Jill A. Brown

Under the spotlight: institutional investors and firm responses to the Council of Institutional Investors' Annual Focus List

This article looks at how a negative third-party quality signal, in the form of external monitoring of firm performance by an investor group, prompts a response from both institutional investors and the firms publicly identified as poor performers. Using a sample of 93 firms placed on the Focus List of the Council of Institutional Investors from 2000 to 2005 and a comparison group of 96 firms in the bottom quartile in stock performance from the S&P500, the authors find that institutional investors respond to this negative third-party signal by reducing their holdings in firms that received this public repudiation. However, this reduction in holdings is moderated by the independence of the board of the targeted firm. This result suggests institutional investors pay particular attention to the governance characteristics of underperforming firms. Lastly, the authors found that targeted firms with more independent boards respond by increasing the intensity of incentives of the CEO, thus signaling their responsiveness to investor concerns.

Do Investors Care About Director Tenure? Insights from Executive Cognition and Social Capital Theories

Governance scholars debate the value of directors as an effective governance mechanism. We suggest that this value varies with director tenure. We study both how shareholder assessments of the value of individual directors vary with director tenure and whether director tenure actually makes a practical difference to governance effectiveness. Using data from abnormal stock price reactions to the sudden deaths of 274 outside directors, and integrating executive cognition and social capital perspectives applied to the dual roles of director monitoring and advising, our results confirm a curvilinear relationship between the assessed value of directors and tenure. We find that directors are more highly valued by investors over a tenure period between 7 and 18 years, moderated by director involvement on key committees. Further, in examining the S&P 1,500, we find that a one standard deviation increase in the percentage of outside directors in this prime tenure period strengthens the CEO pay-performance linkage ...

University Scientists’ Choice to Commercialize their Discoveries

We extend the literature on scientific discovery and commercialization by examining entrepreneurial action by university-based scientists. Specifically, we investigate the decision process and the paths to commercialize academic technologies. University-based technology transfer involves multiple stakeholders with competing interests; hence, we believe researchers should apply a multilevel theoretical lens, which starts with the disclosure of discoveries made by scientists in their labs. We build a multilevel framework that views the scientists’ choice to first disclose viable discoveries to pursue entrepreneurial action as a function of three factors: (i) a scientists rent orientation, (ii) a universitys rent doctrine, and (iii) the rent doctrine of the scientific field in which the scientist conducts research. We suggest that commercial disclosure most often occurs when there is alignment between these three factors. Lastly, we advance an agenda for future empirical research by developing specific propositions about the key constructs and relationships concerning university-based entrepreneurial action.

Board Socio-Cognitive Decision-Making and Task Performance Under Heightened Expectations of Accountability

This study examines how heightened expectations of board responsibility and accountability affect the socio-cognitive decision-making of boards and their collective task performance. Using data from the directors of 60 boards who served before and after the enactment of Sarbanes–Oxley, this study provides insight into the potential negative impact that this tightened accountability environment can have on a board’s task performance. Examining several socio-cognitive elements of board decision-making, board authority is found to have a positive main effect on board task performance, while relative CEO power and affective conflict have curvilinear relationships with board task performance. Cohesiveness also moderates the relationship between a board’s perceived uncertainty and affective conflict with board task performance. In sum, the model shows how a new era of director accountability can affect the social cognitions of board decision-making that underlie board task performance.

Shareholder Democracy as a Misbegotten Metaphor

The rise in corporate scandals and the dawning of the great recession motivated frustrated shareholders to seek greater power in order to influence the actions of the firms in which they own equity. Shareholder democracy has become the umbrella term for these shareholder empowerment efforts.1 Shareholder democracy is a worldwide movement (Fairfax, 2008a) that, having achieved a foothold in the United States, is gaining ground in Canada (Veall, 2012) and Europe (Rose, 2012). Although recently reinvigorated, this shareholder democracy movement is not new. The concept dates back to shortly after World War II, when Lewis Gilbert popularized the concept in the United States. Emerson and Latcham (1954: 152) later argued that “vigorous shareholder participation” was in keeping with democratic values. Mintzberg (1983) contributed a similar argument, contending that a country can only consider itself to be free if its major institutions subscribe to democratic principles. Arguments in favor of shareholder democracy have ranged from protecting society from corporate power to protecting shareholders from managerial abuse to protecting the rights of shareholders to shape their own destinies (Tsuk Mitchell, 2006). These arguments have taken hold as the shareholder democracy movement has pushed successfully for shareholder empowerment at annual meetings, SEC policy changes, and legislative developments that all have led to greater direct shareholder influence over corporate practices (Cohen & Schleyer, 2012).2

The Protection And Deployment Of Financial Innovation

Prevailing theory suggests that firms that effectively protect technological discoveries from emulation will create and capture value. Despite its importance, little research has examined the specific mechanisms of how to protect technological discoveries, and have heretofore emphasized the importance of inherent resource attributes to limit competitor emulation. Using a sample of financial patents, we test theory regarding the effects of resource attributes and deployment mechanisms on resource-based emulation. Results indicate both resource attributes and deployment affect competitor action. However, the timing of emulation often depends upon contextual factors. Thus, resource deployment actions are critical to erecting sustainable resource barriers.

Corporate Social Responsibility: A Review of Current Concepts, Research, and Issues

The purpose of this chapter is to introduce and provide an overview of the topic of corporate social responsibility (CSR). The approach is to present an introduction to the importance of the topic and a review of the concept’s evolution and development which includes an exploration of the topic’s meaning and competing and complementary frameworks which are related. Among these related concepts are the following: business ethics, stakeholder management, sustainability, corporate citizenship, creating shared value, conscious capitalism, and purpose-driven business. These concepts are frequently used interchangeably with CSR, and they have more in common than differences. At their core, each embraces value, balance, and accountability. The chapter also explores a number of key research avenues that are quite contemporary. Among these, the following topics are addressed: political CSR; the CSP–CFP relationship and business case for CSR; upstream/downstream CSR; CSR in emerging economies, corporate social activism, and corporate social irresponsibility. In the final analysis, it is argued that the topic of CSR continues to be on an upward and sustainable trajectory in both conceptual development and practice.

Managing Co-opetition for Shared Stakeholder Utility in Dynamic Environments:

The U.S. health care industry, like many industries, continues to face the need to adapt to new realities stemming from dynamic changes in the external environment. Some nonprofit hospitals have converted to integrated nonprofit/for-profit structures, fostering intra-firm co-opetition, that is, simultaneous cooperation and competition between units. This article examines this phenomenon and provides recommendations regarding controls and incentives that can help administrators actively manage co-opetition and promote shared utility between units. In industries where talent-intensive human capital competes for common resources and revenues, co-opetition can be a strategic tool to navigate competitive forces.