Director Tenure Research Articles

Un análisis empírico de las juntas de directores y los derechos de los accionistas minoritarios latinoamericanos

El artículo examina la relación entre las estructuras de gobierno corporativo y la posibilidad de expropiación de los derechos de los accionistas minoritarios. Se analizaron 97 empresas de Brasil, Chile y México entre el 2000 y 2002. Los resultados indican que el aumento en el tamaño de la junta de directores, al incluir directores externos independientes, baja la posibilidad de la expropiación de los derechos de los acciones minoritarios. Además, a mayor tiempo de servicio en la junta de los directores externos independientes, a menor por ciento de propiedad de los CEOs y a más directores entrecruzados menor es la posibilidad de expropiación de los derechos de los accionistas minoritarios.

The Development of the Skills Curriculum in Law Schools: Lessons for Directors of Academic Law Libraries

Recent challenges to the status and tenure of law library directors has questioned their role law as teachers and scholars. This article analyzes the development of the legal research, clinical, and legal writing curriculum in U.S. law schools and identifies strategies that law librarians could choose to employ to bolster their status as the preeminent teachers of legal research in the academy.

Tenure, Certification, and Education of Nursing Home Administrators, Medical Directors, and Directors of Nursing in For-Profit and Not-for-Profit Nursing Homes: United States 2004

To understand key characteristics of the leadership team, and to examine if differences in these factors exist between for-profit (FP) and not-for-profit (NFP) nursing homes (NHs). Cross sectional. US nursing homes. A nationally representative sample of 1174 US NHs conducted in 2004. N/A. Reported data on tenure, education, and certification of NH administrators (NHAs), medical directors (MeDs), and directors of nursing (DoNs) at FP and NFP facilities. NHAs, MeDs, and DoNs at NFP facilities all had significantly greater tenure at their current facilities compared with their FP counterparts. NHAs and MeDs at NFP facilities were also more likely to have more years of accumulated experience in those roles. MeD certifications differed substantially by specialty, with 23.3%, 37.6%, and 43.5% of MeDs having certification in geriatric, internal, and family medicine, respectively, and about 42% of MeDs were certified by AMDA. However, no differences in MeD certification were observed by facility ownership. Although 68% of all US nursing homes had a MeD who spent 4 or fewer days per month in the facility and only 14% spent 11 days or more per month in the facility, nearly twice as many NFP MeDs spent 11 days or more onsite in the facility compared with FP MeDs. Facility ownership was strongly associated with NHA educational attainment, with a significantly higher proportion of NFP NHAs having master's degrees or higher (41.4% versus 26.6%, P < .0001), and smaller proportions of NFP NHAs having a bachelor's degree or less. In 2004, members of the leadership teams of NFP NHs had more favorable profiles for several characteristics related to education and tenure compared with their FP counterparts. More research is needed to understand how variation in leadership skills and capacity affects quality of care and quality of work life outcomes, including the role of FP/NFP differences in explaining differential quality outcomes.

The impact of board independence and ownership structure on the timeliness of corporate internet reporting of Irish‐listed companies

PurposeThis study seeks to provide valuable new insight into the timeliness of corporate internet reporting (TCIR) by a sample of Irish‐listed companies.Design/methodology/approachThe authors apply an updated version of Abdelsalam et al. TCIR index to assess the timeliness of corporate internet reporting. The index encompasses 13 criteria that are used to measure the TCIR for a sample of Irish‐listed companies. In addition, the authors assess the timeliness of posting companies' annual and interim reports to their web sites. Furthermore, the study examines the influence of board independence and ownership structure on the TCIR behaviour. Board composition is measured by the percentage of independent directors, chairman's dual role and average tenure of directors. Ownership structure is represented by managerial ownership and blockholder ownership.FindingsIt is found that Irish‐listed companies, on average, satisfy only 46 per cent of the timeliness criteria assessed by the timeliness index. After controlling for size, audit fees and firm performance, evidence that TCIR is positively associated with board of director's independence and chief executive officer (CEO) ownership is provided. Furthermore, it is found that large companies are faster in posting their annual reports to their web sites. The findings suggest that board composition and ownership structure influence a firm's TCIR behaviour, presumably in response to the information asymmetry between management and investors and the resulting agency costs.Practical implicationsThe findings highlight the need for improvement in TCIR by Irish‐listed companies in many areas, especially in regard to the regular updates of information provided on their web sites.Originality/valueThis study represents one of the first comprehensive examinations of the important dimension of the TCIR in Irish‐listed companies.

