Is regulatory adoption ceremonial? Evidence from lead director appointments

Research Summary: Regulatory bodies often wrestle with the thorny question of whether to mandate a governance practice or allow for organic adoption. While mandates afford rapid diffusion, we theorize that they also result in ceremonial adoptions. Leveraging a quasi‐natural experiment, we compare adoption outcomes for a governance practice—lead director adoption—that was mandated by the NYSE but not the NASDAQ. We find that NYSE firms are more likely than NASDAQ firms to have installed a lead director as a symbolic management tactic, so their lead directors are less effectual. We also find that transient institutional investors are deceived by this symbolic management, but dedicated institutional investors are not. Managerial Summary: Shareholders and analysts often desire to see companies introduce strict governance measures, such as proxy access and independent boards. Consequently, regulatory bodies often wrestle with the thorny issue of whether and when to mandate such practices for all companies. What they might not realize is that mandates may not work as well as they seem. Although more companies adopt reform under a mandate, they do so merely as a symbolic gesture. We look at one governance reform—appointing a lead director—finding that companies who introduce this reform as a result of a mandate appoint someone that is relatively toothless. We also find, though, that savvy investors are not actually fooled by this tactic and will trade out of firms that attempt such symbolic management.     

External corporate governance and financial fraud: cognitive evaluation theory insights on agency theory prescriptions

R esearch summary : Agency theory suggests that external governance mechanisms (e.g., activist owners, the market for corporate control, securities analysts) can deter managers from acting opportunistically. Using cognitive evaluation theory, we argue that powerful expectations imposed by external governance can impinge on top managers' feelings of autonomy and crowd out their intrinsic motivation, potentially leading to financial fraud. Our findings indicate that external pressure from activist owners, the market for corporate control, and securities analysts increases managers' likelihood of financial fraud. Our study considers external governance from a top manager's perspective and questions one of agency theory's foundational tenets: that external pressure imposed on managers reduces the potential for moral hazard. M anagerial summary : Many of us are familiar with stories about top managers “cooking the books” in one way or another. As a result, companies and regulatory bodies often implement strict controls to try to prevent financial fraud. However, cognitive evaluation theory describes how those external controls could actually have the opposite of their intended effect because they rob managers of their intrinsic motivation for behaving appropriately. We find this to be the case. When top managers face more stringent external control mechanisms, in the form of activist shareholders, the threat of a takeover, or zealous securities analysts, they are actually more likely to engage in financial misbehavior. Copyright © 2016 John Wiley & Sons, Ltd.     

The power and peril of board interlocks

In order to compete, firms must constantly gather and assess information that will help them identify and evaluate emerging opportunities. Their social context is instrumental in determining what information they have to work with and how they might make sense of and act upon that information. Unfortunately, many firms allow themselves to become under-connected, which isolates them from new sources of information, or over-reliant on just a few connections, creating a bottleneck for the flow of information. Herein, we describe how these problems manifest themselves among the network of interlocked directors, which is created when directors of firms sit on multiple boards. This network is so vast and complex that fully understanding the position and structure of a given firm's board interlocks remains elusive. Toward solving this problem, we offer five keys to developing a board with effective interlocks, as well as three cautions regarding how board interlocks could potentially hurt firms.     

Investor perceptions of CEO successor selection in the wake of integrity and competence failures: A policy capturing study

Research summary : Drawing on theory about signaling, sensemaking, and the romance of leadership, we extend inquiry on investors' perceptions of CEO succession following misconduct. Whereas past studies have treated misconduct monolithically, we examine failures of integrity and competence separately. Using a policy capturing methodology that isolates investors' decision making from potential confounds, we find that, following an integrity failure, investors perceive outside and interim successors positively but inside successors negatively. Following a competence failure, investors perceive outside successors positively but are ambivalent toward inside and interim successors. Our findings indicate that whether an act of misconduct was an integrity failure or a competence failure, and what type of successor the firm chooses, are important considerations when using CEO succession as a means to restore investor confidence. Managerial summary: Business headlines regularly feature episodes of organizational misconduct, such as product safety problems, environmental violations, employee mistreatment, and securities lawsuits, and their aftermath. In such scenarios, shareholders demand answers from the people at the top, even if those people were not directly responsible for the problem. As a result, companies often fire the CEO as a means to restore investor confidence. Does this work? It depends on the type of misconduct and who is the CEO's successor. Following a competence failure, investors welcome the appointment of an outsider, but they are indifferent to inside and interim successors. Following an integrity failure, shareholders greet outside and interim CEO successors favorably while frowning on the promotion of insiders. Copyright © 2015 John Wiley & Sons, Ltd.     

