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This study aims to examine the resignations of Indian audit committee directors after a systemic shock (failure of Satyam Computer Services Ltd.).

The authors develop the research questions based on interviews with company directors and audit partners, in addition to economic theory. The authors then use archival data to test the research questions.

The authors find that social and peer pressure is a very important factor in explaining such departures and provides the basis for some counter-intuitive empirical results, for example, directors were less likely to resign from companies audited by Indian affiliates of PricewaterhouseCoopers even though Satyam was audited by one such auditor and ownership by founding families was not associated with director departures.

Going beyond economic theory and analyzes can be useful in examining issues related to corporate boards and audit committees.

Regulators should consider requiring disclosure about director attendance percentages, in addition to the number of meetings, at audit committee – and, perhaps, other board sub-committee – meetings.

Caution is warranted when using results from the USA and other Anglo-Saxon countries to address governance-related issues in India or other Asian countries.

A triangulation of economic theory and societal norms enables us to gain valuable insights about the resignations of audit committee directors in India.

Independent directors are important corporate decision participants and makers. Based on the Chinese cultural background, this paper interprets the listing order of independent directors as independent directors’ status, exploring their influence on the corporate research and development (R&D) behavior.

This paper studies A-share listed firms in China from 2008 to 2018 as the sample. The main method is ordinary least square (OLS) regression. We also use other methods to deal with endogenous problems, such as the firm fixed effect method, change model method, two-stage instrumental variable method, and Heckman two-stage method.

(1) Higher independent directors’ status attribute to more effective exertion of supervision and consultation function, and positively enhance the corporate R&D investment. The increase of the independent director’ status by one standard deviation will increase the R&D investment by 4.6%. (2) The above effect is more influential in firms with stronger traditional culture atmosphere, higher information opacity and higher performance volatility. (3) High-status independent directors promote R&D investment by improving the scientificity of R&D evaluation and reducing information asymmetry. (4) The enhancing effect of independent director’ status on R&D investment is positively associated with the firm’s patent output and market value.

This paper contributes to understanding the relationship between the independent directors’ status and their duty execution from an embedded cultural background perspective. The findings of the study enlighten the improvement of corporate governance efficiency and the healthy development of the capital market.

The purpose of this paper is to show that director turnover varies in predictable and intuitive ways with director incentives.

The paper uses a sample of 51,388 observations pertaining to 13,084 directors who served 1,065 firms during the period 1997‐2004. The data are obtained from RiskMetrics, Compustat, Execu‐Comp, CRSP, IBES, and the Corporate Library databases. Portfolio analysis, logit, and GLIMMIX regression analysis are used for the tests.

The paper provides evidence that directors are more likely to leave when firm performance deteriorates and the firm becomes riskier. While turnover increasing as firm performance deteriorates is consistent with involuntary turnover, directors are also more likely to leave in advance of deteriorating performance. The latter is consistent with directors having inside information and acting on that information to protect their wealth and reputation. When inside and outside director turnover is contrasted, the association between turnover and performance is stronger for inside directors.

Since data are obtained from multiple databases, the sample may be biased in favor of larger firms. The results may, therefore, not be applicable to smaller firms. To the extent that the story is unable to differentiate between voluntary and involuntary director turnover, the results should be interpreted with caution.

Even though extant research has looked extensively at the determinants of CEO turnover, little has been written on director turnover. Director turnover is an important topic to study, since directors, especially outside directors, possess a significant oversight role in the corporation.

Surveys and analyses developments in the Western Australia education system between 1983 and 1989, a period of dramatic and unprecedented change. Demonstrates that patterns of control are underpinned and shaped by ideologies which exist in a wider socio‐political context. The main changes during this period are shown to proceed from two almost opposite ideological strands: a social imperative and an economic imperative. While reconcilable in theory, the attempt in Western Australia at the simultaneous implementation of changes driven by these imperatives resulted in the social imperative being subjugated to the politically‐based economic imperative. Concludes that this outcome occurred through intervening factors associated with patterns of control.

This paper presents a model for predicting crises in small businesses using early‐warning signals. It summarises the results of two separate studies carried out in Finland (with 72 per cent response) and the UK (26 per cent) on the decision process of corporate analysts (Finland) and bank managers (UK) in predicting the failure of small and medium‐sized enterprises (SMEs). Both studies consist of seven main headings and over 40 sub‐headings of possible factors leading to failure. Weighted averages were used for both studies to show the importance of these factors. There are significant similarities in the results of the two studies. Management incompetence was regarded as the most important factor, followed by deficiencies in the accounting system and attitude towards customers. However, low accounting staff morale was considered a very important factor in Finland but not in the UK. Unlike Finland, the UK results emphasised the importance of accounting systems and internal control. These two studies differ from previous studies as managerial auditing elements like the importance of internal control departments (UK evidence) and budgetary control systems were included. Similarities in the results of these surveys conducted under two separate EU environments imply that it would be interesting and beneficial to extend these studies to other member states.

