To date, the results of agency theory-based research exploring the impact of board composition on firms’ critical decisions are equivocal. Through meta-analyses, this study reveals systematic relationships between board composition and six of the seven critical decisions examined. Interestingly, the results provide little support to agency theory’s predictions on the impact of board composition on critical decisions that involve a potential conflict of interest between managers and shareholders. Implications for theory and practice are discussed.

This paper contributes to multiple agency theory by examining how the compensation schemes awarded to outside directors and the CEO jointly affect firm‐level risk taking. Using data of the S&P 1500 firms from 1997 to 2006, we find support for earlier arguments that providing the CEO, the outside directors, or both with stock options increases risk taking. More importantly, we find that compensating outside directors with stock options has significantly stronger effects than CEO stock options. Finally, contrary to what one would expect, we find that these effects are mutually substituting; that is, if both the outside directors and the CEO are provided with stock option compensation, outside directors' incentives weaken the effect of the CEO's incentives on firms' risk taking. Copyright © 2010 John Wiley & Sons, Ltd.

In this paper, we develop an analytical model of outside directors' signaling role---a role that is especially important for entrepreneurial firms. We formally demonstrate that in the face of a market failure in which stakeholders refuse to align themselves with new firms, high-quality new ventures may be able to credibly signal their type by appointing reputable directors to their boards. However, this option is not universally feasible. Both directors' reputations and the quality of their information determine the effectiveness of this strategy. In contrast to earlier adverse selection models, we demonstrate that when the middlemen (directors) have incomplete information on firm quality, bad and good firms can coexist in equilibrium. In this equilibrium, the quality of the directors' information determines the mix of good and bad firms in the population of surviving firms. Avenues for future research and normative implications for practitioners are discussed.Reputable Directors, Signaling Firm Quality, New Ventures

This article examines how the compensation paid for outside directors affects firms’ acquisition behavior. Using panel data of Standard & Poor’s 1500 firms between 1996 and 2002, the authors find that stock and stock option pay for outside directors are related in an inverted U-shaped manner to a firm’s acquisition rate and that for stock options, this relationship is moderated by board composition. Their findings suggest a dual agency model of corporate governance, according to which not only executives’ incentives but also outside directors’ incentives should be aligned with the shareholder value creation.

SummaryIn this article, we seek to contribute to research on organizational citizenship behavior (OCB) by adopting a psychological evolutionary perspective that offers a novel way of interpreting such behaviors. Specifically, drawing on the handicap principle in evolutionary biology, we propose that by demonstrating the ability to bear the burden associated with costly OCBs, organizational members can credibly signal their otherwise unobservable capabilities to others. We develop a model that explores antecedents and outcomes of engaging in costly OCBs and offer avenues for future research within this framework.

corporate social performance, international business, multinationality,

Using a sample of S&P 1500 firms between 1997 and 2000, this paper examines the effects of outside directors' stock-option compensation on firms' R&D intensity. Results suggest that including stock options in outside directors' compensation enhances firms' R&D. Moreover, stock-option compensation moderates the relationship between board composition and R&D intensity. These results suggest that outside directors' compensation schemes do matter. The results also highlight the need to re-evaluate previous findings that addressed the effects of board composition on both firms' performance and strategic decisions. Copyright (c) 2007 The Author; Journal compilation (c) 2007 Blackwell Publishing Ltd.

Insight into organizational responses to stakeholder claims and influence attempts is critical to understand the challenges currently facing managers and organizations. Drawing on Kelman's (1958) model of social influence, we advance the field's understanding of the factors driving firm-level prioritization of competing stakeholder claims by developing a theoretical framework that accounts for both the stakeholder attributes that are important to relevant decision makers, and the decision makers' motivations for accepting or rejecting the influence attempts of varying stakeholders. Our framework distinguishes itself from existing research by focusing on stakeholder prioritization, not salience, recognizing that stakeholder-related decisions result from group interaction and that important decision makers are not limited to those found within the classic boundaries of the firm. Consequently, we argue that decision makers are simultaneously stakeholders with attributes that might be relevant to other decision makers involved in prioritization. In addition, we identify a more extensive set of stakeholder attributes that includes powerlessness and illegitimacy.