Symbolic Shareholder Democracy: Toward a Behavioral Understanding of the Role of Shareholder Voting in CEO Dismissals

2023 | Organization Science | Citations: 0

Authors: Andrei, Alina G.; van Oosterhout, J. (Hans); Sauerwald, Steve

Abstract: We investigate the effect of expressive shareholder dissent voting, in which sha ... Expand

Abstract: We investigate the effect of expressive shareholder dissent voting, in which shareholders use their votes symbolically to express their discontent with management, on subsequent chief executive officer (CEO) dismissals. Using the routine but highly symbolic executive board discharge proposal voted on at the annual shareholder meetings of German firms, we argue that the board of directors understands these votes as a “vote of confidence in management” that challenges the CEO’s mandate to lead the firm. Arguing that board chairs are uniquely positioned to take up the stance of a steward of the firm and its leadership, we examine how independent and family board chairs moderate the board’s response to expressive voting dissent. Using a sample of German public firms over the period 2008–2015, we find that expressive voting dissent increases the chance of CEO dismissal increasingly with the level of dissent expressed. Contrary to prevailing agency theoretical expectations, we do not find that independent chairs are more responsive to expressive voting dissent, nor that this relationship is strengthened by the degree of minority institutional investor ownership of the firm. Consistent with the symbolic perspective on shareholder voting that we seek to develop, however, we find that family chairs are more likely to lead the board to dismiss the CEO due to the intrinsic disvalue they incur from symbolic leadership legitimacy challenges in their firms, and that the positive effect of having a family chair on the dissent induced chance of CEO dismissal is strengthened by the level of family ownership in the firm. Funding: A University of Illinois at Chicago Summer Research Grant is gratefully acknowledged for S. Sauerwald. Collapse

Topics: corporate governance financial performance accounting organizational productivity

Methods: theory development statistical hypothesis test post-hoc analysis longitudinal research survival analysis

Theories: stewardship theory behavioral theory

A Study for Sustainable IT: Management Effects of On-Premises and On-Demand IT on Carbon Intensity

2023 | International Conference on Information Systems | Citations: 0

Authors: Alghamdi, Majed; Aghakhani, Navid; Park, Jiyong; Oh, On-Ook

Abstract: Reducing the level of carbon intensity -i.e., the level of carbon emission -is ... Expand

Abstract: Reducing the level of carbon intensity -i.e., the level of carbon emission -is an important issue in cooperate IT management. Drawing upon the belief-action-outcome (BAO) framework, this study examines the impact of two different IT resources -i.e., onpremises IT (OPIT) and on-demand IT (ODIT) -on a firm's carbon intensity. Also, we examine the moderating impact of green management strategies -i.e., environmental board oversight and environmental management incentives -on the effect of OPIT and ODIT on a firm's carbon intensity. Using panel data with a sample of 3074 observations collected from 864 firms from 2016 to 2019, we find that OPIT usage is positively associated with carbon intensity, whereas ODIT usage is negatively associated with carbon intensity. In addition, we find that, while environmental board oversight mitigates the positive direct impact of OPIT on carbon intensity, environmental management incentives reinforce the negative direct impact of ODIT on carbon intensity. Collapse

Topics: strategic management green IS environmental sustainability database system corporate governance

Methods: longitudinal research Compustat descriptive statistic Breusch-Pagan test

Theories: theory of economic growth

Data governance and the secondary use of data: The board influence

2023 | Information and Organization | Citations: 0

Authors: Black, Stuart; Davern, Michael; Maynard, Sean B.; Nasser, Humza

Abstract: The business analytics and strategic management literatures suggest that organiz ... Expand