Investigating the Relationship Between Board Characteristics and Board Information

While corporate governance research has had some success tying boards' demographic characteristics to relatively distant outcomes such as CEO pay and succession, numerous studies have indicated that a major weakness of this research is that it has largely ignored the intervening behaviours associated with board vigilance. This study begins to answer this call by examining the relationship between boards' demographic characteristics and boards' information‐gathering behaviour. Using primary and secondary data from 149 firms, this study finds that an increase in the proportion of outside directors on a board is associated with an increase in boards' information quality and proactive information‐seeking. In addition, an increase in outside director tenure is associated with boards exchanging information more frequently. Consistent with agency theory predictions, these findings suggest that vigilant boards are likely to take actions aimed at reducing the level of information asymmetry between them and their CEOs.

Audit Committees and Quarterly Earnings Management

Regulators have frequently expressed concerns about corporate earnings management. Audit committees are expected to monitor managers’ financial reporting, including attempts to manipulate earnings numbers. The extant literature has focused on managers’ incentives to manipulate annual earnings numbers. However, managers also have incentives to manage quarterly earnings, due to, for example, pressures to meet quarterly analyst forecasts. We test the association between audit committee characteristics and measures of quarterly earnings management. Using a sample of 896 firm-year observations for the years 1996–2000, we report three findings. First, quarterly earnings management is lower for firms whose audit committee directors have greater governance expertise. Second, the extent of stock ownership by audit committee directors is positively associated with quarterly earnings management. Third, the average tenure of audit committee directors is negatively associated with quarterly earnings management.

Board Composition and the Value of New Zealand Companies

This study examines the relationship between board composition and firm value, and the extent to which this relationship may be affected by a company’s investment opportunity set. There is little research that examines this issue, particularly for the New Zealand market. Of the research that exists, and generally for the research that examines how board composition affects firm performance, the findings have been mixed. Using a randomly chosen sample, which improves the external validity of results from prior studies, we find that board composition of high growth option firms is positively related to firm value, and this relationship is maintained when more refined measures that proxy the characteristics of outside directors (such as tenure of outside directors, the level of outside director equity ownership, the number of other board positions held by outside directors, and the total proportion of non‐executive directors, including grey directors) are recognised.

Corporate Governance Scores and Firm Performance

The recent spate of corporate governance scandals has led to the emergence of several commercial governance rating agencies which rate firms on their strength of governance mechanisms. In this paper, we examine the quality of governance scores offered by one such vendor, The Corporate Library Board Analyst Ratings (BAR). In terms of content, we find that the percentage of independent directors, percentage of independent directors in the committees, director tenure, director age, number of directorships held by each director, independent director ownership and CEO compensation are important determinants of these ratings. Most of the factors used by BAR are consistent with the extant corporate governance theory and evidence. However, the Board Analyst Ratings fail to predict the future operating performance and stock returns of rated firms. Using a broader range of governance mechanisms, we construct an alternative score for governance which is linked to the future operating performance of firms. Overall, our results raise questions about the usefulness of BAR governance ratings to investors.

Board Composition and Firm Performance of Large Latin American Firms: An Exploratory View

ABSTRACT The paper studies the board composition, director tenure and CEO/chairman duality, and their association with financial performance among 71 large companies from nine Latin American countries listed in the U.S. as American depository receipts (ADR). Three measures of board independence and two accounting performance ratios are used. Results show that accounting performance is not associated with board composition among the firms, except that the tenure of outside directors relative to chief executive officer's (CEO) tenure has a positive effect on the return on assets (ROA). The findings suggest that as the number of years that outside directors sit on a board increases, ROA will also increase. RESUMEN. Este estudio analiza la formación de la junta, titularidad del director y dualidad de la función CEO/presidente, y su asociación con el desempeño financiero logrado por 71 grandes compañías de nueve países latinoamericanos listados en los Estados Unidos como tenedores de ADRs (American Depository Receipts). Se utilizaron tres medidas para calcular la independencia de la junta y dos para determinar la razón del desempeño contable. Los resultados obtenidos muestran que el desempeño contable no está asociado con la formación de la junta en estas empresas, excepto en lo que atañe a que la titularidad de los directores externos respecto a la titularidad del CEO ejerce un efecto positivo sobre el retorno patrimonial (ROA–return on assets). Estos resultados sugieren que a medida que aumenta el número de años que los directores externos permanecen en su cargo también aumenta el ROA. RESUMO. Este trabalho analisa a composição da Diretoria, o mandato dos diretores e a dualidade CEO/Presidente e a sua relação com o desempenho financeiro, entre 71 grandes empresas de nove países latino-americanos, cadastrados no E.U.A. como recebedores de depósito americano (ADR). São utilizadas três medidas para avaliar a independência da Diretoria e dois índices para avaliar o desempenho contábil. Os resultados demonstram que o desempenho contábil não está associado à composição da Diretoria, entre tais empresas, mas que o mandato dos diretores externos em relação ao mandato do Diretor-Executivo (CEO) tem um efeito positivo no retorno dos ativos (ROA). Tais conclusões sugerem que, à medida que aumenta o número de anos que os diretores externos permanecem na Diretoria, o ROA também aumentará.

