Do problem directors affect firm operating performance?

2015 ◽  
Vol 23 (2) ◽  
pp. 170-185 ◽  
Author(s):  
Md. Borhan Uddin Bhuiyan
Keyword(s):  
Firm Performance ◽  
Past History ◽  
Practical Implication ◽  
Operating Performance ◽  
Corporate Boards ◽  
Content Type ◽  
Sensitivity Tests ◽  
History Of ◽  
Performance Problem ◽  
The Impact

Purpose – The purpose of this paper is to examine empirically the consequences of having problem directors on the board with respect to operating performance. Problem directors are directors who have a past history of managerial integrity weakness. Design/methodology/approach – This paper uses three measures of operating performance to investigate the impact of problem directors and applies regression analysis to data from S & P 500 companies from 2004 to 2009. Findings – The author found evidence for the problem that director affiliated firms have more board and independent members. The CEO dual firm has a comparatively higher number of problem directors on the board. Firm operating performance is reduced when a board is served by a problem director. The results are consistent for a number of sensitivity tests. Practical implications – Results provide evidence that firms have negative performance consequences when monitored by a director with a lack of managerial integrity. The practical implication of this study is that corporate boards should appoint directors who have a clean professional background so that more vigilant monitoring by directors can be ensured. Originality/value – This study goes beyond the traditional focus on corporate governance and firm performance. The author uses problem directors as an indicator of governance quality to measure firm performance. To the best of the author’s knowledge, this paper is the first to investigate the consequences of firms holding problem directors on the board. This issue has implications for investors, auditors, directors and regulators.

Corporate boards and firm performance: a meta-analytic approach to examine the impact of contextual factors

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Anupama Prashar ◽  
Parul Gupta
Keyword(s):  
Firm Performance ◽  
Effect Size ◽  
Contextual Factors ◽  
Board Members ◽  
Corporate Boards ◽  
Legal Origin ◽  
Content Type ◽  
Industry Type ◽  
Firm Type ◽  
The Impact

PurposeCorporation's board (CB) is viewed as a vital internal corporate governance (CG) mechanism, playing a critical role in mitigating the agency problems and enhancing firm performance. Considering the mixed nature of extant CG literature on CB-firm performance link, this study aims to examine the impact of specific CB attributes on firm performance studied in varied contextual settings and investigates the moderating effects of three contextual factors, i.e. legal origin, industry type and firm type on CB-performance relationships.Design/methodology/approachMeta-analysis technique suggested by Hedges and Olkin (1985) was used to analyse a sample of 330 effect sizes reported in 148 studies published between 2000 and 2020 in 85 peer-viewed journals, studying CB-performance associations across 31 countries. The analyses were conducted in two stages: first, the authors assessed the main effect of CB attributes on firm performance and tested the heterogeneity in effect size across the primary studies. In the next stage, the authors investigated the moderating variables accounting for this heterogeneity in the CB-firm performance relationship.FindingsBoard independence, board diversity, board size and role duality are the CB attributes, which significantly and positively impact firm performance. Further, the homogeneity tests revealed variability in effect size for all CB attributes except for board committees. Subgroup meta-analyses revealed that the contextual factors related to industry-type and firm-type are substantial explanatory source of heterogeneity in CB-performance association, though legal origin of firm also partially explains the heterogeneity in this relationship.Research limitations/implicationsOnly empirical research reporting Pearson product-moment correlation coefficients(r), as the effect size, were considered for this study. Some of the other CB attributes such as board composition, compensation structure of board members, performance evaluation and appointment process of board members were not included due to limited empirical research on these attributes.Practical implicationsThe paper includes implications for managers and policy makers for the development of effective corporate boards and CG mechanisms.Originality/valueThis paper integrates diverse empirical evidence on the associations of CB attributes with firm performance and systematically assesses the moderating factors that contributes to heterogeneity in these relationships.

