lecture 3 (1) Flashcards
board of directors is responsible for
Looking after the interest of all shareholders and stakeholders
Hiring and ifring managers
Measure corporate performance
Management contribution to this performance
Defining/approving major business decisions (asset disposal, investment/acquisitions, tender offers made by acquirers)
Overseeing executive compensation and risk management
One tier board standard in
US, UK, spain or italy
Two tier board division
Management board
supervisory board
supervisory board duties
Employee representatives
Nonexecutive shareholder representation
Two tier board common in
Germany, sweden and china
proponent to CEO chairperson duality
Strong leadership
Splitting role would create tensions and rivalry
Difficult to designate a single spokeperson
Opponents to CEO chairperson duality
duality reduces board independence
No one challenges CEO
More CEO entrenchment
board of directors
Managerial labor marekt
Disciplinary device for the managers
CEO and directors cares about past reputation and performance for their future success in the market
Gender pay gap (europe, UK, USA, ASIA, Africa and latin america
EU: 15%
UK 16,5%
USA 17,5%
Asia 33 %
Africa 45%
Latin america 48%
Romance of leadership
A social construct
Performance tends to be attributed to the leader
Occupational sex segregation
The roles typically occupy tend to be lower-paying areas
Or female dominant industry
Cultural, ethnic, religious and age diversity of boards
Greater differences in demographic may result more cognitive resonance and monitoring the executives by nonexecutives
Study on social diversity on boards and firm performance in sri lanka main results
More social diversity –> better monitoring
Socially diversified firms are doing better in performance
Lower financial distress
Outsider system
Badly performing managers are punished by the outsiders (min shareholders) due to high investor protection rights
Main conflict in UK and US
check slides part 2-3
