Director Tenure Research Articles

Towards Corporate Financial Performance: What is the Role of Board Gender Diversity?

This study seeks to analyse the influence of board gender diversity in influencing the firm financial performance using the agency theory, resource dependency theory and human capital theory in the study. The study population is the forty-nine (49) banks licensed by Bank of Tanzania (BOT) as at December 2022. The study used purposive method of sampling technique and only listed banks were selected as study sample. The study used panel data from listed banks in the Dar es salaam Stock Exchange (DSE) market for the period of ten (10) years from 2013 to 2022. Our study has used secondary data through bank’s annual audited reports extracted from their specific websites and DSE website. Our study used both descriptive and inferential analysis where data collected were analysed by using the STATA 15. The study used return to asset (ROA) as dependent variable and female director education, female director tenure and female director leadership as independent variables. Our results show that female directors on the boardroom with consideration of demographic features of education, tenure and leadership does not significantly influence financial performance of firms. Furthermore, our study recommends further researchers to measure the non-financial influence that female directors may have on firms.

Departure Decisions: Exit Survey of Family Medicine Residency Directors.

Program director (PD) tenure, continuity, and stability may enhance residency program quality, yet many PDs do not stay long in their positions. No prior study has taken a comprehensive census of departing PDs to determine reasons for leaving the role. This study aimed to survey all exiting family medicine (FM) PDs to identify decision factors contributing to their departure. From October 2021 to October 2022, we sent a web-based exit survey to all departing FM PDs. The survey asked departing PDs to rate the strength of 36 factors in the decision to exit the PD role in terms of job satisfaction, accomplishments, career choices, workload, preparation, expectations, and support. We used the Fisher exact test to assess all 36 decision factors and PD characteristics for significant associations with shorter or longer PD tenures. PDs submitted 73 surveys out of 109 invitations (67.0% response). We analyzed 68 with complete data. The median PD tenure was 5.6 years (mean 6.9 years). Most respondents (66/68, 97.1%) identified three or more strong factors in their decision to leave. The strongest factors reflected stable residency programs, an established succession plan, a desire for more personal/family time, and a sense that the time was right. PDs with tenures longer than 3 years were more likely to have completed the National Institute for Program Director Development (P=.001). PDs leave the position for multiple reasons, often positive, and not necessarily due to lack of support and preparation. Further exploration of decision factors may inform strategies to support PDs in their positions.

The Effect of Board of Directors' Diversity on Financial Distress in Energy Companies in Indonesia

The purpose of this study is to determine the role of board diversity in the form of the presence of female directors, the presence of foreign directors, the age of directors and the size of the board of directors against the risk of financial distress by conducting logistic regression testing on energy sector companies in Indonesia during 2018-2022. The results showed that the presence of female directors and the size of the board of directors negatively affected the risk of financial distress. Further research can test separately the period before the pandemic and after the pandemic so that the characteristics of each can be known in more detail. In addition, it can add cognitive diversity factors such as education, expertise and tenure of directors. This research can be used as a reference to determine non-financial factors that can affect the possibility of financial distress experienced by the company.

Directors tenure diversity and corporate sustainability performance: The non-linear evidence from Indonesia public listed companies

The primary objective of this study is to thoroughly investigate the association between director tenure diversity and corporate sustainability performance. This study utilizes a sample comprising 578 firm-year observations from non-financial companies listed on the Indonesia Stock Exchange. To test the hypothesis, the study employs the Ordinary Least Squares method, complemented by a series of endogeneity tests. This study reveals that the sustainability performance of corporations in Indonesia falls significantly short of satisfactory levels. Furthermore, the study indicates that there is a negative association between tenure diversity and sustainability performance, demonstrating a U-shaped curve pattern. To ensure the robustness of our findings, we performed additional analysis using coarsened exact matching and Heckman (1979) two-stage least square methodologies, confirming that the results remained consistent with those of the initial test. Intriguingly, our supplementary analyses also revealed an inverse association between tenure diversity in the boardroom and sustainability performance within companies. This study makes a significant contribution to the corporate governance literature by elucidating the inverse association between director tenure diversity and sustainability performance. In doing so, it enhances the originality and novelty of existing studies, particularly within the context of developing countries, such as Indonesia. This study exhibits novelty by embracing a quantitative approach to measure sustainability performance, revealing an intriguing inverse association between sustainability performance and ESG initiatives within the companies.

