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

Research output: Contribution to journalArticle

15 Scopus citations

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

Keywords

  • agency conflicts
  • board committees
  • boards
  • executive compensation
  • monitoring

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

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