Board performance in a post Sarbanes-Oxley environment: An examination of the relationships among board processes, board intellectual capital and board changes

by Wolf, Patricia M., Ph.D., CAPELLA UNIVERSITY, 2007, 144 pages; 3288788

Abstract:

Corporate governance research has predominantly focused on investigating board structure, board processes and board independence relative to effective organizational performance. Current academic theories have not been able to fully explain how effective boards operate, and thus far, the prevalent academic constructs used to develop recent legislative and regulatory reforms have yet to be empirically confirmed. New theoretical models and conceptual frameworks which, to date have not been tested against a governance framework are beginning to emerge that explore relationships among organizational performance, managerial effectiveness and intellectual capital. The purpose of this quantitative relational study was to determine: (a) Whether a relationship exists between changes made to U.S. Corporate Board processes as a result of corporate reform (Sarbanes-Oxley Act of 2002) and effective board performance, (b) If a correlation exists between board processes and effective board performance, and (c) To what extent (if at all) does a relationship exist between the board's intellectual (human) capital and effective board performance. To help define and measure, as well as evaluate, effective board performance, this study viewed corporate governance and board performance through the conceptual lens of knowledge management and intellectual capital. Firms listed in the S&P 500 for years 2000 and 2006, pre and post Sarbanes-Oxley are investigated. This study found: a significant relationship between changes made to U.S. Corporate Board processes as a result of corporate reform (Sarbanes-Oxley Act of 2002) and effective board performance; a correlation between one of the board processes, CEO succession planning and effective board performance for years, 2000 and 2006; and relationships between certain elements of a board's intellectual (human) capital and effective board performance. With legislative and corporate reforms now firmly in place, an opportunity exists to shift current academic paradigms and view corporate governance through a more holistic lens. Shifting the focus away from theories in isolation, such as the agency theory and moving towards exploring the relationships between a board's intellectual capital (human, structural, social and cultural) and performance may yield a better understanding of the factors that influence good governance, and identify ways to improve the performance of the board.

AdviserJudith L. Forbes
SchoolCAPELLA UNIVERSITY
Source TypeDissertation
SubjectsAccounting; Management
Publication Number3288788

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