Dissenting Directors

The unfriendly board: Antecedents and consequences of board dissent

“…To effectively manage their investment in China, European firms should have a more complete understanding of board dissentdthrough its antecedents and consequences. In fact, recent studies suggest that board dissent is observed in Europe (Marchetti et al, 2017). Our findings of board dissent potentially have implications for corporate governance in Europe.…”

“…Agency theorists contend that the board can exert control over management, and their monitoring can reduce agency costs (Mizruchi, 1983;Zahra & Pearce, 1989). Marchetti et al (2017) argue that expressions of different opinions by directors are a valuable and vital attribute of effective corporate governance. However, boards are subject to the influence of managers, and only play a review and ratification role in the corporate process.…”

“…Duchin, Matsusaka, and Ozbas (2010) find that outside directors' monitoring effectiveness depends on how much it costs to acquire the needed information about the firm. Whereas the disapproval from the directors may indicate effective corporate governance, it could hurt the cooperative norm of the board and lead to undesired outcomes (Marchetti et al, 2017).…”

“…What are the consequences? These two questions are increasingly explored by scholars in law (Marchetti, Siciliano, & Ventoruzzo, 2017), finance (Gillette, Noe, & Rebello, 2003;Jiang, Wan, & Zhao, 2016;Warther, 1998), accounting (Tang, Du, & Hou, 2013;Ye, Zhu, Lu, & Zhang, 2011), and strategic management (Ma & Khanna, 2016). Jiang et al (2016), for instance, find that the reputation concerns of independent directors drive their dissent, and that such behavior can lead to more outside directorships and a lower risk of regulatory sanctions.…”

Corporate Governance Quality, Ownership Structure, Agency Costs and Firm Performance. Evidence from an Emerging Economy

“…Jackling and Johl (2009), in their study, concluded that from the perspective of agency theory, having independent directors on the Board enhances firm performance. Independent directors not only the have experience and the knowledge required to scrutinize the opportunistic behavior of the managers, but can also dissent from the other board members if they find any irregularities (Marchetti et al 2017). The literature has shown mixed results regarding the size of the board, e.g., Mappadang et al (2018) found that larger board size led to tax avoidance.…”