Session 106

Why do Firms do Bad Things and What Do We Know about It?

Track O

Date: Monday, October 8, 2012

Track M

Time: 08:00 – 09:15

Paper

Room: Club C


Session Chair:

  • Tammy E Beck, University of Nebraska-Lincoln

Title: Corporate Governance and Corporate Financial Fraud of Chinese Listed Firms

Authors

  • Daphne Yiu, Chinese University of Hong Kong
  • William Wan, City University of Hong Kong

Abstract: We posit that alternative governance mechanisms exist or emerge to guard against corporate financial fraud in transition economies where market-based formal institutions for an efficient corporate governance system are lacking or underdeveloped. In this proposed study, we identify three types of alternative governance mechanisms – relational governance, administrative governance, and foreign governance. We contend that although they may not be as efficient as formal corporate governance mechanisms available in some developed economies, they are complementary to the prevailing institutional framework of transition economies, thus representing useful deterrents of corporate financial fraud during institutional transition. We test the hypotheses using a sample of Chinese listed firms during 2000 to 2005.

Title: Desirable Attributes and Undesirable Outcomes: An Examination of Executive Cognitive Structure and Social Irresponsibility

Authors

  • K. Ashley Gangloff, Auburn University
  • LaKami Baker, Auburn University
  • Tammy E Beck, University of Nebraska-Lincoln
  • John Fleenor, Center for Creative Leadership

Abstract: This study explores the influence of executive cognitive structures on the firm’s engagement in socially irresponsible corporate behavior. Drawing from upper echelons theory and concepts rooted in criminology, we advance a multi-level model including individual, organizational, and industry level predictors of social irresponsibility. In the proposed study we examine the relationship between executives’ results orientation and ambitiousness and their firms’ engagement in socially irresponsible corporate behavior. Further, we propose the role of pressure and opportunity as moderators of these relationships. The proposed study makes contributions to the upper echelons literature as well as social responsibility and decision making streams.

Title: Good Boards Gone Bad: The Escalation of Commitment of a Board to an Underperforming CEO

Authors

  • Michelle Zorn, Auburn University
  • Annette Ranft, University of Tennessee
  • Kaitlyn DeGhetto, University of Colorado, Colorado Springs

Abstract: An important pursuit is to understand more about the strategic decision-making of the firm’s board of directors. Theoretically, board members are viewed as rational actors that act in the shareholders’ best interests. This view does not recognize that board members are subject to the same rational limits and cognitive biases as all decision makers. We extend prior escalation of commitment literature to examine the relationship between the board of directors and the CEO. This provides a platform to investigate important factors that may unintentionally influence board members’ ability to act rationally and in the best interest of shareholders. In doing so, we integrate justification arguments and prospect theory to develop a model and propositions to help stimulate discussion and future empirical work surrounding this relationship.

Title: Locked in Time: The Temporal Inertia of Traditional Governance Research

Authors

  • Brian Boyd, City University of Hong Kong
  • Marta Geletkanycz, Boston College

Abstract: The mainstays of corporate governance research – among them, agency, managerialist, and resource dependence theories – were formulated decades ago, and in an era of vastly different political, social, and regulatory constraints. Nevertheless, these theories provide the lens through which many scholars (even in 2012) continue to explore governance, if not advance prescriptive wisdom. In this study, we examine the role of transitions in governance. Our setting is not an emergent economy and/or industries in upheaval. Rather, our focus is on traditional governance research, and scholars’ attendance to critical transitions in related practice. We find that over a thirty-year evolution, governance reforms have largely gone unaddressed in top-tier research. Implications for governance understanding, as well as adaptive remedies are discussed.

All Sessions in Track O...

Sun: 08:00 – 09:15
Session 119: Strategic Leadership
Sun: 09:30 – 10:45
Session 120: Corporate Governance
Sun: 11:15 – 12:30
Session 122: Strategic Leadership and Corporate Governance Complementarities: Why we Are an IG
Sun: 15:15 – 16:30
Session 107: The Benefits of Experience: Vicarious and Otherwise
Mon: 08:00 – 09:15
Session 106: Why do Firms do Bad Things and What Do We Know about It?
Mon: 09:30 – 10:45
Session 103: Reputation: Organizational and Individual Dimensions
Mon: 13:30 – 14:45
Session 112: CEO and TMT Turnover: Firm Implications
Session 214: CEOs and Leadership
Mon: 16:30 – 17:45
Session 113: Large Shareholders are Doing it for Themselves
Tue: 08:00 – 09:15
Session 115: Board Member Characteristics and Board Diversity
Session 137: CEO Human Capital: Take a Little off the Top
Session 254: Capital Markets and Efficiency
Tue: 11:00 – 12:15
Session 111: Why Boards Look the Way They Do: Director Selection
Session 117: Heterogeneous Owner Types and their Influence
Tue: 14:15 – 15:30
Session 108: CEOs Matter, Don\'t They?
Session 116: Discretion and Compensation
Tue: 15:45 – 17:00
Session 114: Adoption of a Practice and its Implications
Tue: 17:30 – 18:45
Session 118: The TMT as a Unit
Session 215: CEO Personality and Characteristics Influencing Decision Making

All Sessions in Track M...

Sun: 08:00 – 09:15
Session 126: Entrepreneurship & Stakeholders - The Future Research Agenda
Sun: 11:15 – 12:30
Session 276: Performance Measurement Tools: A Review of Progress
Mon: 08:00 – 09:15
Session 106: Why do Firms do Bad Things and What Do We Know about It?
Mon: 09:30 – 10:45
Session 15: Human Factors in Stakeholder Strategy
Mon: 13:30 – 14:45
Session 12: Effective Stakeholder Management
Session 138: Value Creation & Appropriation: Take the money and run
Mon: 16:30 – 17:45
Session 113: Large Shareholders are Doing it for Themselves
Tue: 08:00 – 09:15
Session 11: Stakeholders and Corporate Social Performance
Tue: 11:00 – 12:15
Session 117: Heterogeneous Owner Types and their Influence
Tue: 14:15 – 15:30
Session 182: Challenges for Stakeholder Management
Tue: 15:45 – 17:00
Session 10: Stakeholders and Crisis Performance
Tue: 17:30 – 18:45
Session 13: The Problem of Performance in the Theory of the Firm:


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