Keeping Directors in Line: Social Distancing as a Control Mechanism in the Corporate Elite

Abstract

for providing insightful comments on earlier drafts of this paper. We also thank Donald Palmer and the anonymous ASQ reviewers for their constructive feedback and valuable suggestions on the paper, and we thank Piruze Sabuncu for her assistance in data collection.

Stock market reaction to CEO certification: the signaling role of CEO background

“…Firm performance was measured as the industry adjusted return on assets (ROA) in the year prior to filing by subtracting the median ROA of all firms (excluding the focal firm) in the SEC's list that shared the focal firm's primary two-digit Standard Industrial Classification (SIC) code (Westphal and Khanna, 2004;Zhang, 2006Zhang, , 2008. Data were obtained from Compustat Fundamentals Annual.…”

Decline of the Corporate Community : Network Dynamics of the Dutch Business Elite

“…When norms of good corporate governance prevail in the corporate elite, it will be difficult for any individual member to defy these norms (see for instance Westphal and Khanna 2003). Such positive groupthink can contribute to socially responsible behaviour by the corporate elite members, and it can prevent undesired behaviour.…”

“…To a certain extent, indirect coordination takes the form of common social process that are not in any way specific for the corporate elite. Westphal and Khanna (2003) give a good example of how social dynamics affect corporate directors. They studied how social distancing (reducing the frequency and closeness of contact between people) is used amongst the corporate elite as a control mechanism for defiant members.…”

“…But so do the structural (institutional) ties between economic actors, as well as the specific socio-cultural character of the corporate elite. Social control and social exclusion (as punishment) play an important role amongst the corporate elite (Westphal and Khanna 2003). Moral standards and norms of appropriate behaviour are 'policed' within social groups.…”

Beyond human capital explanations for the gender pay gap among executives: investigating board embeddedness effects on discrimination

“…We adopt two competing theoretical perspectives to examine embeddedness effects on discrimination: the possibility of homophily among economic elites (Shipilov et al 2011;McPherson et al 2001) and the resource function of board networks (Beckman and Haunschild 2002;Shropshire 2010;Hillman et al 2007). On the one hand, board members become members of the economic elite via additional directorships (Useem 1982;Davis and Greve 1997;Westphal and Khanna 2003) and this societal class is still predominately male (Adams and Ferreira 2009;Huse et al 2009;Hillman et al 2007). Following the homophily among economic elites perception of board embeddedness, embedded boards assess transaction costs for communication and cooperation with the female minority as greater.…”