The growing emphasis on sustainability in the business landscape has prompted scholars and industry practitioners to explore the role of corporate governance, particularly the board of directors, in promoting corporate sustainability. Companies are called upon to operate ethically and to redefine their objectives beyond mere economic pursuits to create social impacts that contribute to sustainability challenges. Corporate governance plays a key role in this regard, as it defines the purpose and ethical orientation of the firm, thereby shaping its sustainability. While (...) previous research has primarily focused on observable board characteristics, this study delves into a critical yet underexplored aspect of sustainable boards, i.e., the sustainability experience. Drawing on the upper echelon and resource dependency theories, our research examines how the sustainability experience of board members influences a firm’s sustainability performance, investigating the moderating effect of board age. We analyzed European listed companies from 2014 to 2020, and our findings show that the effect of board sustainability experience on firm performance is contingent on board age. Specifically, our results show that younger boards amplify the positive effect of sustainability experience, while for older boards, this effect diminishes, up to the point of being completely mitigated, highlighting a potential misalignment between sustainability efforts and ethical business conduct. This study is pioneering in investigating the joint effects of board sustainability experience and board age on a firm’s sustainability, thus, providing valuable contributions to theory and practical recommendations for firms in director recruitment, as well as recommendations for regulatory practices. (shrink)

This issue was published in the framework of a program that has been made possible by the generous support of the American people through the United States Department of State. The contents are the responsibility of the authors and do not necessarily reflect the views of the Department of State or the United States Government.

Board composition, insider participation on compensation committees, and director compensation practices can potentially cause conflicts of interest between directors and shareholders. If these corporate governance structures result in situations where actions beneficial to directors do not also benefit shareholders, then shareholders may suffer.Corporate ethics programs usually address conflicts of interest that may arise in the firm''s activities. Some boards of directors take active roles in their firms'' ethics programs by actively overseeing the programs. This paper empirically examines the relationship (...) between ethics programs and potential conflicts of interest and the relationship between board involvement in a firm''s ethics program and potential conflicts of interest. (shrink)

We explore the impact of board resources arising from diverse board members on the achievement of environmental, social, and governance (ESG) goals. Employing resource dependence theory as our frame and drawing on qualitative data from 41 interviews with board directors of publicly traded and privately held companies in the United Arab Emirates (UAE), we identify three key mechanisms underpinning the achievement of ESG goals, namely, the leveraging of particular connections, the deployment of different resources, and the harnessing of a range (...) of diversity types. We find that the use of social resources is often related to environmental concerns and occasionally social goals, but rarely governance issues. We also find that financial motivations often drive environmental issues, while many of the social resources that added value occurred in the public sector. Importantly, the combining of both skill and social resources, rather than relying on each alone, was seen to increase the likelihood of achieving ESG goals. Our findings also point to the importance of board diversity in accomplishing the board's ESG goals, most especially functional diversity. We propose that such functional diversity, along with resources in the form of social resources and skills, needs to feature more prominently in order to improve ESG performance and outcomes. We highlight the implications of our work, especially regarding the establishment of board diversity policies beyond gender alone. (shrink)

One of the fundamental principles of good corporate governance is transparency, i.e., the disclosure of private information to external stakeholders, so that they may make judgments and decisions relating to the corporation. Equally important, but less discussed, is the competing value that corporations need to protect legitimate secrets. Corporations thus need a communication strategy for dealing with external stakeholders which addresses the conflict between disclosure and secrecy. This article focuses on an important element of that communication strategy in the context (...) of financial reporting: the possibility that corporate insiders may consider it in their interest, or in the interest of specific stakeholders, to alter or manipulate the financial information that it discloses publicly. Using concepts from the corporate governance and financial reporting literatures, it addresses the ethical question of who (management or the board of directors) should be responsible for making the fundamental strategic choices whether and (if so) how the corporation alters or manipulates the financial information. This article argues that the board of directors is responsible for formulating (and monitoring) the corporation's communication strategy, and that management is responsible for carrying it out. (shrink)

