Australian Journal of Management

We use the 2003 NYSE and NASDAQ listing rules for board independence as an exogenous shock to estimate the causal relation between board independence and the variability of firm performance. Using a difference-in-difference approach, we find that non-compliant firms without a majority of independent directors observe a larger decrease in the variability of firm performance than compliant firms. In particular, board independence is negatively associated with the variability of (1) monthly stock returns, (2) ROA, (3) Tobin’s Q, (4) analyst forecast inaccuracy, (5) accounting accruals, (6) extraordinary items, (7) capital expenditures, (8) cash holdings and (9) the frequency of acquisition activities. We conclude that increased board independence weakens the CEO’s power over the board and restrains corporate risk-taking; thus, decisions made by firms with more independent boards are less extreme, resulting in less variability of firm performance.

Exploiting the passage of the Sarbanes–Oxley Act (SOX) as an exogenous regulatory shock, we investigate whether board independence substitutes for external audit quality. Based on over 14,000 observations across 18 years, our difference-in-difference estimates show that firms forced to raise board independence are far less likely to employ a Big 4 auditor. In particular, board independence lowers the propensity to use a Big 4 auditor by approximately 38%. Firms with stronger board independence enjoy more effective governance and therefore do not need as much external audit quality as those with less effective governance do. Based on a natural experiment, our empirical strategy is far less vulnerable to endogeneity and is thus considerably more likely to show a causal effect, rather than merely an association.

Recent corporate governance guidelines have focused on the structure of the board of directors, with little recognition of the importance of director attendance at board and committee meetings. Director attendance is vital as prior studies show that director absences result in weaker monitoring of management and lower firm performance. This study examines whether directors learn from the attendance behavior of their board colleagues, thereby magnifying the scope and potential consequences of good or poor attendance practices. We find that director attendance is significantly positively related to their board colleagues attendance, including colleagues in the same firm and colleagues in other firms where the director holds other directorships. For policymakers, these results indicate that ongoing attention needs to be paid to the attendance practices of directors, with intervention required to ensure poor attendance practices do not become contagious.

This article examines the effect of carbon risk on firm performance, exploiting the Australia ratification of Kyoto Protocol in December 2007 as an exogenous shock. The article finds that polluters, firms in highest-emitting industries, experience a reduction in financial performance relative to controlling non-polluters subsequent to the ratification, and the effect is more pronounced among financially constrained firms. The results are robust to various definitions of polluters, measures of financial constraints, falsification tests on the timing of the Kyoto adoption and the impact of the Global Financial Crisis. The evidence suggests a negative association between carbon risk and firm performance.

Countries around the world spend substantial amounts of money on programmes designed to address social issues such as place-based disadvantage, health and aged care. Despite such huge investments, evidence shows that many of these social problems are complex and remain far from being resolved, and in some situations, they are worsening. To face these challenges, many organizations have turned to interorganizational collaboration as a more effective means of dealing with social issues. This exploratory qualitative study investigates a relatively new framework for tackling complex social challenges – Collective Impact. We show that while the interpretation and application of the Collective Impact framework varies, broad similarities can be found. We conclude that Collective Impact is best conceptualized as a method for network-based collaboration rather than a distinct methodology or philosophy, and emphasize the importance of the relational aspects of interorganizational collaboration.

This study investigates how both the amount of information provided in and the timing of new product preannouncements (NPPAs) influence firm value over the NPPA period, the new product introduction (NPI) period and in the long term, respectively. We adopt an information economics perspective, and signalling theory in particular, to motivate our tests. The findings show that the share price impact of the product information content varies over the different time horizons assessed. It is positive within the NPPA period and in the long term, but insignificant within the NPI period. The use of an early NPPA is associated with a negative impact on firm value across the NPPA, NPI and long-term horizons. We also test for moderating effects and show that earlier timing weakens the positive impacts of information amount on firm value both within the NPPA period and the long-term horizon.

Our study examines the interconnection between women’s workplace hierarchical relationships and their career decisions using relational cultural theory (RCT) and the kaleidoscope career model (KCM). The findings suggest that the quality of these relationships directly and indirectly affect women’s careers, particularly when the relationship is perceived as negative. This research critiques and extends the KCM by adding an important relational component. Balance is extended to include the impact women’s hierarchical relationships have on personal and family wellbeing, particularly where it is viewed as negative, disempowering and lacking in mutuality. Challenge is extended to include the additional demands presented by a negative hierarchical relationship, along with the opportunity it provides for learning and growth. Our research makes the case for greater personal and organisational awareness of the connection between women’s hierarchical relationships and potential career impacts as one mechanism to support the careers of women.

Taken-for-granted rules are difficult to change. The Australian construction industry is one example, where despite considerable attempts at regulating gender equality by government and others, the industry remains steadfastly male dominated. This article investigates the drivers (i.e. why) and processes (i.e. how) of change with regard to gender equality in the workplace. Using institutional entrepreneurship, we provide insight into the change towards gender equality in the Australian construction industry. We collect data from two Australian construction companies and, drawing on interviews conducted with business leaders, look at how new meanings around gender equality and diversity are negotiated. We find that while gender equality is an important point of focus for both companies, discrepancies remain between perceptions and reality as well as people’s level of readiness. We conclude with implications for theory and future research.