Governance structures in the post asset restructuring period: responses by boards of directors and top managers to institutional pressures
Doctor of Philosophy (PhD)
Management (Business Administration)
This dissertation investigates two relationships between governance and portfolio restructuring. First, post-restructuring governance is addressed. Prior research suggests that firms restructure because of less than desirable performance, which results from managerial inefficiencies. Such inefficiencies are predominantly believed to be the result of inadequate governance. Research has never proven that governance is weak in the pre-restructuring period, yet this philosophy has become institutionalized. Thus, if governance is weak or a complete failure in the pre-restructuring period, then what changes do firms make in the post-restructuring period? Drawing on institutional and resource dependence theories, this dissertation addresses this issue by suggesting that modifications to governance structures in the post-restructuring period are greatest for those firms with poor performance in the pre-restructuring period. Specifically, these firms will adjust their governance structures to reflect socially valid indicators of sound governance. By changing governance structures that adhere to the prescriptions of rationalizing myths in the institutional environment, an organization might enhance its legitimacy and demonstrate that it is behaving on collectively valued purposes in a proper manner. The results revealed that the relationship between restructuring and governance is best characterized as direct, irrespective of firm performance. Restructuring was positively related to the proportion of outsiders on the board, and CEO, top management team, and board of director equity ownership in the post-restructuring period. The results also revealed an interaction effect between restructuring and CEO equity ownership, as well as a curvilinear relationship between restructuring and CEO duality. Second, this dissertation focuses on the impact of governance on the restructuring-performance relationship. Due to institutionalized beliefs about what constitutes sound governance, it is argued that firms will be positively rewarded if their firms possess socially valid indicators of governance because there is evidence that market valuations can be impacted by non-financial factors, such as governance structures. The results revealed that CEO duality negatively influences shareholder returns. Additionally, shareholders of restructuring firms were positively rewarded by holding ownership positions in firms with independent boards and boards with large ties to the environment. Discussions for both studies are offered, in addition to contributions, limitations, and areas for future research.
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Cashen, Luke Hendrik, "Governance structures in the post asset restructuring period: responses by boards of directors and top managers to institutional pressures" (2005). LSU Doctoral Dissertations. 2915.