Session 111

Why Boards Look the Way They Do: Director Selection

Track O

Date: Tuesday, October 9, 2012

 

Time: 11:00 – 12:15

Common Ground

Room: Meeting Room 2.1


Facilitator:

  • Scott Johnson, Oklahoma State University

Title: Identifying Effective Boards: Distinguishing between Boards\' Symbolic versus Psychological Independence

Authors

  • Dawn Harris, Loyola University Chicago
  • Sanjay Goel, University of Minnesota Duluth

Abstract: In spite of decades of research and prescriptions on board independence, the empirical evidence on the existence and effect of board independence remains ambiguous. In this paper, we propose an alternative perspective on board independence, using developments in identity theory and its application. We distinguish between board’s symbolic independence and its psychological independence. We provide arguments why symbolic independence of the board may be conceptually deficient in achieving board independence. We develop a conceptual framework arguing that an identity-based psychological independence of the board not only achieves a more tangible independence, but may also be linked directly to board effectiveness.

Title: Integration Across the board: What Drives Post-Acquisition Appointments of Target Firm Directors to Acquirers\' Boards?

Authors

  • Katalin Takacs Haynes, University of Delaware
  • Mario Schijven, University of Illinois at Urbana-Champaign

Abstract: The literatures on boards of directors and acquisitions represent important, but distinct research domains within strategic management. A small number of studies reveals the influence boards of directors have on acquisitions but there is a dearth of information about the influence of acquisitions on board composition. This study opens a line of inquiry into the selection of directors from the target firm. We first examine whether the nature of the acquisition determines director selection such that the economic and social perspectives that drive acquisitions are also present in director selection. After identifying board composition profiles that positively influence firm performance, we investigate the speed with which post-acquisition companies align their boards with the ideal profiles.

Title: Internal and External Power Struggles in Board Member Selection

Authors

  • Alina Wilker, University of Munich
  • Anja Tuschke, University of Munich
  • Patricia Klarner, Erasmus University Rotterdam

Abstract: This paper examines how the appointment of new board directors is impacted by the power of a firm’s main actors, namely the CEO, the board chairman, current directors, and shareholders. Our analysis of director selection decisions in a sample of 110 listed German firms between 2004 and 2009 shows that CEOs’ influence on director selection differs by their power base (tenure, status, and ownership). Findings also reveal that CEOs’ ability to influence director selection is constrained by the power of the board and large shareholders. Additionally, firm complexity decisively impairs director selection decisions. Overall, our results contribute to corporate governance research by showing that CEO power can be counterbalanced internally and externally within the context of director appointments.

Title: Supply Side Considerations on the Market for Corporate Directors

Authors

  • Michael Withers, Texas A&M University

Abstract: Understanding the determinants of board composition is a central focus of corporate governance research. While extant research offers a number of key insights into understanding board composition, it has done so often neglecting the individual-level characteristics of the potential director. This study examines the individual-level determinants of why current corporate directors receive subsequent board appointments. Integrating research on director selection and human and social capital perspectives of job mobility, I argue that certain human and social capital indicators of director’s ability to perform the monitoring and resource functions should directly relate to his or her likelihood of joining a new board, with those directors with higher levels of human and social capital more likely to join new boards.

Title: Where do Intra-Group Directors Come From? A Resource Dependence Perspective

Authors

  • Giin Lee, Korea University
  • Hicheon Kim, Korea University

Abstract: Business groups add value through resource sharing and coordination. However, operational details and an analysis of which party receives benefits have not been fully explored. Because they directly influence firms' strategies with valuable knowledge and experience from group firms, intra-group directors are proper means to examine resource sharing mechanisms among member firms. In this paper we examine how member firms’ ties within a group influence the number of intra-group directors. Specifically we consider trade ties, ownership ties, and knowledge ties as an indicator of a firm’s need of external links. We conclude that ownership ties and knowledge ties show a significant positive relationship with the number of intra-group directors. This study explains how business groups use human resources to facilitate group coordination and resource sharing.

Title: Why do Outside Directors Serve on Boards? Directors’ Motives and Board Effectiveness

Authors

  • Ying Feng, ESC Rennes School of Business
  • Jatinder Sidhu, Erasmus University Rotterdam

Abstract: In the flourishing literature on corporate governance, the motivation of outside directors to serve on boards tends to be taken for granted. Yet, the willingness of individuals to join boards is not straightforward to explain. Because neither the pecuniary rewards nor the intrinsic features of the job are necessarily very attractive, directors’ motives constitute an intriguing phenomenon worthy of theoretical and empirical inquiry. In this research we draw on agency, stewardship and social exchange theories to predict alternative conditions that motivate outsiders to join a board. We furthermore argue that directors’ motives can be anticipated to have a bearing on board processes and board effectiveness. Our propositions are tested using data from a wide cross-section of Chinese firms.

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


Strategic Management Society

Prague