A distinction must be drawn between a dismissal on the one hand, and on the other a repudiation of a contract of employment as a result of a breach of a fundamental term of that contract. When such a repudiation has been accepted by the innocent party then a termination of employment takes place. Such termination does not constitute dismissal (see London v. James Laidlaw & Sons Ltd (1974) IRLR 136 and Gannon v. J. C. Firth (1976) IRLR 415 EAT).

One of the rewards of success for the company director is that he is unlikely to be called upon to explain his policies publicly and that, consequent upon success, shareholders, whether large or small, are likely to accept uncritically any explanation of the company's activities which the chairman thinks appropriate. In fact, unlike cabinet ministers, who seldom refuse an opportunity of discussing their r6le, or their government's policies, members of boards of directors rarely make statements about company affairs. Even in the very unusual event of a resignation of a director being proffered or sought have those who voted his adoption in the first place any clear idea as to what differences of opinion, blunders, or stupidity may have led to the disappearance of the director. Furthermore, as the process of election or selection calls for none of the skills on the part of the new director associated with the hustings, most shareholders one suspects place their trust in men unknown, unheard and unrecognized. Business success and high profits seldom come to companies all the time and to many companies but rarely. The excuse proffered is that “things did not turn out as expected” or ‐ and currently much more common — “things would have turned out as expected if only Government policy, or the economic climate had been different”. Currently many chairmen have been able to explain away losses amounting to millions of pounds simply by claiming that the national economic position is unfavourable: shareholders appear to have become so bemused by the pessimism surrounding the economic situation that they confidently re‐elect boards of directors who promise nothing better than low sales, lower returns, and lowest profits. It is not surprising that explanations such as those outlined above were accepted occasionally, but in many cases the records of his annual statements show that the chairman has been able to claim the economic situation as being unfavourable as an excuse year after year. In such cases one can only suppose that a favourable economic situation would be one in which some magic National Finance Corporation automatically multiplied profits by two if they were large, by ten if they were small, and gave some special reward for a loss. Discussions recently surrounding a number of take‐over situations, as well as the examination of Lord Robens' thesis that the chairman of a nationalized undertaking must on principle proffer his resignation if serious public criticism is levelled against the corporation, make it worthwhile to re‐examine attitudes towards directors and chairmen of companies. The case that follows invites an examination of the role and responsibilities of directors in a particular situation.

The purpose of this paper is to use difference-in-difference method (DID) to study the influences of independent directors’ political connection on firm value.

File No. 18 by the Organization Department of the Communist Party of China Central Committee requires that the leading cadres in party and government offices are not allowed to act as independent directors; this restriction applies to retired officials as well. As a result, many listed companies lose the political connections of officers as independent directors. This paper takes it as an exogenous shock to evaluate the influence of the political connection of independent directors on firm value, effectively alleviating the endogeneity problem existing in previous studies.

The research finds the following: under the policy of compelled resignation, the loss of political connection of independent directors has a prominent negative impact on firm value; and compared to state-owned enterprises, the firm value of private enterprises receives a greater negative impact. However, the political advantage of state-owned enterprises is not obviously influenced. In the regions with worse external market environments, due to a greater reliance on resources brought about by political connection, the policy has a much greater influence on their listed companies.

The study faces several limitations, each of which represents a potential research direction. First, our analysis is based on the policy effects on the firm’s current Tobin’s Q and finds a negative effect of losing political connections. However, the long-term effects are still unclear, as some studies find a negative effect of political connections. Second, the paper focuses on one channel in which political connections may affect firm value. Other channels, such as subsidies and loans from state-owned banks, which need more granular data, should be explored in the future.

The use of DID model can better objectively evaluate the implementation effects of ban policies and alleviate endogenous problems, which is also enlightening for further perfection of the system of independent directors in the A-share market.

It enriches existing researches of the value of independent directors from the perspective of political connection, which is conducive to understanding the influence and channel on the firm value after the loss of political connection and the value of independent directors in the corporate governance in a more comprehensive and accurate manner.

This paper extends the relevant research on the value of the political connection of independent directors from the perspective of political connection and enlightens the evaluation of the effect of ban policies.

