Commanding board of director attention: investigating how organizational performance and CEO duality affect board members' attention to monitoring

Boards of directors' attention to monitoring represents an understudied topic in corporate governance. By analyzing hundreds of board meeting transcripts, we find that board members do not maintain constant levels of attention toward monitoring, but instead selectively allocate attention to the...

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Bibliographic Details
Published in:	Strategic management journal 2010-09, Vol.31 (9), p.946-968
Main Authors:	Tuggle, Christopher S., Sirmon, David G., Reutzel, Christopher R., Bierman, Leonard
Format:	Article
Language:	eng
Subjects:	Allocations attention-based view Board of directors Boards of directors Business audits Business management Business structures CEO duality Chief executive officers Corporate governance Corporate strategies Deviation Financial performance Management science Meetings monitoring Organizational behaviour Planning methods power Prospect theory Strategic management Studies
Online Access:	Get full text
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Summary:	Boards of directors' attention to monitoring represents an understudied topic in corporate governance. By analyzing hundreds of board meeting transcripts, we find that board members do not maintain constant levels of attention toward monitoring, but instead selectively allocate attention to their monitoring function. Drawing from the attention-based view, prospect theory, and the literature on power, we find that deviation from prior performance and CEO duality affect this allocation. Specifically, while negative deviation from prior performance increases boards' attention to monitoring, positive deviation from prior performance reduces it. The presence of duality also reduces the boards' allocation of attention to monitoring. Additional analysis demonstrates that the effects of duality are realized in part by the CEO-chair's control of the meeting's agenda and location. Finally, the results show that duality and deviation from prior performance interactively affect boards' attention to monitoring. In total, we find that board members do not consistently monitor management in order to protect shareholder value, a proposition often assumed within governance research; rather, our results demonstrate that board members' monitoring behaviors are contextually dependent. The contextual dependency of board attention to monitoring suggests that additional efforts may be needed to ensure the protection of shareholders' interests.
ISSN:	0143-2095 1097-0266