On the Right Side of the Faultline: Effects of Subgroups and CEO Inclusion on CEO Compensation

AbstractThis study examines how subgroup formation resulting from group faultlines can affect corporate boards’ CEO compensation‐setting process. Group faultlines are hypothetical dividing lines that can split the board into subgroups based on directors’ diversity characteristics. Using a sample of US firms for the period 2007–2019, we find that if the CEO demographically belongs to the same faultline‐based subgroup as corporate directors who are members of the compensation committee, strong faultlines lead to higher CEO compensation. Furthermore, we show that joint tenure of directors and the CEO strengthens this relationship. Our results are robust to endogeneity concerns and a battery of sensitivity tests. Our findings make important contributions to the literature on CEO compensation, corporate governance and faultlines, as we consider not only the existence of faultlines in the board context but also how the composition of identity‐based subgroups affects CEO compensation.

Can board of directors’ faultlines improve corporate innovation performance? Evidence from China

Innovation, which is a pivotal force behind the sustained growth of enterprises, has garnered significant attention across various industries. As the epicenter of corporate decision-making, the board of directors plays a pivotal role in allocating resources and overseeing the execution of strategy. Consequently, it inevitably impacts the innovation capabilities of a business. Previous research has focused primarily on single board member characteristics, such as age, gender, tenure, and educational qualifications, overlooking the cumulative influence of multiple attributes. Therefore, this study aims to investigate the impact of faultlines arising from the intersection of these characteristics within a board on innovation performance. Using panel data from China’s A-share listed companies from 2010 to 2021, this research constructs a framework to analyze board faultlines based on gender, age, education, director tenure, independence status, and occupational background. A comprehensive examination reveals a positive association between board faultlines and innovation performance, indicating that diversity within a board can foster enhanced innovative outputs. These findings persist even after rigorous robustness tests, including two-stage instrumental variable regression using lagged innovation performance as well as when substituting explanatory variables and sample intervals. Further analysis reveals that the influence of board faultlines on innovation performance is significant only under certain contextual conditions: when equity concentration is low, industry competition is intense, and risk aversion is greater. This study offers valuable insights for optimizing board membership configurations and thus, ultimately, enhancing the innovation capabilities of enterprises.

THE IMPACT OF CORPORATE GOVERNANCE AND BOARD CHARACTERISTICS TOWARD FIRM VALUE OF BUMN COMPANIES

Since 2014, there has been a massive increase in infrastructure development. The interesting thing about this industry is a decrease in the share price of these companies, especially state-owned companies that are mostly working on the infrastructure development. According to this phenomenon, a study was conducted to determine the effect of corporate governance and the characteristics of the board of directors on firm value which is a reflection of value of share in the market price. The characteristics of the board of directors consist of age, gender, tenure, and educational background. The audit committee, independent commissioners, and the board of commissioners are proxies for corporate governance. The data used are state-owned infrastructure companies listed on the Indonesia Stock Exchange from 2015-2022. The number of companies is 8 companies. The analysis uses multiple regression analysis, and they processed with Statistical Product and Service Solution (SPSS version 29). The results of this study indicate that the audit committee, age of directors, and educational background of directors have a significant effect on firm value. Meanwhile, the independent commissioners, board of commissioners, gender of directors, and tenure of directors do not affect firm value. The conclusion is that the role of the audit committee and the age and education of the board of directors play an important role in firm value. This study implies that the selection of the audit committee and the age and educational background of board members are the prominent focus of recruitment in a company to increase firm value.

Board gender diversity and ESG performance: The mediating role of temporal orientation in South Africa context

Prevailing research on the interaction between board gender diversity (BGD) and Environmental, Social, and Governance (ESG) performance presents equivocal findings, particularly in the context of developing countries. This study ventures into an exploratory examination of this association, situated in the socio-cultural milieu of South Africa, a region where the lower social status of women often leads to a bias towards short-term perspectives. Drawing on the role congruity theory of prejudice toward female leaders, this study aims to investigate the mediating role of short-term orientation (SHRT) in the BGD-ESG relationship. We further explore how the preference of female directors toward SHRT varies depending on their tenure on the board and across family and non-family firms. The empirical findings, drawn from an examination of publicly listed non-financial firms on the Johannesburg Stock Exchange (JSE) from 2015 to 2020, indicate a negative relationship between BGD and ESG, with SHRT predominantly mediating this association. Additionally, the tenure of female directors attenuates their preference for SHRT. Notably, we found the effect of BGD on SHRT is less pronounced in family firms, where the choices of female directors are more aligned with the family firm's long-term orientation. Our findings contribute to both theory and practice by advancing our understanding of the BGD-ESG relationship and providing practical implications for organizations, leaders, and policymakers.