The cases highlight the challenges in running a new start-up especially by women in a developing nation such as India in a high growth industry. The success of a business depends on employee motivation, sales, marketing, functional coordination and coordinated efforts from all the executives. Experten Office Supplies Pvt. Ltd. (EXOS) was women empowered entrepreneurial startup (printing) in Mumbai established themselves as a trustable brand among their clientele for their office stationeries need. At Initial stages, they started with a good pace and growth in revenue. Directors of EXOS, Komal and Upasana Sanjay Kumar, were facing a downturn, their declining sales and were stressed regarding the resignation of their core member Pravin. The reasons for the situation were many, including unplanned motivational factors, non-risk-taking ability, no proper sales management (organization structure), planning process issues, lack of reward system and dependency on a person, less marketing initiative. These issues must be resolved to come back in the business, increase its sales, better sales organization structure. After the case analysis, students should be able to: know the key role of marketing and sales as a management function. Develop motivation policies for the salesforce and key team members in the organization. Understand the salesforce retention strategies of the organization.

In September 2019, directors of EXOS, Komal and Upasana Sanjay Kumar were discussing the downturn of EXOS and were stressed regarding their declining sales and profit margin. Both were disappointed at the resignation of their Business Manager. They were in worry as the new deal that they were about to get which could have made them earn, but Pravin resigned from the job in short notice. The case has short- and long-term aspects. The short-term aspect is about the decision related to EXOS’s top performer, Pravin, how to retain him, which motivational factor will help him to rethink his resignation. The long-term aspect deals with framing a motivation model that will prevent the organization from a similar situation in the future. The case outlines the human resource management issues and particularly the importance of motivation to retain the talent of a small startup firm. Directors recognize the importance of Pravin and they have a realization that the deal on which Pravin is working is critical. Under this situation, Upasana has to stop Pravin.

Undergraduate, Master of Business Administration (MBA) or in the Management Development Programs.

Teaching notes are available for educators only.

CSS: 8 Marketing.

This study aims to examine the reputation effect by assessing whether fraudulent financial reporting is associated with high board turnover and significant loss of directorship held by directors affiliated with fraud firms. Although the Sarbanes–Oxley Act (SOX) and major stock exchanges enhance board independence and formalize committee requirements, the new rules also create a high demand for qualified directors in the director labor market. Thus, this study further examines the change in the reputation effect of directors at fraud firms after SOX.

This paper intends to answer two research questions: Do directors suffer significant loss of reputation when firms are caught in fraudulent financial reporting schemes? Is the loss of reputation of directors at fraud firms affected by the regulation of SOX? To examine the reputation effect, this paper investigates the differences in director turnover and loss of directorships between fraud and non-fraud firms. To examine the regulation effect, this paper investigates the differences in director turnover and loss of directorships of directors at fraud firms by comparing non-fraud firms’ director turnover and directorship loss between the pre-SOX and post-SOX periods.

Consistent with the reputation effect, this paper found that director turnover at fraud firms is significantly higher than that at non-fraud firms. It also found that the loss of directorships of directors at fraud firms is not significantly higher, which is consistent with findings of some prior research. The paper also investigates whether this reputation effect has changed after SOX but found no significant difference in the reputation effect at fraud firms. In conjunction with prior research that finds an increased demand for qualified directors in the labor market after SOX, the results imply that this shortage of qualified directors does not help fraud firms discipline directors after SOX.

The findings are limited by the sample selection of only the initial litigation of US firms which are charged of fraudulent financial reporting. The findings suggest that SOX creates an increased demand for qualified directors, and consequently results in a shortage of qualified directors in the post-SOX labor market. The shortage of qualified directors slows the director turnover and weakens firms’ ability to replace culpable directors. Future research is needed on how governance practices might contribute to the lack of turnover among board members and how to promote ongoing overhauls of boards.

The decision process for removing a director is complicated and lacks transparency. Shareholders often do not know the real reason for a director’s departure from the board. To increase the accountability of individual directors and information transparency, new rules are needed for the disclosure of evaluations of individual directors’ governance effectiveness.

Survey of previous studies (Helland, 2006; Srinivasan, 2005; Fich and Shivdasani, 2007) indicates mixed evidence on reputation effect and no evidence so far on the SOX regulation effect. This study fills the gap by extending the findings of prior research to investigate the reputation effect along with the regulation effect of SOX at fraud firms. Different from findings of some previous studies (Helland, 2006; Fich and Shivdasani, 2007), this paper provides evidence consistent with the reputation effect. It also provides new evidence on the unintended consequences of SOX on director turnover.