Lender representatives on board of directors and internationalization in firms: an institutionalized agency perspective

Abstract

From an agency perspective, the Anglo-Saxon features of corporate governance are predominantly explored by various studies in extant literature. However, it has recently been established that diverse and unique institutional configurations exist in different economies across the world and hence, the attitude of different actors within a firm, as shaped by institutional logics, can vary. Our study applies the institutionalized agency perspective to understand how the behaviour of different actors, within firms in the Indian institutional context, are shaped, consequently determining their roles in the strategic decisions of firms. We examine the representation of lenders in the board of directors, which is a characteristic of corporate governance in India. Our sample for this study consists of 985 unique Indian firms and 5513 firm year observations across the 2006–2017 time-period. We find a negative association between the proportion of lender representatives on board of directors and internationalization of firms. In addition, we also find that family ownership positively moderates this relation, whereas foreign institutional investors and domestic banks and financial institutional investors moderate this relationship negatively. In this manner, we explore the impact of institutional environment on a very specific actor (lenders) and their representatives towards internationalization.

Do bankers on board fulfill their role? Corporate social responsibility, environmental concerns and firm leverage

“…The role of banker‐directors as important players on the board of non‐financial firms has been well‐recognized in the literature. Evidence for both advanced and emerging economies suggests that banker‐director on boards of firms provide them with specialized knowledge across diverse domains such as funding acquisition (Byrd & Mizruchi, 2005), capital structure (Kuo et al, 2012), mergers (Hilscher & Sisli‐Ciamarra, 2013), accounting conservatism (Erkens et al, 2014), investment decisions (Dittmann et al, 2010; Guner et al, 2008; Slomka‐Golebiowska, 2014), innovative activities (Ghosh, 2016), business interests (Ferreira & Matos, 2012), CEO incentives (Kang & Kim, 2017), enhancing corporate social responsibilities (Hasan et al, 2021) or even export behavior (Panicker et al, 2023). An aspect that does not appear to have been adequately addressed is the role of banker‐directors on firm leverage, especially in the presence of climate risks.…”