Selection Management Research Articles

Ballot order effects in independent director elections

Using a sample of individual mutual voting records, we examine ballot order effects in independent director elections. Our results show that down-ballot directors receive considerably less opposition from shareholders. This result holds in a sample where directors are positioned alphabetically on the proxy ballot, and, thus unrelated to the directors’ ability or position on the board. We find that the ballot order effect strengthens in settings where the ballot is more complex and shareholders are less attentive. These results suggest that investors, confronted with repeated decision making across multiple proxy votes, are subject to the choice fatigue bias that affects their voting patterns when electing directors. Furthermore, we find that the ballot order effect impacts director career concerns; although down-ballot directors are less likely to receive shareholder opposition, when they are opposed, they are more likely to leave the board. These findings, which document a systematic bias in the proxy voting process, are relevant to regulators and practitioners given the impact proxy voting has on firm governance.

Museums’ Economic Performance and Directors’ Recruitment Process: An Assessment of the Recent Policy Reform of the Italian Museum Sector

We study the economic effects of a reform of the national museum sector, the so-called Franceschini Reform, implemented in 2015. The reform introduced a new organization of the national museum system. One of the most innovative instruments of the policy was the establishment of a different method - an international call for applications - in the selection of directors of major museums (museums of “national interest”). The article studies the effects of this new recruitment policy on museum economic performance, focusing on revenues. Using a difference-in-difference technique for the years 2014 to 2017, we show that the new recruitment policy improved the revenues of treated museums throughout Italy by a range between 17% and 26%. We also find that the characteristics of the directors (age, field of degree, and study abroad experience) play a role in explaining the increase in revenue of these Institutions. We thus find evidence of significant benefits of the policy. The new knowledge may be useful for improving museum and cultural sector management policies.

Board political ideological diversity and information exposure as antecedents to value creation and value appropriation

AbstractStrategic emphasis is a critical decision reflecting a firm's relative proclivity toward value creation versus value appropriation. Despite the increasing role of the board in setting the strategic priorities of firms, there is a dearth of research examining board‐level influences on strategic emphasis. Drawing on the cognitive perspective of corporate governance, we posit that exposure to external information via board interlocks provides competing incentives to pursue value creation and value appropriation strategies. We hypothesize that political ideological diversity among directors facilitates the utilization of external information for novel purposes, thus increasing firms' value creation focus. Combining data on directors' political ideologies with network analysis, we test these hypotheses in 584 large U.S. firms between 2000 and 2018. We find that political ideological diversity influences strategic emphasis both directly and in interaction with board interlock network centrality: politically ideological diverse boards exhibit a greater focus on value creation, and this effect is strengthened when the board is well connected to others. These results have implications for the director selection process, and for executives advocating for value creation strategies and the requisite R&D investments under differing conditions of board composition and information exposure.

Validating an Automated System of Evaluation for English Drafting Skill: A Case of Large-scale, High-stakes Selection of Entry-level Managerial Positions

The effectiveness of using a constructed response measure for assessing drafting ability is proven and has been used extensively in managerial selection in state-owned organizations. With the advent of online recruitment trends and technology-enhanced assessments, automated scoring has been conceived as a replacement for human scoring with the purpose of emulating the human scoring system. In the context of large-scale writing assessments, automated scoring could provide superior results to human scoring in terms of validity and reliability. In the present study, an attempt has been made to validate an automated essay scoring (AES) algorithm. The study was conducted on a sample of 11,497 randomly selected from a population of 54,392 shortlisted candidates for a national-level examination for the selection of entry-level executives in managerial positions in state-owned banks and a state-owned insurance company. The evaluation of the descriptive (constructed response) component of the examination (English composition) was carried out parallelly by four expert human raters and the AES algorithm. The parameters for evaluation were devised and made available to raters and the algorithm. Data were analysed using mean SD and Pearson correlation coefficient. Results show that the mean scores of human expert raters ( M = 14.648) and automated algorithm method ( M = 15.804) were similar. Further analysis was also undertaken to check the convergent validity of the features used in the algorithm by examining the relation of algorithm scores with sub scores from the objective test of the same construct. Results indicate a significant correlation. It can thus be said that the algorithm scoring method developed can be considered a replacement in that it can complement human expert raters in the evaluation of descriptive papers with consistent scoring and fairness, without inherent biases of inter-rater and intra-rater variation, in addition to practical benefits of speed and cost.

