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Browsing by Author "Cochran, Philip L."
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Item The composition of boards of directors and incidence of golden parachutes(Academy of Management Journal, 1985) Cochran, Philip L.; Wood, Robert A.; Jones, Thomas B.Golden parachutes are a new and controversial management perquisite that allow covered managers to voluntarily resign and collect substantial remuneration—in some cases several million dollars—after a triggering event, usually a hostile takeover. This ability to unilaterally pull a ripcord has provoked much criticism of this perquisite. Critics of golden parachutes see them as evidence that senior managers can he more interested in maximizing their own incomes than in shareholder returns. Business Week, for example, in an editorial entitled “The Gilded Ripoff,” stated that the ethical difference hetween golden parachutes and theft is “hard to discern” (1982:136). On the other hand, proponents of golden parachutes justify them as a means of attracting and keeping new managerial talent as well ensuring that current management remains objective, loyal, and on board during a hostile takeover attempt. What characteristics are firms that give managers contracts with golden parachutes likely to have' One possible factor is the composition of a firm's board of directors, since it is the board that must ultimately approve such arrangements. Perhaps directors who are insiders are likely to be less independent of the CEO and senior management than are directors who are outsiders. Bacon and Brown reported general agreement among board members of major U.S. corporations that “the board should have a majority of outside directors.…[to] properly carry out its responsibilities and maintain its necessary independence of management” (1977:91). This suggests that if managers want golden parachutes they are more likely to get them in firms that have a high percentage of directors who are insiders. Thus we expect: Hypothesis 1: The probability that firms will give their management golden parachute contracts is positively related to the percentage of directors who are insiders. Another factor likely to be related to whether or not firms provide golden parachutes is the amount of stock that members of boards of directors own. Directors who own substantial amounts of stock should be more inclined to put the interests of stockholders above those of management. To the extent that golden parachutes are unwarranted diversions of stockholder monies, they should be more common in firms with boards that own relatively little of the firms' stock than in firms with boards that own much stock. Thus: Hypothesis 2: The probability that firms will grant golden parachute contracts is negatively related to the percentage of total stock outstanding that their boards of directors own. The size of firms is likely to be related to their propensity to issue golden parachutes. Large firms, at least until 1984, were not considered likely takeover targets, so their managements had less incentive to acquire this particular perquisite than did small firms' managers. In addition, small firms may feel more need to offer such an exotic perquisite than do large firms. Thus: Hypothesis 3: The probability that firms will grant golden parachute contracts is negatively related to their size. Firms that are underperforming and therefore not achieving full potential profits are more likely to be takeover targets than are firms with healthy profits. Further, underperformers are more likely than strong firms to find it difficult to attract and retain qualified managers. Thus: Hypothesis 4: The probability that firms will grant golden parachute contracts is negatively related to their financial performance. Finally, since debt is unattractive to a potential raider, firms that are highly leveraged are less likely takeover targets than those that are not. In fact, adding financial leverage is a defensive tactic often used to avoid takeovers (Brealey & Myers, 1981: 674). Thus we expect: Hypothesis 5: The probability that firms will grant golden parachute contracts is negatively related to their debt.Item Corporate Ethics Programs as Control Systems: Influences of Executive Commitment and Environmental Factors(Academy of Management Journal, 1999) Weaver, Gary R.; Trevino, Linda Klebe; Cochran, Philip L.Our study asked why corporations introduce formal programs to manage ethics and why those programs display varying characteristics. We used control theory to delineate an ethics program's scope and its orientation toward compliance- and values-based control. Managerial choice theory suggests that environmental factors and management's ethical commitment will influence these dimensions. Environmental factors were the stronger influences on scope, but management commitment was the stronger determinant of control orientation. Research and policy implications are discussed.Item Corporate Social Responsibility and Financial Performance(Academy of Management Journal, 1984) Cochran, Philip L.; Wood, Robert A.The relationship between corporate social responsibility and financial performance is reexamined using a new methodology, improved technique, and industry-specific control groups. Average age of corporate assets is found to be highly correlated with social responsibility ranking. After controlling for this factor, there still is some correlation between corporate social responsibility and financial performance.Item The Evolution of the Corporate Social Performance Model(Academy of Management Review, 1985) Wartick, Steven L.; Cochran, Philip L.This paper traces the evolution of the corporate social performance model by focusing on three challenges to the concept of corporate social responsibility: economic responsibility, public responsibility, and social responsiveness, it also examines social issues management as a dimension of corporate social performance. It concludes that the corporate social performance model is valuable for business and society study and that it provides the beginnings of a paradigm for the field.Item "Golden Parachutes": A Closer Look(University of California, 1984) Cochran, Philip L.; Wartick, Steven L.This article describes various aspects related to the policy of golden parachutes (GP). Discussed are golden parachutes in regards to changes in organizational control, voluntary and involuntary termination, and guaranteed employment provisions. In regards to the question of who has golden parachutes, the authors examined the proxy statements of all of the 1981 Fortune 500 companies. Content analysis of these statements was conducted. The authors determined that 11 percent of those firms had GPs. Also discussed is what is included in a GP, the pros and cons of GPs, and the legal perspectives.Item Golden Parachutes: Contests, Issues and Trends.