Abstract: The business analytics and strategic management literatures suggest that organizations should seek to exploit data as a key mechanism for competitive advantage. However, the rules of engagement are evolving, the regulatory landscape is becoming increasingly complex, and ex­ amples of poor outcomes are increasingly common. The board – in its role of setting and moni­ toring risk appetite – needs to be able to govern the risk/reward trade-off of the data asset. Contemporary data governance approaches are inadequate: they are overly rigid and risk ori­ ented, limited in scope to an organization’s self-interest rather than considering the broad set of stakeholders, and do not provide a platform for the board to manage this critical risk. This paper uses a unique set of informants – 41 board directors – to demonstrate that differences in board perspectives influence how organizations explore the secondary use of data. Furthermore, this paper identifies a set of relevant individual, organizational and environmental factors and pre­ sents empirically based configurations of these factors that lead organizations to consider (or neglect) the secondary use of data as a critical enabler of competitive advantage. Collapse

Topics: data governance competitive advantage IT governance fuzzy logic strategic management

Methods: qualitative interview qualitative coding theory development mixed method personal interview

Theories: contingency theory fuzzy set theory transaction cost economics dynamic capabilities theory theory of everything

“Dear CEO and Board”: How Activist Investors’ Confidence in Tone Influences Campaign Success

2023 | Organization Science | Citations: 0

Authors: Brauer, Matthias; Wiersema, Margarethe; Binder, Philipp

Abstract: Activist hedge funds represent the most potent form of financial activism. Yet w ... Expand

Abstract: Activist hedge funds represent the most potent form of financial activism. Yet we do not fully understand how these activist investors, despite holding only a small stake in target firms, are able to influence management and the board to acquiesce to their demands, especially given the large uncertainty that their demands will improve shareholder value. Building on impression management (IM) theory, we propose that activist investors who express their concerns and demands with high confidence in their letters to target firms are likely to be perceived as knowledgeable and competent by the firm’s other shareholders, thus influencing the response of the firm’s management and board. In support of this theoretical proposition, results of our empirical analysis of 475 U.S. activist campaigns against U.S. companies between 2007 and 2019 suggest that confidence in tone in an activist’s letter, as a form of self-promotion, is positively associated with campaign success. We also observe that the positive association between confidence in tone in activist letters and campaign success is less for activists with greater success in prior campaigns and in campaigns with multiple activists. Our paper contributes to financial activism research by showing that activists’ verbal impression management can serve as an effective influence tactic in their campaigns. Our study also contributes to the emerging research stream on verbal IM by introducing a language attribute, confidence in tone, that has not been studied in management research and is distinct from past constructs examined in verbal IM research. Collapse

Topics: corporate governance strategic management organizational productivity decision making database system

Methods: descriptive statistic qualitative content analysis theory development linguistic analysis regression analysis method

Theories: behavioral theory

How Does (In)consistent Performance Feedback Affect Business Model Digitalization？

2023 | Americas Conference on Information Systems | Citations: 0

Authors: Chen, Yao; Chen, Meng; Liu, Hefu; Tang, Xinlin

Abstract: Despite the merits of business model (BM) digitalization to sustain organizatio ... Expand

Abstract: Despite the merits of business model (BM) digitalization to sustain organizational competitive advantages, many firms are cautious to digitalize their BMs due to the efforts needed and the high risks accompanying them. To date, the existing understanding of the antecedents of BM digitalization is still underdeveloped. We draw on the behavioral theory of the firm to develop a comprehensive understanding of what motivates firms to promote BM digitalization. In so doing, this study explores how (in)consistency between historical and social performance feedback affects BM digitalization. Moreover, we theorize that board experience with BM digitalization from interlock firms is an important contingency that influences these relationships. Based on panel data from 2,373 Chinese-listed firms from 2008 to 2019, the results provide general support for our arguments. This study contributes to the BM digitalization literature by disentangling the critical roles of (in)consistent performance feedback and board experience. Collapse

Topics: organizational productivity research and development corporate governance accounting accounting standard

Methods: theory development machine learning descriptive statistic statistical hypothesis test word2vec

Theories: behavioral theory of the firm

The Crisis in Local Newspapers and Organizational Wrongdoing: The Role of Community Social Connectedness

