Boardroom Leadership: the Board of Directors as a Source of Strategic Leadership (original) (raw)
Related papers
Board Composition, Board Diversity and Stock Performance
Zenodo (CERN European Organization for Nuclear Research), 2021
The study investigates the relationship between six board compositions and stock returns. The results indicate a significant association between various board compositions and stock returns. Specifically, board size and executive directors have a negative impact, whereas independent directors enhance stock returns. Busy directors positively impact the abnormal stock returns for the companies in the non-financial industry, which implies that busy directors who serve on more boards tend to be well connected. More importantly, the results indicate a significant positive relationship between board tenure and stock returns. Board service time is perceived as the board quality of knowledge and experience from the investors' point of view.
Board Leadership Structure and Firm Risk-Taking Behaviour
Corporate Ownership and Control
In this paper the conceptual frameworks, which make different predictions about the effect of board leadership structure on firm risk-taking behaviour, are examined. From a sample of 243 Australian listed firms, it is found that leadership structure does not have any significant influence on firm risk; higher blockholder ownership or lower dividend payout is related to increased performance variance. This research suffers from some limitations; the archival study of the functional background of board chairman may not reveal the underlying relationship between the board of directors and firm risk-taking behavior. We only test the influence of leadership structure on performance variance; further research could investigate the potential impact of board composition on firm risk-taking propensity.
Studies 5-4-2018 Executive Portfolio Diversification Through
2018
In recent decades, many tminagers and executives have received company stock and stock options as a portion of their pay. As the incidence of this phenomenon increased, it became evident that insiders needed a way to diversify their holdings. One way this could be accommodated is through the issuance of dividends. This paper examined how executive stock ownership and managerial power impacted a firm's dividend policy. Specifically, it examined the power of an executive as measured by the G index. It further took into account the current level of ownership for a particular manager, as well as the value of their shares as a percentage of their total compensation, and how these measures affected the relationships. We hypothesized that greater managerial power and ownership would result in greater dividends issued per share as a means to diversify the managers' portfolio of wealth. In order to conduct this analysis, data on executive compensation, firm characteristics, and dividend policy was obtained from Compustat and Institutional Shareholder Services (ISS) within Wharton Research Data Services (WRDS). Econometric techniques such as regression analysis, panel vector auto-regression, and Granger causality tests were employed to test this hypothesis. Results looking at both correlation and causality between the power measure, level of ownership, and dividends per share were discussed.
An Organizational Portfolio Theory of Board Composition
A new theory of organizational change and success has recently been proposed, organizational portfolio theory (Donaldson, 1999). One purpose of this theory is to provide a fresh perspective on the determinants and consequences of board composition. After outlining organizational portfolio theory, this paper suggests some implications of the new theory for understanding the dynamic relationship between board composition and firm performance.
BOARD DYNAMICS AND DECISION-MAKING IN TURBULENT TIMES
Corporate Governance and Organizational Behavior Review, 2021
The board of directors’ role is evolving and becoming more important in the wake of corporate scandals resulting in the collapse of large corporations and losses to shareholders. Poor governance can lead to wrong decision-making, which might destroy organizations, particularly during times of environmental turbulence. The 2008 Global Financial Crises followed by 2011 Arab Spring throughout the MENA region and then 2019 pandemic situation are a few of many factors that created a turbulent economic and political environment for organizations, highlighting the importance of excellent decision-making skills. However, there is limited research on boards’ decision-making during difficult times in the MENA region. The authors interviewed 26 board members of 21 companies operated under duress to examine the effects on boardroom level decision making of the magnified levels of duress and stress experienced during turbulent times. Key findings from the research include trends in emotional responses in relation to decision-making, changes in the decision-making process after crises, leadership positions, and board behavior. The authors recommend that boards incorporate diversity training and awareness into all levels of their decision-making process and to the board members’ selection process. Future research should expand to different regions and industries and examine the effects of board members’ personal traits and backgrounds on their quality of choices and decision-making.