This article investigates whether increased female representation on a board improves firm performance in terms of electric vehicle (EV) sales in China when government subsidies are available. The increase in EV sales in China is a direct result of the sustainability efforts spearheaded by the various levels of local and state governments. This area is of importance due to the rising Chinese footprint in global EV sales, the increasing role of subsidies, and a transformation from State-Owned Enterprises (SOEs) to market-driven (...) firms that are more likely to pay attention to corporate governance issues such as board diversity. Using the instrumental variable (IV) approach, we estimate a two-stage least squares (2SLS) regression to control for more women representation on EV boards using firm-level data. The results indicate that board gender diversity (BGD) positively impacts firm performance in terms of EV sales. Furthermore, the effect amplifies in the presence of government subsidies. The insights provide valuable contributions to bridge the critical literature gap on how board diversity impacts firm performance in the presence of subsidies and offer valuable insights into corporate governance and policymaking. (shrink)

This paper examines the relationships between corporate governance and corporate sustainability by focusing on two main components of companies’ governance structure: boards of directors and investor relations officers. We propose an original empirical strategy based on the 120 biggest French capitalizations for the year 2013, allowing us to measure boards of directors’ independence and expertise, as well as investor relations officers’ convictions and communication on corporate sustainability. Our results show that corporate governance has an ambiguous impact on corporate (...) sustainability because of opposing forces: internal, external and intermediate forces. On the one hand, the higher the proportion of inside directors, the higher the company’s environmental and governance performance, while the higher the proportion of general experts in the board room, the lower the company’s governance performance. On the other hand, investor relations officers’ beliefs that corporate sustainability is primarily driven by investors’ ethical values appear negatively related to companies’ governance performance. In sum, corporate sustainability appears positively related to internal forces and negatively related to external forces. The results of this study demonstrate the need to carry out efforts to train BoDs and IROs to respond to corporate sustainability and to take more of a leadership role in this area. (shrink)

Business ethics is one of the most significant demands made by institutional and individual investors, who usually require the participation of the board of directors in the planning and implementation of ethical behaviour in corporations. This is done by drawing up an ethics code and then monitoring its fulfilment. This study has a dual objective: first, to analyse the role played by the composition of the board of directors, and by that we mean its independence and the diversity of its (...) members, on the implementation and scope of an EC, and, second, to detect whether the corporate governance system moderates the level of involvement of the board in ethical issues. The findings obtained from a data panel sample made up of 760 listed companies from 12 countries for the years 2003–2009 show that the largest companies with large-sized and diverse boards implement the most developed ECs. Nevertheless, the extent of involvement of the independent directors is conditioned by the level of shareholder orientation characteristic of the system of CG in the corporation’s country of origin. (shrink)

This study investigates whether and to what extent publicly listed corporations voluntarily comply with and disclose recommended good corporate governance practices, and distinctively examines whether the observed cross-sectional differences in such CG disclosures can be explained by ownership and board mechanisms with specific focus on Saudi Arabia. The study’s results suggest that corporations with larger boards, a Big 4 auditor, higher government ownership, a CG committee, and higher institutional ownership disclose considerably more than those that are not. By contrast, (...) the study finds that an increase in block ownership significantly reduces CG disclosure. The study’s results are generally robust to a number of econometric models that control for different types of disclosure indices, firm-specific characteristics, and firm-level fixed effects. The study’s results have important implications for policy makers, practitioners, and regulatory authorities, especially those in developing countries across the globe. (shrink)

This paper was inspired by the intersection of Tom Lyson’s interest in how power is concentrated in society’s institutions and his concern for the role of the land-grant system in revealing and addressing inequities that occur as a result of such concentration. This study examines the power structure that governs land-grant universities by presenting social and demographic information on 635 trustees at the 50 US land-grant universities established by the Morrill Act of 1862. Along with these data, Fortune 1000 companies (...) with which land-grant universities are connected through board member interlocks are listed and charted out. The research found that land-grant governing boards are characterized by some degree of demographic homogeneity, but they are less corporately interconnected than their private university counterparts. (shrink)