Knowledge strategy planning and information system strategies enable dynamic capabilities innovation capabilities impacting firm performance

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Adilson Carlos Yoshikuni ◽  
Frederico Ribeiro Galvão ◽  
Alberto Luiz Albertin
Keyword(s):  
Information System ◽  
Firm Performance ◽  
Dynamic Capabilities ◽  
Positive Impact ◽  
Practical Implication ◽  
Content Type ◽  
Knowledge Strategy ◽  
Strategy Planning ◽  
The Impact ◽  
The Relationship

Purpose Many studies have not fully explored the relationship between knowledge and information system strategies (ISS) and their overall impact on firm performance (FP). In an attempt to address this knowledge gap, this study draws on the dynamic capabilities view, and on recent literature on knowledge strategy planning (KSP), and examines the alignment between KSP and ISS to enable dynamic capabilities innovation capabilities (DCIC) to gain FP. Design/methodology/approach The survey examined empirical data from 234 Brazilian companies using the partial least squares path modeling to test the hypotheses proposed herein. Findings The empirical results confirmed that both KSP and ISS have a positive impact on DCIC. Furthermore, the results indicated that FP was positively impacted through DCIC. The results indicated that the alignment between KSP and ISS positively impacts DCIC and ultimately FP. Research limitations/implications The data was collected from 234 Brazilian companies in a country classified as a developing economy. Future studies could investigate the impact of KSP and ISS on FP in developed economies. The practical implication of the study required managers to be knowledgeable about the value of alignment between KSP and IT capabilities involving more practitioners in the strategy-as-practice to create innovation capabilities and enhance FP. Originality/value This is one of the earliest studies that has investigated the relationships between KSP and ISS and their impact on FP within a developed economy context. The relationship between all constructs that have not been addressed previously contributes to extend the literature on KSP, ISS and dynamic capabilities view.

Business strategy, performance appraisal and organizational results

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Alberto Bayo-Moriones ◽  
Jose Enrique Galdon-Sanchez ◽  
Sara Martinez-de-Morentin
Keyword(s):  
Firm Performance ◽  
Human Resources ◽  
Performance Appraisal ◽  
Competitive Strategy ◽  
Management Practices ◽  
Robust Regression ◽  
Innovation Strategy ◽  
Content Type ◽  
The Impact ◽  
Developmental Performance

PurposeThe purpose of this study is to analyze how the design of performance appraisal is influenced by the competitive strategy of the firm. Then, this paper examines if the alignment between appraisal and strategy impacts firm performance.Design/methodology/approachThe study sample includes 258 Spanish firms in the manufacturing and services sectors. This information was gathered through questionnaires addressed to the CEO and the senior human resources manager. Several econometric models are estimated, using robust regression analysis and including a set of relevant control variables.FindingsA positive relationship is found between an innovation strategy and developmental performance appraisal. A cost strategy has a negative impact on the adoption of developmental performance appraisal. The findings also confirm that firms with a quality strategy and developmental appraisal have higher performance. In addition, firms adopting an innovation strategy and administrative appraisal enjoy higher return of equity.Research limitations/implicationsFuture research should analyze the dynamics of the relationships between appraisal, strategy and performance to rule out the flaws of cross-sectional data. Another potential extension is the analysis of the interactions of the design of other human resources management practices with both competitive strategy and firm performance.Practical implicationsFirms can improve performance by aligning performance appraisal design with strategy. Those with an innovation strategy should choose administrative appraisal, and those competing on quality should focus on developmental appraisal.Originality/valueThis paper compares the theoretical recommendations on performance appraisal for different competitive strategies, what firms actually do, and the impact that the alignment between appraisal and strategy has on firm performance.

