Board composition and organizational performance: two studies of insider/outsider effects

Article Abstract:

This paper presents two studies that examine the commonly held belief that corporate boards are more likely to have positive effects on organizational performance when composed of outside directors. The first study - a meta-analysis of 63 correlations - indicates that, on average, the greater presence of outsiders is associated with higher performance, but so too is the greater presence of insiders. Instead of providing evidence of a positive outsider effect, these results suggest the existence of a curvilinear homogeneity effect in which performance is enhanced by the greater relative presence of either inside or outside directors. The second study - a hierarchical polynomial regression analysis of data from 259 large US companies - confirms the existence of a curvilinear relationship between insider/outsider composition and performance measured as return on assets. (Reprinted by permission of the publisher.)

Performance, Organizational effectiveness

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Stakeholder-agency theory

Article Abstract:

Taking agency theory and stakeholder theory as points of departure, this article proposes a paradigm that helps explain the following: (1) certain aspects of a firm's strategic behaviour; (2) the structure of management-stakeholder contracts; (3) the form taken by the institutional structures that monitor and enforce contracts between managers and other stakeholders; and (4) the evolutionary process that shapes both management-stakeholder contracts and the institutional structures that police those contracts. (Reprinted by permission of the publisher.)

Analysis

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Boards of directors and shark repellents: assessing the value of an agency theory perspective

Article Abstract:

Relationships between the adoption of shark repellents and vaious mechanisms that agency theory recommends for aligning the interests of corporate board members and shareholders are examined. Because agency theory explains so little of the variance of shark repellent adoption, other theoretical formulations for corporate governance, such as stewardship theory and agent morality, should be considered.

Science & research, Investor Relations

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