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Boards of Directors and the Adoption of a CEO Performance Evaluation Process: Agency — and Institutional — Theory Perspectives
Author(s) -
Young Gary J.,
Stedham Yvonne,
Beekun Rafik I.
Publication year - 2000
Publication title -
journal of management studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.398
H-Index - 184
eISSN - 1467-6486
pISSN - 0022-2380
DOI - 10.1111/1467-6486.00181
Subject(s) - accounting , corporate governance , business , principal–agent problem , corporation , agency (philosophy) , sample (material) , institutional theory , chief executive officer , process (computing) , public relations , management , economics , finance , political science , sociology , social science , computer science , chemistry , chromatography , operating system
Using both agency and institutional theories, we examined factors associated with the board’s adoption of a formal process for evaluating the performance of the corporation’s chief executive officer (CEO). Our sample was drawn from the hospital industry. Results show that an independent board chairperson, the level of market competition and the degree of managed care penetration were significant predictors of whether or not the board had adopted a formal CEO evaluation process. These findings imply that initiatives to improve governance effectiveness based on agency theory should take into account the institutional environment of corporate boards.