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Habitual accountability routines in the boardroom: how boards balance control and collaboration

Habitual accountability routines in the boardroom: how boards balance control and collaboration PurposeCorporate accountability is a complex chain of reporting that reaches from external stakeholders into the organization’s management structure. The transition from external to internal accountability mechanisms primarily occurs at the board of directors. Yet outside of incentive mechanisms, we know surprisingly little about how internal actors (management) are held to account by the representatives of external shareholders (the board). The purpose of this paper is to explore the process of accountability at this transition point by documenting the routines used by boards to hold the firm’s management to account. In doing so, we develop the understanding of the important transition between internal and external firm accountability.Design/methodology/approachAn inductive, case-based approach identifies recurrent behaviour patterns in two matched boards over three video-taped meetings. Sequential analysis of coded group and individual behaviours provides insight into boards’ accountability routines.FindingsThe boards engaged in clear, recurrent accountability routines. Individuals on the boards play different roles in these routines depending on the issue before the board, allowing both directors and managers to hold each other to account. The outsiders (directors) both challenge and support the insiders (managers) during board discussions, switching their behaviours with different agenda items but maintaining a consistent group level of support and scepticism across the meeting. This allows for the simultaneous development of trust and verification at the group level, a necessary condition for effective accountability.Research limitations/implicationsAs board relationships and organisational context are highly variable, future research should concentrate on testing the generalizability of the results across different board and shareholder structures.Practical implicationsThe results call into question the current governance focus on the independence of the individual director, as the authors identify that all directors appear to act as agents at one time or another in a meeting. Accountability at the boardroom level requires an effective group process not usually addressed in governance recommendations or regulation.Originality/valueThis study provides unique insights into board dynamics, documenting the accountability implications of group behaviours. By focussing on the group process, the authors highlight the potential mismatch of monotonic, individual-level approaches to governance and accountability prevalent in current agency approaches. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Accounting Auditing & Accountability Journal Emerald Publishing

Habitual accountability routines in the boardroom: how boards balance control and collaboration

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References (94)

Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0951-3574
DOI
10.1108/AAAJ-07-2015-2143
Publisher site
See Article on Publisher Site

Abstract

PurposeCorporate accountability is a complex chain of reporting that reaches from external stakeholders into the organization’s management structure. The transition from external to internal accountability mechanisms primarily occurs at the board of directors. Yet outside of incentive mechanisms, we know surprisingly little about how internal actors (management) are held to account by the representatives of external shareholders (the board). The purpose of this paper is to explore the process of accountability at this transition point by documenting the routines used by boards to hold the firm’s management to account. In doing so, we develop the understanding of the important transition between internal and external firm accountability.Design/methodology/approachAn inductive, case-based approach identifies recurrent behaviour patterns in two matched boards over three video-taped meetings. Sequential analysis of coded group and individual behaviours provides insight into boards’ accountability routines.FindingsThe boards engaged in clear, recurrent accountability routines. Individuals on the boards play different roles in these routines depending on the issue before the board, allowing both directors and managers to hold each other to account. The outsiders (directors) both challenge and support the insiders (managers) during board discussions, switching their behaviours with different agenda items but maintaining a consistent group level of support and scepticism across the meeting. This allows for the simultaneous development of trust and verification at the group level, a necessary condition for effective accountability.Research limitations/implicationsAs board relationships and organisational context are highly variable, future research should concentrate on testing the generalizability of the results across different board and shareholder structures.Practical implicationsThe results call into question the current governance focus on the independence of the individual director, as the authors identify that all directors appear to act as agents at one time or another in a meeting. Accountability at the boardroom level requires an effective group process not usually addressed in governance recommendations or regulation.Originality/valueThis study provides unique insights into board dynamics, documenting the accountability implications of group behaviours. By focussing on the group process, the authors highlight the potential mismatch of monotonic, individual-level approaches to governance and accountability prevalent in current agency approaches.

Journal

Accounting Auditing & Accountability Journal – Emerald Publishing

Published: Feb 20, 2017

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