Chairperson and CEO foreignness and CG quality of emerging markets MNCs: Moderating role of international board interlocks

Luo

Business Ethics Env & Resp

et al. 2021

Drawing upon token theory and critical mass theory, this study examines whether all female directors are equally considered as tokens. We argue that inside female directors are less likely than outside female directors to be considered as tokens because they are more powerful and influential. Using a 10‐year sample of Chinese publicly listed firms on the Shanghai or Shenzhen Stock Exchanges from 2008 to 2017, we find that even one inside female director can make a significant contribution to corporate social responsibility (CSR), while outside female directors do not have a positive effect on CSR until their number reaches the critical mass (i.e., three). The results suggest that the predictions of token theory and critical mass theory vary across female director types. These findings contribute to the current literature by integrating female director typology with their numerical representation to explain their token status.

Section: Empirical Findings and Discussionmentioning

confidence: 99%

Go beyond tokens: Number and type both matter

Luo

Business Ethics Env & Resp

et al. 2021

“…The third regression introduces the explanatory variable ICOB, without distinguishing whether the Board chair is a controlling family member. In line with the Resource Dependence Theory, the positive and significant sign of this variable indicates that, in general, COB interlocks favour the flow of information and the sharing of resources for the benefit of family businesses' performance (ROA), being a tool that serves to counteract the limitations present in environments of relative institutional weakness (Areneke and Tunyi, 2022). This overall result weights the normal period of time to a greater extent than the one with the greatest volatility, given that only two years deal with the financial crisis and, instead, the normal years correspond to twelve.…”

Section: Resultsmentioning

confidence: 82%

“…From the perspective of agency theory, in normal times, even in emerging markets where formal institutions are comparatively weaker and therefore the probabilities of expropriation against minority shareholders are greater, family businesses will take advantage of interlocks mainly to encourage performance and not to pursue family benefits that threaten the interests of other stakeholders (Purkayastha et al ., 2019; Boubakri et al ., 2005; Sauerwald et al ., 2016). Therefore, in this situation the postulates of the resource dependence theory are met, being interlocks a means of coping with the uncertainty that characterises weak formal institutional environments, facilitating collaboration and resource exchanges among participating corporates, thus promoting performance (Fernández-Pérez et al ., 2014; Cárdenas, 2014; Song et al ., 2021; Areneke and Tunyi, 2022). By contrast, non-family businesses COB interlocks (during normal times) have no impact on ROA.…”

Section: Resultsmentioning

confidence: 99%

“…During normal periods, family firms in emerging markets like Mexico can take advantage of interlocking directorates to balance the uncertainty and increased business risk present in environments of formal institutional weakness (Areneke and Tunyi, 2022). In line with the resource dependence theory, the directors who participate in these interlocks (whether or not they belong to the business family), have better access to information, knowledge, and resources, which favours financial performance (Martin et al, 2015).…”

Section: Reducing the Gaps Through Agency Theorymentioning

confidence: 99%

See 1 more Smart Citation

Interlocking directorates and family firm performance: an emerging market’s perspective

Watkins-Fassler

Ariza

Fernández‐Pérez

et al. 2023

JFBM

PurposeThis study analyses interlocking directorates from the perspective of an emerging market, Mexico, where formal institutions are weak, and family firms with high ownership concentration dominate. It responds to recent calls in the literature on interlocks, which urge the differentiation between family and non-family businesses and to complete more research on emerging economies.Design/methodology/approachA database was constructed for 89 non-financial companies (52 family-owned) listed on the Mexican Stock Exchange (BMV) from 2001 to 2014. This period includes normal times and an episode of financial crisis (2009–2010). To test the hypotheses, a dynamic panel model (in two stages) is used, applying GMM.FindingsIn normal times, the advantages of Board Chairman (COB) interlocks for the performance of publicly traded Mexican family firms are obtained regardless of the weak formal institutional environment. By contrast, during financial crisis, interlocking family COBs are more likely to jointly expropriate minority shareholders with actions that further their family objectives, which mitigates the positive effect of interlocks on performance. These findings contrast with the insignificant effects of COB interlocks found for non-family corporates.Originality/valueA new framework is proposed which, through agency theory, finds points of concordance among resource dependence and class hegemony theories, to understand the effect of interlocking directorates on the performance of family firms operating in Mexico. The results of the empirical exercise for family companies listed on BMV during normal and financial crisis periods suggest its applicability.

“…To provide evidence of robustness of our findings to endogeneity from unobserved individual effects and simultaneity (Areneke and Tunyi, 2020), we used a dynamic estimating technique, the first-difference GMM proposed by Arellano and Bond (1991) which takes the first differences to remove unobserved individual effects and also test for auto-correlation of the first and second order. The technique identifies reliable instruments to use in the estimation equations (Wintoki et al , 2012; Flannery and Hankins, 2013).…”

Section: Inferential Analysismentioning

confidence: 99%

Does board chairperson experience matter? Examining the relationship between board attributes and human rights reporting in Kenya

Tarus

Tuwey

Yego

2022

Purpose Using the resource dependence and legitimacy theories, this research aims to examine the relationship between board attributes and human rights reporting, as well as the interaction effect of board chairperson experience on the relationship among listed firms at the Nairobi Securities Exchange (NSE). Design/methodology/approach This study collected data from annual reports of firms listed on the NSE from 2009 to 2019 using content analysis to examine how boards influence human rights reporting. A total of 547 firm-year observations were used to test the hypotheses. This study used a hierarchical regression model to examine the relationship. Findings This study found that board attributes are important predictors of human rights reporting. This study shows that both board diversity and board independence have a positive impact on human rights reporting. Furthermore, the interaction results revealed that having a highly experienced chairperson strengthens the effect of board independence on human rights reporting; however, this study found that experienced chairperson reduces the influence of board diversity on human rights reporting. Research limitations/implications The findings suggest that board diversity and independence are essential attributes to which listed companies should pay attention when appointing board members. Moreover, the chairperson's leadership on the board is critical in ensuring that publicly trading companies adopt policies that disclose human rights information. Originality/value This paper provides insights into Kenya's human rights disclosure practices. It also analyzes how boards influence human rights disclosures, an empirical test that has received little attention in the previous literature. This study emphasizes the importance of board members and the chairperson in advocating for human rights reporting to improve corporate sustainability.