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Article
Publication date: 23 February 2010

John Byrd, L. Ann Martin and Subhrendu Rath

The purpose of this paper is to examine the impact of high‐level‐executives joining the Board of another US company on the shareholder wealth of the firms in which these…

Abstract

Purpose

The purpose of this paper is to examine the impact of high‐level‐executives joining the Board of another US company on the shareholder wealth of the firms in which these executives work.

Design/methodology/approach

The “event‐study” methodology is used first to estimate the shareholder effects and then, through multivariate regression analysis, establish a relationship of these effects with executive characteristics.

Findings

The paper documents that the abnormal return becomes more positive the closer the executive is to retirement and more negative as the number of other corporate Boards the executive already sits on increases. Unlike previous research, it is not found that prior performance of the employing company helps explain the cross‐sectional variation in the announcement day abnormal returns.

Research limitations/implications

The result supports the concerns of shareholder activists that key executives joining the Boards of other companies do their home shareholders a disservice by being spread too thin. It supports the hypothesis that investors interpret a CEO joining the Board of another firm as value decreasing.

Originality/value

The paper provides a link between managerial labor and shareholder wealth. Important and high‐level‐executives, while attempting to enhance their own personal benefits by joining other Boards, can destroy shareholder value of the company for which they work.

Details

International Journal of Managerial Finance, vol. 6 no. 1
Type: Research Article
ISSN: 1743-9132

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Article
Publication date: 4 April 2016

Sudha Mathew, Salma Ibrahim and Stuart Archbold

The purpose of this paper is to identify the board attributes that significantly increase firm risk. The study aims to find whether board size, percentage of non-executive

Abstract

Purpose

The purpose of this paper is to identify the board attributes that significantly increase firm risk. The study aims to find whether board size, percentage of non-executive directors, women on the board, a powerful chief executive officer, equity ownership amongst executive board directors and institutional investor ownership are associated with firm risk. This is the first study that examines which board attributes increase firm risk using a UK-based sample.

Design/methodology/approach

This empirical study collected secondary data from Bloomberg and Morningstar databases. The data sample is an unbalanced panel of 260 companies’ secondary data on FTSE 350 index in the UK, from 2005 to 2010. The data were statistically analysed using STATA.

Findings

The study establishes the board attributes that were significantly related to firm risk. The results show that a board which can increase firm risk is one that is small in size, has high equity ownership amongst executive board directors and has high institutional investor ownership.

Research limitations/implications

The governance culture and regulatory system in the UK is different from other countries. As the data are a UK-based sample, the results can lack generalisability.

Practical implications

The results are useful for investors who invest in large firms, to have the knowledge about the board attributes that can increase firm risk. Regulators can also use the results to strengthen regulatory guidelines.

Originality/value

This study fills the gap in knowledge in UK governance literature on the board attributes that can increase firm risk.

Details

Corporate Governance, vol. 16 no. 2
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 4 July 2018

Neil J. Fletcher and Rory J. Ridley-Duff

This paper aims to investigate the intersection between corporate governance and management accounting information within the board meeting of an English further education college.

Abstract

Purpose

This paper aims to investigate the intersection between corporate governance and management accounting information within the board meeting of an English further education college.

Design/methodology/approach

The empirical fieldwork uses an interventionist approach. Board members’ mental models of a management accounting boundary object are analysed.

Findings

The paper supports Parker (2007) and Cornforth and Edward’s (1999) observation that within a board meeting, collaborative “micro-management” type talk is considered to lie outside the acceptable remit of non-executive and executive board member interaction. Such an attitude can prevent an intertwining of management accounting information and other mental models of an organisation occurring. This can preclude management accounting information from rendering an organisation visible, in an expansive manner, within a boardroom.

Research limitations/implications

Interventionist researchers working within the black box of the board are encouraged to design more radical and collaborative interventions than the interview/report format used here.

Practical implications

Non-executive directors might benefit from being offered the opportunity to interact with management accounting information outside the formal board meeting and committee structure.

Originality/value

A deeper understanding of how directors’ mental models, boardroom behaviours and attitudes influence their interaction with management accounting information is offered. Insight into the limitations of using management accounting information in the boardroom is developed.

Details

Qualitative Research in Accounting & Management, vol. 15 no. 3
Type: Research Article
ISSN: 1176-6093

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Article
Publication date: 18 November 2013

Phil Saj

The purpose of this study is to compare the use of performance information by board members and executives of a large Australian community service organization in order to…

Abstract

Purpose

The purpose of this study is to compare the use of performance information by board members and executives of a large Australian community service organization in order to ascertain what they focused on and how they worked together in effecting organizational governance.

Design/methodology/approach

Field based case study using stewardship theory.

Findings

While board members and executives worked closely together within a mutually agreed organizational space, there was a clear bifurcation of focus with the board concerned more with the financial performance and the executive more with service performance. Further differentiation of role with respect to financial performance was observed such that the board's attention was directed most to issues that presented the greatest risk to the organization. The study found that board members and executives “cut across” traditionally assigned roles, thus demonstrating a joint mode of organizational governance that was underpinned by organizational policies, processes and structures.