Market orientation, innovation commercialization capability and firm performance relationships: the moderating role of supply chain influence

2017 ◽  
Vol 32 (7) ◽  
pp. 913-924 ◽  
Author(s):  
Jeen-Su Lim ◽  
William K. Darley ◽  
David Marion
Keyword(s):  
Supply Chain ◽  
Firm Performance ◽  
Market Orientation ◽  
Innovation Management ◽  
Strategy Formulation ◽  
Content Type ◽  
Positive Effects ◽  
The Impact ◽  
Moderating Role

Purpose The study aims to explore supply chain influence (SCI) on the linkages among market orientation, innovation capabilities and firm performance (FP), using the resource-based view as a theoretical backdrop. Design Survey data from 182 top managers who are involved in strategy formulation and innovative direction of their companies was collected and analyzed using moderated multiple regression analysis. Findings Results revealed a moderating role of the SCI in that the proactive market orientation (PMO) and FP relationship is stronger when SCI is high, and innovation commercialization capability (ICC) and FP relationship is stronger when SCI is low. Practical implications Firms pursuing high PMO strategy must collaborate with supply chain function to achieve the full effect of PMO. Additionally, as supply chain is critical to meeting customers’ needs, these firms should allow supply chain to exert greater influence to enjoy the positive effects of PMO in addition to ensuring full integration into marketing strategy implementation. Also, firms with high ICC need to limit SCI to maximize the benefit of ICC on FP, just as innovation management needs to be cognizant of other functional areas. Originality/value The study investigates the potential moderating role of SCI on the relationships among market orientation, ICC and FP. The study fills a gap in the understanding of the nature and role of supply chain in the marketing–supply chain interaction, and the impact on FP.

The impact of intellectual capital on firm performance: a study of Indian firms listed in COSPI

2018 ◽  
Vol 19 (5) ◽  
pp. 935-964 ◽  
Author(s):  
Neha Smriti ◽  
Niladri Das
Keyword(s):  
Firm Performance ◽  
Intellectual Capital ◽  
Value Creation ◽  
Generalized Method Of Moments ◽  
Value Added ◽  
Secondary Data ◽  
Share Price ◽  
Content Type ◽  
Listed Firms ◽  
The Impact

Purpose The purpose of this paper is to examine the effect of intellectual capital (IC) on financial performance (FP) for Indian companies listed on the Centre for Monitoring Indian Economy Overall Share Price Index (COSPI). Design/methodology/approach Hypotheses were developed according to theories and literature review. Secondary data were collected from Indian companies listed on the COSPI between 2001 and 2016, and the value-added intellectual coefficient (VAIC) of Pulic (2000) was used to measure IC and its components. A dynamic system generalized method of moments (SGMM) estimator was employed to identify the variables that significantly contribute to firm performance. Findings Indian listed firms appear to be performing well and efficiently utilizing their IC. Overall, human capital had a major impact on firm productivity during the study period. Furthermore, the empirical analysis showed that structural capital efficiency and capital employed efficiency were equally important contributors to firm’s sales growth and market value. The growing importance of the contribution of IC to value creation was consistently reflected in the FP of these Indian companies. Practical implications This study has robust theoretical grounds and employs a validated methodology. The present study extends knowledge of IC among academicians and managers and highlights its contribution to value creation. The findings may help stakeholders and policymakers in developing countries properly reallocate intellectual resources. Originality/value This study is the first study to evaluate IC and its relationship with traditional measures of firm performance among Indian listed firms using dynamic SGMM and VAIC models.

Does investment in innovation impact firm performance in emerging economies? An empirical investigation of the Indian food and agricultural manufacturing industry

2021 ◽  
Vol 13 (2) ◽  
pp. 233-248
Author(s):  
Manogna R.L. ◽  
Aswini Kumar Mishra
Keyword(s):  
Firm Performance ◽  
Manufacturing Industry ◽  
Emerging Market ◽  
Developed Countries ◽  
Emerging Economy ◽  
Content Type ◽  
Agricultural Industry ◽  
Indian Food ◽  
The Impact ◽  
The Relationship