2023 | Organization Science | Citations: 0

Authors: Choi, Tony Jaehyun; Valente, Mike

Abstract: Drawing on institutional anomie theory, we examine how the crisis in local newsp ... Expand

Abstract: Drawing on institutional anomie theory, we examine how the crisis in local newspapers has induced organizational wrongdoings in local communities. We argue that, because local newspapers are the primary source of accountability journalism in local communities, their decline leads to an anomic state that increases the scale of organizational wrongdoing. We also investigate whether institutional complementarity helps overcome the anomic state: Due to functional similarity, community social connectedness compensates for the scarcity of local newspapers. Our analysis of U.S. metropolitan areas for the period of 2007–2015 reveals that the positive relationship between local newspaper scarcity and the scale of organizational wrongdoing is not present in all communities but does appear when a community lacks community social connectedness. We also find that this moderating role of community social connectedness is observed only for internal organizational wrongdoings that are less visible to the public than external ones. Collapse

Topics: digital news missing data decision making social capital database system

Methods: descriptive statistic statistical hypothesis test longitudinal research longitudinal data analysis hierarchical linear modeling

Theories: organizational behavior theory

A Rising Tide Lifts All Boats: The Effects of Common Ownership on Corporate Social Responsibility

2023 | Organization Science | Citations: 0

Authors: DesJardine, Mark R.; Grewal, Jody; Viswanathan, Kala

Abstract: Common owners face an incredible investment challenge: managing systematic risk. ... Expand

Abstract: Common owners face an incredible investment challenge: managing systematic risk. Because common owners hold shares in multiple firms across an industry, an action (or inaction) by one firm that affects industry peers is felt more severely by common owners than by non-common owners. Research has largely focused on common owners’ role in orchestrating competitive dynamics among their portfolio firms, with almost no empirical investigation of how common owners manage systematic risk. Drawing on research showing that one firm’s corporate social responsibility (CSR) can produce positive spillovers for peer firms and that its irresponsibility can harm its peers, we argue that common owners increase firms’ CSR to produce spillovers that reduce systematic risk and multiply their investment returns. Consistent with our theory, we find that common ownership is positively associated with firm CSR. Unpacking that relationship, we find that increases in CSR are driven by common owners with long-term orientations and are concentrated in stakeholder sensitive industries, in which CSR spillovers are most economically impactful. We also find that common owners focus their efforts on financially material CSR over financially immaterial CSR. We use a natural experiment with a quasi-exogenous shock to rule out alternative explanations. Our study contributes to literatures on the antecedents of CSR and outcomes of common ownership, providing a new perspective on how common owners shape corporate strategic behavior. Supplemental Material: The online appendix is available at https://doi.org/10.1287/orsc.2022.1620. Collapse

Topics: Chief Information Officer accounting corporate governance corporate social responsibility database system

Methods: descriptive statistic longitudinal research theory development difference in differences experimental group

The Downside of Displaying Agentic Values: Evidence from Shareholder Activism

2023 | Organization Science | Citations: 0

Authors: DesJardine, Mark R.; Shi, Wei

Abstract: Activist shareholders face a challenging task in preemptively identifying execut ... Expand

Abstract: Activist shareholders face a challenging task in preemptively identifying executives who they perceive might destroy shareholder value—before harm is done. We develop a framework where activist shareholders resolve this problem by forming attributions about executives’ intentions based on their displays of agentic values, which reflect independence and control. For activist shareholders, a strong display of independence can evoke concerns that an executive will act without the regulation of shareholder input, and a strong display of control can create concerns an executive will engineer governance provisions to their own benefit. As such, we hypothesize that above-average agentic value displays by CEOs increase the likelihood firms are targeted by shareholder activists. Extending our theory, we argue the positive effect that agentic value displays have on attracting shareholder activism is stronger when CEOs permit higher spending on corporate and stakeholder investment, both of which can exacerbate shareholder harm when executed poorly. We also posit that activism campaigns driven by CEOs’ agentic value displays will largely come from activist shareholders seeking to exert their own control over agentic-speaking CEOs. Using data on shareholder activism campaigns at US-based companies from 2003–2018, we find support for our hypotheses. We discuss multiple theoretical implications for research on corporate governance, stakeholder management, and investor relations. Collapse

