Session 196

Behavioral Perspectives on Boards of Directors

Track F

Date: Wednesday, October 14, 2009

 

Time: 11:30 – 12:45

Paper

Room: Auditorium


Session Chair:
James Westphal, University of Michigan

Title: Does History Matter in Corporate Governance? Influence of Owner’s Legacy on Firm Performance

Authors

  • Indrajit Mukherjee, XLRI Xavier School of Management
  • Apalak Khatua, XLRI Xavier School of Management

Abstract: This study explores how backgrounds of different categories of controlling owners in emerging economy influence firm performance. The legacy of pre-liberalization era of the different owner-categories, manifested through the social network and organizational routines, influence the firm performance in the post-liberalization era. The results validate our core thesis that the legacies of different categories of controlling owners influence the performance of firms. The study extends the corporate governance theory by taking a multi theoretical perspective. It has important implication for policy decisions on privatization and limits of foreign direct investment. The insights will help practicing managers in understanding ways in which owners contribute or hinder firm performance and to take necessary actions to leverage advantages and overcome hindrance.

Title: Group Polarization on Corporate Boards: Theory and Evidence on Board Decisions About Acquisition Premiums

Authors

  • David Hongquan Zhu, Arizona State University

Abstract: This study examines how a fundamental group decision-making bias (i.e., group polarization) may influence boards’ decisions about acquisition premiums. The theory explains how board discussions can induce directors to make a collective decision that amplifies their average pre-meeting position. Specifically, I suggest that when prior premiums experienced by directors would lead them to on average support a high (low) premium prior to a meeting, they tend to approve a focal premium that is even higher (lower). I also examine several key moderators of polarization. Results based on acquisitions made by Fortune 500 boards (95-06) provide strong support to the theory. This study advances a social psychological perspective on corporate governance, and explains how group processes may influence the diffusion of acquisition practices through interlock networks.

Title: The Higher They Rise, the Harder They Fall: The Insidious Effects of Ingratiation Towards High Status Corporate Elites

Authors

  • Sun Hyun Park, Seoul National University
  • James Westphal, University of Michigan
  • Ithai Stern, INSEAD

Abstract: Our study contributes to an understanding of executive career dynamics by suggesting how high levels of ingratiation experienced by CEOs as they rise to higher social status positions can lead to biased self perceptions that impair subsequent strategic decision making and eventually put their positions at risk. Our theoretical framework and supportive empirical findings indicate that CEOs ascending to higher social status positions in the corporate elite by acquiring more board appointments become increasingly attractive targets of ingratiation from colleagues. High levels of received ingratiation can increase CEOs’ overconfidence in their strategic judgment and leadership capability, which results in failure to initiate strategic change in response to poor performance, and such strategic persistence can ultimately increase the likelihood of the CEO’s dismissal.

Title: When Institutional Logicss Collide, Who Wins? The Incorporation of Independent Directors into Family Firms

Authors

  • Chi-Nien Chung, National University of Singapore
  • Young-Choon Kim, Ulsan National Institute of Science and Technology
  • Edward Zajac, Northwestern University

Abstract: We study the influence of foreign institutional investors on corporate governance reform in the context of family governance in emerging economies. Using the sample of the listed Taiwanese firms, we examine the appointment of independent directors between 2002 and 2005. Our findings suggest that Taiwanese firms responded to pressure of foreign institutional investors when they are weakly controlled by the family or when a firm’s CEO has been exposed to alterative governance models through formal education in the U.S. This finding supports the argument that external pressure of foreign institutional investors is moderated by the strength of family control and the alterative cognition scheme of the key decision-maker. We discuss the implication of our research on institutional change in globalized environments.

All Sessions in Track F...

Sun: 10:00 – 11:30
Session 260: Writing Workshop for Doctoral Students and Junior Faculty
Sun: 13:00 – 14:30
Session 261: Shareholder Primacy and Corporate Policy
Sun: 15:00 – 16:30
Session 262: The Role of Government in M&A Activity
Sun: 16:30 – 17:30
Session 310: Corporate Strategy & Governance, IG Meeting
Mon: 12:45 – 14:00
Session 198: Perspectives on CEO Succession
Session 228: Business Groups, Alliances, and Contracts
Mon: 15:45 – 17:00
Session 229: Alliances and Corporate Strategy
Session 230: Ownership Determinants and Consequences
Mon: 17:15 – 18:30
Session 194: CEOs and Top Management Teams
Session 197: Diversity, Identity, and Corporate Governance
Session 233: Top Executives and Directors in Organizational Dynamics
Tue: 10:00 – 11:15
Session 199: Executive Compensation
Session 200: Social Psychological Perspectives of CEOs
Tue: 11:30 – 12:45
Session 195: Competitive Dynamics of Business Groups
Session 234: Constraints and Catalysts on Corporate Growth
Tue: 14:30 – 15:45
Session 226: Relatedness, Dominant Logics, and Other Diversification Logics
Session 231: Institutions and Agents
Wed: 10:00 – 11:15
Session 227: Corporate Strategy & Diversification
Session 232: Stakeholders in the Corporate Governance Equation
Wed: 11:30 – 12:45
Session 196: Behavioral Perspectives on Boards of Directors
Session 225: Acquisitions and Corporate Strategy


Strategic Management Society

Washington DC