Board monitoring, firm risk, and external regulation

Brick, Ivan E.; Chidambaran, N.K.

doi:10.1007/s11149-007-9045-9

Cited by 67 publications

(54 citation statements)

References 70 publications

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“…This suggestion is supported by results of Vafaes' (1999) and Adams' (2005) investigations stating that boards respond to poor performances by raising their level of board activity. As per Brick and Chidambaran (2008), the danger of discordance between board members increases when the firm performs poorly. This may result in an increase in the board's activity, because, inter alia, directors may want to protect themselves from being blamed for not having taken action when needed.…”

Section: The Board Of Directorsmentioning

confidence: 99%

Financial Distress and Corporate Governance: The Impact of Board Configuration

Brédart¹

2014

IBR

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The number of filings for bankruptcy procedures has exploded since 2007 and governance has been pointed out as one of the causes. We took a dataset of 312 US firms and asked the following research question: does the board of directors configuration have an impact on financial distress? We used a matched-pair sample of US quoted firms with half of the sample filing for Chapter 7 (liquidation) or 11 (reorganization) of the United States Bankruptcy Code and conducted logit regression analysis. We found that some board size was significantly different for firms that opted for legal protection from those that did not. This study uses corporate governance perspective to analyse the configuration of the board and its impact on a the decision of a company to resort to a bankruptcy protection law. By demonstrating that corporate governance matters in terms of financial distress, this study offers guidance to shareholders and financial institutions.

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Section: The Board Of Directorsmentioning

confidence: 99%

Financial Distress and Corporate Governance: The Impact of Board Configuration

Brédart¹

2014

IBR

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“…Alignment of interests between investors and executives, however, could also increase risk taking if this is in the interests of investors. In this context, Pathan () finds a positive relationship between strong bank boards (measured by board size and independence, among others) and banks’ risk taking, but Brick and Chidambaran () find the opposite relationship between board monitoring (proxied by board independence) and firm risk in the absence of regulation.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Corporate Governance and Risk Taking: Evidence From the U.K. and German Insurance Markets

Eling¹,

Marek²

2013

J of Risk & Insurance

101

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We analyze the impact of factors related to corporate governance (i.e., compensation, monitoring, and ownership structure) on risk taking in the insurance industry. We measure asset, product, and financial risk in insurance companies and employ a structural equation model in which corporate governance is modeled as a latent factor. Based on this model, we present empirical evidence on the link between corporate governance and risk taking, considering insurers from two large European insurance markets. Higher levels of compensation, increased monitoring (more independent boards with more meetings), and more blockholders are associated with lower risk taking. Our empirical results provide justification for including factors related to corporate governance in insurance regulation.

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“…In a different context (tiiat of executive board monitoring). Brick & Chidambaran (2008) also consider the interplay between regulation and risk-taking. They demonstrate that increased regulation has driven an increase in board monitoring as evidenced by data gathered between 1996 and 2003.…”

Section: Business Culture and Riskmentioning

confidence: 99%

The impact of regulation, ownership and business culture on managing corporate risk within the water industry

et al. 2013

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Although the specifics of water utility ownership, regulation and management culture have been explored in terms of their impact on economic and customer value, there has beeti little meaningful engagement with their influence on the risk environment and risk management. Using a literature review as the primary source of informatioti, this paper maps the existing knowledge base otito two critical questions: what are the particular features of regulation, ownership and management culture which influence the risk dynamic, and what are the implications of these relationships in the context of ambitions for resilient organizations? In addressing these queries, the paper considers the mindful choices and adjustments a utility must make to its risk management strategy to manage strategic tensions between efñciency, risk and resilience. The conclusions note a gap in understanding of the drivers required for a paradigm shift within the water sector from a re-active to a pro-active risk management culture. A proposed model of the tensions between reactive risk management and pro-active, adaptive risk management provides a compelling case for measured risk management approaches which are informed by an appreciation of regulation, owtiership and business culture. Such approaches will support water authorities in meeting corporate aspirations to become 'high reliability' services while retaining the capacity to out-perform financial and service level targets.

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Board monitoring, firm risk, and external regulation

Abstract: Regulation, Board monitoring, Firm risk, Board independence, G34,

Cited by 67 publications

References 70 publications

Financial Distress and Corporate Governance: The Impact of Board Configuration

Financial Distress and Corporate Governance: The Impact of Board Configuration

Corporate Governance and Risk Taking: Evidence From the U.K. and German Insurance Markets

The impact of regulation, ownership and business culture on managing corporate risk within the water industry

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