Ian Gregory-Smith

Appointments, Pay and Performance in UK Boardrooms by Gender

This article uses UK data to examine issues regarding the scarcity of women in boardroom positions. The article examines appointments, pay and any associated productivity effects deriving from increased diversity. Evidence of gender-bias in the appointment of women as non-executive directors is found together with mixed evidence of discrimination in wages or fees paid. However, the article finds no support for the argument that gender diverse boards enhance corporate performance. Proposals in favour of greater board diversity may be best structured around the moral value of diversity, rather than with reference to an expectation of improved company performance.

FIRED OR RETIRED? A COMPETING RISKS ANALYSIS OF CHIEF EXECUTIVE TURNOVER*

We apply duration analysis to model the tenure and mode of exit of CEOs from FTSE 350 companies from 1996-2005, a decade in which corporate governance reforms have sought to increase the accountability of the CEO to shareholders and their representatives on the board. We find a greater likelihood of dismissal in the latter part of the period. However, we also find that the likelihood of forced departure sharply decreases from the fifth year of a CEOs tenure. We find evidence that this is because CEOs who survive beyond year four are able to entrench themselves in their position.

Chief Executive Pay and Remuneration Committee Independence

This article tests the impact of remuneration committee independence on Chief Executive (CEO) pay. FTSE350 companies between 1996 and 2008 are used to assess whether remuneration committees facilitate optimal contracting or whether CEOs capture the pay�?setting process and inflate their own remuneration. This panel has a number of advantages over prior samples and, in particular, contains a more comprehensive assessment of non�?executive directors’ independence. No evidence of a relationship between CEO pay and director independence is found, challenging the theory of managerial power and the received wisdom of institutional guidance.This article tests the impact of remuneration committee independence on Chief Executive (CEO) pay. FTSE350 companies between 1996 and 2008 are used to assess whether remuneration committees facilitate optimal contracting or whether CEOs capture the pay-setting process and inflate their own remuneration. This panel has a number of advantages over prior samples and, in particular, contains a more comprehensive assessment of non-executive directors’ independence. No evidence of a relationship between CEO pay and director independence is found, challenging the theory of managerial power and the received wisdom of institutional guidance.

CEO Pay and Voting Dissent Before and After the Crisis

‘Say on pay’ – that is empowering shareholders to vote on the remuneration arrangements of their firms senior executives – has become an international policy response to the perceived explosion in rewards for top management. In this study, we examine the operation of say in pay in the UK, the country which pioneered its adoption, using the population of non-investment trust companies in the FTSE 350 over the period 2003–12. We find that executive remuneration and dissent on the remuneration committee report are positively correlated. However, the magnitude of this effect is small. We find that dissent plays a role in moderating future executive compensation levels, although this effect is restricted to levels of dissent above 10%, and primarily acting upon the higher quantiles of rewards.

Uncertainty of outcome or strengths of teams: an economic analysis of attendance demand for international cricket

A significant body of theoretical literature has argued that popular interest in sporting contests between teams is heavily influenced by how difficult it is to predict the result ex-ante. Empirical research has, however, been unable to reach a consensus on the magnitude of uncertainty of outcome on demand. In this article, we seek to resolve this impasse by distinguishing between uncertainty of outcome in the short run and uncertainty of outcome in the long run. We also show that it is important to control for the independent effect of absolute team strength when testing the uncertainty of outcome hypothesis. Using data on over 380 Test cricket matches played in England, Australia and New Zealand since 1980, we find that short-run uncertainty of outcome has a significant impact on attendance demand and that absolute team strength has better explanatory power for attendance demand than does long-run uncertainty of outcome. Our results suggest some policy implications for the management and organization of international cricket.

Symbolic management and the glass cliff: Evidence from the boardroom careers of female and male directors

This paper uses archival board data to demonstrate that women who take positions as directors of UK companies have shorter tenures than their male counterparts. The authors show that female directors face a much higher risk of dismissal as they approach nine years of service on the board, when their long service deprives them of the all-important classification as ‘independent’. At this point, their position on the board becomes precarious. Male directors do not suffer the same increase in boardroom exit. This gender-specific difference is clearly shown to be linked to the independence status. It is argued that these observations are consistent with the notion that female directors are being used in the symbolic management of corporate governance and that, at nine years, when the cloak of independence disappears, women directors are then exposed to the biases that arise from role congruity issues.

Symbolic Management and the Glass Cliff

This paper uses archival board data to demonstrate that women who take positions as directors of UK companies have shorter tenures than their male counterparts. The authors show that female directors face a much higher risk of dismissal as they approach nine years of service on the board, when their long service deprives them of the all-important classification as ‘independent’. At this point, their position on the board becomes precarious. Male directors do not suffer the same increase in boardroom exit. This gender-specific difference is clearly shown to be linked to the independence status. It is argued that these observations are consistent with the notion that female directors are being used in the symbolic management of corporate governance and that, at nine years, when the cloak of independence disappears, women directors are then exposed to the biases that arise from role congruity issues.

Managerial Decision Making Under Uncertainty: The Case of Twenty20 Cricket

We consider managerial decision making by examining the impact of decisions taken by cricket captains on Twenty20 International (T20I) match outcomes. In particular, we examine whether pressure from external commentators is associated with suboptimal decision making by captains. Using data from over 300 T20I matches, we find little evidence that either winning the toss or choosing to bat first improves the likelihood of winning. Despite this, we find that captains in T20I cricket are significantly more likely to choose to bat rather than bowl after winning the toss, a finding that is consistent with social pressure constraining captains’ decision making.

Testing the Participation Constraint in the Executive Labour Market

This paper tests the participation constraint by examining the workings of the executive labour market in a panel of UK listed companies over a period of 14 years. Directors are found to move jobs regularly – both within companies and between companies. Consistent with agency theory, directors who are underpaid relative to their comparable peers are particularly likely to leave for higher paying jobs in other companies. Those who move between companies secure more favourable terms than those who move within their firm – even when the move does not involve promotion, calling into question the managerial power perspective of this area of employment.

An Economic Analysis of Attendance Demand for One Day International Cricket

The future of One Day International (ODI) cricket has come under scrutiny following increasing competition from other formats of cricket. We identify trends in attendance demand by examining over 540 ODI matches played in Australia and England between 1981 and 2015. We use fixed effects and Tobit random effects models to isolate key determinants of attendance demand for ODI cricket and, in particular, the impact of uncertainty of outcome. We find that team strength has little independent effect on ODI attendances, but the uncertainty of the match outcome, as measured by the relative strengths of the teams over a long period of time, increases demand for ODI matches in England. Further, organising the ODI as a day/night (floodlit) game has a large positive impact on attendance in Australia.