Do CEOs Ever Lose? Fairness Perspective on the Allocation of Residuals Between CEOs and Shareholders

In this study we introduce a justice perspective to examining the result of bargaining between CEOs and boards over the allocation of firm residuals that ultimately determines CEO compensation. Framing CEO pay as the result of bargaining between CEOs and boards focuses attention on the power of CEOs to increase their share of firm residuals in the form of increased compensation, and the diligence of boards of directors to constrain CEO opportunism. Framing this negotiation through a theory of justice offers an alternative perspective to the search for pay-performance sensitivity. We predict and find that as board diligence in controlling opportunism declines and CEO power increases, CEOs are increasingly able to capture a larger portion of firm residuals relative to shareholders. This finding supports critics who charge that CEO pay violates norms of distributive and procedural justice

Organizational speed as a dynamic capability: Toward a holistic perspective

Current research on organizational speed has been disjointed, which has left organizational speed as an underdeveloped area of study. In this essay, we expand the view of organizational speed as a multidimensional gestalt-like construct that may influence firm performance and competitive advantage. We offer a capability-based definition of organizational speed and identify and review the building blocks of organizational speed. We propose new avenues and questions for future research based on our perspective

A Meta-Analytic Review of Competitive Aggressiveness Research

Competitive aggressiveness has been at the center of competitive dynamics literature for decades, however there is no consensus as to its primary drivers and performance consequences. Thus, we present the results of a meta-analysis of the antecedents to and consequences of competitive aggressiveness using three aggressiveness components—competitive volume, complexity, and heterogeneity. Leveraging the awareness, motivation, capability framework as a guide of the drivers of competitive aggressiveness, we find that greater organizational size and age, lower slack resources and prior performance, greater market growth, lower market concentration, and more heterogeneous top management teams lead to more aggressive actions. In addition, we found that among the different components of aggressiveness competitive volume improved operating performance

Not All Responses Are the Same: How CEO Cognitions Impact Strategy When Performance Falls Below Aspirations

This study integrates research on managerial discretion within the behavioral theory of the firm to examine how four CEO psychological traits serving as antecedents of managerial discretion—ambiguity tolerance, cognitive complexity, locus of control, and commitment to the status quo—moderate firm responses to poor performance. Using CEOs’ responses to questionnaires, CEO ambiguity tolerance is found to positively moderate the relationship between negative attainment discrepancy and strategic change when performance is slightly below aspirations, defined as average market return for the firm’s industry. Further, CEOs with greater cognitive complexity are found to engage in more strategic change when performance is farther below aspirations. Thus, this study begins to unpack the role of CEOs’ cognitive makeup on firm responses to performance shortfalls

Board Committees in Corporate Governance: A Cross-Disciplinary Review and Agenda for the Future

The importance of board committees – specialized subgroups that exist to perform many of the board\u27s most critical functions, such as setting executive compensation, identifying potential board members, and overseeing financial reporting – has grown over time due to increased legal requirements and greater complexity of the environment in which firms operate. This has resulted in a large body of work examining board committees across the accounting, finance, and management disciplines. However, this research has developed rather independently within each discipline, preventing scholars and practitioners from developing a comprehensive understanding of board committees. To address this issue, we conduct a comprehensive review of the literature that: 1) summarizes and synthesizes antecedents and outcomes associated with board committees in publicly-traded firms in English common law countries; and 2) offers a critical analysis of existing research, providing recommendations for advancements and new directions in board committee research

Board Committees in Corporate Governance: A Cross‐Disciplinary Review and Agenda for the Future

The importance of board committees – specialized subgroups that exist to perform many of the board\u27s most critical functions, such as setting executive compensation, identifying potential board members, and overseeing financial reporting – has grown over time due to increased legal requirements and greater complexity of the environment in which firms operate. This has resulted in a large body of work examining board committees across the accounting, finance, and management disciplines. However, this research has developed rather independently within each discipline, preventing scholars and practitioners from developing a comprehensive understanding of board committees. To address this issue, we conduct a comprehensive review of the literature that: 1) summarizes and synthesizes antecedents and outcomes associated with board committees in publicly‐traded firms in English common law countries; and 2) offers a critical analysis of existing research, providing recommendations for advancements and new directions in board committee research

Board demography and divestitures: The impact of gender and racial diversity on divestiture rate and divestiture returns

Drawing on resource dependence theory and group diversity research, this paper examines how board gender and racial diversity impact corporate divestitures. We argue that due to the diverse experiences, knowledge, and perspectives that female and racial minority directors bring to the boardroom, it is more difficult and time-consuming for the board to reach a consensus and pursue a common course of action. Consistent with this argument, our results indicate that board gender and racial diversity lead to longer divestiture completion times and a lower divestiture rate. Additionally, we argue that due to their cognitive heterogeneity, diverse boards likely exchange a greater variety of information, engage in more thorough discussions, and implement greater oversight of divestitures, leading to more positive divestitures returns. Offering mixed support for this argument, we found that while gender diversity increased divestiture returns, racial diversity was associated with lower divestiture returns

The Role of Top Management Teams in Firm Responses to Performance Shortfalls

Past research rooted in the Behavioral Theory of the Firm has extensively examined the impact of performance feedback on organizational change and risk taking, finding robust effects that performance shortfalls enhance the risk taking of firms. We argue that the strength of this effect is likely to be contingent on the attributes of the firm’s top management team. To enhance our understanding of which firms are more likely to be sensitive to performance cues, we draw on the Upper Echelon Theory to theorize that key structural attributes of the top management team—tenure and gender diversity, size, and pay disparity—affect how top executives interpret poor performance and act upon it through engagement in strategic risk taking. Results show that top management teams with greater tenure diversity, smaller size, and smaller pay disparity among members engage in more strategic risk taking following performance shortfalls