Editorial New Answers and Questions Arising from Corporate Governance Research
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Course
Corporate Governance
Institution
Corporate Governance
Goodscience not only addresses important questions,
but it also raises new questions. The six articles in this
issue do just that. Our lead-off article is a novel conceptual
study written by Knapp, Dalziel, and Lewis. They argue that
two of the leading theories within the field of corporate...
Corporate Governance: An International Review, 2011, 19(4): 293–294
Editorial
New Answers and Questions Arising from
Corporate Governance Research
By William Judge
G ood science not only addresses important questions,
but it also raises new questions. The six articles in this
issue do just that. Our lead-off article is a novel conceptual
of the firm in question. Clearly, this study raises the very
interesting question: Should our research focus on general
tendencies across all firms, or seek to understand outliers?
study written by Knapp, Dalziel, and Lewis. They argue that The next two studies empirically investigate the effects of
two of the leading theories within the field of corporate corporate boards on firm internationalization. First Chen
governance (i.e., agency and stewardship theory) offer studies a wide range of firms in Taiwan and finds that
rather simplistic and rather rigid perspectives on human average top management team tenure is positively associ-
nature. In contrast, they assert that a social-cognitive per- ated with internationalization and average top management
spective is more realistic and precise; and they expound on team age is negatively associated with it. Furthermore, board
social categorization theory as a social-cognitive perspective composition moderated the top management team tenure
that can reconcile the many contradictions between agency relationship with firm internationalization. Following that
and stewardship perspectives. As such, organizations are study, Barroso, Villega, and Perez-Calero seek to understand
viewed as networks of social categories whereby managers how board capability influences firm internationalization for
categorize the board’s attempt to control the firm. In so a sample of firms based in Spain. Notably, they find a nega-
doing, they discuss concepts like negative and positive dis- tive relationship between average board member tenure and
cretionary behavior and intended and unintended conse- firm internationalization, just the opposite of what Chen
quences of board control mechanisms that hover around found in her study for top management team members. In
over top management teams, as well as emphasize the addition, they found several other linear relationships asso-
importance of considering social perceptions and doing ciated with board capability. So what explains this difference
cost/benefit analyses behind all control initiatives. One new in findings related to tenure? Does tenure have a different
question created by this study is: What assumptions regard- impact within the board as compared to the top management
ing human nature are required for a generalizable, parsimo- team? Does tenure play a different role in different parts of
nious, and accurate theory of comparative corporate the world? Is the relationship between tenure and interna-
governance? Another that arises is: Can we meaningfully tionalization different than other outcomes variables?
study the board in isolation from its relationship with the The next empirical study, authored by Machold, Huse,
top management team? Minichilli, and Nordqvist, examines board processes in
Our second study in this issue was an empirical study of small firms in Norway. Using the team production perspec-
the relationship between corporate governance and firm per- tive, these scholars seek to understand how board processes
formance in the US mutual fund industry. Using an agency and structures might influence board involvement in the
perspective, Chen and Huang seek to better understand the strategic making process. Notably, they find that processes
relative importance of board control versus managerial such as average board member knowledge, board leadership
incentives as corporate governance mechanisms. Interest- efficacy, and board development activities are much more
ingly, they find that the impact of both board control and influential in explaining board involvement in strategy than
managerial incentives is very different in the overall sample, board structure is. As a result, this study raises the very
as compared to their relationship at the high and low end of interesting question as to the relative importance of board
the firm performance spectrum. Using quantile regression processes versus board structure for explaining firm-level
analysis, they demonstrate that effective board control is outcomes. If, for instance, board processes are much more
more important to firm performance than managerial incen- important, as this study implies, what are the most impor-
tives overall, but that these governance mechanisms vary in tant processes and how might those processes be best
their relative impacts depending on the performance profile encouraged and/or demanded within a society?
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