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Dissertation
The role of corporate directors in declining organizations
Doctor of Philosophy (Ph.D.), Drexel University
Jun 1997
DOI:
https://doi.org/10.17918/00000843
Abstract
This study examined the three roles (Control, Strategic, and Service) of directors at declining firms. It was expected that boards adopt certain roles during a decline which are reflected in their attributes (composition, characteristics, and structure) and related to performance during and after the decline. The 127 firms in this ample had three consecutive years of declining Return on Sales. Using a three-stage, nine-year model, U.S. manufacturing firms with available data in the Compustat database were identified. Board data were collected from proxy statements to test the lagged relationship of board attributes and performance. Cause of Decline (Internal vs. External) was introduced as a moderating variable. The board variables included: board size; proportion of outside directors; stock ownership of outsiders; financial and total board interlocks; outsider background-manufacturing experience; outsider background-current executive; outsider tenure; outsider age; and unitary board leadership. Cause of Decline was determined by pairs of judges who read about the declining organizations then recorded the degree to which they thought the decline was due to internal or external factors. Correlations and multiple regression analysis were conducted on the data. There was limited support for the hypotheses. At firms whose declines were due to internal causes, board size, financial interlocks, total interlocks, outside director background-executive, and outside director age were positively related to performance. When declines were due to external causes these same variables were negatively correlated. In the analysis of outsider proportion and outsider tenure there were no significant main or interaction effects. This argues against mandating the composition of a board (insiders vs. outsiders) and length of appointment. In several models the significant interaction and/or main effect involved variables which measured a change in a board attribute or performance over time. This suggests that boards are dynamic bodies which should be examined in terms of how changes to them might be associated with performance. The contributions of this study include using cause of decline as a moderating variable, examining the performance relationship in a lagged model, and including the change in variables (board and performance) in the analysis.
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Details
- Title
- The role of corporate directors in declining organizations
- Creators
- Annette Louise Halpin
- Contributors
- P. N. SubbaNarasimha (Advisor)
- Awarding Institution
- Drexel University
- Degree Awarded
- Doctor of Philosophy (Ph.D.)
- Publisher
- Drexel University; Philadelphia, Pennsylvania
- Number of pages
- xii, 222 pages
- Resource Type
- Dissertation
- Language
- English
- Academic Unit
- College of Business (and) Administration (1970-1999); Drexel University
- Other Identifier
- 991014970312604721