Michael K. Bednar

Connecting the Dots: Bringing External Corporate Governance into the Corporate Governance Puzzle

AbstractCorporate governance (CG) research has largely focused on internal governance mechanisms (i.e. the board of directors, controlling owners, and managerial incentives). However, much of this ...

Burr Under the Saddle: How Media Coverage Influences Strategic Change

In this paper we introduce a new antecedent to the strategic change literature by examining the effect of media coverage on the extent of strategic change. Specifically, we examine how negative media coverage may prompt firms to make changes to their resource allocations and then explore how the makeup of the board and firm performance can moderate this relationship. We develop a theoretical framework to explain why media coverage may affect strategic change and then test our theory with a longitudinal analysis of 250 firms over a four-year period. The empirical results lend support to our theory of media influence on strategic change and suggest that the evaluations of firms by outside constituents may influence the decision making of executives.

Are Boards Designed to Fail? The Implausibility of Effective Board Monitoring

Abstract In this review, we challenge the idea that directors are well positioned to be effective monitors of management. Moving beyond the logic of incentives and ability, we conceptualize a model based on the premise of boards as groups of individuals obtaining, processing and sharing information and explain how variation in information-processing demands at the director, board and firm level may challenge effective monitoring. We draw on multiple theoretical perspectives to identify these barriers to effective board monitoring. Our goal in reviewing these barriers is to help us take stock of existing research in corporate governance and to better explain board behavior beyond traditional agency and resource dependency accounts. We also aim to uncover gaps in the conceptual and empirical research and suggest areas of fruitful future research.

Social Comparison and Reciprocity in Director Compensation

In this article, we develop theory regarding one set of mechanisms through which increases in the compensation of directors are transmitted throughout the director labor market. In a longitudinal study using director compensation data from 1996 to 2005, we test hypotheses about how directors’ use of social comparison processes, and reciprocity between CEOs and the board, drive up the compensation level for boards of directors. Specifically, we argue and find that directors’ home firms and interlocked boards serve as salient comparison groups for board members.

Changing of the Guard: Shifting the Conversation Surrounding CEO Turnover

The importance of CEO turnover for organizations is well established. Indeed, CEO turnover is inevitable in organizations and can have a significant impact on firm outcomes. Given its importance, r...