(Academy of Management Proceedings, 1983) Wartick, Steven L.; Cochran, Philip L.This paper explores a relatively new executive perquisite, golden parachutes (GP's). The number of firms that have or are planning to adopt GP's is discussed. Features of GP's are outlined. Reasons that firms have adopted GP's are explored. Finally, a series of arguments against this practice are laid out.Item Integrated and Decoupled Corporate Social Performance: Management Commitments, External Pressures, and Corporate Ethics Practices(Academy of Management Journal, 1999) Weaver, Gary R.; Trevino, Linda Klebe; Cochran, Philip L.Corporations can respond to expectations for socially responsible processes and outcomes in organizationally integrated ways or in easily decoupled fashion. This study focused on a particular type of socially responsible organizational process: formal corporate ethics programs. Theory suggests that external pressures for social performance encourage easily decoupled processes but that top management commitments can encourage both easily decoupled and integrated processes. Analysis of survey and archival data generally supported this position. Implications for social performance research, practice, and public policy are discussed.Item Limited leadership: an examination of Houston nonprofit board diversity and whether selection processes and executive director perceptions of governance models affect composition(2016-02-03) Seaworth, Angela D.; Cochran, Philip L.; Benjamin, Lehn; Mesch, Debra J.; Witkowski, Gregory R.Nonprofit governing board diversity recently gained attention from scholars, and the changing demographics of the United States' population create urgency around understanding how to diversify nonprofit boards. This study examined nonprofit board diversity in the largest majority-minority city in the United States -- Houston, Texas -- which was also declared the most diverse city in the country in the 2010 Census. GuideStar was used to identify nonprofit organizations in the Houston metropolitan area with annual revenue of $250,000+ and were contactable. 712 executive directors were surveyed electronically; there was a 26% response rate yielding responses from 185 nonprofit organizations. The survey was designed in three sections to study board composition, board processes and whether or not the executive director's perception of the governance model would influence the diversity ratio on an organization's board, and the analyses correspond with those three sections. The study found Houston's nonprofit boards are 9% more diverse than the national average and that Caucasians continue to be overrepresented in governing roles. Other composition findings were that the diversity ratio for board members under 35 years old is beginning to mirror the Houston population and that there was statistical significance between board members being 65 years+ and a lower diversity ratio on the board; however, there was no evidence that suggested nonprofit boards are more diverse in diverse communities. The study identified a gender gap in executive committee service, with a mode of one female serving on these committees despite that fact women make up 46% of all nonprofit board members. No relationship was found between diversity ratios and board procedures or the executive director's perception of the organization's governance model. Other findings were that Houston boards use executive committees at twice the rate of the national average, and that there is direct contradiction between the perceived value of diversity and what characteristics are considered important when recruiting board members. This study ruled out simple solutions for increasing board diversity through board procedures, and it identified areas for future research regarding governance models, the alignment of recruiting characteristics with board diversity and gender equality in leadership.Item An overview of empirical research on ethics in entrepreneurial firms within the United States(Business Ethics Network of Africa, 2009-07) Baucus, Melissa; Cochran, Philip L.Scholars recognise that entrepreneurs may encounter different ethical issues and pressures than managers in larger corporations. This has fostered empirical research aimed at assessing ethics in entrepreneurial settings in the United States. Our emphasis on empirical research with little attention paid to purely conceptual papers allows us to highlight the narrow definition of entrepreneurship used in the US and how US researchers distinguish between entrepreneurship and other types of small businesses. This differs greatly from many other countries, especially those in which researchers equate entrepreneurship with the study of small and medium sized enterprises (SMEs). Researchers in the US often distinguish ethics from corporate social responsibility (CSR), corporate social performance (CSP), stakeholder theory and stakeholder management with different theoretical models proposed in each of these areas. After discussing these various definitional issues, we review the empirical research on ethics in entrepreneurial firms, discussing what the results tell us, identifying gaps in prior research and concluding with recommendations for future research that draws more heavily on theoretical frameworks in the field of ethics.Item Radio Frequency Identification and Privacy Law: An Integrative Approach(American Business Law Journal, 2009) Magid, Julie Manning; Cochran, Philip L.; Tatikonda, Mohan V.The indiscriminate nature of Radio Frequency Identification (RFID)1 technology creates unique privacy issues.2 Currently privacy standards for the type of information gathered through RFID and the use of that information do not exist.3 With few exceptions, compatible readers may legally access from a remote location RFID devices and the information these devices contain. After gathering information, the legal uses of that information are innumerable in terms of aggregation and re-use.