The governance structures of state public health systems vary as much as the states themselves, including the existence and role of state boards of health. Understanding these differences is essential to a complete understanding of the governmental public health enterprise. State boards of health are obvious vehicles for public health policy development in some states, where they work closely with or oversee state health agencies. In other states they do not exist or serve only in a non-binding advisory (...) capacity.In this article, we distinguish and identify state boards of health and state public health advisory boards, examine state boards of health in practice, and discuss their role in advocacy and policy development in the context of state politics. We used a set of mixed qualitative methods, including a literature review, online research of state statutes establishing state board of health authorities, and key informant interviews. Informants were five current and former state board of health members, four current and former state health officers, and nine state health agency senior policy staff, spanning 13 states. (shrink)

The governance structures of state public health systems vary as much as the states themselves, including the existence and role of state boards of health. Understanding these differences is essential to a complete understanding of the governmental public health enterprise. State boards of health are obvious vehicles for public health policy development in some states, where they work closely with or oversee state health agencies. In other states they do not exist or serve only in a non-binding advisory (...) capacity.In this article, we distinguish and identify state boards of health and state public health advisory boards, examine state boards of health in practice, and discuss their role in advocacy and policy development in the context of state politics. We used a set of mixed qualitative methods, including a literature review, online research of state statutes establishing state board of health authorities, and key informant interviews. Informants were five current and former state board of health members, four current and former state health officers, and nine state health agency senior policy staff, spanning 13 states. (shrink)

The study investigates the effect of board characteristics and firm performance on disclosure tones by considering DICTION five master variables namely activity, optimism, certainty, realism and commonality tones using a sample of 779 annual reports of GCC listed firms (2012 to 2018). Disclosure tones of the sampled GCC firms were measured through corporate narrative disclosures by DICTION 7.0 software. Then, the ordinary least square regression analysis was conducted. The main findings of the study show that firm performance has a significant (...) effect on disclosure tones in terms of activity, optimism, certainty, and realism tones except for commonality reported tone. Board characteristics have different effects on the five disclosure tones. The study offers a unique contribution to accounting literature as it is one of the first studies in the Gulf region that seeks to examine the relationship between disclosure tones and firm performance as well as board governance. (shrink)

This study investigates how adoption of advisory governance policy encourages firms to become more responsive to their shareholders over time. Although shareholder activism is costly and often viewed as unable to drive meaningful change, we identify increasing shareholder voice as an underlying mechanism to explain how advisory policy adoption ultimately reshapes board–shareholder relations. Drawing on signaling theory and behavioral views of board–shareholder dynamics, we test our predictions following the broad shift in corporate board voting policies from plurality to majority vote (...) standards. While prior research shows that majority vote adoption has little to no direct impact on director elections, empirical results from 2,390 firm-year observations provide support for our hypotheses that adoption of this advisory electoral standard signals a willingness to hear shareholder concerns, leading to increased shareholder activism and, in turn, board responsiveness to shareholder proposals. Overall, our results help explain why some firms continue to fight the purely advisory policy and why an era of shareholder empowerment followed the majority vote campaign. (shrink)

Managers are most likely to turn to the board of directors for guidance during a period of crisis. But can good corporate governance prevent an organization from reaching that critical point in the first place? In light of the recent global financial crisis, this question has become all the more pressing, and so to prevent future crises, we argue that corporate boards of directors need to be keenly aware of the potential social harms that might arise from the value-creating (...) activities of the firm they are tasked with monitoring. Boards of directors must be vigilant in understanding the firm’s value proposition, perceiving the potential harms that managers tend to overlook, and inserting themselves into the strategy-making process. We offer a typology of scenarios involving potential social harm and benefit and analyze when boards of directors must take a more active role in shaping firm strategy despite resistance from management. (shrink)

Recent corporate scandals have put company boards in the spotlight. Legislation, codes of conduct, and guidelines have been developed to improve corporate governance. But while many prescriptions for improving corporate governance focus on the structure of boards, Dr. Richard Leblanc's research suggests that there is no direct causal relationship between board structure and corporate performance. Indeed, many recent failed corporations had exemplary board structure. Richard Leblanc discusses how to assess board effectiveness and improve it.