Topics: corporate governance research and development accounting database system Netflix

Methods: descriptive statistic theory development instrumental variables estimation robustness check statistical hypothesis test

Theories: big five model attribution theory behavioral economics

Blockchain technology and gender equality: A systematic literature review

2023 | International Journal of Information Management | Citations: 0

Authors: Di Vaio, Assunta; Hassan, Rohail; Palladino, Rosa

Abstract: This study examines the literary corpus on the role and potential of blockchain ... Expand

Abstract: This study examines the literary corpus on the role and potential of blockchain technology in promoting gender equality through the lens of new technology-oriented corporate governance models. It investigates if and how corporate governance models can include blockchain technology to add value to gender equality and inclusion processes, in line with Sustainable Development Goal (SDG) 5. A bibliometric analysis of a database—containing 127 articles, 4 United Nations reports, 3 European institutions’ reports, 1 International Labour Office report, 1 World Economic Forum report, and 4 industry reports useful to our analysis—was conducted from 1990 to 2021, to provide a map of the knowledge generated and circulated by the literature. This study offers insights into publication activities, essential topics, citation trends, and the status of collaborations between contributors to previous research and aggregated contributions to the area of blockchain technology studies. Furthermore, the study offers a retrospective analysis of the content published in the blockchain technology field. The findings indicate that field research has focussed primarily on blockchain’s economic and financial attributes but not on social potential. This study emphasises the implementation of blockchain technology to manage gender equality and inclusion processes by orienting corporate governance models towards social and sustainable values. Collapse

Topics: blockchain database system information system use corporate governance business process management

Methods: bibliometric analysis literature sample qualitative content analysis VOSviewer literature study

Theories: institutional theory

The Returns to Nonmarket Strategies During Institutional Transitions: Investor Reactions to Actor and Tie Characteristics

2023 | Organization Science | Citations: 0

Authors: Gatignon, Aline; Gama, Marina A. B.; DeMello, Rodrigo B.

Abstract: We explain how investor perceptions of nonmarket strategies’ legitimacy, and the ... Expand

Abstract: We explain how investor perceptions of nonmarket strategies’ legitimacy, and thereby value, change during institutional transitions toward greater legal compliance. Indirect influence strategies should be better aligned with the transition and therefore become more legitimate than those associated with direct co-optation and control. Moreover, investors should assess this alignment based on two defining characteristics of firms’ nonmarket strategies, namely, the nonmarket actors and the ties involved. We, therefore, expect investors to value firms’ ties to nongovernmental organizations (NGOs) more than to political actors and ties formed via donations more than board ties. We test our hypotheses in the context of seven police raids that took place in Brazil in 2014; these raids launched “Operation Car Wash,” an anticorruption probe that signaled to investors a shift toward greater legal compliance at that point in time. Ultimately, we find that firms benefited the most when both nonmarket actors and ties were aligned with the institutional transition (i.e., NGO donations), and they suffered the most when both characteristics were misaligned (i.e., political board ties). Our findings integrate nonmarket strategies’ political and social facets by showing how actor and tie characteristics jointly explain their success or failure. They also contribute to explaining which firms will be better positioned to weather institutional transitions between legal capture and legal compliance. Funding: This work was supported by Getúlio Vargas Pesquisa-Fundação Getúlio Vargas; Govil Family Faculty Scholar Award; Wharton School, University of Pennsylvania. Supplemental Material: The online appendices are available at https://doi.org/10.1287/orsc.2022.1616. Collapse

Topics: database system corporate governance financial performance accounting corporate social responsibility

Methods: Wald test robustness check qualitative interview statistical hypothesis test theory development