The Effects of Board Chairs’ Political Ideologies on Board Chair Orientations

Abstract

Prior research has shown that board chair governance orientations affect firm performance. Yet, how board chairs choose or are predisposed to adopt specific governance orientations has largely remained unexplored. Integrating research on behavioral governance and political psychology, we propose that board chairs will gravitate toward different governance orientations based in part on their political ideologies. Specifically, we posit that conservative-leaning chairs, relative to their liberal-leaning counterparts, are significantly more likely to adopt a collaboration orientation toward their CEOs and less likely to adopt a control orientation. We propose that CEO’s personal characteristics, namely political ideology and gender, moderate these relationships. Our analyses of sampled S&P 500 firms lend support to our predictions. Our theory and findings contribute to literatures on behavioral corporate governance and emergent research on ideological foundations of executive decision-making.