Start-up organisations are small companies that experience a high level of growth and considerable risk to their very survival until they evolve into stable, established companies. This situation presents a particular set of challenges in terms of corporate governance, yet research on the governance of start-ups is limited. This research paper examines and comments on the governance of start-up organisations in New Zealand. The study replicates and extends previous New Zealand-based research of boards of established companies. From the data (...) gathered from the two surveys, conclusions can be drawn as to the role and focus of boards in start-ups versus established companies. The results are consistent with a model of active ownership which identifies key differences from established companies that could improve the governance of start-ups. The results also highlight the dependence of what might constitute effective corporate governance for a start-up on the strategic context of the company and its life cycle stage. (shrink)

This study empirically investigates the dismissal of U.S. CEOs following negative media coverage of environmental, social, and governance (ESG) practices. Extending related literature on the media, ESG, and CEO dismissal, I develop a theoretical framework that considers the media as an influential third party that forms and reflects public opinion about ESG issues. In this role, the media reduces information asymmetry by providing cues on their relative salience and prompting corporate directors to attribute firm-level ESG issues to the CEO, regardless (...) of their involvement in the misconduct. Findings confirm this framework and particularly suggest that coverage of issues in prominent media sources is more likely to result in CEO dismissal. Further, companies that have made public commitments to ESG oversight and those with stronger monitoring are more likely to dismiss the CEO following negative coverage of ESG issues. Overall, this study builds an understanding of how contemporary boards approach the uncertain CEO dismissal decision amidst media coverage of ESG- related misconduct and reflects a shifting norm towards ESG integration at the board-level. (shrink)

This paper presents a preliminary progress report into the governance role that boards play (and should play) in the strategic planning process. It reports on whether the nature and degree of their involvement (or lack thereof) in certain strategic planning activities is positively associated with selected performance outcomes. The findings indicate that, surprisingly, a board's involvement in reviewing and discussing its organisation's financial statements may not be adding the kind of value that organisations look to receive from their board (...) of directors. (shrink)

Although non-profit organisations typically have high representation of females on their boards, relatively little is known about the effects of gender diversity in these organisations particularly in relation to financial management. In this archival study, resource dependency theory and agency analysis are combined to provide theoretical insight and empirical analysis of gender diversity on effective financial management in member-governed, community financial institutions. The investigation is possible due to the unique characteristics of the organisational form and region being examined—credit unions (...) in Northern Ireland. The sector has not been subject to external regulation on board gender, yet a wide array of gender mix on boards ranging from 100 % male to 100 % female are in existence. In addition, effective financial management is crucial to their survival and their ability to meet member objectives. Boards with higher female representation exhibit superior financial management first, in respect of loan book quality in the period of austerity following the financial crisis and second when measured against return on assets. (shrink)

Regulation is nothing without enforcement. This particularly holds for the dynamic field of emerging technologies. Hence, this article has two ambitions. First, it explains how the EU´s new Artificial Intelligence Act (AIA) will be implemented and enforced by various institutional bodies, thus clarifying the governance framework of the AIA. Second, it proposes a normative model of governance, providing recommendations to ensure uniform and coordinated execution of the AIA and the fulfilment of the legislation. Taken together, the article explores how the (...) AIA may be implemented by national and EU institutional bodies, encompassing longstanding bodies, such as the European Commission, and those newly established under the AIA, such as the AI Office. It investigates their roles across supranational and national levels, emphasizing how EU regulations influence institutional structures and operations. These regulations may not only directly dictate the structural design of institutions but also indirectly request administrative capacities needed to enforce the AIA. (shrink)