Purpose The study aims to analyze the impact of Research & Development (R&D) intensity on the firm’s performance, measured by growth of sales in the emerging market like India. Innovation strategy and its outcomes for firms may be different in developing countries as compared to developed countries. Thus, a study that focuses on the emerging economy like India, with a majority of the population dependent on agriculture, is of prime importance to the firm performance in the food and agricultural manufacturing industry. For this study, the broader focus will be on one widely recognised factor which may influence the growth rate of firms, i.e. investment in innovations which is in terms of R&D expenditure. Design/methodology/approach The paper investigates the relationship between the R&D efforts and growth of firms in the Indian food and agricultural manufacturing industry during 2001–2019. To empirically test the relationship between firm’s growth (FG) and R&D investments, system generalised method of moments technique has been used, hence enabling to avoid problems related to endogeneity and simultaneity. Findings The findings reveal that investments in innovations have a positive effect on the growth of firms in the Indian food and agricultural manufacturing industry. Investment in R&D also enables the firms to reap benefits from externalities present in the industry. Further analysis reveals that younger firms grow faster when they invest in R&D. More specifically, this paper finds evidence in the case of the food and agricultural industry that import of raw materials negatively affects the FG and export intensity positively affects the growth in the case of R&D firms. Research limitations/implications This study suggests that the government should encourage the industries to invest optimally in R&D projects by providing favourable fiscal treatments and R&D subsidies which are observed to have positive effects in various developed countries. Originality/value To the best of the author’s knowledge, the current paper is the first to analyse the impact of innovation in food and agricultural industry on firm’s performance in an emerging economy context with the latest data. This paper agrees that a government initiative to increase private R&D expenditure would have favourable effects on FG as growing investments in R&D lead to further growth of the firms.

Board gender diversity: performance and risk of Brazilian firms

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mauro Mastella ◽  
Daniel Vancin ◽  
Marcelo Perlin ◽  
Guilherme Kirch
Keyword(s):  
Firm Performance ◽  
Boards Of Directors ◽  
Gender Diversity ◽  
Ordinary Least Squares ◽  
Firm Risk ◽  
Content Type ◽  
Study Approach ◽  
Female Presence ◽  
Board Gender Diversity ◽  
The Impact

Purpose This study aims to intend to check if female board representation affects performance and risk and to analyse the evolution of the demographic aspects of the presence of women on boards in Brazil. Design/methodology/approach The authors used a sample of 150 Brazilian publicly traded companies from 2010–2018, with different measures of firm performance, firm risk and women’s presence on the board. The study approach is based on a set of ordinary least squares, quantile and panel data regressions. Findings The presence of women on the board has a positive effect on all of our accounting and market performance measures. However, the result of the impact on risk is not conclusive. The study also found that the number of females on the board has a more significant effect at the lower levels of firm performance measured by return on equity, but at the higher levels when measured by Tobin’s Q. Regarding return on assets, the more significant effect happened on the extremes of the performance distribution. The study findings point that market investors place more value in female presence on the board than in director positions. Originality/value By estimating the impact of women’s presence on the boards of directors in firm performance and risk, this study aimed to verify this impact in different aspects of the company. In addition, the authors did so in a sample with many years, making it possible to evaluate the historical evolution of the feminine presence in the boards of administration as well as in the groups of directors, assisting Brazilian legislators with new evidence about the possible impacts of Draft Law 7179/2017.

How does reverse factoring affect operating performance? An event study of Chinese manufacturing firms

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yongyi Shou ◽  
Jinan Shao ◽  
Weijiao Wang
Keyword(s):  
Event Study ◽  
Cost Efficiency ◽  
Operating Performance ◽  
Manufacturing Firms ◽  
Content Type ◽  
Performance Effect ◽  
Study Results ◽  
Operating Margin ◽  
The Impact ◽  
The Relationship

