Corporate Board role duties and composition

Journal Information
ISSN / EISSN : 1810-8601 / 2312-2722
Published by: Virtus Interpress (10.22495)
Total articles ≅ 322
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Igbekele Sunday Osinubi
Corporate Board role duties and composition, Volume 17, pp 4-6; https://doi.org/10.22495/cbv17i3editorial

Abstract:
Corporate managers make choices that seek to improve the performance of their organisation. These decisions involve interpreting and framing the environment, developing and implementing programmes and services, and creating processes and structures to monitor and control resources for optimal impact (Brown & Iverson, 2004). Board performs a critical function to monitor environmental trends that might affect organisational performance. The strategy adopted by the corporate board will have a considerable impact on their performance. The literature also suggests that the composition of the board will be contingent upon the characteristics of the firm’s external environment, the demands of its strategy and the salient contextual factors and the past financial performance of the company (Pfeffer & Salancik, 1978). These issues are addressed in the collection of high-quality papers in this issue of Corporate Board: Role, Duties and Composition.
Hugh Grove, Maclyn Clouse
Corporate Board role duties and composition, Volume 17, pp 61-71; https://doi.org/10.22495/cbv17i3art5

Abstract:
The key research aim of this paper is to analyze whether an activist investor’s recommendations for financial, corporate governance, and strategic management performances were successful or not. This paper updates the initial case study of the activist investor, Barington Capital Group, in analyzing the performance of a public company, L Brands, which had lost $20 billion in market capitalization in the last three years prior to the public letter from Barington to the L Brands CEO in March 2019. This updated case study analyzes whether Barington’s initial recommendations worked as operational guidelines for improving L Brands’ financial, corporate governance, and strategic management performances. From its financial analysis, Barington recommended either an initial public offering of the superior performing Bath & Body Works brand or a spinoff of the weak performing Victoria’s Secret brand. From its corporate governance and strategic management analysis, Barington recommended that L Brands improve the composition of its board of directors whose deficiencies in director independence, industry experience, and diversity hindered its ability to effectively oversee and advise strategic management. It is important to note that this paper was prepared exclusively with public information.
Fabio Franzoi
Corporate Board role duties and composition, Volume 17, pp 42-60; https://doi.org/10.22495/cbv17i3art4

Abstract:
While research on long-term capital structures of family and non-family firms is well established, differences in current assets- and liabilities-management are largely under-researched. The aim of the study is to examine whether the type and degree of family involvement in the firm affect the efficiency of working capital management. Employing a partially hand-collected panel of 278 listed firms from 2000–2013 this paper analyzes the impact of family shareholders as owners, managers, and supervisors on working capital handling in Germany. The results show that primarily the share of family members in the executive board increases the length of the cash conversion cycle (CCC), particularly in smaller and non-service firms. Most notably, family management increases the inventory period (DIO). The higher average equity ratio of family firms suggests that family firms may face reduced financing pressure to address such inefficiencies in current assets and current liabilities management. Furthermore, family-managed firms may be less professional in their working capital management. The findings contribute to the literature by showing that in a country with a less investor-friendly corporate governance system, family influences on working capital management are primarily due to management presence, not plain shareholder influence. The results stress the need for researchers to consider the degree of family management involvement when analyzing the financial aspects of family firms.
Corporate Board role duties and composition, Volume 17, pp 31-41; https://doi.org/10.22495/cbv17i3art3