This study examines how and when nonprofit board performance is impacted by board diversity. Specifically, we investigate board diversity policies and practices as well as board inclusion behaviors as mediating mechanisms for the influence of age, gender, and racial/ethnic diversity of the board on effective board governance practices. The empirical analysis, using a sample of 1,456 nonprofit board chief executive officers, finds that board governance practices are directly influenced by the gender and racial diversity of the board and that board (...) inclusion behaviors together with diversity policies and practices mediate the influence of the board’s gender and racial diversity on internal and external governance practices. Additionally, we found an interaction effect that indicates when boards have greater gender diversity, the negative impact of racial diversity on governance practices is mitigated. The findings suggest that board governance can be improved with more diverse membership, but only if the board behaves inclusively and there are policies and practices in place to allow the diverse members to have an impact. (shrink)

Multinational corporations dominate the global business arena, but new expectations for MNC boards call to question how they might effectively manage global stakeholder relationships in this new era of accountability. Uniting political behavior theory, which describes a board’s international political orientation, and global operating governance systems outlining a set of board behaviors, we develop a typology of four types of boards. We then provide recommendations for the development of an integrative governance structure, taking into account the mechanisms, structure, (...) endorsements, and codes of conduct that MNCs can use to promote ethical behavior across MNC horizons. (shrink)

Corporate governance sits at the intersection of many disciplines, among them law, business, management, finance, and accounting. The point of departure for large portions of this literature concerns the ugliness of greed, ambition, misdemeanors, and malfeasance of corporations, their directors, and those actors who hold shares in them. This essay takes a rather different starting point. Drawing upon insights from a distant field, it uses the discussion of aesthetics in Dewey’s treatise on art to ask what motivates directors to act (...) in ways that constitute the attention and engagement that we associate with the effectiveness of boards. Using Dewey’s thinking about aesthetic experience, this paper examines the experience of organization boards, both in the literature and in the personal experience of the author. These observations point to need to reflect on motivation when considering both the practice of corporate governance and the policy frameworks in which it operates. (shrink)

This Article analyzes the composition of the board of directors as a vehicle for state intervention in corporate governance. Such intervention is ubiquitous and often motivated by goals that stray from shareholder wealth maximization, or corporate governance more generally, to promote other national interests such as diversity. Regulating board composition thus is merely the continuation of politics by other means. After briefly discussing direct state ownership in business firms as a way to advance policy goals, the Article explicates the tensions (...) between boards’ dual responsibilities of monitoring and strategy-setting. These oftentimes conflicting missions curb the law’s ability to guide board members’ conduct through the conventional legal duties of loyalty and care or other injunctions. Although the two roles also may entail conflicting implications for board composition, regulation of board composition nonetheless may prove a superior means for promoting policy goals, especially with regard to the objective of the corporation. Composition regulation harnesses board members’ personal attributes — specifically, their values — to facilitate the attainment of these goals. Instead of telling board members what to do, the state may fare better by regulating who they are. (shrink)

This paper unravels an unprecedented interplay between board gender diversity (BGD) and corporate environmental, social, and governance (ESG) disputes among Chinese A-share-listed nonfinancial companies from 2017 to 2021. Framed within a knowledge-based and sensemaking perspective of institutional frameworks, the research not only illuminates the profound impact of internal (corporate governance ratings) and external (regional institutional development) institutional factors on this intricate relationship but also brings to light a paradigm-shifting revelation. The study employed a diverse set of empirical tests, ranging from (...) ordinary least squares regression to advanced methods such as the generalized method of moments, two-stage least squares, and propensity score matching, providing a nuanced and comprehensive analysis. The findings highlight the pivotal role of female directors in significantly mitigating ESG disputes. A mechanism analysis further uncovers that internal and external institutional quality are potent positive moderators in shaping the BGD–ESG dispute dynamic. This research has profound implications, providing valuable insights for stakeholders, policymakers, and scholars, offering a comprehensive understanding of how gender diversity fosters sustainability while unravelling the intricate tapestry of internal and external institutional dynamics that shape ESG outcomes. (shrink)

