Board Chairperson Research Articles

Table of Contents

Abstract Hold on tight in this new economy Time management tip: Set committee meeting dates Board member's request exceeds his authority During difficult times, take pride in your organization's work Meeting tip for the board chairperson

Board of directors' independence and executive compensation disclosure transparency

PurposeThis paper aims to investigate the relationship between board of directors' independence and executive compensation disclosures transparency.Design/methodology/approachThe paper examines compensation disclosure practices of a sample of 181 firms listed on the Toronto Stock Exchange. Board independence from management is assessed through an aggregate score which takes into account the proportion of independent directors, board leadership structure (i.e. CEO is the board chairperson), and the existence and independence of board committees. A cross‐sectional regression analysis is used to examine the relationship between board independence and the extent of compensation disclosure.FindingsThe paper finds that board independence from management is positively related to the transparency of executive compensation‐related information. In addition, this study documents a positive (negative) relation between firm size, US cross‐listing, growth opportunities (leverage) and the extent of executive compensation disclosure.Research limitations/implicationsThe study's results provide support to the managerial opportunism hypothesis in executive compensation. These findings highlight the importance of the board of directors as an effective governance mechanism which limits managerial rent‐seeking in the design as well as the disclosure of executive compensation practices.Originality/valueThis paper extends prior disclosure studies by examining the impact of board characteristics on the transparency of executive compensation disclosures in a principles‐based governance regime. Furthermore, executive compensation disclosure provides an interesting setting in which to examine the ability of the directors to act independently from managers in a conflict of interests situation.

Board Leadership and Strategy Involvement in Small Firms: A Team Production Approach

Manuscript Type: Empirical Research Question/Issue: Boards’ involvement in strategy is generally seen to be an indicator of board effectiveness, but less is known about the relationship between board leadership and strategy involvement, especially in small firms. This study analyzes board leadership from a team production perspective as an antecedent to board strategy involvement in small firms. Research Findings/Insights: Using survey data from 140 small firms in Norway collected in two different time periods, we demonstrate that leadership behaviors and processes have a greater impact on boards’ strategy involvement than structural leadership characteristics alone. Theoretical/Academic Implications: The study provides empirical support for a team production perspective on boards. Our data show that (1) board members’ knowledge, board development, and board chairperson leadership efficacy positively influence boards’ strategy involvement, and (2) chairperson leadership efficacy enhances boards’ strategy involvement under structural conditions of combined CEO/chairperson leadership and changes in board composition. These findings expand the traditional understanding of structural leadership conditions. Practitioner/Policy Implications: The study offers insights to small business owners and managers on how to improve the strategy involvement of boards. For policy makers, the study has implications for the content of codes of good governance practice relevant to small firms, specifically in relation to board development initiatives and board evaluations.

CEO Duality Leadership And Firm Risk-Taking Propensity

Based on a sample of 290 large U.S. corporations, we find that dual positioning on both CEO and board chairperson positions at the corporate top leads to reduced firm risk-taking propensity, serving managerial risk minimization preferences. We also find empirical evidence that traditionally emphasized control mechanisms of board independence and managerial ownership are ineffective in controlling managerial behavior when CEO duality leadership exists. Additionally, the power balance obtained from concentrated shareholder ownership in the firm has significant impact on controlling managerial behavior regarding firm risk taking. The findings of this research contribute to reducing the controversy surrounding CEO duality leadership by furnishing empirical evidence of how CEO duality leadership in corporate governance structure affects managerial behavior in corporate strategic management.

Professor Barry David Schoub

It is with pleasure that the editorial staff of The Southern African Journal of Epidemiology and Infection (SAJEI) presents this Festschrift edition as a tribute to Prof Barry David Schoub. During his outstanding career as medical virologist and national and international expert in the field of infectious diseases and their prevention, Prof Schoub was founding Director of the National Institute for Communicable Diseases (NICD), serving as Executive Director between 2002 and 2011, and, before that, Director of the National Institute of Virology (NIV) between 1982 and 2002. This Festschrift is presented to Prof Schoub in recognition of his invaluable contribution to infectious diseases in South Africa and internationally, and has been made possible by an academic grant from the Poliomyelitis Research Foundation (PRF), of which Barry has been an integral part for many years. We extend special thanks to Mr Roy Wiggill, former Chairperson of the PRF Board, the current Board Chairperson, Mr A Moffat, and members of the PRF Board for this generous gesture.

