When does ownership matter? Board characteristics and behavior

Kurt A. Desender; Ruth V. Aguilera; Rafel Crespi; Miguel García-Cestona

doi:10.1002/smj.2046

When does ownership matter? Board characteristics and behavior

Kurt A. Desender, Ruth V. Aguilera, Rafel Crespi, Miguel García-Cestona

Grup de Recerca d'Eficiència i Competitivitat Empresarial - Business Eficiency and Competitiveness Group

Research output: Contribution to journal › Article › Research › peer-review

208 Citations (Scopus)

Abstract

We develop a contingency approach to explain how firm ownership influences the monitoring function of the board - measured as the magnitude of external audit fees contracted by the board - by extending agency theory to incorporate the resource dependence notion that boards have distinct incentives and abilities to monitor management. Analyses of data on Continental European companies reveal that while board independence and audit services are complementary when ownership is dispersed, this is not the case when ownership is concentrated - suggesting that ownership concentration and board composition become substitutes in terms of monitoring management. Additional analysis shows that the relationship between board composition and external audit fees is also contingent upon the type of the controlling shareholder. Copyright © 2013 John Wiley & Sons, Ltd.

Original language	English
Pages (from-to)	823-842
Journal	Strategic Management Journal
Volume	34
Issue number	7
DOIs	https://doi.org/10.1002/smj.2046
Publication status	Published - 1 Jul 2013

Keywords

audit
board of directors
corporate governance
monitoring
ownership structure

Access to Document

10.1002/smj.2046

Cite this

@article{2cbd5a20cf84484e87242168534f4366,

title = "When does ownership matter? Board characteristics and behavior",

abstract = "We develop a contingency approach to explain how firm ownership influences the monitoring function of the board - measured as the magnitude of external audit fees contracted by the board - by extending agency theory to incorporate the resource dependence notion that boards have distinct incentives and abilities to monitor management. Analyses of data on Continental European companies reveal that while board independence and audit services are complementary when ownership is dispersed, this is not the case when ownership is concentrated - suggesting that ownership concentration and board composition become substitutes in terms of monitoring management. Additional analysis shows that the relationship between board composition and external audit fees is also contingent upon the type of the controlling shareholder. Copyright {\textcopyright} 2013 John Wiley & Sons, Ltd.",

keywords = "audit, board of directors, corporate governance, monitoring, ownership structure",

author = "Desender, {Kurt A.} and Aguilera, {Ruth V.} and Rafel Crespi and Miguel Garc{\'i}a-Cestona",

year = "2013",

month = jul,

day = "1",

doi = "10.1002/smj.2046",

language = "English",

volume = "34",

pages = "823--842",

journal = "Strategic Management Journal",

issn = "0143-2095",

publisher = "John Wiley and Sons Ltd",

number = "7",

}

TY - JOUR

T1 - When does ownership matter? Board characteristics and behavior

AU - Desender, Kurt A.

AU - Aguilera, Ruth V.

AU - Crespi, Rafel

AU - García-Cestona, Miguel

PY - 2013/7/1

Y1 - 2013/7/1

N2 - We develop a contingency approach to explain how firm ownership influences the monitoring function of the board - measured as the magnitude of external audit fees contracted by the board - by extending agency theory to incorporate the resource dependence notion that boards have distinct incentives and abilities to monitor management. Analyses of data on Continental European companies reveal that while board independence and audit services are complementary when ownership is dispersed, this is not the case when ownership is concentrated - suggesting that ownership concentration and board composition become substitutes in terms of monitoring management. Additional analysis shows that the relationship between board composition and external audit fees is also contingent upon the type of the controlling shareholder. Copyright © 2013 John Wiley & Sons, Ltd.

AB - We develop a contingency approach to explain how firm ownership influences the monitoring function of the board - measured as the magnitude of external audit fees contracted by the board - by extending agency theory to incorporate the resource dependence notion that boards have distinct incentives and abilities to monitor management. Analyses of data on Continental European companies reveal that while board independence and audit services are complementary when ownership is dispersed, this is not the case when ownership is concentrated - suggesting that ownership concentration and board composition become substitutes in terms of monitoring management. Additional analysis shows that the relationship between board composition and external audit fees is also contingent upon the type of the controlling shareholder. Copyright © 2013 John Wiley & Sons, Ltd.

KW - audit

KW - board of directors

KW - corporate governance

KW - monitoring

KW - ownership structure

U2 - 10.1002/smj.2046

DO - 10.1002/smj.2046

M3 - Article

SN - 0143-2095

VL - 34

SP - 823

EP - 842

JO - Strategic Management Journal

JF - Strategic Management Journal

IS - 7

ER -

When does ownership matter? Board characteristics and behavior

Abstract

Keywords

Access to Document

Fingerprint

Cite this