After a crisis, broad and sweeping reforms are enacted to restore trust. Following the 2007-2008 Great Financial Crisis, the European Union has engaged in an ambitious overhaul of banking regulation. One of its centerpieces, the 2013 Fourth Capital Requirements Directive, tackles, amongst other things, the perceived pre-crisis failings in the governance of banks. We focus on the provisions that are aimed at reshaping bank boards’ composition, functioning, and their members’ liabilities, and argue that they are unlikely to improve bank (...) boards’ effectiveness or prevent excessive risk-taking. We criticize some of them for mandating solutions, like board diversity and the separation of chairman and CEO, that may be good for some banks but are bad for others, in the absence of any convincing argument that their overall effect is positive. We also criticize enhanced board liability by showing that it may increase the risk of herd behavior and lead to more serious harm in the event of managerial mistakes. We also highlight that the push towards unfriendly boards will negatively affect board dynamics and make boards as dysfunctional as when the CEO dominates them. We further argue that limits on directorships and diversity requirements will worsen the shortage of bank directors, while requirements for induction and training and board evaluation exercises will more likely lead to tick-the-box exercises than under the current situation in which they are just best practices. We conclude that European policymakers and supervisors should avoid using a heavy hand, respectively, when issuing rules implementing CRD IV provisions with regard to bank boards and when enforcing them. (shrink)

ABSTRACT:Despite 40 years of equal opportunities policies and more than two decades of government and organization initiatives aimed at helping women reach the upper echelons of the corporate world, women are seriously underrepresented on corporate boards. Recently, fifteen countries sought to redress this imbalance by introducing gender quotas for board representation. The introduction of board gender quota legislation creates ethical tensions and dilemmas which we categorize in terms of motivations, legitimacy, and outcomes. We investigate these tensions through four overarching (...) theoretical perspectives: institutional, stakeholder, social identity, and social capital. We outline a future research agenda based on how these tensions offer greater focus to research on quotas and more broadly to ethics and diversity in organizations in terms of theory, anticipated ethical tensions, data, and methodology. In sum, our review seeks to synthesize existing multidisciplinary research and stimulate future enquiry on this expanding set of legislation. (shrink)

In an open, unregulated and globalised economy, it is logical that the problem of corporate government not only occupy the time of academics, but also preoccupy both companies and the public administration. Corporate governance varies depending on several factors, such as the culture of a particular country, the economic situation and the organisational structures. Thus, there is no single recipe which can be applied automatically and is universally valid in all contexts. However, it is possible to propose some general principles (...) which have duly stood the test of experience and are recognised as providing valuable guidance for efficient corporate governance.The aim of this article is to present the Spanish "Olivencia Report", which is an attempt to draft an "ethical code" containing a number of practices and principles, which, if they were to be applied, could improve the governance of the larger Spanish companies listed on the Stock Market. (shrink)

The Sarbanes-Oxley Act of 2002 is considered by many to have made the most sweeping changes affecting corporate governance since the Securities and Exchange Acts of 1933 and 1934. About 4 years after its passing, however, many governance experts question whether the time and expense of compliance engender any real reforms. This article examines whether corporations have restructured their boards in response to the enactment of Sarbanes-Oxley and finds evidence that companies are implementing changes that should strengthen the monitoring (...) ability of their boards. (shrink)

The aim of this article is to analyse the internal mechanisms of corporate governance (board of directors and ownership structure), which influence voluntary disclosure of intangibles. The results appear to corroborate the view that an increase in institutional investor shareholding has a negative effect on voluntary disclosure, supporting the hypothesis of entrenchment, whereas an excessive ownership by institutional investors may have adverse effects on strategic disclosure decisions. The results also indicate that an increase in the number of members of the (...) board to up to 15 has a beneficial effect on the disclosure of intangibles. However, as this number increases, the effect inverts and becomes adverse to improving the capacity for supervision and control in the decision-making process regarding the voluntary disclosure of intangibles. The findings endorse the recommendation of the most of the Corporate Governance Codes regarding an advisable maximum of 15 members on a board to ensure its effectiveness and internal cohesion. (shrink)

