I know something you don't know! The role of linking pin directors in monitoring and incentive alignment

Research output: Contribution to journalArticle

12 Citations (Scopus)

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 languageEnglish (US)
Pages (from-to)964-981
Number of pages18
JournalStrategic Management Journal
Volume37
Issue number5
DOIs
StatePublished - May 1 2016

Fingerprint

Monitoring
Incentive alignment
Responsibility
Audit committee
Conservative accounting
Accounting choice
Executive compensation
Managers
Knowledge transfer
Compensation committees
Board committees

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 journalArticle

@article{4c7e85362c7e45538b6615f609c53264,
title = "I know something you don't know!: The role of linking pin directors in monitoring and incentive alignment",
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.",
keywords = "agency conflicts, board committees, boards, executive compensation, monitoring",
author = "Pamela Brandes and Ravi Dharwadkar and Sanghyun Suh",
year = "2016",
month = "5",
day = "1",
doi = "10.1002/smj.2353",
language = "English (US)",
volume = "37",
pages = "964--981",
journal = "Strategic Management Journal",
issn = "0143-2095",
publisher = "John Wiley and Sons Ltd",
number = "5",

}

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 -