Abstract
Increasing regulatory pressures have created specialization within boards, with more requirements and responsibilities being refocused to the committee level. Using data from S&P 1,500 firms, we find that board committee overlap associated with linking pin directors (i.e., those serving simultaneously on the audit and compensation committees) is an important conduit for knowledge transfer between boards' monitoring and incentive alignment functions. These directors are associated with lower executive compensation and influence pay mix. In studying the dynamics behind this process, we find that newly created linking pins improve monitoring effectiveness whereas recently dissolved linking pins decrease it. We also find that linking pins are all the more important when managers make less conservative accounting choices.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 964-981 |
| Number of pages | 18 |
| Journal | Strategic Management Journal |
| Volume | 37 |
| Issue number | 5 |
| DOIs | |
| State | Published - May 1 2016 |
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Keywords
- agency conflicts
- board committees
- boards
- executive compensation
- monitoring
ASJC Scopus subject areas
- Business and International Management
- Strategy and Management
Cite this
I know something you don't know! The role of linking pin directors in monitoring and incentive alignment. / Brandes, Pamela; Dharwadkar, Ravi; Suh, Sanghyun.
In: Strategic Management Journal, Vol. 37, No. 5, 01.05.2016, p. 964-981.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - I know something you don't know!
T2 - The role of linking pin directors in monitoring and incentive alignment
AU - Brandes, Pamela
AU - Dharwadkar, Ravi
AU - Suh, Sanghyun
PY - 2016/5/1
Y1 - 2016/5/1
N2 - Increasing regulatory pressures have created specialization within boards, with more requirements and responsibilities being refocused to the committee level. Using data from S&P 1,500 firms, we find that board committee overlap associated with linking pin directors (i.e., those serving simultaneously on the audit and compensation committees) is an important conduit for knowledge transfer between boards' monitoring and incentive alignment functions. These directors are associated with lower executive compensation and influence pay mix. In studying the dynamics behind this process, we find that newly created linking pins improve monitoring effectiveness whereas recently dissolved linking pins decrease it. We also find that linking pins are all the more important when managers make less conservative accounting choices.
AB - Increasing regulatory pressures have created specialization within boards, with more requirements and responsibilities being refocused to the committee level. Using data from S&P 1,500 firms, we find that board committee overlap associated with linking pin directors (i.e., those serving simultaneously on the audit and compensation committees) is an important conduit for knowledge transfer between boards' monitoring and incentive alignment functions. These directors are associated with lower executive compensation and influence pay mix. In studying the dynamics behind this process, we find that newly created linking pins improve monitoring effectiveness whereas recently dissolved linking pins decrease it. We also find that linking pins are all the more important when managers make less conservative accounting choices.
KW - agency conflicts
KW - board committees
KW - boards
KW - executive compensation
KW - monitoring
UR - http://www.scopus.com/inward/record.url?scp=84945207906&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84945207906&partnerID=8YFLogxK
U2 - 10.1002/smj.2353
DO - 10.1002/smj.2353
M3 - Article
AN - SCOPUS:84945207906
VL - 37
SP - 964
EP - 981
JO - Strategic Management Journal
JF - Strategic Management Journal
SN - 0143-2095
IS - 5
ER -