Nominating Committees Research Articles

By-Laws of the Bibliographical Society of America

By-Laws of the Bibliographical Society of America

By-Laws of the Bibliographical Society of America

By-Laws of the Bibliographical Society of America

By-Laws of the Bibliographical Society of America

By-Laws of the Bibliographical Society of America

Got a plan in the pipeline? Nominating committee’s information processing in executive successions

PurposeThe purpose of this paper is to examine how information-processing mechanisms between nominating committees (NCs), incumbent executives, board chairs, and shareholders affect the comprehensiveness of executive succession processes.Design/methodology/approachThe authors employ an explanatory multiple-case study that comprises eight CEO and CFO succession cases in large German publicly traded firms.FindingsThe findings reveal that comprehensiveness is determined by four key information-processing mechanisms: the effectiveness of NC’s information sharing, absorbing disagreement, and integrating heterogeneous opinions; board chair leadership (i.e. an apprentice board leadership structure in association with the board chair’s openness to ideas); the breadth and depth of information sharing between executives and NCs; and the extent and timing to which major shareholders influence succession processes.Research limitations/implicationsThe authors summarize the findings in a conceptual framework and develop a set of propositions to guide future research on the topic. Such studies may want to test the suggestions in a quantitative way, preferably in a multinational context.Originality/valueThe authors’ emerging conceptual framework contributes a set of information-processing variables by which NCs engage in comprehensive executive successions with incumbent executives, board chairs, and major shareholders and offers a multiechelon approach to study executive successions.

Relation-based Versus Rule-Based Governance Systems

Relation-based Versus Rule-Based Governance Systems

The Effects of Corporate Governance on the Informativeness of Earnings

This study draws upon prior research on corporate governance and examines whether the informativeness of earnings, proxied by the earnings response coefficient varies with the percentage of outside independent directors serving on the board, the absence of CEO duality, and the presence of independent audit (AUDC), compensation (COMC), and nominating (NOMC) committees. The results suggest a positive association between the proportion of outside independent directors serving on firm’s boards and earnings informativeness. However, the results do not suggest an association between non-CEO duality, or independent AUDC, COMC, and NOMC and earnings informativeness.

Recent Technical Papers on Corporate Governance

During 2004, the Social Science Research Network (SSRN) posted nearly 200 draft and pre-published articles examining aspects of corporate governance on its website. This cluster of new work exceeded by scale that on the telecom collapse, the stock bubble, the overvalued dollar, and the Irish economic renaissance. The question is whether it is evidence that social science research follows what gets media attention, or whether it forms an organic whole attempting to advance towards a solution to the governance crisis. We develop an overview of that part of year 2004’s corporate governance research that answers partially that question. Articles were evaluated on six factors: intent, hypothesis, sources, methodology, relevance and importance, on a score between zero and one for each factor, providing for a score between zero and six for each article. The articles were then clustered into four categories: 1) the role of the board in explaining the corporate governance crisis 2) the relationship of executive and director compensation and corporate governance 3) the effect of governance indices on firm performance 4) the market for corporate control. In order to test for the “organic whole” of this stream of literature we evaluated each cluster using the factors as common metrics. In our judgment, a small number of articles (30% of those with scores of six) made contributions to understanding and thus improving governance in 2004. In the first set of articles Uzun et al. found less fraud if boards are smaller and have a lower percentage of non-independent inside directors; public firms having independent directors on nominating and audit committees experience lower levels of fraud (those in the sample tested [1978-2001 period] were not subject to the current requirements of the Sarbanes-Oxley Act of 2002 [SOX] of an independent director to chair the audit committee; thus the results are somewhat dated). Agrawal and Chadha found that boards having independent directors with financial expertise (on the board or audit committee) were less likely to experience a “shock” (defined by the authors as a significant accounting restatement). Brown and Caylor found that seven of the metrics utilized by Institutional Shareholder Services (ISS), principally those related to director performance and senior management stock options, had an effect on firm performance. On the second set, Shi found that CEO compensation structure was related to the type of risk (general, industry, and firm specific) that management can be held accountable for. Kadan and Yang found a relationship between executive stock options and earnings management. Datta et al. argue that there is a relationship between managerial stock ownership and corporate debt maturity (shorter debt maturity subjects the firm to greater monitoring by the debt capital markets). Cohen et al. found that subsequent to the passage of the Sarbanes-Oxley Act of 2002 (SOX), firms increased the fixed portion of executive compensation packages to compensate CEOs for the additional liability imposed on them by SOX. Moreover, CEO’s in the post-SOX environment were less likely to invest in RD well governed firms recognize write-offs earlier. On the fourth cluster of articles, Qiu found that when public pension ownership in a firm is high, corporate (post merger) performance in stronger. Wang found that block and higher institutional stock ownership (a governance mechanism) reduces corporate fraud and increases fraud detection. Bebchuk et al. find that the entrenchment index (developed from six ISS corporate governance variables) improves firm performance. Bebchuk et al. argue that internal barriers developed by management with the approval of the board constrain outside market governance forces. We also note two governance articles developed in 2004 that are based more on the extensive prior research by authors, rather than new empirical research. We refer to these as Type II articles in this paper. One article of interest by Jensen et al. posits a refinement of executive compensation that they believe will result in an improved performance metric to evaluate management. Shareholder value related to management performance should be measured by changes in earnings, incorporating cost of capital, rather than being measured solely by share price. The authors argue for the creation of bonus banks that allow for negative bonuses, thus holding management accountable for poor performance. Romano found that the development of SOX and derivative governance reforms was not grounded in empirical research. Romano argues that policy makers developed SOX rapidly in response to pressure from the public and media that was amplified by an election cycle. In our view, the articles by Jensen et al. and Romano provide the greatest contribution to our understanding of corporate governance. We believe that while many of the Type I (based on empirical research) articles provide answers to individual corporate governance factors (or sets of factors), they address only partial elements of a multivariate equation, rather than an organic whole, that would offer a solution to strengthen corporate governance.

