Why do Boards Differ? Because Owners Do: Assessing Ownership Impact on Board Composition

摘要

Manuscript Type: Empirical Research Question/Issue: Does the ownership structure of a firm, specifically the aggregation of the different ownership types within each firm, relate with the composition of its board? Research Findings/Insights: Using archival data from a sample comprising 1,487 U.S. firms, we find that the composition of the individual profiles of directors on corporate boards (i.e., independent, affiliated, or insider) match a firm's aggregated ownership configuration (institutional, corporate parent, family-entrepreneur control) even after parsing out the impact of CEO characteristics, firm size, and performance. Further analyses elaborate on the specific relationship between each director profile and ownership types present within the firm. Theoretical/Academic Implications: This study builds upon three conceptual perspectives: agency, resource dependency, and behavioral. We argue that each type of ownership has differing imperatives and may prefer different types of directors to fulfill their governance needs. The paper illustrates that the relationship between corporate governance, specifically board composition, and ownership is a comprehensive phenomenon that is best understood through multiple theoretical lenses. Practitioner/Policy Implications: This study shows that ownership and board composition are not substitutable governance mechanisms as commonly understood, but might be complementary mechanisms. A finding that governance mechanisms are complementary implies that regulatory or institutional pressures to modify board composition with the addition of directors with similar profiles may affect the governance in unforeseen ways.