Although corporate governance researchers have devoted considerable attention to the role of boards of directors in monitoring management and providing resources, less attention has been paid to whether and how they affect the strategic actions of firms in response to changing environments. Taking a process-based perspective, we examine how several prevalent board processes affect the involvement of boards in strategic decision-making and how such involvement shapes organizational performance. Moreover, we offer an initial attempt to compare the strategic role (...) of boards in for-profit and non-profit organizations. An investigation of 217 for-profit and 156 non-profit organizations in Canada indicates that different processes lead boards to different levels of strategic involvement, and that such effects are contingent on the types of organizations concerned. Moreover, boards that are active in strategic decision-making enhance the performance of their organizations. Our findings have implications for board research and practice. (shrink)

This study investigates how board size and occupational background of directors differentially influence social performance in for-profit and non-profit organizations. Using data from California hospitals, we develop a quantitative measure of social performance and provide the following empirical evidence. First, board size is negatively (positively) associated with social performance in for-profit (non-profit) hospitals. Second, the presence of government officials on the board is negatively (positively) related to social performance in for-profit (non-profit) hospitals. Third, representation of physicians on the board is (...) positively associated with social performance in for-profit hospitals, whereas their presence is not significantly related to social performance in non-profit hospitals. Our findings highlight the different effects of governance mechanisms on social performance in for-profit and non-profit organizations. (shrink)

In recent years, the US and the EU have pursued markedly different agendas in the pursuit of board gender diversity. The EU has taken a more pro-active governmental approach of mandated quotas, whereas the US is relying largely on the endogenous mechanism of shareholder diversity proposals. Despite their obvious allure as a means of bringing about rapid change, evidence is mounting that board gender diversity quotas may yield various deleterious side effects; and quotas may not be as successful in their (...) core aim of promoting gender diversity as initial broad statistical measures indicate. In this paper we critique the expanding EU quota regime, and consider US shareholder proposals as an alternative change mechanism for improving gender diversity in corporate boards. As an alternative to quotas, diversity resolutions are often dismissed as ineffective because the vast majority fail to formally pass (with a failure rate close to 95%). However, on closer inspection, this ‘failure’ actually results in success. Contrary to the conventional ‘folk’ wisdom -- in the quest to promote gender diversity on corporate boards, the endogenous (US) mechanism of board diversity proposals has, to date, resulted in similar increases in gender diversity as the exogenous (EU) mechanism of government-mandated gender quotas. Furthermore, the former mechanism is more consistent with recent ‘third-wave’ feminist theory. We conclude with the policy recommendation that, rather than quotas, the EU should focus on removing the regulatory barriers that inhibit shareholder democracy. (shrink)

Does the board of directors influence cost of debt financing? This study of a sample of Spanish listed companies during the period 2004-2007 provides some evidence about the question. The results suggest that two board attributes - director ownership and board activity - appear to influence in the risk assessment of debtholders because of their ability to reduce agency cost and information asymmetry. We also find a non-linear relationship between board size and cost of debt, suggesting that from certain levels (...) the benefits of large boards may be outweighed by the cost of poorer communication and increased decision-making time. (shrink)

In the slipstream of several large-scale corporate scandals, the board of directors has gained a pivotal position in the corporate governance debate. However, due to an overreliance on particular methodological (i.e. input–output studies) and theoretical (i.e. agency theory) research fortresses in past board research, academic knowledge concerning how this important governance mechanism actually operates and functions remains relatively limited. This theoretical paper aims to contribute to the promising stream of research which focuses on behavioural perspectives and processes within the corporate (...) board, by delving into one of the research areas perhaps plagued most by these predominant approaches: board leadership. In adopting a team perspective on the board of directors our study goes beyond traditional board leadership research, which has turned a blind eye on actual leadership dynamics, by examining leadership processes and behaviours inside the board team. Specifically, we develop a conceptual framework addressing a novel and ethical approach to team leadership within the board, i.e. shared leadership, which has previously been demonstrated to result in performance benefits in various other team settings. (shrink)