Board Rudiments and the Executive Attitude Towards Corporate Risk-Taking
International Journal of Financial Research, 2018
This paper examines the effect of key board distinctiveness on managerial risk-taking behaviour. Using a total sample of 121 firms made up of 1,166 corporate directors and 847 firm-year observations, the study finds robust evidence across the three stages of estimation that suggests power separation in terms of CEO non-duality is negatively associated with executive risk-taking due to enhanced board assertiveness and independence. Board size is inversely associated with the variability of market value measure both within and at inter-firm levels. With average board membership in the study sample made up of 10 directors, the study finds crucial empirical evidence that points to the key benefits of large board configuration including the social capital, diversity of thoughts, knowledge, and experience, effectiveness and vigilance which curtails executive entrenchment. In contrast, the paper records positive association between the presence of foreign directors and corporate risk-taking. Due to their wealth of experiences, foreign directors tend to have more strategic sense of purpose and are likely not to hesitate in taking appropriate risk decisions when it really matters. While the paper finds little evidence that suggests a within-firm positive relationship between board independence and managerial risky propensities, there was no evidence found to indicate that board quality and ethnic diversity affects corporate risk-taking.
Understanding the leadership role of the board chairperson through a team production approach
Current corporate governance recommendations-rooted in an investor-based shareholder supremacy model-often narrowly discuss the issue of board leadership as whether or not there is a separation of the CEO and chairperson positions. In this article, we employ a team production approach to better understand the leadership role of the board chairperson. We argue that effective board performance is driven by the extent to which corporate directors bring relevant knowledge into the boardroom. An important prerequisite, however, is that the knowledge must be actively used. In line with this argument, we contend that the competencies and behaviors of the board chairperson are critical in order to unleash a board's value-creating potential.
From Duality to Dynamics: Past, Present and Future in Research on Board Leadership
2012
This chapter provides a review of 127 published articles reporting on board leadership in corporate governance research. The articles are reviewed and presented with respect to the background of authors, the academic journals where studies are published, the main topics that is pursued, the empirical contexts and the methodologies used. Moreover, we identify trends in scholarly thinking on board leadership that has emerged and developed during the past decades. On the basis of these findings, we provide directions for further research on board leadership. Also, we make some reflections about possible research streams that may provide fertile ground for best practice recommendations.
Board diversity and financial performance: A graphical time-series approach
Directors need to guide and govern companies on behalf of and for the benefit of shareholders and stakeholders (Adams, Hermalin, & Weisbach, 2010; "Duties of directors," 2011). However questions remain as to whether boards with higher levels of diversity amongst directors are better equipped to fulfil their fiduciary duty than boards with lower levels of diversity (Carter, This research examines whether increased levels of diversity within boards are associated with improved financial performance to shareholders. From the literature, several theoretical frameworks that could explain why increased diversity might or might not lead to improved board performance were noted. Share returns and directors' demographic data were collected for a sample of the largest 40 companies listed on the JSE from 2000 to 2013. This data was analysed using Muller and Ward's (2013) investment style engine by forming portfolios of companies based on board-diversity constructs. Time-series graphs of cumulative portfolio market returns were analysed to determine if the diversity dimensions tested were associated with improved company financial performance.
Effective Directors, 2021
Leadership matters-it matters whether the leadership in question is of a small team, a large organisation, or a board. Research consistently shows a strong connection between the quality of leadership and better outcomes. But what is effective leadership? How do you know it when you see it? If you ask most managers or investors, they will typically talk about the style of individual leaders and mention ideas such as charisma or authenticity. But what does this mean for boards? Does it mean that we need effective chairs who understand how to lead in the boardroom? The short answer is yes, and much more. Business schools have been studying boards and senior executive team dynamics and what makes for better outcomes for decades. It is not an exact science, but it does give us some clear ideas about what matters, the how and why of leadership success in the boardroom, and things to look for to increase your chances of positive outcomes for your organisation. Everyone matters When we focus on successful leadership in the boardroom, most observers overfocus on the chair. Yes, every great board has a great chair who can