Abstract:
Diversity on corporate boards has been studied from different perspectives in recent decades. The present study aims at investigating the impact on firm performance of two demographic diversity traits in boardrooms: tenure and educational diversity. The extant literature does not provide aligned findings on this topic, thus further research is still needed. The authors hypothesize that both tenure and educational diversity of board members have a positive effect on firm performance. To measure firm performance two dependent variables are used, applying two models for each hypothesis investigated Tobin’s Q and return on assets. The study is conducted using sample data of 187 listed firms within the European area, covering a 9-year period, from 2010 to 2018. Diversity dimensions are measured through indexes constructed on the basis of the mix among the directors in terms of educational level and tenure. The outcomes highlight a significant and positive relationship between tenure diversity on corporate boards and firm performance. In terms of the impact of educational diversity, no evidence indicating a positive effect on firm performance is found. The research carried out is unique because it considers two personal attributes of diversity calculating diversity indexes and measuring their impact on the firm’s performance. The econometric approach used has not been extensively applied in previous research. In fact, the majority of previous empirical studies have measured diversity through percentages or dummy variables, depending on the type of diversity aspect being analyzed, and then used it as the independent variable.
Corporate Board role duties and composition, Volume 17, pp 21-30; https://doi.org/10.22495/cbv17i3art2

Abstract:
Interlocking directorates create the conditions for social embeddedness and represent a key driver of the diffusion of strategies and practices (Okhmatovskiy & David, 2012). Among the multiple focuses of analysis, board interlocks have been regarded as a source of inter-organizational imitation in the context of corporate acquisitions (Xia, Ma, Tong, & Li, 2018; de Sousa Barros, Cárdenas, & Mendes-Da-Silva, 2021). Imitation indeed has been acknowledged as one of the primary implications of interlocking directorates (Shropshire, 2010). This study, therefore, offers an in-depth summary and discussion of how interlocks of business elites influence corporate acquisitions. Multiple contributions are provided. First, the paper develops a thematic analysis in which multiple research focuses are identified, namely acquisition activity and emphasis, acquisition timing in mergers and acquisitions (M&A) waves, acquisition process, and acquisition premium. Second, it elaborates on a number of potential avenues for future research. Specifically, it identifies three main lines of inquiry related to the imitation scope, performance at both firm- and industry-level, and potential theoretical cross-fertilizations. Moreover, methodological considerations are discussed especially in terms of operationalization choices and their implications. To the best of the author’s knowledge, this paper represents the first attempt to review the literature on the interlocks-acquisition field.
Mohammad A. Ta’Amnha, Omar M. Bwaliez, Ihab K. Magableh, Ghazi A. Samawi,
Corporate Board role duties and composition, Volume 17, pp 8-20; https://doi.org/10.22495/cbv17i3art1

Abstract:
The coronavirus disease 2019 (COVID-19) pandemic developed a new form of perceived organizational support called COVID 19-related organizational support (COVID-OS). This study investigates the role of COVID-OS in creating and maintaining an attractive employer brand. Although the COVID-19 pandemic has affected all types of organizations, both profit and nonprofit, the literature still lacks thorough research about the COVID-OS and employer brand in the context of nonprofit organizations (particularly the humanitarian ones). Based on in depth qualitative data drawn from 38 semi-structured interviews with humanitarian employees in Jordan during the COVID-19 pandemic, this study revealed that the board of humanitarian organizations can create and maintain their employer brand through providing different forms of organizational support to their employees. These forms of support are health and mental support, support from the working social environment, support of the work-life balance, providing online training and development programs, fair recognition and compensation programs, and leadership support. This study provides significant theoretical implications to the literature regarding the link between organizational support and employer brand. It also offers valuable practical implications for policymakers of humanitarian organizations.
Pedro B. Água
Corporate Board role duties and composition, Volume 17, pp 4-6; https://doi.org/10.22495/cbv17i2editorial

Abstract:
Corporate strategy is considered a central driver of a firm’s long-term orientation, a key influencer in corporate performance, and nowadays being impacted by an increasing business endeavour where complexity is the new normal. Corporate governance suggests that boards of directors have the duty to govern the firms they are responsible for, and doing so in a sustainable way. Hence, boards are supposed to make relevant decisions on corporate strategy. How is, however, strategy translated into the board agenda? Corporate governance faces a new set of challenges as a great deal of countries are progressively getting out of the pandemic constraints that have slowed economic performance for most businesses. The way strategies will be developed will dictate their fit for purpose. Such strategies will have to cope with increasing sustainability goals; provide a competitive edge against competitors’ technological edges and innovation in general. Such strategies will have to deal with innovative usages of IT and potential business disruptions that may be triggered by digital transformation. All such paradigm changes will demand more effort from boards, and force them to dive into unusual fields, such as learning about complexity and systems thinking. As important as strategy formulation is ethical leadership for strategy deployment and sustainability. Overall, such topics are placed high on boards agendas and are addressed in the current issue of Corporate Board: Role, Duties and Composition.
Hugh Grove, Maclyn Clouse
Corporate Board role duties and composition, Volume 17, pp 54-69; https://doi.org/10.22495/cbv17i2art5

