambidexterity. We argue that founder-CEOs’ ethical leadership can enhance young firms’ ambidexterity in an indirect way, through promoting top management team (TMT) members’ advice-seeking behavior and team satisfaction. Data from a multi-source and time-lagged survey of founder-CEOs and all TMT members in 81 Chinese technology-based young firms supported our predictions. We discuss the theoretical and practical implications of our study to the extant research.

     

Industry and the Family: Two Engines of Growth

We generalize the class of endogenous growth models in which the scale of the economy has level rather than growth effects, and study the implications of different demographic and technological factors when both fertility choice and research effort are endogenous. The model incorporates two dimensions of technological progress: vertical (quality of goods) and horizontal (variety of goods). Both dimensions contribute to productivity growth but are driven by different processes and hence respond differently to changes in fundamentals. Specifically, while unbounded vertical progress is feasible, the scale of the economy limits the variety of goods. Incorporating a linearity in reproduction generates steady-state population growth and variety expansion. We thus have two engines of growth generating dynamics that we compare with observed changes in demographics, market structure, and patterns of growth. Numerical solutions yield the important insight that, while endogenous, fertility responds very little to industrial policies. Demographic shocks, in contrast, have substantial effects on growth.     

Applying a third party access model for China’s gas pipeline network: an independent pipeline operator and congestion rent transfer

This paper investigates third party access regulatory issues in China’s natural gas industry. We study the development of China’s gas market-oriented reform and how third party access becomes a pressing issue in that context. This paper aims to report stakeholders’ benefit and distributional effects during a hypothetical third party access process. To that end, we apply an oligopolistic equilibrium model, based on the mixed complementarity problem, to China’s gas pipeline network. We compare two scenarios: a scenario without third party access and the other scenario where an independent pipeline operator optimizes flows. This latter scenario aims to guarantee that the maximum social benefit is achieved. In addition, the latter scenario transfers the congestion rent to former integrated gas companies to compensate their actual loss control of the pipeline operation, in order to minimize the adverse distributional effects for pipeline companies. The solution of the model indicates that operational separation is feasible with Pareto improvement in China’s context. Moreover, it merits particular attention from policy makers in China that pipeline capacity scarcity should be properly evaluated and managed.     

Trade Union Responses to zero hours work in Ireland

This paper examines the strategies adopted by Irish unions in responding to zero hours work in four sectors. It concludes that rather than adopting either a passive or a uniform approach, unions have pragmatically varied their strategies to curtail zero‐hours work through actively combining both bargaining and regulatory approaches.