Institutional shareholders, proxy advisor recommendation, and vote outcomes in shareholder meetings

Our investigations into the shareholder meetings of UK indexed companies indicate that vote outcomes become more sensitive to proxy advisor recommendations as ownership by well-diversified foreign institutions increases. Vote sensitivity is associated especially with ownership by well-diversified institutional investors that speak a different language. The results support the recent regulatory focus on proxy advisory firms and on how institutional investors manage their fiduciary duties. The findings are supported by firm*agenda fixed-effects models, matching analyses of director election, alternative definitions of portfolio diversification, and examination of specific countries’ institutions that reduce endogeneity biases. French and Japanese data also show qualitatively the same result.

A Literature Review on the Ways of Minor Shareholders' Participation in Corporate Governance

This paper summarizes the research on the ways of minor shareholders' participation in corporate governance. The ways of minor shareholders' participation in corporate governance include voting with hands, voting with feet and voting with mouths. In this paper, the case analysis of Gree Electric Appliances' general meeting of directors election shows that the activism of minor shareholders can play a better role in governance. However, controlling shareholders may take passive means such as related transactions to seize the interests of minor shareholders. Finally, this paper puts forward some suggestions to strengthen the protection of minor shareholders' rights and comments on the policy enlightenment.

Corporate Governance Practices in India: Problems & Importance

The paper seeks to explore the impact of corporate governance (CG) measures on the performance, importance and problems from the viewpiont of India.The focus on corporate governance has increased since the past few decades in most countries around the world, especially in the wake of corporate collapses in early 2000s. These corporate collapses have leads to the growing volume of academic and practical research in this area. Corporate governance refers to the set of rules and practices that ensure the effective and corporate efficient management of a company. In India, the Companies Act, 2013 lays down the legal framework for corporate governance, which is overseen by the Securities and Exchange Board of India (SEBI) and other regulatory authorities. Some of the key corporate governance practices in India include: Board of Directors: Companies in India are required to have a board of directors that oversees the management of the company. The board is expected to act in the best interests of the company and its stakeholders.Independent Directors: At least one-third of the board of directors of a listed company in India must be independent directors. These directors are expected to provide unbiased and objective advice to the board. Audit Committees: Listed companies in India are required to have an audit committee that oversees the financial reporting process and ensures that the company's financial statements are accurate and reliable. Shareholder Rights: Shareholders in India have a number of rights, including the right to vote on key issues such as the election of directors and the approval of major corporate transactions. Disclosure and Transparency: Indian companies are required to disclose a wide range of information to the public, including financial statements, annual reports, and information about the company's management and operations. In this paper we will study the concept and principles of corporate goverbance along with its importance from the viewpoint of India. Then we will discuss the various issues and challenges related to corporate governance.

Effects of shareholder proposals on the market value of Japanese firms

This study investigates the effect of shareholder proposals on the market value of Japanese firms in the second wave of activism from 2017 to 2021. While announcements of receiving a shareholder proposal positively affect stock prices of investee companies, rejection of a shareholder's proposal has a negative impact. Unlike the first wave of activism, proposals related to the election and dismissal of directors are no different from those of other proposals, which may become more important as shareholder proposals diversify. Similar to the first wave, market responses become larger when the large shareholders made the proposals.

Gender diversity on boards: Determinants that underlie the proposals for female directors

Although the gender composition of corporate boards and the contribution of female directors to corporate governance have been previously analysed, few studies have investigated the factors that may help contribute to increasing the still scarce presence of women on boards. Therefore, using three-stage least squares (3SLS) estimation on a data panel comprising the 100 largest companies in the world according to the 2019 Fortune Global 500 ranking, including data on (re)election proposals for corporate board members, this research aims to analyse the influence of the number of men's nominations, board interlocks, director tenure, geographical area, the sector to which the firms belong, and the relevance of firms on women's nominations for boards of directors. The results show the factors that facilitate the presence of women on boards. In addition, the different influences that remain in the election of female and male directors when considering factors related to the experience, expertise, and networks of directors or the visibility of firms can also be observed. This study contributes to the knowledge of gender diversity on boards, shedding light on the factors that might lead to gender-balanced boards. It could also help companies and policymakers design strategies to build more egalitarian boards.

Moderating Role of Governance Regulatory Compliance on Board Diversity and Voluntary Disclosure of Non-Financial Firms in a Developing Country

The main aim of this paper is to investigate the moderation influence of CG regulatory compliance on the relationship between board diversity and voluntary disclosure (VD) of Nigerian listed firms since the literature on disclosure studies has concentrated principally on examining a direct relationship between internal governance mechanisms, neglecting the external regulations. Being an ex post facto design, a sample of 67 firms listed in the Nigerian stock exchange for the period 2012–2017 is used. A system GMM approach (being the best and most contemporary panel approach) is employed. The study revealed that the interaction of regulatory code compliance with board gender and ethnic diversity has a significant positive impact on the firms’ voluntary disclosure. The result also indicates that ethnic diversity shows a positive and significant association with voluntary disclosure. To the best of the researchers’ knowledge, this study is among the few attempts at explicitly examining the effect of CG regulatory compliance on board diversity and VD in CG studies, especially in a developing economy such as that of Nigeria. Additionally, it is among the few attempts that provide empirical results using superior dynamic panel models. This study provides a strong practical implication for business firms, policymakers, future research, and society. For instance, the findings have direct implications for Nigerian firms in the selection of directors in order to comprise well-educated people of different ethnic backgrounds and be inclusive of females.

