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The Nature of Board Nominating Committees and Their Role in Corporate Governance

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  • Nikos Vafeas

    (Department of Business Administration, University of Cyprus, Nicosia, Cyprus.)

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    Abstract

    This study examines the association between the employment and composition of nominating committees with board and ownership characteristics. First, the results suggest that the likelihood of using a nominating committee is inversely related to the level of inside ownership and positively weakly, related to the independence, but not the number, of outside board members. Second, the percentage of insiders participating in the committee is positively related to inside ownership, and negatively related to proxies for outside director quality. Finally, outside directors are more likely to serve on the nominating committee the more outside directorships they hold, and the longer their tenure in the firm. The likelihood of insider committee membership rises with a director's equity investment, with board tenure, and with other committee memberships. Taken together, the results are consistent with nominating committees substituting inside ownership in controlling management, mostly improving board quality, and being staffed with independent, experienced, and knowledgable members. Copyright Blackwell Publishers Ltd 1999.

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    Bibliographic Info

    Article provided by Wiley Blackwell in its journal Journal of Business Finance & Accounting.

    Volume (Year): 26 (1999-01)
    Issue (Month): 1-2 ()
    Pages: 199-225

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    Handle: RePEc:bla:jbfnac:v:26:y:1999-01:i:1-2:p:199-225

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    Web page: http://www.blackwellpublishing.com/journal.asp?ref=0306-686X

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    Cited by:
    1. Ameur Boujenoui & Richard Bozec & Daniel Zeghal, 2004. "Analyse de l’évolution des mécanismes de gouvernance d’entreprise dans les sociétés d’État au Canada," Revue Finance Contrôle Stratégie, revues.org, vol. 7(2), pages 95-122, June.
    2. Marco Allegrini & Giulio Greco, 2013. "Corporate boards, audit committees and voluntary disclosure: evidence from Italian Listed Companies," Journal of Management and Governance, Springer, vol. 17(1), pages 187-216, February.
    3. Romilda Mazzotta & Stefania Veltri, 2014. "The relationship between corporate governance and the cost of equity capital. Evidence from the Italian stock exchange," Journal of Management and Governance, Springer, vol. 18(2), pages 419-448, May.
    4. Puan Yatim, 2010. "Board structures and the establishment of a risk management committee by Malaysian listed firms," Journal of Management and Governance, Springer, vol. 14(1), pages 17-36, February.
    5. Craig Peterson & James Philpot, 2007. "Women’s Roles on U.S. Fortune 500 Boards: Director Expertise and Committee Memberships," Journal of Business Ethics, Springer, vol. 72(2), pages 177-196, May.
    6. Shamsul Nahar Abdullah & Nor Zalina Mohamad Yusof & Mohamad Naimi Mohamad Nor, 2010. "Financial restatements and corporate governance among Malaysian listed companies," Managerial Auditing Journal, Emerald Group Publishing, vol. 25(6), pages 526-552, July.
    7. Charles Piot, 2005. "Les Comités De Rémunération Et De Sélection Sont-Ils Perçus Comme Des Mécanismes De Contrôle En France ?," Post-Print halshs-00581273, HAL.
    8. Charles Piot, 2006. "Les déterminants de l’existence et de l’indépendance managériale des comités de rémunération et de sélection en France," Revue Finance Contrôle Stratégie, revues.org, vol. 9(2), pages 159-185, June.
    9. Zhilan Feng & Chinmoy Ghosh & C. Sirmans, 2007. "CEO Involvement in Director Selection: Implications for REIT Dividend Policy," The Journal of Real Estate Finance and Economics, Springer, vol. 35(4), pages 385-410, November.

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