This study examines small business owners at small firms in Västerbotten’s perception on board composition, board diversity and the role of the board together with its impact on firm performance. We were interested in knowing what kind of characteristics these firms are looking for in their board composition and explore their attitudes towards their choice ofinside or outside directors, and also the impact of homogeneity and heterogeneity in theboard. Further, we wanted to examine the general role of the board in small firms and get insight on whether the small business owners believe this had any impact on firm performance or not. The subject of board of directors can be found within the field of corporate governance, in which it has a central role. Existing literature on the subject left a gap of knowledge on board of directors in small firms, from which the opportunity of research was found. Since a vast amount of firms on the Swedish market are small firms, this subject is of significant meaning for understanding and gaining insight into how small business owners in these firms view the board of directors. To get a deeper view into the subject we explored if any differences were detectable between three different industries, and the selected industries were; IT, transportation and construction. This qualitative study was conducted by using a semi-structured interview technique. The objectives of having a qualitative study was to obtain in-depth understandings and perceptions from the participants in order to answer our research questions; What kind of characteristics are small business owners looking for when selecting new board members, what type of different resources can different types of directors bring, and what impact do small business owners believe this has on firms’ performance? The findings from this study revealed that small business owners at small firms in Västerbotten did not value and use the board in the same extent as larger firms had been found to do in other empirical studies. However, indications were found among our sample that small firms in the IT industry uses their boards in another way than other firms do. Moreover, it was of common occurrence that small firms only have one singe director on their boards both due to that they have a board solely due to legal reasons and also due to that the owners, which is also the directors in these firms, does not want to reduce their level of control over the firm. Overall, the impression from the participants’ perceptions and views were that the board was not used in the way it could be and that for many small firms the costof recruiting more directors is too high.

CEO duality has been the subject of debate for over twenty years and shows no signs of abating. With conflicting theoretical and empirical evidence underpinning the debate the practice has fluctuated, investor perception of board leadership structure has altered, international regulation has reacted, scholarly conceptualizations of duality have become overly complex, and the need to understand duality and conclude the debate has increased. This thesis explores duality in listed corporations and aims to form an appropriate solution to end the dichotomy. My solution requires one to confront misunderstandings which have led to a traditional insistence towards structural reform and prolonged the contentious debate, and recognize an underlying contention which needs to be resolved to bring finality to the debate. I argue finality is possible if a process oriented approach is adopted and corporations recognize the need to be technically equipped to deal with leadership structures in the modern corporate arena.

CEO duality has been the subject of debate for over twenty years and shows no signs of abating. With conflicting theoretical and empirical evidence underpinning the debate the practice has fluctuated, investor perception of board leadership structure has altered, international regulation has reacted, scholarly conceptualizations of duality have become overly complex, and the need to understand duality and conclude the debate has increased. This thesis explores duality in listed corporations and aims to form an appropriate solution to end the dichotomy. My solution requires one to confront misunderstandings which have led to a traditional insistence towards structural reform and prolonged the contentious debate, and recognize an underlying contention which needs to be resolved to bring finality to the debate. I argue finality is possible if a process oriented approach is adopted and corporations recognize the need to be technically equipped to deal with leadership structures in the modern corporate arena.

An analysis of company law may allow us to abandon a perception that company law is impartial to the political context in which it is applied. This paper argues that state protectionism is reflected in the design of company law. Specifically, states may confer public functions to board of directors through their duties and authorities; in turn, directors’ functions may become barriers to foreign investments. To illustrate this argument, focus is placed on the duties of Canadian corporate directors and how their functions affect foreign direct investment in Canada. It demonstrates that the public function conferred to corporate directors echoes the State’s policy and regulations governing foreign investment. As a consequence to the redundancy of the public interest rationalization and the lack of political will to affect real market openness, unnecessary barriers are being placed for market access which may ultimately render Canada less attractive for foreign investors.

An analysis of company law may allow us to abandon a perception that company law is impartial to the political context in which it is applied. This paper argues that state protectionism is reflected in the design of company law. Specifically, states may confer public functions to board of directors through their duties and authorities; in turn, directors’ functions may become barriers to foreign investments. To illustrate this argument, focus is placed on the duties of Canadian corporate directors and how their functions affect foreign direct investment in Canada. It demonstrates that the public function conferred to corporate directors echoes the State’s policy and regulations governing foreign investment. As a consequence to the redundancy of the public interest rationalization and the lack of political will to affect real market openness, unnecessary barriers are being placed for market access which may ultimately render Canada less attractive for foreign investors.

Prior studies document that board directors who fail to act as effective monitors of management are penalized by the labor market in the form of fewer subsequent board seats. However, there is little evidence on how the market rewards directors for exceptional advising and monitoring on corporate boards. In this paper, I use national director awards as a positive shock to directors’ reputations and examine changes in board seats for award-winning directors. Award-winning directors gain more board seats than non-winning directors, both after and before the awards. Event study tests suggest that the quality of award-winning directors may have been revealed to the labor market before the awards but not to the broader stock market. Stock market reactions to appointments of award-winning directors are positive and statistically significant only after the awards, not before.

Thesis first defines the term risk and risk management. Subsequently it sort number of risks according the needs of financial sector. It's dealing with particular phases of risk management, outlines tools and principles of corporate governance and explains internal control. It analyses the role of board of directors and various committees, their tasks and responsibilities. Sequentially it describes organizational structure of particular companies, introduces roles and responsibilities particular committees and summarizes mutual comparison of those companies.