Director Job Security and Corporate Innovation

AbstractIn this article, we show that firms can become conservative in innovation when their directors face job insecurity. We find that after the staggered enactment of majority voting legislation that strengthens shareholders’ power in director elections, firms produce fewer patents, particularly exploratory patents, and fewer forward citations. This effect is stronger for directors facing higher dismissal costs or threats and for firms with greater needs for board expertise and is mitigated by institutional investors’ expertise in innovation. Overall, our results suggest that heightened job insecurity induces director myopia, which leads to a reduction in investment in risky, long-term innovation projects.

Proxy Advisors: A Double-Edged Sword for Institutional Investors

Institutional investors who own shares in hundreds of companies and have heavily diversified portfolios face significant challenges. More importantly, investee companies usually organise their annual general meetings at the same time, which creates a huge logistical and administrative workload for institutional investors. Also, the “free riding” is also a frequent problem, which greatly reduces the incentive for institutional investors to participate in corporate governance. Hence, the proxy advisors were introduced because of two factors: regulatory policies demand and market demand. Proxy advisors do have a lot to offer to corporate governance, and many empirical studies have demonstrated that proxy advisors play an important role in director elections, say-on-pay and ESG. However, there are some negative effects, such as the multiple conflicts of interest, ineffective and incomplete information and insufficient transparency, institutional investors’ over-reliance on proxy advisors. In addition to having an impact on corporate governance, proxy advisors have a significant effect on the engagement of shareholders. There are three main points. Firstly, proxy advisors stimulate institutional investors' participation in corporate voting through lowering the costs. Secondly, proxy advisors mitigate the collective action dilemma of institutional investors, and the third one is about the robo-voting problem. From the discussion of the essay, the impact of proxy advisors on shareholder engagement is significant, and while there is a degree of negative impact, the positive impact of proxy advisors is more significant and should be sustained and improved.

The Effect of Audit Committee Resources on Accounting Reporting Quality of Listed Oil and Gas in Nigeria.

This study focuses on the link between audit committee resources and accounting reporting quality proxy by accrual quality of listed Oil and Gas firms in Nigeria. The aim is to examine whether audit committee variables such as female gender, size, and accounting certification expert have an oversight effect on financial reporting quality. The study employed ex-post facto and correlational research designs and adopted agency theory to underpin the study. The population of the study is twelve (12) oil and gas firms listed on the Nigerian Exchange Group as of December 31, 2021. The study covered a- ten years period from 2012 to 2021. Ten (10) oil and gas firms were sampled using the purposive sampling method. The information is taken from audited yearly accounts of the sampled firms, which formed a panel data set that was analyzed using the multiple regression method of analysis. The study provides empirical evidence that Audit Committee-female gender (ACFG), Audit Committee Size (ACSZ), and Audit Committee Accounting Certification expert (ACAE) influence the Financial Reporting Quality of listed Oil and Gas firms in Nigeria. Policymakers should provide policy on the composition of the committee human resources to spelt out their functions effectively, hence we endorsed that the selection of autonomous directors ought to be built on the prior annals of the person’s history in terms of performance relatively. The government should consider the practicality of the results and make provision for at least two accounting certification resources in the audit committee to grip multifaceted financial entities more effectively. Similarly, females genders are multitasking, and they are required to better accounting norms, these are in other to secure the demand of investors generally in Oil and Gas firms listed in Nigeria.

Особливості розробки підсистеми обрання наукового керівника

A review of works devoted to the University automation problems or Gale-Shapley algorithm using is carried out. The paper analyzes the organizational, information and communication components of the scientific director electing process. The drawbacks of the students distribution existing algorithms are highlighted, namely: a student is left without a scientific director; distribution blocking due to a teacher or student fault; teachers' quotas dynamic change during distribution. The following subsystem users groups (roles) are distinguished: student, graduate student, departments teachers, department head, laboratory assistant, dean, deputy dean, dean's office methodologist, rector, specialist of the general department. A modified scientific director election process (algorithm) is proposed. A mathematical model for these processes is described. An algorithm that allows automatically set priorities in questionnaires that are not completed by students / teachers has been developed. The Gale-Shapley algorithm is used for automatic pairing < scientific director; student>. In this case, the following conditions are met for the obtained set of pairs: each student must be assigned a scientific director; for scientific director, selected students number should be according to the workload. To test the approach proposed in the work, a corresponding subsystem consisting of a relational database and a web application was implemented. When creating a web application, the following were used: Spring Framework, Vaadin, Hibernate, RabbitMQ message broker, PostgreSQL DBMS, REST.