Length of Board Tenure and Outside Director Independence

I posit and test two competing views on the significance of outside director tenure lengths; the expertise hypothesis suggesting that extended board service time is a sign of director commitment, experience, and competence and the management‐friendliness hypothesis suggesting that extended board service time marks directors who befriend management at the expense of shareholders. I find evidence that Senior directors, defined as directors with twenty or more years of board service, are almost twice as likely to occupy a ‘management‐affiliated’ profession compared to the rest, and that they are also more likely to staff the firm's nominating and compensation committees. Senior director participation in the compensation committee is associated with higher pay for the CEO, especially when the CEO is more powerful in the firm. These results are consistent with the management‐friendliness hypothesis, and highlight a need for setting term limits for directors.

Board composition and earnings management in Canada

This study contributes to the literature on the role of the board by investigating the effect of board composition on the practice of earnings management in Canada. We find that earnings are managed upward to avoid reporting losses and earnings declines. While outside directors, as a whole, do not reduce abnormal accruals, directors from financial intermediaries reduce earnings management, and the board representation of active institutional shareholders reduces it further. We do not find that monitoring of abnormal accruals by outside directors, as a whole, or by directors from financial institutions is more effective after the issuance of the Toronto Stock Exchange's Corporate Governance Guidelines of 1994. Finally, we do not find that earnings management decreases with the average tenure of outside directors as board members of the firm, either. Our findings suggest that adding outside directors to the board may not achieve improvement in governance practices by itself, especially in jurisdictions where ownership is highly concentrated and the outside directors' labor market may not be well developed.

Nursing homes as complex adaptive systems: relationship between management practice and resident outcomes.

Despite numerous clinical and regulatory efforts, problems of poor quality of care in nursing homes continue, suggesting a need for effective management practices. To test complexity hypotheses about the relationship between management practices (communication openness, decision making, relationship-oriented leadership, and formalization) and resident outcomes (aggressive behavior, restraint use, immobility of complications, and fractures), while controlling for case mix, size, ownership, and director's tenure and experience. A cross-sectional correlational field study design was used. Primary data were obtained from directors of nursing and registered nurses employed in 164 Texas nursing homes. Investigators administered self-report surveys onsite. Secondary data were obtained from 1995 Medicaid Cost Reports and the Texas nursing home Minimum Data Set (MDS) and were linked to primary data using a unique identifier. Hypotheses were supported in that each management practice explained one or more of the resident outcomes. Larger size and longer director of nursing tenure and experience also explained better resident outcomes. Predictors explained 11% ñ 21% of the variance. Complexity science was used to explain the results. The findings open the door to rethinking nursing home management practice. Practices that increase communication and interaction among people are needed for better resident outcomes.

Board Independence and Compensation Policies in Large Bank Holding Companies

We use a sample of large bank holding companies to empirically examine the association between financial performance and organizational structure. We regress firm accounting performance on measures of board independence, CEO pay-performance sensitivity, the product of board independence and CEO pay-performance sensitivity, and other organizational features and control variables. We find that both CEO pay-performance sensitivity and the relative tenure of independent outside directors have a positive effect on accounting performance. Their interactive effect tends to be negative. Thus, the marginal value of each mechanism for accounting performance declines as the use of the other mechanism increases. These results are robust in a simultaneous equations framework that accounts for endogeneity issues. We also find a positive relation between the percentage of independent outside directors and CEO pay-performance sensitivity.

An Empirical Analysis of the Relation between the Board of Director Composition and Financial Statement Fraud

This study empirically tests the prediction that the inclusion of larger proportions of outside members on the board of directors significantly reduces the likelihood of financial statement fraud. Results from logit regression analysis of 75 fraud and 75 no-fraud firms indicate that no- fraud firms have boards with significantly higher percentages of outside members than fraud firms. Results are not sensitive to the definition of outside directors used, given that no-fraud firms have significantly higher percentages of both grey and independent directors than fraud firms. Interestingly, the presence of an audit committee does not significantly affect the likelihood of financial statement fraud. Additionally, as outside director ownership in the firm and outside director tenure on the board increase and as the number of outside directorships in other firms held by outside directors decreases, the likelihood of financial statement fraud decreases.

The Tenure of Directors of Nursing

Director of nursing (DON) tenure is often a question of debate, with some believing that there is rapid turnover among DONs. A survey of university and university-affiliated hospitals was conducted to assess turnover among DONs and the reasons they leave their positions. Over a 10-year period, hospitals averaged 2.5 DONs per hospital. The majority of hospitals (57%) had one to two DONs and 19% had four or more DONs during this 10-year period. Fifty percent of the current DONs have been in their positions for 5 or more years. Termination and requested resignation were cited most frequently as the reasons past DONs left their positions (40%). In spite of the high termination rate, both DONs and chief executive officers (CEOs) feel that they work effectively together.