Squared Away: Veterans on the Board of Directors

Simpson, Joseph; Sariol, Ana M.

doi:10.1007/s10551-018-3907-1

Cited by 21 publications

(23 citation statements)

References 51 publications

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“…A notable study that examines the military connection in a firm is by Benmelech and Frydman (2015), which found military CEOs who pursue lower corporate investment are less likely to be involved in fraudulent corporate activity and perform better during industry downturns. Following this, several studies have begun to examine other characteristics of military connection and its relationship with corporates, such as tax avoidance (Law and Mills, 2017), financial misconduct (Koch-Bayram and Wernicke, 2018), securities class action lawsuit (Simpson and Sariol, 2019), interest rates (Harymawan, 2018), CSR disclosure (Nasih et al , 2019) and auditor choice (Harymawan, 2020). A recent study examines China's military-connected firms' innovation intensity by emphasizing their risk-averse traits (Guo et al , 2020).…”

Section: Literature Reviewmentioning

confidence: 99%

Innovation intensity of military-connected firms

Harymawan

Putra

Amalia

et al. 2021

IJMF

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PurposeThe study aims to examine the military-connected firms' risk preference, specifically in the innovation intensity level context. The authors argue that firms with military-experienced top management have conservative and risk-averse behavior, influencing the innovation investment policy.Design/methodology/approachThe authors use nonfinancial Indonesian-listed firms from 2010 to 2018 amounted to 2,504 firm-year observations.FindingsThe authors document a negative relationship between military connection with both innovation activities and outputs. The additional analysis documents that risk-preferences of military-connected firms will be drastically changed when the industry has a high digital level, which confirms that risk-averse military-experienced management is less dominant with adaptation skill. The authors also identify that veterans did not need a long tenure to influence firms' innovation investment policy. Lastly, the result is robust due to various endogeneity tests employed.Originality/valueThis study further examines military-connected firms' technological innovation compared to prior studies and enriches the related literature.

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Section: Literature Reviewmentioning

confidence: 99%

Innovation intensity of military-connected firms

Harymawan

Putra

Amalia

et al. 2021

IJMF

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“…A major player in business needs a CEO that has already proven they can manage a fiercely competitive business environment and, among all candidates' background, military experiences may well suit best for this requirement (Duffy, 2006). Firms should be interested in appointing directors who possess not only superior decision-making skills under pressure, but who also may be inclined to behave more ethically to prevent future breaches of stakeholder trust (Simpson & Sariol, 2018). Somehow military personnel have been viewed as a great leader as they have already experienced hard times and rallied the morale of their comrades.…”

Section: Hypothesis Developmentmentioning

confidence: 99%

“…KLD (Simpson & Sariol, 2018), CSR advertising expense (Oh, et al, 2017) or other CSRD criteria to provide more robust result of military connection and CSR correlation.…”

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confidence: 99%

Military experienced board and corporate social responsibility disclosure: an empirical evidence from Indonesia

Nasih¹,

Harymawan²,

Putra³

et al. 2019

JESI

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This study examines the impact of military connection and politically connection on Corporate Social Responsibility Disclosure. Using 110 firm year observations of Indonesia listed firms, we predict that the presence of military or politically connection in firm's board will increase the Corporate Social Responsibility Disclosure level on its Sustainability Report. We found that military connected boards increase the Corporate Social Responsibility Disclosure while politically connection does not show any correlation. Our further analysis on specific type of each connection shows that military career position, army military origin, marine military origin, People's Consultative Assembly politically affiliation and House of Representation politically affiliation increase the level of Corporate Social Responsibility Disclosure level. Our result is robust due to various research model and Heckman's two stage regression.

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“…Managers with military experience are associated with conservative disclosure styles (Bamber et al , 2010), increased corporate social responsibility disclosure (Nasih et al , 2019), less tax avoidance (Law and Mills, 2017), less fraudulent financial reporting and option backdating (Koch-Bayram and Wernicke, 2018), greater merger synergies (Lin et al , 2011), conservative corporate policies (Benmelech and Frydman, 2015), lower interest rates on debt (Iman, 2018) and less corporate philanthropy (Luo et al , 2017). In a related study examining directors with military experience, Simpson and Sariol (2019) find firms facing securities class action lawsuits are more likely to appoint directors with military experience, citing the appeal of their resilience in times of distress. By contrast, we do not limit our analysis to a period of firm crises as we are interested, more generally, in the corporate governance impact of independent directors with military experience on the board.…”

Section: Introductionmentioning

confidence: 99%

Military veterans on the board and executive compensation

Rainville

2020

IJMF

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PurposeThe purpose of this study is to examine the relationship between independent director military service and monitoring effectiveness, focusing on chief executive officer (CEO) compensation.Design/methodology/approachThe authors identify independent directors with military experience using BoardEx data. The authors focus on the level of CEO compensation. The methods used include panel data estimation, propensity score matching analysis and instrumental variable analysis.FindingsThe authors find more powerful CEOs are more likely to appoint independent directors with past military service to the board. Boards with a larger proportion of independent directors with military experience tend to award higher levels of CEO compensation. Moreover, the positive relationship between independent directors with military experience and executive compensation is stronger when the CEO is more powerful.Originality/valueThis paper examines a relatively unexplored director background, directors with military experience, and finds this type of independent director is associated with weak monitoring. The authors contribute to the literature examining the effect of executive and board member military experience on corporations. The authors identify weak monitoring of powerful CEOs as a potential weakness of directors with military experience. This drawback should be considered before appointing a director with military experience to the board.

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Squared Away: Veterans on the Board of Directors

Cited by 21 publications

References 51 publications

Innovation intensity of military-connected firms

Innovation intensity of military-connected firms

Military experienced board and corporate social responsibility disclosure: an empirical evidence from Indonesia

Military veterans on the board and executive compensation

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