Board committees and corporate outcomes

Abstract

This thesis seeks to extend the existing knowledge of the role of outside directors who are active executives in other firms on corporate board committees. The first paper comprehensively reviews the literature regarding advising/monitoring committees and corporate outcomes. Using the systematic literature review method, 421 articles from 112 journals that were published between 1992 and 2018 were reviewed. The main findings are as follows. First, and theoretically, agency theory was the most dominant applied theory, whilst the application of integrated theoretical frameworks was lacking in the reviewed articles. Second, the existing empirical evidence has focused excessively on (i) monitoring instead of advisory committees and (ii) observable rather than less visible committee attributes. Third, scarcity of cross-country studies along with methodological limitations relating to measurement inconsistencies and insufficiency/opacity of variables, among others, were identified. Finally, promising future research avenues have been outlined.
Departing from the existing evidence, the second paper investigated the effect of advisory (ADVAE) and monitoring (MONAE) directors who are active executives in other firms on executive compensation. Using one of the largest UK samples to date, consisting of 10,925 firm-years, covering a period of 20 years (1999-2018), the empirical findings are as follows. The findings suggested that MONAE are associated with (i) higher executive (a) raw and (b) excess pay levels, and (ii) lower future financial performance. However, the findings indicated that ADVAE are not significantly associated with any of these corporate consequences.
The third paper investigated the impact of ADVAE and MONAE on corporate tax avoidance. Based on a large sample of UK firms over the 1999-2018 period, this paper reported several empirical findings. The findings indicated that MONAE have a nonsignificant relationship with corporate tax avoidance. However, the findings showed that ADVAE are positively and significantly related to corporate tax avoidance. Further analysis shows that firm complexity moderates the ADVAE-tax avoidance relationship but not the MONAE-tax avoidance relationship.

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Identifiers

ORCID for Mohammed Abdulaziz M Alhossini: orcid.org/0000-0001-8523-3265

ORCID for Collins Ntim: orcid.org/0000-0002-1042-4056

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