Catherine M. Dalton

1 The Fundamental Agency Problem and Its Mitigation: Independence, Equity, and the Market for Corporate Control

A central tenet of agency theory is that there is potential for mischief when the interests of owners and managers diverge. In those circumstances, and for a variety of reasons, managers may be able to exact higher rents than are reasonable or than the owners of the firm would otherwise accord them. While that foundational element of agency theory is secure, other elements derived directly from agency theory are far less settled. Indeed, even after some 75 years of conceptualization and empirical research, the three principal approaches that have long been proposed to mitigate the fundamental agency problem remain contentious. Accordingly, we provide a review of the fundamental agency problem and its mitigation through independence, equity, and the market for corporate control.

Top Management Teams, Strategy and Financial Performance: A Meta-Analytic Examination

A considerable amount of research has investigated the linkage between top management team (TMT) characteristics and firm financial performance. Much of this research relies on demographic data. While these data are reliable and accessible, findings across studies are not consistent. Meta-analysis of several TMT indicators and firm financial performance provides modest support for direct relationships but indicates moderating influences. Further meta-analysis and a confirmatory factor analysis enrich these findings by examining potential moderating and intervening factors.

Integration of Micro and Macro Studies in Governance Research: CEO Duality, Board Composition, and Financial Performance:

The authors provide two examples of contemporary and contentious issues related to the governance of publicly traded corporations—the composition of boards of directors and the choice of CEO or board chairperson leadership structures. In each case, despite voluminous empirical attention, there is virtually no evidence related to the financial performance of the firm with regard to either of these fundamental elements of firms’ governance structures. The authors suggest that these null results may be related to the inadequacy of analyses relied on to examine such issues, an inadequacy that might be constructively addressed by more attention to multi-level alternatives.

Initial public offering investor valuations: An examination of top management team prestige and environmental uncertainty

Relying on one of the more notable entrepreneurial settings, an initial public offering (IPO), this article extends prior work on top management team (TMT) characteristics. We examine whether or not prestigious TMTs at the time of an IPO enhance organizational legitimacy and thereby provide a signal to potential investors. Because an IPO represents an entrepreneurial context characterized by high levels of uncertainty, we also consider the impact of environmental uncertainty on the TMT prestige/investor valuation relationship. We find that both an element of TMT prestige and environmental uncertainty influence investor valuations. However, we also find that the influence of prestige does not assuage investors when analyzing IPOs in different environmental conditions.

Meta-Analytic Choices and Judgment Calls: Implications for Theory Building and Testing, Obtained Effect Sizes, and Scholarly Impact

The authors content analyzed 196 meta-analyses including 5,581 effect-size estimates published in Academy of Management Journal, Journal of Applied Psychology, Journal of Management, Personnel Psychology, and Strategic Management Journal from January 1982 through August 2009 to assess the presumed effects of each of 21 methodological choices and judgment calls on substantive conclusions. Results indicate that, overall, the various meta-analytic methodological choices available and judgment calls involved in the conduct of a meta-analysis have little impact on the resulting magnitude of the meta-analytically derived effect sizes. Thus, the present study, based on actual meta-analyses, casts doubt on previous warnings, primarily based on selective case studies, that judgment calls have an important impact on substantive conclusions. The authors also tested the fit of a multivariate model that includes relationships among theory-building and theory-testing goals, obtained effect sizes, year of publication of the meta-analysis, and scholarly impact (i.e., citations per year). Results indicate that the more a meta-analysis attempts to test an existing theory, the larger the number of citations, whereas the more a meta-analysis attempts to build new theory, the lower the number of citations. Also, in support of scientific particularism, as opposed to scientific universalism, the magnitude of the derived effects is not related to the extent to which a meta-analysis is cited. Taken together, the results provide a comprehensive data-based understanding of how meta-analytic reviews are conducted and the implications of these practices for theory building and testing, obtained effect sizes, and scholarly impact.

Debunking Myths and Urban Legends About Meta-Analysis

Meta-analysis is the dominant approach to research synthesis in the organizational sciences. We discuss seven meta-analytic practices, misconceptions, claims, and assumptions that have reached the status of myths and urban legends (MULs). These seven MULs include issues related to data collection (e.g., consequences of choices made in the process of gathering primary-level studies to be included in a meta-analysis), data analysis (e.g., effects of meta-analytic choices and technical refinements on substantive conclusions and recommendations for practice), and the interpretation of results (e.g., meta-analytic inferences about causal relationships). We provide a critical analysis of each of these seven MULs, including a discussion of why each merits being classified as an MUL, their kernels of truth value, and what part of each MUL represents misunderstanding. As a consequence of discussing each of these seven MULs, we offer best-practice recommendations regarding how to conduct meta-analytic reviews.

Strategic Management Studies are a Special Case for Meta-Analysis

Meta-analysis has been relied on relatively infrequently in strategic management studies, certainly as compared to other fields such as the medical sciences, psychology, and education. This may be unfortunate, as there are several aspects of the manner in which strategic management studies are typically conducted that make them especially appropriate for this approach. To this end, we provide a brief foundation for meta-analysis, an example of meta-analysis, and a discussion of those elements that strongly recommend the efficacy of meta-analysis for the synthesis of strategic management studies.

CEO succession: some finer – and perhaps provocative – points

Purpose – The paper discusses some finer points on CEO succession.Design/methodology/approach – This as a viewpoint paper in which the authors discuss the merits and disadvantages of various approaches to CEO successionFindings – CEO succession planning is a fundamental element of enterprise risk. A board must have an effective CEO and the board must have a means to replace the CEO. Boards must have succession processes in place for the routine and the unplanned emergency.Originality/value – It is hoped that the discussion will direct more attention to CEO succession and its challenges.

In defense of the individual: the CEO as board chairperson

Purpose – Looks at group decision making by Boards and impact of diversity on effectiveness.Findings – Extensive research fails to demonstrate the superiority of the separate board leadership structure. Other factors supersede the need for independence where board leadership is concerned. There is no substitute for a single strong leader who is accountable.Practical implications – Provides executives with information on important factors to consider when determining board structure.Originality/value – Of particular value to CEOs and other board members

Corporate governance best practices: the proof is in the process

Purpose – This paper looks at the failure of corporate boards to incorporate best practices into their functioning.Design/methodology/approach – The study discusses the failure of corporate boards to incorporate best practices into their functioning.Findings – One answer to the continued failure of corporate governance, albeit not likely the answer, is a misplaced focus on structural aspects of the board of directors at the expense of process issues.Practical implications – Provides executives with information on important factors to consider in monitoring board performance.Originality/value – This article is of particular value to CEOs and other board members.