The organizational dynamics of corporate governance structures: An investigation of heterogeneity in boards' participation in corporate governance

This study carries forward corporate governance research that explores relationships between independent variables such as the percentage of independent directors, the percentage of blockholdings by affiliated parties, and the board chair also being the CEO (duality)' and various dependent variables. This organizational research project takes these same three frequently used corporate governance structure independent variables and investigates their relationship to a new measure of the participation of the board of directors in the governance of the corporation. The new dependent variable metric is comprised of the annual number of meetings of the board of directors plus the number of meetings of the various committees of the board of directors. The target population was the Standard & Poors MidCap 400 companies, and the data was collected for the 2003 reporting year. The data collected was a census rather than a sample. The results showed that there is a moderate positive correlation between the percent of independent directors; a moderate negative correlation between the percentage of affiliated blockholdings, and a weak negative correlation between the existence of duality and the total number of meetings of the board of directors and its committees. A multiple correlation analysis indicated a significant moderate multiple correlation between the three variables taken together and the total number of meetings of the board of directors and its committees. These results indicate that these three independent variables are related to the board process issue of heterogeneity of the participation of boards of directors in the governance of the S&P MidCap 400 companies in the reporting year. The conclusions of this study are that the role taken by the board, as evidenced by its participation in the governance of the corporation, is related to the three governance structures studied. The implications of these results are that companies with heavily outsider boards and low percentages of affiliated blockholdings have more active boards. Boards of directors at companies with the opposite circumstances may be in a low power position and are less active in the governance of the corporation.