Transnational entrepreneurs,worldchanging entrepreneurs,and ambassadors: a typology of the new breed of expatriates

As barriers to globalization have steadily diminished, the number of entrepreneurial and noncommercial expatriates have grown from a trickle to a torrent. Much of what we know about expatriatism may not apply to this new breed of expatriates. A four-quadrant typology of expatriates draws attention to important differences in expatriate types. I make use of the notions of comparative fit and normative fit from self-categorization theory to validate the typology. Examining the experiences of 160 expatriates demonstrates that the proposed typology represents real differences and is invoked by expatriates in the field. Scholars may apply this typology to explain inconsistent findings in extant studies and as a guide for the development of new research questions.     

TACKLING THE ENDOGENEITY OF FERTILITY IN THE STUDY OF WOMEN'S EMPLOYMENT IN DEVELOPING COUNTRIES: ALTERNATIVE ESTIMATION STRATEGIES USING DATA FROM URBAN BRAZIL

Abstract

Opinions differ about whether family structure, especially fertility, should be considered endogenous in models of behavior in developing countries. Faced with a dearth of good instruments, mainstream researchers often urge working in reduced form and, therefore, losing variables of policy interest or limiting the type of questions they ask to those where good instruments are available. Rather than treating endogeneity as a yes or no characteristic, we suggest instead that researchers consider the likely magnitude of endogeneity bias before moving to reduced form. Facing a situation where endogeneity bias is often presented as a concern but where we expect little endogeneity bias, we tackle endogeneity using multiple econometric techniques not available to the average researcher. We find support for our hypothesis that little bias arises due to the assumption of exogeneity of recent fertility in a model of women's employment.     

Signalling Theory and Equilibrium in Strategic Management Research: An Assessment and a Research Agenda

Actors within organizations commonly must make choices armed with incomplete and asymmetrically distributed information. Signalling theory seeks to explain how individuals are able to do so. This theory's primary predictive mechanism is ‘separating equilibrium’, which occurs when a signal's expectations are confirmed through experience. A content analysis finds that most strategic management signalling theory studies have not fully leveraged separating equilibrium. This presents two possible paths for future research. First, some researchers may wish to incorporate separating equilibrium. We illustrate how doing so can uncover new relationships, generate novel insights, and fortify the theory's application. Others who want to theorize about signals, but not examine separating equilibrium, could integrate ideas from signalling theory with other information perspectives. Here a signal becomes one stimulus among many that corporate actors interpret and act upon. We provide research agendas so strategy scholars can apply signalling theory most effectively to meet their research objectives.     

Managers and their not-so rational decisions

Today's corporate environment requires managers to be excellent decision makers. Their ability to make fast, widely-supported, and effective decisions will, in large part, shape the performance of their firms. In this article, we describe two cognitive systems that influence decision making. System 1 refers to a process that is fast, effortless, and intuitive. System 2 is a slow, controlled, and rule-governed decision-making process. Both are important to a wide variety of managerial decisions, and they interact with each other. There are, however, a number of forces at work that hinder the effectiveness of these processes. For example, we know from prospect theory that managers are unwilling to incur loss, so much so that they often make irrational decisions based on a small probability that they could avoid such loss. Another example, the escalation of commitment, explains why managers may continue to dedicate resources to failed projects. We describe these and other biases, with a view toward helping managers better understand the problems of decision making and improve the effectiveness of their decisions.     

应对贸易融资难

目前最令人担忧的是贸易紧缩程度不断上升，超过50％的贸易公司得不到资金支持。贸易公司必须从自身出发解决问题。