Research limitations/implications

This paper provides rich empirical evidence in relation to matters that have been subject to high levels of theorisation; by answering recent calls from scholars for in-depth research on governance processes; and by identifying the common threads that link research on not-for-profit governance with stewardship theory and the extended concepts of accountability. It contributes to practice by providing a comprehensive explanation of a contemporary governance arrangement. It contributes to the public policy debate since a key issue currently under review in Australia, and New Zealand, to name just two jurisdictions, is the attribution of responsibilities by key decision makers in charities, in particular, the vexed question of management involvement in governance processes.

Originality/value

The paper provides rich empirical data about an issue of ongoing importance to third sector organizations.

Details

Qualitative Research in Accounting & Management, vol. 10 no. 3/4
Type: Research Article
ISSN: 1176-6093

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Article
Publication date: 28 January 2014

Pieter-Jan Bezemer, Stefan Peij, Laura de Kruijs and Gregory Maassen

This study seeks to explore how non-executive directors address governance problems on Dutch two-tier boards. Within this board model, challenges might be particularly

Abstract

Purpose

This study seeks to explore how non-executive directors address governance problems on Dutch two-tier boards. Within this board model, challenges might be particularly difficult to address due to the formal separation of management boards' decision-management from supervisory boards' decision-control roles.

Design/methodology/approach

Semi-structured interviews and a questionnaire among non-executive directors provide unique insights into three major challenges in the boardrooms of two-tier boards in The Netherlands.

Findings

The study indicates that non-executive directors mainly experience challenges in three areas: the ability to ask management critical questions, information asymmetries between the management and supervisory boards and the management of the relationship between individual executive and non-executive directors. The qualitative in-depth analysis reveals the complexity of the contributing factors to problems in the boardroom and the range of process and social interventions non-executive directors use to address boardroom issues with management and the organization of the board.

Practical implications

While policy makers have been largely occupied with the “right” board composition, the results highlight the importance of adequately addressing operational challenges in the boardroom. The results emphasize the importance of a better understanding of board processes and the need of non-executive directors to carefully manage relationships in and around the boardroom.

Originality/value

Whereas most studies have focussed on regulatory initiatives to improve the functioning of boards (e.g. the independence of the board), this study explores how non-executive directors attempt to enhance the effectiveness of boards on which they serve.

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Article
Publication date: 10 November 2020

Irfan Saleem, Eric Lamarque and Rashedul Hasan

The purpose of this study is to study the evolution of French corporate governance law in light of collibration approach and bring statistical evidence from French…

Abstract

Purpose

The purpose of this study is to study the evolution of French corporate governance law in light of collibration approach and bring statistical evidence from French Companies Executive Compensation practices.

Design/methodology/approach

The study has used mixed methods. In the first part, the authors analyzed the French laws in the light of collibration. In the second part of the study, the authors used unbalanced panel data to test the hypotheses related to executive remuneration based on the theoretical underpinning of collibration. Data for 173 firms listed in the Euronext Paris Index is collected from the Bloomberg database. Seemingly unrelated regression (SUR) analysis is performed to investigate the impact of collibration on the governance disclosure of French-listed firms.

Findings

SUR results indicate that board size plays a significant role in the governance disclosure before collibration. However, the collibration model is found to be more effective in ensuring the desired level of governance disclosure. Under the collibration approach, executive remuneration, frequency of board meetings, executive directors in the compensation committee and independent directors play a significant role in governance disclosure. Board size, however, does not have a substantial impact on governance disclosure after the adoption of collibration mechanism.

Research limitations/implications

Results provided by this study can allow regulators to improve corporate disclosure regime in France, which could play a vital role in safeguarding the interest of stakeholder.

Originality/value

The authors study the impact of collibration on the extent of governance disclosure in the context of France. Empirical evidence on the implication of collibration as governance mechanisms to enhance stakeholder confidence is rare and allows this study to make a unique contribution to the governance literature.

Details

International Journal of Law and Management, vol. 63 no. 2
Type: Research Article
ISSN: 1754-243X

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Article
Publication date: 18 September 2019

Ebrahim Mohammed Al-Matari

Consistent with the board of directors and top executive management’s role in ensuring and promoting investments for economic development, this paper aims to examine Omani…

Abstract

Purpose

Consistent with the board of directors and top executive management’s role in ensuring and promoting investments for economic development, this paper aims to examine Omani executive management’s role in helping goals achievement in firms. This paper examines the relationships among the study variables, which are top executive management characteristics and corporate performance in the context of Omani listed firms, with the help of two control variables.

Design/methodology/approach

The study focused on a unique context, a developing nation, Oman and its exchange market for the past seven years (2011-2017). In addition, the data were collected from annual report according to board of directors and top executive management variables, and the financial data were obtained from DataStream. The study used the panel data approach to test the relationships characteristics of board of directors, top executive management and corporate performance.

