corporate governance, boards of directors, Sarbanes-Oxley, board committees, board composition, board structure,

This study incorporates insights from both institutional and family socioemotional wealth perspectives with agency theory to examine the relationships among governance practices, family ownership, and information disclosure quality. Employing a sample of 516 publicly listed firms in Taiwan over a period of 5 years (2006)(2007)(2008)(2009)(2010), we found that high levels of board independence and board activity have a significant positive effect on disclosure quality. Further, family ownership positively moderated the relationship between board independence and disclosure quality. This relationship is stronger with a higher level of family ownership. The results support the institutional proposition that family-owned firms that pursue socioemotional wealth are more likely to promote information transparency to gain legitimacy and enhance their reputations with outside stakeholders.

Purpose Human capital has been traditionally viewed in terms of how an individual’s investment in knowledge, skills and abilities can lead to higher pay or promotions. More recently, human capital has been regarded as a unit-level resource using the term “human capital resources” to consider the aggregate effects of human capital. The purpose of this paper is to examine the collective human capital present in a firm’s board of directors as a valuable resource leading to superior firm outcomes. Design/methodology/approach The study examined the effects on firm innovation of the scientific expertise of corporate directors, average board tenure and the presence of a firm’s founder on the board. Data from a sample of pharmaceutical firms were analyzed with the dependent variable, innovation, measured as patent applications and both individual and unit-level human capital measures of the predictor variables. Findings The results show that the presence of a founder-director is positively related to innovation and more pronounced when combined with the board’s scientific expertise. Board tenure shows a relationship to innovation and is more evident in combination with the board’s aggregate level of scientific expertise. The effect of directors’ scientific expertise is also greater when measured at the board level of scientific expertise. Research limitations/implications Future studies should examine these relationships within a broader context extending the research to other industries thereby incorporating wider variation in both the antecedents and measures of innovation. In addition, future studies might investigate a likely non-monotonic relationship of board tenure with strategic outcomes, recognizing the non-linear nature of effects of board tenure. Practical implications In addition to the theoretical and empirical implications, this research may also inform practicing managers charged with constituting their boards of directors and provide some guidance for the recruitment and retention of board members. The research may also assist top managers and investors in knowing when the presence of a founder on the board is useful and supportive of the firm’s strategic direction. Originality/value The study extends scholarly understanding of human capital theory beyond the top management team to boards of directors demonstrating the importance not only of directors’ individual capital but also how it combines with that of other directors. Moreover, it enhances understanding of board characteristics beyond the bounds of demographic characteristics to show that additional qualities affect firm strategy. This research also informs managers, boards and investors how boards might be more effectively constituted to impact firm strategy.

The human capital of corporate boards of directors is a key organizational resource affecting a variety of strategic outcomes. Using human capital theory within the broader theoretical contexts of agency theory and the resource dependence perspective, we investigate the effects of certain types of board human capital on firm innovation. Our findings are generally supportive of our theory that board human capital is associated with firm innovation. Specifically, we examine the role of certain types of board human capital on firm innovation and find that scientific expertise, industry experience, financial expertise, and women directors positively affect firm innovation in the pharmaceutical industry, with innovation measured by R&D expenditures and number of patents. These results imply that the knowledge, experience, and expertise that directors bring to corporate boards are important considerations in constituting corporate boards. Further, our work adds to understanding of the impact of board characteristics on firm strategic outcomes.

No abstract