The staggered tenure of CEO and board secretary and information disclosure quality

This paper explores whether the staggered tenure of CFOs and directors' secretaries impacts the quality of corporate disclosure. A sample of A-share listed companies from 2007 to 2022 is selected as the data sample. The study shows that staggered tenure of CFOs and board secretaries can significantly improve the quality of information disclosure; the effect of staggered tenure of the two on the governance of non-state-owned enterprises is more obvious; the effect of staggered tenure of the two on the quality of information disclosure is more evident in firms in which the board secretaries are shareholders.

Does corporate governance and profitability effect on corporate social responsibility disclosure?

Trust has a role in establishing successful business relationships, companies must be able to meet the needs of stakeholders. So that corporate governance mechanisms are needed. The CSR disclosure is a form of corporate responsibility to the community and the environmental aspect. Corporate governance in this study is examined in four separate variables, namely the tenure of directors, board size, independent commissioners, and managerial ownership. This study also analyzes the effect the profitability in increasing CSR disclosure level. The sample is 54 observation collected from companies listed on the IDX using the purposive sampling method. Multiple linear regression analysis is used. The results prove that board size, independent commissioners and profitability are able to increase the company's motivation to disclose CSR. While the tenure of directors and managerial ownership are not able to motivate in disclosing CSR. For further research, is expected to examine the characteristics of audit committees, institutional ownership and the number of audit committee meetings.

Corporate governance and performance of state-owned enterprises in a least developed economy

Purpose: The main objective of the study was to investigate how corporate governance affects the performance of state-owned enterprises (SOEs) in a least developed economy.Design/methodology/approach: Both primary and secondary data from nine state-owned companies that operated between 2001 and 2016 were analysed in the study. The investigation used a quantitative methodology. Fixed effects, random effects and generalised method of moments (GMM) estimations were used to conduct regression analysis.Findings/results: The findings show that corporate governance characteristics affect SOE performance in a least developed economy. The performance of SOEs is influenced favourably by board structures, director tenure, reduced government ownership and leverage. Conversely, increased state ownership leads to subpar performance. The study also reveals that the presence of civil servants and directors with political affiliations in government-controlled companies has a negative effect on enterprise value.Practical implications: The use of multiple case studies to investigate SOEs in their natural setting has given some insights for both professional managers and policymakers interested in developing corporate governance frameworks to improve SOEs value in least developed economies, particularly in sub-Saharan Africa, even though the results are limited in terms of statistical generalisation because the study was based on a single country.Originality/value: The study fills a gap in the literature about how SOE performance is affected by corporate governance in least developed nations, where such research is underdeveloped.

PROMOTING FIRM PERFORMANCE VIA BOARD OF DIRECTORS EFFECTIVENESS : A STUDY OF FINANCIAL SERVICES COMPANIES IN NEW ORLEANS

This study explores the critical link between board effectiveness and company performance, focusing on New Orleans' financial services sector. In today's dynamic business landscape, boards of directors play a pivotal role in guiding organizations towards sustainable growth and value creation. The research aims to contribute significantly to the corporate governance discourse by introducing novel metrics such as cash flow and value-added production, expanding the scope of analysis beyond traditional financial indicators. We emphasize two key factors: gender diversity and director tenure, offering a holistic understanding of board composition. The empirical analysis draws from a dataset of financial services firms in New Orleans, revealing that boards with gender diversity and experienced directors excel in strategic decision-making, risk management, and innovation. This highlights the importance of building diverse and knowledgeable boards that blend seasoned business leaders with fresh perspectives. The findings hold broader implications for policymakers, who can advocate for policies promoting diversity and experience in corporate governance. Investors gain insights into value drivers beyond traditional metrics, facilitating partnerships with companies prioritizing comprehensive performance improvement. The study illuminates the intricate relationship between board effectiveness and company success in New Orleans' financial services sector. The unique methodology combines innovative performance indicators and an integrated framework, providing a comprehensive view of the value created by diverse and experienced boards. These insights inform investment strategies, policy development, and strategic decision-making, fostering long-term company performance and societal benefit.

