Board Monitoring (board + monitoring)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting100%

Selected Abstracts

Board Monitoring, Regulation, and Performance in the Banking Industry: Evidence from the Market for Corporate Control

CORPORATE GOVERNANCE, Issue 5 2010
Jens Hagendorff
ABSTRACT Manuscript Type: Empirical Research Question/Issue: The specific monitoring effect of boards of directors versus industry regulation is unclear. In this paper, we examine how the interaction between bank-level monitoring and regulatory regimes influences the announcement period returns of acquiring banks in the US and twelve European economies. Research Findings/Insights: We study three board monitoring mechanisms , independence, CEO-chair duality, and diversity , and analyze their effectiveness in preventing underperforming merger strategies under bank regulators of varying strictness. Only under strict banking regulation regimes, do board independence and diversity improve acquisition performance. In less strict regulatory environments, corporate governance is virtually irrelevant in improving the performance outcomes of merger activities. Theoretical/Academic Implications: Our results indicate a complementary role between monitoring by boards and bank regulation. This study is the first to report evidence consistent with complementarity by investigating the effectiveness (rather than the prevalence) of governance arrangements across regulatory regimes. Practitioner/Policy Implications: Our work offers insights to policymakers charged with improving the quality of decision-making at financial institutions. Attempts to improve the ability of bank boards to critically assess managerial initiatives are most likely to be successful if internal governance is accompanied by strict industry regulation. [source]

Optimal Board Monitoring in Family-owned Companies: Evidence from Asia

CORPORATE GOVERNANCE, Issue 1 2010
En-Te Chen
ABSTRACT Manuscript Type: Empirical Research Question/Issue: We propose that high levels of monitoring are not always in the best interests of minority shareholders. In family-owned companies the optimal level of board monitoring required by minority shareholders is expected to be lower than that of other companies. This is because the relative benefits and costs of monitoring are different in family-owned companies. Research Findings/Insights: At moderate levels of board monitoring, we find concave relationships between board monitoring variables and firm performance for family-owned companies but not for other companies. The optimal level of board monitoring for our sample of Asian family-owned companies equates to board independence of 38 per cent, separation of the chairman and CEO positions, and establishment of audit and remuneration committees. Additional testing shows that the optimal level of board monitoring is sensitive to the magnitude of the agency conflict between the family group and minority shareholders and the presence of substitute monitoring. Theoretical/Academic Implications: This study shows that the effect of additional monitoring on agency costs and firm performance differs across firms with different ownership structures. Practitioner/Policy Implications: For policymakers, the results show that more monitoring is not always in the best interests of minority shareholders. Therefore, it may be inappropriate for regulators to advise all companies to follow the same set of corporate governance guidelines. However, our results also indicate that the board governance practices of family-owned companies are still well below the identified optimal levels. [source]

Managers as Monitors: An Analysis of the Non-executive Role of Senior Executives in UK Companies

BRITISH JOURNAL OF MANAGEMENT, Issue 1 2000
Noel O'Sullivan
An important aspect of current governance practice is the use of non-executive directors to monitor the behaviour of company management. This paper examines the extent to which senior executives are utilized as non-executives in large UK companies. The results suggest that executive directors are not an important source of non-executive directors. The average number of non-executive directorships held by each executive is 0.22. Indeed, 85% of executives hold no additional directorships. The holding of non-executive directorships is positively related to the strength of board monitoring in the executive's company, executive tenure and company size. Executives in companies with greater growth opportunities and operating in regulated industries are less likely to hold non-executive directorships. [source]