Scholars have emphasized the potential of self-regulation, realized through ‘codes of good governance’, to improve gender diversity on boards. Yet, unconvinced of the effectiveness of this self-regulation, many regulators have implemented mandatory quota laws. Our study sheds light on this dilemma. Seeking to broaden our conceptual knowledge of how such ‘codes’ work in the specific case of gender diversity on boards, we ask: Under which conditions is self-regulation via voluntary principles of good governance effective? Expanding recent institutional-theory perspectives (...) from the literature of women on boards, we show that, in the case of Austria, self-regulation via code recommendations is ineffective unless supported by additional forces. The primary reason for this, we argue, is that nominators do not expect benefits from gender-diverse boards. Furthermore, non-compliant companies face little pressure to change due to the small number of companies that have already adopted respective code recommendations. We identify two potential alternatives to boost the effectiveness of voluntary self-regulation for gender-diverse boards: First, the introduction of concrete targets for female representation and the public monitoring of fulfillment; and, second, the establishment of a credible threat that mandatory quotas will be imposed if diversity goals are not achieved. Drawing on longitudinal data from 2006 to 2016 on listed and state-owned companies in Austria, we give an empirical account of the conditions that assure effective self-regulation. Arguing that codes suffer from what we call ‘opportunity bias’, we conclude that political goals based on ethical rather than instrumental considerations are unlikely to be effectively implemented solely by codes of good governance. (shrink)

We examine the key elements of board diversity (or heterogeneity) amongst listed companies operating in an emerging economy (Mauritius) and the extent to which these influence financial performance. Specifically, we ask whether there is evidence of tangible benefits in pursuing a strategy of board diversity in terms of gender-, age-, educational background and independence in a corporate context which has long been dominated by family-led and ‘closed’ boardrooms. In light of recent corporate governance developments which appear to foster greater diversity, (...) we examine data from the 2007 annual reports of all 42 companies listed on the Stock Exchange of Mauritius. We find that (i) women remain poorly represented on boards (ii) there is a relatively satisfactory level of heterogeneity in terms of educational background, age and independence in relation to developed countries. We also find significant regression coefficients for all four variables in terms of their impact on short-term performance. However, these relationships are characterised by both negative and positive impacts thereby leading to discussions on the validity of a strict heterogeneous or homogeneous board composition in the context of a developing economy. (shrink)

Outside directors’ regular board meeting attendance is important in improving the effectiveness of a governance system. Such attendance is evidence of their commitment to the firm as key other players in monitoring and decision making. Using a unique dataset for Korean firms, and three-level random coefficients models, we find that, foreign outside directors, an independent appointment process, professional knowledge of business operations and accumulated firm-specific knowledge are important factors that affect outside directors’ attendance of board meetings. The results also confirm (...) that both outside directors’ personal characteristics and the social context are crucial in understanding their board meeting attendance. Further analysis shows that a positive corporate environment that supports the outside director system encourages outside directors’ attendance at board meetings. (shrink)

This article seeks to contribute to the literature on corporate governance with particular focus on state-owned enterprises (SOEs). We put our analysis into the context of Russian SOEs operating in an economy with a high level of the state presence, and investigate the relationship between board characteristics and the dividend policy of SOEs. Specifically, we add to the studies on corporate governance in emerging markets by consideration of professional attorneys, a special category of mandated directors and a unique feature of (...) boards of Russian SOEs. We analysed a panel of 1,226 firm-year observations for 2009-2012, the specific period of incremental innovations in SOEs' governance. Generally, our results support the agency theory and demonstrate that an increase in the proportion of independent directors and professional attorneys and an increase in the dividend payouts occur simultaneously, while the proportion of executives on the board is negatively related to the payout ratio. (shrink)

This paper aims to critically review the existing literature on the relationship between corporate governance, in particular board diversity, and both corporate social responsibility and corporate social responsibility reporting and to suggest some important avenues for future research in this field. Assuming that both CSR and CSRR are outcomes of boards’ decisions, this paper proposes that examining boards’ decision making processes with regard to CSR would provide more insight into the link between board diversity and CSR. Particularly, the (...) paper stresses the importance of studies linking gender diversity and CSR decision making processes, which is quite rare in the existing literature. It also highlights the importance of more qualitative methods and longitudinal studies for the development of understanding of the diversity–CSR relationship. (shrink)