Tenure of independent directors and analysts following: Moderating role of institutional ownership

Tenure of independent directors and analysts following: Moderating role of institutional ownership

Assessing Capacity in Rural Nonprofits

Organizational capacity is necessary for nonprofits to meet their missions and contribute to society. Less is known about rural nonprofits’ organizational capacity and characteristics, as most research focuses on urban nonprofits. The present study first considers the utility of an organizational capacity assessment and identifies pertinent areas of organizational capacity in rural nonprofits. The second objective of the study is to examine relationships between areas of organizational capacity and organizational-level characteristics. In May 2019, nonprofits (n = 290) from persistently poor, rural counties in 14 southern states participated in a survey providing organizational characteristics and assessing organizational capacity. An exploratory factor analysis on the organizational capacity assessment revealed four organizational capacity areas: Organizational Identity, Fund Development, Volunteers, and Organizational Procedures. Then, descriptive, bivariate, and multivariate analyses were conducted to understand the relationships between the organizational capacity areas and organization characteristics, including organizational age, expenses, life stage, NTEE classification, and executive director tenure. Findings indicate significant relationships exist between organizational capacity and characteristics, consistent with previous studies. Older, mature, and/or larger rural nonprofits have increased capacity in several areas. Thus, targeting younger and smaller rural organizations for capacity-building efforts may be impactful.

Independent directors’ attributes and related party transactions in Malaysia: evidence from an individual perspective

Purpose This study aims to examine the ability of independent directors to discipline related-party transactions (RPTs) among listed companies in Malaysia. Firms typically appoint independent directors individually, not as a group. However, board members are commonly viewed collectively as a group, and evidence of the abilities of individual directors is scarce. Design/methodology/approach The attributes of individual independent directors include accounting literacy, length of service, audit committee membership and active participation in board and audit committee meetings. The unit of analysis is the individual independent director. The final sample consists of 1,552 observations in 2017, and RPTs are categorized as either efficient or conflicting. Findings The study finds that the tenure of individual independent directors and active participation in board meetings affect the firm’s engagement in RPTs. However, the financial literacy, audit committee membership and attendance of independent directors at audit committee meetings do not affect the firm’s engagement in RPTs, either efficient or conflicting. Overall, this result offers limited support for the upper-echelon theory concerning the attributes of individual independent directors and RPTs. Research limitations/implications This study uses cross-sectional observations for 2017, which predates the COVID-19 pandemic. Thus, this study ignores the impact of restrictions in community mobility during the pandemic on the independent director’s ability to monitor the corporation. This circumstance may have implications for practice and merit further research. Practical implications The findings provide information for board nominating committees, regulators and policymakers that the capability of individual independent directors to fulfill their responsibilities is limited. The firm’s nominating committee must be very selective in nominating and appointing independent directors with appropriate competencies. Investors should choose companies that have reappointed the same independent directors for an extended period, as they may benefit from the experience in protecting investors’ interests. Originality/value This paper contributes novel evidence to upper-echelon theory literature on the association between independent directors and RPT types from the perspective of individual independent directors.

The tenure of directors and value relevance of accounting information

The tenure of directors and value relevance of accounting information

Independent Director Tenure and Corporate Governance: Evidence from Insider Trading

Abstract Executives trade more profitably and opportunistically over the course of the tenure of independent directors (IDs). IDs’ increased connections with and hence allegiance to executives are likely the channel through which ID tenure can affect executive trading. Executive opportunism is mitigated by disciplinary factors that include the presence of a firm’s internal trading policy, blockholders, and IDs with legal expertise as well as the risk of shareholder-initiated derivative lawsuits. These results point to an association between long-tenured IDs and weakened corporate governance.

STATUTORY ATTRIBUTES OF FEMALE DIRECTORS AND EARNINGS QUALITY IN INDONESIA

All parties with an interest in the company need quality earnings information for economic decision making. This creates a moral hazard on the part of management to use various means in order to provide good news for these parties. This study aims to examine the effect of various attributes required by law (namely business education background, proportion, years of service, and foreign citizenship) related to the presence of women in top management on the earnings quality of companies in Indonesia. With the sample criteria set, 467 observations were obtained for companies listed on the IDX in 2015 - 2018. The results obtained indicate that the business education background and foreign citizenship of female directors affect earnings quality. Meanwhile, the proportion and tenure of female directors have no effect on earnings quality.

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.

Practical tips for navigating a program director transition.

Residency and fellowship program directors profoundly impact trainees, institutions, and patient safety. Yet, there is concern for rapid attrition in the role. The average program director tenure is only 4-7 years, and that timeline is likely a result of burnout or opportunities for career advancement. Program director transitions must be carefully executed to ensure minimal disruption to the program. Transitions benefit from clear communication with trainees and other stakeholders, well-planned successions or searches for a replacement, and clearly delineated expectations and responsibilities of the outgoing program director. In this Practical Tips, four former residency program directors offer a roadmap for a successful program director transition, with specific recommendations to guide critical decisions and steps in the process. Themes emphasized include readiness for a transition, communication strategies, alignment of program mission and search efforts, and anticipatory support to ensure the success of the new director.