Does board diversity really matter to shareholders?

Does board diversity really matter to shareholders? To answer this question, we depart from the traditional approach of analysing the impact of board diversity on firm value to instead concentrate on shareholder voting outcomes in annual director elections. By exploring a hand-collected dataset, we identify that diversity matters to shareholders. New to the literature, we find that shareholders’ greater support for diverse directors is driven by votes for minority directors. Specifically, we show that non-Caucasian female directors can fully explain the greater shareholder approval for female directors. Our study has implications for board selection and shows that board diversity is valuable to shareholders.

The Diversity of Director Election Rules in Australian National Sporting Organisations

The Diversity of Director Election Rules in Australian National Sporting Organisations

CEO networks and the labor market for directors

Directors at firms with well-connected CEOs are more likely to obtain directorships at firms that are connected to the CEOs. Recommended directors do not become beholden to the CEO. Reciprocity is an important determinant of recommendations because CEOs are more likely to recommend their directors if they received help from their network filling vacant board positions. CEOs also benefit strategically from the additional appointments of their directors. Analyses of appointment announcement returns and director election results show that shareholders are not concerned by such recommendations. The results highlight the importance of CEOs as intermediaries in the director labor market. • CEOs function as intermediaries in the director labor market. • Well-connected CEOs recommend their directors to firms linked to the CEO. • Recommended directors do not become beholden to the CEO. • CEOs recommend their directors for strategic and reciprocity purposes.

이사 후보에 대한 의결권 반대 사유와 이사회 효율성 및 기업가치와의 관계

We examine the relationship between dissent in director elections and board effectiveness. In our analysis, we categorize reasons for dissenting in board votes into prior irresponsible behavior, lack of independence, lack of past attendance, and serving on multiple board seats. We find that having a director who faced dissent on a board of directors reduces board effectiveness, especially in cases involving inside directors who have prior irresponsible behavior on their records, inside directors who serve on multiple boards, and outside directors who lack independence. Moreover, having a director who faced dissent on a board is negatively associated with corporate value. We also find that having a nominating committee that is composed only of outside directors has a moderating effect on this negative association between dissent in director elections and board effectiveness(firm value). We find similar results in an analysis of proxyvoting advice offered by an advisory firm. Our results suggest the importance of incorporating a wider range of board-member characteristics beyond such commonly used measures as outside director ratios and gender diversity.

Why embrace a double-edged sword? A behavioral theory of board political capital building

Firm political connections are widely recognized to have both positive and negative implications, but why do firms build political connections in the first place? Distinct from prior research that typically views firm political connections as capital stock, we focus on board political capital building—selecting new directors with political backgrounds—as a strategic decision. Drawing on the behavioral theory of the firm, we examine how board political capital building is driven by performance shortfalls based on the logic of problemistic search—seeking the potential benefits of political connections while undertaking the potential downsides. Using director selection data on Chinese listed firms, we find that firms with higher performance shortfalls are more inclined to select new independent directors with political backgrounds. We further demonstrate that it is more feasible for firms with performance shortfalls to build lower-level board political capital but infeasible for them to build upper-level political capital.

Who monitors the monitors? An examination of listed companies in an emerging market context

The growing number of corporate scandals globally highlights the importance of effective corporate governance mechanisms. Many of the corporate governance frameworks that are rooted in the agency theory advocate the election of independent non-executive directors, an independent chairperson, and a lead independent director. Shareholder voting on the election or re-election of directors (hereafter referred to as ‘director re-elections’) has been largely unexplored in South Africa—a country widely recognised as a pioneer in the corporate governance field and yet marred by several corporate scandals in recent years. In this study, an unbalanced panel data set was thus constructed comprising voting outcomes and board-level characteristics of companies listed on the Johannesburg Stock Exchange from 2014 to 2020. Significant positive relationships were noted between shareholder voting opposition to director re-elections and both board size and board tenure. Shareholders who cast opposing votes mainly did so because of their concerns about the lack of director independence, at board, committee, and nominee level. The findings of this study were explained in the context of the agency, stakeholder, stewardship, and resource dependence theories. It is recommended that nomination committees use more robust selection criteria for directors. Shareholders are also encouraged to vote more actively on director re-elections to monitor these monitors.