Defining the role of primary health care nurse practitioners in rural Nova Scotia.

This article reports on a mixed methods study to define the role of nurse practitioners (NPs) in rural Nova Scotia, Canada, by collecting the perceptions of rural health board chairpersons and health-care providers. Qualitative data were collected in telephone interviews with health board chairpersons. Quantitative data were collected in a survey of NPs, family physicians, public health nurses, and family practice nurses.The authors describe participants' perspectives on the health needs of rural communities, the gaps in the current model of primary health care services, the envisaged role of NPs in rural communities, and the facilitators of and barriers to NP role implementation. Optimizing the benefits of the NP role for residents of rural communities requires attention to the barriers that impede deployment and integration of the role.

Integration of Micro and Macro Studies in Governance Research: CEO Duality, Board Composition, and Financial Performance

The authors provide two examples of contemporary and contentious issues related to the governance of publicly traded corporations—the composition of boards of directors and the choice of CEO or board chairperson leadership structures. In each case, despite voluminous empirical attention, there is virtually no evidence related to the financial performance of the firm with regard to either of these fundamental elements of firms’ governance structures. The authors suggest that these null results may be related to the inadequacy of analyses relied on to examine such issues, an inadequacy that might be constructively addressed by more attention to multi-level alternatives.

Earnings management following chief executive officer changes: the effect of contemporaneous chairperson and chief financial officer appointments

AbstractUsing a sample of listed Australian firms from 1999 to 2007, we examine the relationship between discretionary accruals and concurrent senior management appointments. Employing panel data regression models and focusing on a measure of discretionary accruals that excludes the effect of transparent write‐downs such as restructuring charges, we find that chief executive officer (CEO) appointments, as a general phenomenon, are not significantly associated with opaque earnings management in the year of appointment or the following year. However, we find that CEO changes accompanied by a concurrent change in board chairperson are associated with significant income‐decreasing earnings management in the year of appointment. We detect no significant relationship between contemporaneous CEO and chief financial officer changes and discretionary accruals. We find no evidence of earnings management in the first compete financial period following CEO appointment, regardless of whether or not concurrent Chair or chief financial officer appointments occurred.

Agency conflicts between board and manager

AbstractDetecting agency problems is an important task when assessing the effectiveness of a nonprofit organization's governance. A first step is to examine the objectives of principals and agents and determine whether there is a systematic difference between them. Using a discrete choice experiment, we identify the objectives of board chairpersons (principals) and headmasters (agents) of Flemish nonprofit schools. We find systematic differences between the two groups. Of the seven possible objectives set out in the experiment, six are relevant for both headmasters and board chairpersons. For four of these, the preferences of both groups differ significantly. Whereas ideological values play an important role for both the board and the headmaster, they are significantly more important for the board. Both parties dislike having a large number of pupils, and the disutility is larger for the board. With respect to job satisfaction and pupil satisfaction, we find the opposite: while the board is prepared to give up pupil and job satisfaction in favor of the other objectives, these two objectives score very high on the priority list of the headmasters.

Corporate governance and firm value during a financial crisis

The main purpose of this paper is to evaluate the effects of management ownership and other corporate governance variables on Hong Kong firms’ stock performance following the onset of the Asian Financial Crisis (1997–98). Our results show that Hong Kong firms with a more concentrated management (executive board) ownership displayed better capital market performance during the 13-month period of the Crisis. We also find that firms with more equity ownership by non-executive directors, and in which the positions of CEO and board chairperson were occupied by the same individual experienced a smaller stock price decline. Our findings are consistent with the notion that there is a greater alignment of insiders with outside owners, rather than the expropriation by insiders who have the opportunity to divert value, for firms with higher levels of management ownership during an unexpected capital market crisis.

