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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.)

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.

Suggested Citation

  • Nikos Vafeas, 1999. "The Nature of Board Nominating Committees and Their Role in Corporate Governance," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 26(1-2), pages 199-225.
  • Handle: RePEc:bla:jbfnac:v:26:y:1999-01:i:1-2:p:199-225
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    Citations

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    Cited by:

    1. Vidhi Chhaochharia & Yaniv Grinstein, 2007. "The Changing Structure of US Corporate Boards: 1997-2003," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(6), pages 1215-1223, November.
    2. 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.
    3. 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.
    4. Isabel Gutierrez & Jordi Surroca, 2014. "Revisiting corporate governance through the lens of the Spanish evidence," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 18(4), pages 989-1017, November.
    5. 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 & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 18(2), pages 419-448, May.
    6. Puan Yatim, 2010. "Board structures and the establishment of a risk management committee by Malaysian listed firms," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 14(1), pages 17-36, February.
    7. repec:bla:acctfi:v:57:y:2017:i:3:p:907-933 is not listed on IDEAS
    8. 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.
    9. 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.
    10. Winfried Ruigrok & Simon Peck & Sabina Tacheva & Peder Greve & Yan Hu, 2006. "The Determinants and Effects of Board Nomination Committees," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 10(2), pages 119-148, May.
    11. 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.
    12. 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, June.
    13. Marco Allegrini & Giulio Greco, 2013. "Corporate boards, audit committees and voluntary disclosure: evidence from Italian Listed Companies," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 17(1), pages 187-216, February.
    14. Salim, Ruhul & Arjomandi, Amir & Seufert, Juergen Heinz, 2016. "Does corporate governance affect Australian banks' performance?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 43(C), pages 113-125.

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