PurposeAs a popular supply chain finance (SCF) strategy, reverse factoring has been widely adopted by buyer firms. However, the extant literature provides scant empirical evidence on the performance effect of reverse factoring. The purpose of this study is to seek to narrow this gap by empirically examining the relationship between reverse factoring and operating performance and the contingency conditions of this relationship.Design/methodology/approachBased on a sample of 167 announcements of reverse factoring implementation made by publicly listed Chinese manufacturing firms between 2014 and 2018, this paper employs a long-term event study approach to analyze the operating performance effect of reverse factoring as well as the moderating effects of production and innovation capabilities.FindingsThe event study results indicate that reverse factoring has a positive effect on buyer firms' operating performance in terms of cost efficiency and operating margin. In addition, both production and innovation capabilities positively moderate the relationship between reverse factoring and operating margin. However, neither of them moderates the relationship between reverse factoring and cost efficiency.Originality/valueThis is the first study that empirically examines the impact of reverse factoring on operating performance based on secondary data. Furthermore, it sheds light on the SCF literature by providing insights into the contingency effects of production and innovation capabilities, which also extends our understanding of the application of extended resource-based view in SCF research.

scholarly journals Conflict-induced forced CEO turnover and firm performance

2018 ◽  
Vol 44 (9) ◽  
pp. 1134-1154
Author(s):  
Kuntara Pukthuanthong ◽  
Saif Ullah ◽  
Thomas J. Walker ◽  
Jing Zhang
Keyword(s):  
Firm Performance ◽  
Univariate Analysis ◽  
Ceo Turnover ◽  
Main Role ◽  
Corporate Boards ◽  
Firm Characteristics ◽  
Stock Performance ◽  
Content Type ◽  
Strategic Direction ◽  
The Board Of Directors

Purpose The purpose of this paper is to examine operational and stock performance changes around forced CEO turnovers caused by conflicts between corporate boards and CEOs over the strategic direction of the firm. In addition, the authors investigate whether changes in performance can be explained by board, CEO, or firm characteristics. Design/methodology/approach The authors apply propensity score matching to choose matching firms that do not forced CEO turnover but have similar characteristics with the sample firms. The authors compare their operating and stock performances. The authors apply both univariate analysis and multivariate regression analyses. Findings The authors find that the CEO turnovers caused by conflicts between corporate boards and CEOs over the strategic direction of the firms tend to be preceded by significant declines in a firm’s operating and stock performance and that corporate performance improves after turnovers. In addition, the authors find that an increase in long-term incentives and firm size and a decrease in turnover improve firm performance. Originality/value While the existing corporate governance literature emphasizes oversight as the main role of the board of directors and identifies the CEO as the leader who sets the strategic direction of the firm, in cases of conflict-induced forced CEO turnover, it is the board that sets the strategic direction. This paper is the first to provide evidence regarding the implications of conflict-induced forced CEO turnovers.

The impact of gender and ethnic diversity on REIT operating performance

2019 ◽  
Vol 45 (1) ◽  
pp. 72-84 ◽  
Author(s):  
Robert Hogan ◽  
Daniel Huerta
Keyword(s):  
Ethnic Diversity ◽  
Middle Management ◽  
Operating Performance ◽  
Socially Responsible ◽  
Content Type ◽  
Return On Equity ◽  
The Board Of Directors ◽  
Managerial Positions ◽  
Funds From Operations ◽  
The Impact

Purpose The purpose of this paper is to examine the relationship between gender and ethnic diversity in managerial positions and Real Estate Investment Trust (REIT) operating performance. Design/methodology/approach The authors employ two-stage Heckman correction models on an unbalanced panel of US Equity REITs for the time period from 2000 to 2015. The second-stage model uses multiple operating performance measures regressed on a dichotomous variable that indicates if the REIT promotes diversity in middle management in addition to a vector of control variables. Findings The results indicate that REITs that promote diversity in middle management with profit-and-loss responsibilities have lower operating performance than comparable counterparts. That is, gender and demographic diversity is negatively related to REIT performance as measured by return on assets, return on equity and funds from operations. Practical implications The analysis indicates that while gender and ethnic diversity is socially responsible and may provide many benefits, diversity among managers and decision makers has to be carefully implemented in order to achieve positive financial results. Originality/value This paper contributes to the literature by investigating whether diversity in leading managerial positions, other than in top officer ranks and on the board of directors, have an impact on REIT operating performance.

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