Findings

Based on the obtained results, showed positive and significant positive relationships between some characteristics of top executive management and corporate performance, and significant negative relationships between others and the same. Specifically, board size, non-executive directors, general experience and account experience were in the former category, while board meeting was in the latter category. Finally, size and professional certificate of top executive management did not have a significant relationship with corporate performance.

Research limitations/implications

This study, like previous studies has some limitations such as sample, country, variables and years; therefore, at the end of this study, many limitations and suggestions for future research studies are provided. Moreover, the study findings can be used by the market to assist managers to enhance corporate weaknesses.

Originality/value

The focus of the study was placed on the top executive management and corporate governance of Omani listed firms that has implications for practitioners particularly concerning the top executive management role. Added to this, the study conducted an investigation of the integration between board of directors and top executive management, with corporate governance among Omani listed firms. The study also provided information that has implications to academics when it comes to board of directors and top executive management strategies to encourage consideration of the relationship to develop best practices.

Details

Corporate Governance: The International Journal of Business in Society, vol. 20 no. 1
Type: Research Article
ISSN: 1472-0701

Keywords

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Article
Publication date: 1 April 2003

Sheila Jackson, Elaine Farndale and Andrew Kakabadse

In a review of the literature, supported by six case studies, executive development for senior managers in public and private organisations is explored in depth. The study…

Abstract

In a review of the literature, supported by six case studies, executive development for senior managers in public and private organisations is explored in depth. The study looks at the roles and responsibilities of the chairman, CEO, executive and non‐executive directors, the required capabilities to achieve successful performance, and the related executive development activity implemented to support these. Methods of delivery, development needs analysis and evaluation are explored in case organisations to ascertain current practice. A detailed review of the leadership and governance literatures is included to highlight the breadth of knowledge required at director level. Key findings of the study include the importance of focusing executive development on capability enhancement, to ensure that it is supporting organisational priorities, and on its thorough customisation to the corporate context. Deficiencies in current corporate practice are also identified.

Details

Journal of Management Development, vol. 22 no. 3
Type: Research Article
ISSN: 0262-1711

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Article
Publication date: 18 January 2016

Niamh M. Brennan, Collette E. Kirwan and John Redmond

The purpose of this paper is to understand the influence of information and knowledge exchange and sharing between managers and non-executive directors is important in…

Abstract

Purpose

The purpose of this paper is to understand the influence of information and knowledge exchange and sharing between managers and non-executive directors is important in assessing the dynamic processes of accountability in boardrooms. By analysing information/knowledge at multiple levels, invoking the literature on implicit/tacit and explicit information/knowledge, the authors show that information asymmetry is a necessary condition for effective boards. The authors introduce a conceptual model of manager-non-executive director information asymmetry as an outcome of the interpretation of information/knowledge-sharing processes amongst board members. The model provides a more nuanced agenda of the management-board information asymmetry problem to enable a better understanding of the role of different types of information in practice.

Design/methodology/approach

The analysis of information/knowledge exchange, sharing and creation and the resultant conceptual model are based on the following elements: manager-non-executive director information/knowledge, management-board information/knowledge and board dynamics and reciprocal processes converting implicit/tacit into explicit information/knowledge.

Findings

The paper provides new insights into the dynamics of information/knowledge exchange, sharing and creation between managers and non-executive directors (individual level)/between management and boards (group level). The authors characterise this as a two-way process, back-and-forth between managers/executive directors and non-executive directors. The importance of relative/experienced “ignorance” of non-executive directors is revealed, which the authors term the “information asymmetry paradox”.

Research limitations/implications

The authors set out key opportunities for developing a research agenda from the model based on prior research of knowledge conversion processes and how these may be applied in a boardroom setting.

Practical implications

The model may assist directors in better understanding their roles and the division of labour between managers and non-executive directors from an information/knowledge perspective.

Originality/value

The authors apply Ikujiro Nonaka’s knowledge conversion framework to consider the transitioning from individual implicit personal to explicit shared information/knowledge, to understand the subtle processes at play in boardrooms influencing information/knowledge exchange, sharing and creation between managers and non-executive directors.

Details

Accounting, Auditing & Accountability Journal, vol. 29 no. 1
Type: Research Article
ISSN: 0951-3574

Keywords

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Article
Publication date: 1 April 1996

John Deffenbaugh

The establishment of NHS trust boards on a business format was a recent innovation resulting from the NHS reforms. In order to realize benefits for patients, it is…

Abstract

The establishment of NHS trust boards on a business format was a recent innovation resulting from the NHS reforms. In order to realize benefits for patients, it is essential that boards operate effectively. Explores within the framework of corporate governance, the practical implications of board member roles. Drawing on experience of strategy formulation at board level, analyses and clarifies the roles, and presents recommendations to increase board effectiveness.

Details

Journal of Management in Medicine, vol. 10 no. 2
Type: Research Article
ISSN: 0268-9235

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