The Nature of Board Nominating Committees and Their Role in Corporate Governance

This study examines the association between the employment and composition of nominating committees with board and ownership characteristics. First, the results suggest that the likelihood of using a nominating committee is inversely related to the level of inside ownership and positively weakly, related to the independence, but not the number, of outside board members. Second, the percentage of insiders participating in the committee is positively related to inside ownership, and negatively related to proxies for outside director quality. Finally, outside directors are more likely to serve on the nominating committee the more outside directorships they hold, and the longer their tenure in the firm. The likelihood of insider committee membership rises with a director's equity investment, with board tenure, and with other committee memberships. Taken together, the results are consistent with nominating committees substituting inside ownership in controlling management, mostly improving board quality, and being staffed with independent, experienced, and knowledgable members.

In Memoriam: Bryan Steven Obst, 1956-1991

Born on 7 April 1912, Ralph Dexter grew up in the fishing port of Gloucester, on Cape Ann, Massachusetts. His early passion for molluscs, crustaceans, and tidal pools remained with him throughout his life, but at age 16 a Miss Babson of the Cape Ann Scientific, Literary, and Historical Association awakened his interest in birds. He received his Bachelor of Science degree from the University of Massachusetts in 1934 and in 1981 received the University's Distinguished Alumnus Award. His outstanding undergraduate record earned him admission to the University of Illinois at Urbana-Champaign where, in 1938, he was awarded a Ph.D. for his doctoral dissertation on the ecological interactions of marine communities in a tidal inlet on Cape Ann, Massachusetts (Ecol. Monogr. 17:261294, 1944). He later served as Vice-President and President of the Malacological Union. In 1937 Ralph accepted a job at Kent State University where for 45 years he taught courses in ecology, field zoology (which included ornithology), and history of biology, and where, in 1938, he married Jean Westwater. With Kent, Ohio, having few tidal communities, Ralph began a long-term study of the Chimney Swifts (Chaetura pelagica) that nested in the vent pipes on the roof of the biology building. From 1944 until the end of his life, Ralph banded all adult and nestling swifts that used those vents. During this time he published many papers on swifts, as well as ecological studies of the House Sparrow (Passer domesticus), Common Barn-Owl (Tyto alba), Evening Grosbeak (Coccothraustes vespertinus), and Common Nighthawk (Chordeiles minor). In 1957 Kent State recognized Ralph Dexter with its Most Distinguished Faculty Award, in 1964 the Chimney Swift was incorporated into the seal of the university, and in 1977 Ralph received the University's President's Medal. Ralph's interest in America's 19th century naturalists is reflected in several historical papers, his active membership in the Society for the History of Natural Science, and his pivotal role in founding the History of Science Committee of the Ohio Academy of Science. He was a Fellow of the AAAS and the Ohio Academy of Sciences; for the latter he served as Secretary, Historian, and President. In 1991 the Academy honored him as one of its Centennial Honorees. He joined the American Ornithologists' Union in 1942 and became an elected member in 1976. He was also a member of the Association of Field Ornithologists, the Wilson Ornithological Society (where he served on the Nominating and Resolutions committees), and the Inland Bird Banding Association (where he served as Vice-President). Ralph Dexter died in Kent, Ohio, on 29 October 1991. He is survived by two daughters.

The state of symbolic computation

When I was first asked to give this banquet talk, I was somewhat hesitant to accept. I have not been very heavily involved in the field of symbolic and algebraic manipulation for the past three years. I have contented myself with such behind-the-scenes activities as serving as an associate editor for the ACM Transactions on Mathematical Software and as a member of the SIGSAM Nominating Committees two years ago and again this year.

Origins of National Nominating Committees and Platforms

Origins of National Nominating Committees and Platforms