CSR Communication Intensity in Chinese and Indian Multinational Companies

ABSTRACTManuscript Type: EmpiricalResearch Question/Issue: Why do firms in China, which has a higher level of economic development, communicate less CSR than firms in India? We use a model that includes country‐, industry‐, and firm‐level factors to predict CSR communications intensity, a proxy for CSR activities.Research Findings/Insights: Using data on 68 of the largest multinational companies in China and India, our study shows that Indian firms communicate more CSR primarily due to a more rule‐based, as opposed to relation‐based, governance environment. Firms in the manufacturing industry tend to communicate more CSR. Firm‐level characteristics such as size, duality of CEO and board chairperson, and percentage of external members on the board also have a significant influence on CSR communications.Theoretical/Academic Implications: The main theoretical contribution of our study is to bring a three‐level perspective, relying not only on firm‐ and industry‐specific factors, but also on the governance environment, to the study of firms' CSR behavior. We show that the national governance environment dominates the national income level in affecting CSR communications intensity. We demonstrate that the macro institutional environment in a country strongly affects firm CSR behavior. Our findings suggest that CSR should be studied by considering multilevel antecedents.Practitioner/Policy Implications: Our study suggests that in order to improve the CSR of firms, policy makers in India and China must first try to improve public governance at the national level. Executives doing business with Chinese and Indian companies need to better understand the contrasting governance and their effects on the CSR practices in each country. For the international community and those concerned about product safety and other social issues related to China and India, our findings suggest that improvement will not be immediate since the governance environment changes relatively slowly.

Can board mechanism affect the firm value in Pakistan?

Corporate governance is, undoubtedly, extremely essential for the performance of the organizations. The structure of corporate ownership has significant impact on the external as well as internal performance factors of firms. The relationship between corporate governance indicators and firm performance has been extensively investigated; however, a little work has been done on how the structure of board can add value to the firm. This paper sheds light on the relationship of some aspects of board structure like board size, board composition, and CEO duality with the performance variables Tobin’s Q and Return on Assets (ROA) by using a sample of 53 firms of cement and sugar sectors of Pakistan for a period of 2005-2007. The results indicate that the firms perform better with moderate board size and the performance is adversely affected if CEO also acts as chairperson of board of directors whereas the external directors can play a positive role for firm performance in Pakistan.

The link between board composition and board objectives: an empirical analysis on Flemish non‐profit schools

AbstractFlemish non‐profit schools have no legally imposed composition rules with respect to their board of directors. Hence, large variation exists in their size and composition. We argue that these differences in board composition can result in different policies followed by the board. To empirically test this hypothesis we question the board's chairpersons of Flemish non‐profit schools about the objectives set forward by the board. Ordered probit regressions on the importance attached to different educational objectives provide support for our hypothesis and thus alert policy makers to account for the linkages between objectives and board characteristics when formulating legislation with respect to school board composition. Copyright © 2008 John Wiley & Sons, Ltd.

Outreach and profitability of microfinance institutions: the role of governance

PurposeThis paper aims to examine how selected governance indicators impact on performance measures of outreach and profitability in microfinance institutions (MFIs).Design/methodology/approachThe paper adopts a quantitative approach based on both primary and secondary data from conveniently sampled 52 microfinance institutions. A panel data technique is employed as the key analytical framework.FindingsIt is shown that governance plays a critical role in the performance of MFIs and that the independence of the board and a clear separation of the positions of a CEO and board chairperson have a positive correlation with both performance measures.Research limitations/implicationsIt would have been appropriate to have a larger number of MFIs for the study. This limitation however does not compromise on the validity of the conclusions based on the findings of the study.Practical implicationsIn the context of multi‐dimensional and sometimes conflicting objectives facing MFIs, a clear balancing act of social objectives and institutional sustainability to ensure effective performance of MFIs is recommended.Originality/valueStudies on governance and its relationship with firm behaviour is limited especially in Sub‐Saharan Africa. Its application in the microfinance sector with its peculiar characteristics is the added value of this paper.

Managerial dominance and audit committee independence in Spanish corporate governance

The purpose of this paper is to analyse whether the independence of audit committees is affected by the degree of control exerted by managers over the board of directors. Results from a sample of 75 listed Spanish companies show that the majority of firms that voluntarily adopted an audit committee between 1998 and 2001, made an effort to guarantee their independence from management. The degree of independence is shown to be determined by the proportion of inside directors on the board, the same person holding both the CEO and board chairperson positions, and the level of management ownership. These findings may have political implications because existing regulations do not limit the presence of inside directors on audit committees. The presence of inside directors may compromise effectiveness, turning audit committees into instruments of management to provide the appearance of monitoring.

