Effects of Social Capital and Power on Surviving Transformational Change: The Case of Initial Public Offerings

Fischer, Harald M.; Pollock, Timothy G.

doi:10.5465/20159597

Cited by 216 publications

(435 citation statements)

References 71 publications

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“…There are two major schools of thought regarding the relationship between board size and firm performance. One school suggests that small boards are more likely to monitor management better since their members are less able to hide in a large group (Fischer & Pollock, 2004). Furthermore, small groups are able to arrive at decisions more quickly than larger ones.…”

Section: Governance and Corporate Survivalmentioning

confidence: 99%

“…If grandstanding occurs in Australia, then venture capital-backed IPOs are liked to have lower likelihood of survival. Another explanation regarding the impact of venture capital backing is provided by Fischer and Pollock (2004) and Arthurs, Hoskisson, Busenitz, and Johnson (2008). From an ownership perspective, venture capitalists can be considered as principals in the firm in which they invest.…”

Section: Variables and Measuresmentioning

confidence: 99%

“…Furthermore, they may enjoy superior access to key resources (Goodstein, Gautam, & Boeker, 1994). These advantages of larger boards may be particularly valuable to young, IPO firms (Fischer & Pollock, 2004). Dalton, Daily, Johnson, and Ellstrand (1999) conduct a meta-analysis of studies of board size and performance and conclude that there is a positive relationship between board size and financial performance.…”

Section: Governance and Corporate Survivalmentioning

confidence: 99%

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Board Structure and Survival of New Economy IPO Firms

Chancharat

Krishnamurti

Tian

2012

Corporate Governance

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Manuscript Type: Empirical Research Question/Issue: This study examines the relevance of currently accepted best practice recommendations regarding board structure on the survival likelihood of new economy initial public offering companies. We argue that industry context determines governance outcomes. Research Findings/Insights: We study 125 Australian new economy firms listed between 1994 and 2002. Each firm is tracked until the end of 2007 for monitoring their survival. We find that board independence is associated with an increase in the likelihood of corporate survival. We also find that the benefits of board independence increase at a decreasing rate. Theoretical/Academic Implications: The standard best practice recommendation of board independence stems from the monitoring role of directors and is based on agency theory. The results from our study suggest that the recommendation regarding board independence does not work well for new economy firms. While the agency theory based model implies a monotonic relation between board independence and performance, our research suggests that the relationship is nonlinear. This variation occurs because of increased monitoring costs faced by outsiders due to higher information asymmetry and complexity of new economy firms. Our empirical results suggest that inside directors play a complementary role to outsiders in mitigating firm failure. Practitioner/Policy Implications: Our research offers insights to policy makers who are interested in setting best practice standards regarding board structure. Our research suggests that firm/industry characteristics play a crucial role in determining the optimal board structure. In firms/industries where outsiders face significantly higher information processing costs, insiders can play a valuable complementary role to outsiders in enhancing the effectiveness of the board. Thus future hard or soft regulations related to board structure should consider industry context.

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Section: Governance and Corporate Survivalmentioning

confidence: 99%

Section: Variables and Measuresmentioning

confidence: 99%

Section: Governance and Corporate Survivalmentioning

confidence: 99%

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Board Structure and Survival of New Economy IPO Firms

Chancharat

Krishnamurti

Tian

2012

Corporate Governance

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“…There is no a single definition of social capital (Fischer and Pollock 2004;Kostova and Roth 2003). Some scholars define social capital as "resources embedded in a social structure that are accessed and/or mobilized in purposive actions" (Lin 2001: 29;Thompson 2005Thompson : 1012.…”

Section: Social Capitalmentioning

confidence: 99%

Enhancing Cross-Cultural Training Efficacy on Expatriate Adjustment through Emotional Intelligence and Social Capital

Susanto

Rostiani

2012

GADJAH MADA INT. J. BUS.

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Abstract:Cross cultural training is widely believed to make a positive contribution to expatriate adjustment. In practice, however, it is very costly and sometimes ineffective for expatriates. Therefore, there is a growing importance placed on increasing the cost effectiveness or enhancing the efficacy of crosscultural training by functioning individual expatriate's social capital and emotional intelligence as moderating variables towards expatriate's adjustment and performance. To do so we blend ideas drawn from social capital theory and emotional intelligence to develop the structure that underlies the logic of this paper. Thus, this paper uses social capital and emotional intelligence theories to enrich extant literature on expatriate adjustment Abstrak: Pelatihan lintas budaya telah dipercaya memberikan kontribusi positif bagi proses penyesuaian ekspatriat. Meskipun demikian, dalam prakteknya, pelatihan tersebut sangat mahal dan terkadang tidak efektif. Oleh karena itu, penting untuk meningkatkan efektivitas biaya atau pencapaian pelatihan lintas budaya dengan memfungsikan modal sosial dan kepintaran emosi ekspatriat sebagai variabel pemoderasi antara penyesuaian ekspatriat dan kinerjanya. Penulis menggabungkan beberapa ide dari teori modal sosial dan kepintaran emosional untuk membangun sebuah kerangka sebagai dasar tulisan ini. Oleh karena itu, tulisan ini menggunakan teori modal sosial dan teori kepintaran emosional untuk memperkaya literatur mengenai penyesuaian ekspatriat.

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“…Pressure from investment bankers, potential investors and regulators (e.g., the US Securities and Exchange Commission) often lead to more independent boards with divided leadership structures (Certo et al 2001) upto and potentially including the displacement of the founder who chaired the board and simultaneously acted as chief executive. The argument for such action is that separating the CEO/Chair position will improve governance and that replacing founders with "professional" managers and directors, who are better-suited to the challenges associated with leading public corporations (Fischer and Pollock 2004), may in some cases substantially increase the value of the firm (Arcand 2004).…”

Section: Theory Developmentmentioning

confidence: 99%

A Test of Lazear’s Theory of Entrepreneurship in the Open Source Software Virtual Community

Giuri

Rullani

Torrisi

2009

New Frontiers in Entrepreneurship

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While the process of pursuing an initial public offering (IPO) provides new capital with which new ventures might pursue significant opportunities, research suggests that many IPO firms decrease in value subsequent to the new offering. Using an agency perspective, we argue that the IPO process itself may not only raise direct governance costs (due to increased monitoring and bonding), but may also create a distraction for managers who need to remain focused on the strategy to effectively use a large infusion of capital from the IPO. Likewise, we argue that governance participants, especially board members, will be distracted by the work necessary to take the firm public and, as such, may not be focused on the strategic monitoring necessary for continued firm's viability. This lack of monitoring may also allow managerial opportunism to be more prevalent, especially given the large amount of capital available to managers once the IPO is completed. Accordingly, we argue that excessive governance costs (both direct and indirect) may be associated with the IPO process and subsequent IPO firm performance.

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Effects of Social Capital and Power on Surviving Transformational Change: The Case of Initial Public Offerings

Cited by 216 publications

References 71 publications

Board Structure and Survival of New Economy IPO Firms

Board Structure and Survival of New Economy IPO Firms

Enhancing Cross-Cultural Training Efficacy on Expatriate Adjustment through Emotional Intelligence and Social Capital

A Test of Lazear’s Theory of Entrepreneurship in the Open Source Software Virtual Community

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