Does one size fit all? A configurational approach to board effectiveness in limiting the excess cash

Purpose The study, by focusing on a context dominated by firms with a concentrated ownership, in which type-II agency problems (principal-principal conflicts) may occur, aims to depict which board configurations may be effective in protecting minority shareholders by mitigating the risk of controlli...

Full description

Saved in:
Bibliographic Details
Published in:Management decision 2021-12, Vol.59 (13), p.136-163
Main Authors: Brogi, Marina, Gallucci, Carmen, Santulli, Rosalia
Format: Article
Language:English
Subjects:
Boards of directors
Corporate governance
Costs
COVID-19
Directors
Family owned businesses
Fuzzy sets
Investigations
Liquid assets
Liquidity
Opportunity costs
Public companies
Stockholders
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Purpose The study, by focusing on a context dominated by firms with a concentrated ownership, in which type-II agency problems (principal-principal conflicts) may occur, aims to depict which board configurations may be effective in protecting minority shareholders by mitigating the risk of controlling shareholders' expropriation via cash holdings.Design/methodology/approach The research adopts a configurational approach and empirically conducts a fuzzy set/qualitative comparative analysis on a sample of 268 Italian listed companies.Findings The analysis depicts three combinations of board configurations and ownership structures that can be considered effective, namely Active Independent Control, Female Active Control and Double Internal Control.Originality/value The study revisits the topic of the risk of expropriation via cash holdings in a type-II agency problem framework and delineates the meaning of board effectiveness in a mature context ruled by family firms, like Italy. Furthermore, by drawing on a configurational approach, it overcomes the causality relationship between each board characteristic and cash holdings policies and reasons from a “bundle” perspective.
ISSN:0025-1747
1758-6070
DOI:10.1108/MD-08-2020-0999