Board vigilance, director experience, and corporate outcomes

Agency-based studies of boards of directors address factors relevant to board vigilance with respect to the monitoring of senior managers. We argue that relying solely on director vigilance may be limiting because vigilance without relevant experience is unlikely to ensure board effectiveness. Our c...

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Bibliographic Details
Published in:Strategic management journal 2008-04, Vol.29 (4), p.363-382
Main Authors: Kroll, Mark, Walters, Bruce A., Wright, Peter
Format: Article
Language:English
Subjects:
Acquisitions
Board of directors
Boards of directors
Business management
Business structures
Business studies
Chief executive officers
Corporate acquisitions
Corporate governance
Corporate strategies
Directors
Experiential learning
Knowledge acquisition
Management science
Musical agency
Outside directors
Senior management
Shareholders
Studies
Target acquisitions
Upper management
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Summary:Agency-based studies of boards of directors address factors relevant to board vigilance with respect to the monitoring of senior managers. We argue that relying solely on director vigilance may be limiting because vigilance without relevant experience is unlikely to ensure board effectiveness. Our contention is that boards comprising vigilant directors, as well as directors with appropriate knowledge gained through experience, not only will be better monitors, but also more useful advisors to top managers. The focus of our study is on the effect on acquisition outcomes of the interaction of board vigilance and director experiential learning. Consistent with our expectations, the empirical findings indicate that vigilant boards rich in appropriate experience are associated with superior acquisition outcomes.
ISSN:0143-2095
1097-0266
DOI:10.1002/smj.649