CORPORATE GOVERNANCE AND FINANCING CHOICES OF FIRMS: A PANEL DATA ANALYSIS

AbstractWe examine how corporate governance indicators such as board size, board composition and CEO duality impact on financing decisions of firms. Panel data covering the five year period 1999‐2003 from forty‐seven (47) listed firms on the Nairobi Stock Exchange (NSE) was used. Analysis was done within the Random‐effects GLS regression framework. Findings of the study indicate that firms with larger board sizes employ more debt irrespective of the maturity period and also the independence of a board negatively and significantly correlates with short‐term debts. Again, when a CEO doubles as board chairperson, less debt is employed. Thus, the study reaffirms the notion that the governance structure of a firm affects its financing choices.

Getting the Board on Board: Engaging Hospital Boards in Quality and Patient Safety

Transformational change in health care calls on hospital boards of trustees to engage in quality ata level that has never been asked before. Yet little research has been conducted regarding the role of hospital governance in quality. Interviews were conducted with chief executive officers (CEOs) and board chairpersons from aconvenient sample of 30 hospitals, representing 14 states across the United States. The interviews were 30 to 45 minutes in length and included approximately 30 questions that were open-ended and ratings based. The level of knowledge of landmark Institute of Medicine (IOM) quality reports among CEOs and board chairs was remarkably low. Conversely, board chairs and CEOs were well attuned to public reporting of quality information. There were significant differences between the CEOs' perception of the level of knowledge of their board chairs and the board chairs' self-perception. There was a mild association between board engagement in quality and hospital performance asdefined by their rates in their composite measure of heart failure, heart attack, and pneumonia. The engagement of hospital boards inquality can be enhanced by (1) increasing education on quality to increase the board's quality literacy; (2) improving the framing of an agenda for quality; (3) more quality planning, focus, and incentives for leadership and governance for quality improvement; and (4) greater focus on the patients. Implementing these steps can improve a hospital's overall performance.

In defense of the individual: the CEO as board chairperson

PurposeLooks at group decision making by Boards and impact of diversity on effectiveness.FindingsExtensive research fails to demonstrate the superiority of the separate board leadership structure. Other factors supersede the need for independence where board leadership is concerned. There is no substitute for a single strong leader who is accountable.Practical implicationsProvides executives with information on important factors to consider when determining board structure.Originality/valueOf particular value to CEOs and other board members

Environmental and Organizational Features and Their Impact on Structural and Functional Characteristics of Boards in Nonprofit Organizations

ABSTRACT Boards of directors govern not-for-profit organizations and they are responsible for the overall performance and the ultimate achievements of the organization. In this study two questions are examined: First, the impact of the organization's external task environment on the characteristics of board's structure and functioning in nonprofit organizations; and second, the relationships between organizational features and board's structure and functioning. The study included a stratified sample of 161 non-profit organizations in Israel. Data collection included face-to-face interviews with 121 executive directors and 40 board chairpersons. The results show that only collaboration with other organizations in the task environment was significantly positively correlated with several functional characteristics of the boards. Organizational characteristics such as age, membership size, and number of paid workers were significantly positively correlated with a number of board structural and functional characteristics of boards. In addition, significant intercorrelations between structural and functional characteristics of boards were found. The results are discussed and further avenues of research are proposed.

エリアマネジメントの実践に関する一考察

From the point of view of Area Management, a voluntary and non-commercialized party can be the first key factor in order to build a good and matured community in urban area, and it may, generally, be recognized soon. However, there is no concrete idea or theory in such group's activities yet. As a challenging case to realize active and creative community building for a main body such as a NPO, activities of “Ligare” for Otemachi-Marunouchi-Yurakucho area should be introduced and examined: DAI-MARU-YU Area Management Organization, (Authorized NPO, Shigenori KOBAYASHI, Board Chairperson), -“Ligare” for nominal designation.Activities of Ligare are classified into three categories: 1) vitalizing the local community and economy, 2) improving environment of the area, 3) promoting exchanges within and in/around the area and formation of vivid community.Public Open Spaces are the second key factor. And Publicly Provided Open Spaces which are developed by regulations are excellent infrastructure as public open spaces.Recently, Tokyo Municipal Government enacted a unique city ordinance called “SHARE-MACHI Jorei”, which contains measures to make more effective use of publicly provided open spaces.They registered Ligare as the core group for the specified area and allow the group to ease regulations for usage of publicly provided open spaces; and as a result, it enables the group to make more independent and creative activities. This could be a good example that relaxations of regulations for usage of publicly provided open spaces for such registered NPO is an efficient measure to promote and develop urban community building in Japan.