Recent research has investigated the moderating effects of environmental characteristics on the relationships between top management team heterogeneities and firm performance but has given little attention to the moderating role of board composition. This study examines the moderating effects of the proportion of outside board membership on the relationships between top management team heterogeneities and firm performance. The upper echelons theory would contend that outside directors with their valuable resources (information, skills, and network) and the tendency to challenge and initiate cognitive conflicts with top management teams can improve the quality of strategic decision making process and firm performance. To test these predictions, it is hypothesized that the greater the proportion of outside directors, the more positive the relationship between top management team tenure heterogeneity, educational heterogeneity, functional background heterogeneity, and firm performance. Fortune 500 companies were chosen as the sample of the study. I utilized moderated hierarchical regression to analyze the data. The results do not support the predictions. Several theoretical and methodological issues are discussed.

As a CEO assumes an important role in an organization, his or her personality, with emphasis on arrogance, may affect a multitude of board members’ attitudes. This study gauges the effect of CEO arrogance on board members’ attitudes, which includes the engagement; cohesiveness; collaboration; job satisfaction; consensual decision making and desirability of the CEO. This investigation drew from existing literature that personality traits affect a leaders’ effectiveness in terms of group performance and followers’ satisfaction (Avolio, Gardner, Walumbwa, Luthans&May, 2004). Through experimental design, actual board meetings were simulated and CEO arrogance was manipulated, mainly by adapting the indicators from the Arrogance Scale in the Workplace developed by Johnson et al. (2010). Experiments were conducted in samples of MBA students and senior management consultants of roughly similar demographics. The findings confirmed that CEO arrogance has a detrimental effect on all the board members’ attitude. Arrogance accounted for almost 60 per cent of the board members’ attitudes ratings. This study is confirms that an arrogant CEO negatively affects the board member dynamics which are essential in maintaining an effective board. This urges the organizations to acquire non-arrogant CEOs to improve the organisation’s productivity. Alternatively, an organization can consider alternatives to dilute a CEO’s arrogance. / Dissertation (MBA)--University of Pretoria, 2012. / Gordon Institute of Business Science (GIBS) / unrestricted

As financial intermediaries, banks are "special" because they play an important role in transferring funds from surplus spending units to deficit spending units and serve as a channel of monetary policy. Therefore, the safety and soundness of banks is essential to the financial stability and economic development. This study investigates how bank governance mechanisms, namely, executive compensation and board of directors, affect bank safety. Given the unique nature that bank assets are opaque, bank governance is expected to be different from corporate governance of industrial firms. This study also investigates how the opaqueness nature of bank assets affects the compensation design of bank executives. Chapter 1 investigates the association between asset opacity and CEO pay-performance sensitivity of bank holding companies (BHCs). Contrary to the monitoring cost hypothesis according to which when information asymmetry is high firms rely more heavily on equity-based compensation, I find that when the share of opaque assets in total assets increases, pay-performance sensitivity in BHCs declines. This finding supports the view that when the share of opaque assets increases, managers can pursue risky projects to a greater extent in the interests of shareholders but at the expenses of bondholders, and, hence, the optimal compensation structure in BHCs with larger share of opaque assets has a lower pay-performance sensitivity to restrain managerial risk-taking incentives, reducing the conflicts of interests between shareholders and bondholders. The negative effect of asset opacity on pay-performance sensitivity is robust after accounting for the endogeneity of asset opacity and using various compensation measures. In addition, I find that higher pay-performance sensitivity generally leads to a greater share of opaque assets in total assets. The results of this study suggest that asset opacity is an important determinant of compensation structure in the banking industry. BHCs should use caution when using stocks and options to promote prudent risk taking under bank asset opacity conditions because opaque bank assets make risk-shifting behaviors induced by equity-based compensation difficult to monitor, threatening the bank stability. Regulators should also account for this opacity effect. Chapter 2 investigates the relationship between insolvency risk and executive compensation for BHCs over the 1992-2008 period. I employ CEO compensation sensitivity to risk (vega) and pay-share inequality between the CEO and other executives as measures of compensation and employ a simultaneous equation model to account for the endogeneity problem between vega and risk. Five main results are obtained. First, CEO compensations in BHCs have risen in response to deregulation to resemble those of the industrial firms. Second, higher vegas lead to greater bank instability. Third, the association between bank stability and managerial compensation is bi-directional; higher vegas induce greater risk and vice versa. Fourth, BHCs in the next to the largest-size group increase CEO vegas the most and have the strongest potential to create instability in the financial industry, such as the one witnessed in 2007-2009. Fifth, increased pay-share inequality has effects opposite to those of the increase in vega; greater pay-share inequality is associated with greater bank stability. Implications of executive compensation effects on instability for depositors, deposit insurers and regulators are drawn. Chapter 3 investigates the association between the structure of board of directors and risk taking of bank holding companies. I use the number of directors on the risk committee and the frequency of its meetings to measure the strength of risk management exercised by bank boards. Several interesting findings are obtained. First, banks with stronger risk committees, namely risk committees with a greater number of directors and more frequent meetings, are associated with more diversified loan portfolios, greater amounts of safer loans, less mortgage-backed securities, and lower market risk. These results continue to hold even after controlling for the possible endogeneity problem using the dynamic panel GMM estimator. Overall, these results suggest that stronger risk management by bank boards has a positive and significant impact on banks' safety and soundness. Second, the percentage of banks having a risk committee has been increasing steadily since 1999, suggesting bank boards have gradually taken a greater role in risk management and their fiduciary duties have expanded beyond shareholders to include depositors. However, less than half of bank boards have a risk committee before 2007, suggesting weak risk management at the top level and the possibility that bank boards may have failed to control the excessive risk-taking in the banking industry leading to the recent financial crisis. Finally, the percentage of banks with a risk committee is still less than 60% after the crisis, suggesting that depositors and bank supervisors could enhance the stability of banks by further improving the effectiveness of internal risk control at bank boards. / Business Administration/Finance