Abstract:
The major research purpose of this paper is to identify the challenges for boards of directors concerning their responsibilities to assess and track their companies’ commitments to zero net emissions goals and performances. A major challenge for boards is to determine whether their companies are sincerely trying to reach zero net emissions or just doing greenwashing, i.e., just making commitments or pledges without any substantial subsequent performance. This literature-search research broadens previous research on companies’ commitments to renewable energy (Grove & Clouse, 2021) to zero net emissions goal commitments and related boards’ monitoring responsibilities, especially to avoid greenwashing. This study also extends previous research on climate change risks and opportunities (Grove, Clouse, & Xu, 2021) to develop and establish board challenges for zero net emissions goals with the following sections: overview of climate risk, current climate lawsuits and board risks, EU climate law, carbon inserts, carbon offsets, carbon credits for agriculture, climate disclosure metrics, global bank greenwashing, and conclusions. The International Organization of Securities Commissions Organization (IOSCO) includes 90% of the public market security regulators in the world and has established a working group that should establish climate disclosure metrics for public companies. Climate disclosure metrics are relevant and needed to help stakeholders, including boards, assess company climate performances, opportunities, and risks.
Erik Beulen, Ries Bode
Corporate Board role duties and composition, Volume 17, pp 38-53; https://doi.org/10.22495/cbv17i2art4

Abstract:
In corporate governance, more dedicated attention to digital transformations is becoming essential. This research applies design science to design an information technology and innovation (IT&I) committee as an integral part of corporate governance for organisations that are engaging in digital transformations. This research builds on the work of Turel and Bart (2014). In our research, we conclude that the seven Dutch studied organisations, which are engaging in digital transformations, have corporate governance challenges for the board of directors related to these transformations. These challenges include the presence of digital capabilities and experience, as well as having sufficient dedication and focus on digital transformation. In most organizations, the audit committee addresses the risks associated with information technology including digital transformations. However, our research shows that the audit committee by default does not focus on business opportunities of digital transformations. Our research proposes a design for an IT&I committee, which enhances corporate governance, as well as the long-term value creation by means of IT, technology, and innovation. The IT&I committee councils and monitors digital transformations and facilitates decision-making by the board of directors. Overall, the results of our research suggest that installing an IT&I committee improves corporate governance for organisations that are engaging in digital transformations.
Corporate Board role duties and composition, Volume 17, pp 27-37; https://doi.org/10.22495/cbv17i2art3

Abstract:
Board decision-making is a complex process. It is represented by reasoning for choosing the most suitable alternative within a series of options for the operation of the corporation. In practice, strategic decision-making is an important function of the board of directors, especially in the information age. Although there are various determinants of the board for carrying out decision-making, there has been little research concerning the impact of information technology (IT) governance wisdom on board decision-making. This study seeks to investigate the origin of IT governance and analyze IT governance wisdom from the perspective of the philosophical thinking of The Art of War. The analysis indicates that the concept of IT governance must have been produced no earlier than the late 1990s, highly likely at the beginning of the 21st century. In addition, this study presents the results of qualitative field research of a Chinese information and communication technology (ICT) company which indicates that it has an important meaning in explaining IT governance wisdom might have a significant influence on board decision-making. In summary, the importance of information governance wisdom in the decision-making process of the board of directors is also a reflection of intelligent management while considering the interests of shareholders in the digital era.
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