Responses to a Governance Mandate: The Adoption of Governance Committees by NYSE Firms. (November 2015)

• Record Type: Journal Article
• Authors: Jones, Carla D.; Li, Mengge; Cannella, Albert A.
• Is Part Of: Journal of management. Volume 41:Number 7(2015)
• Page Start: 1873
• Page End: 1897
• Publication Date: 2015-11
• Subjects: boards of directors -- institutional theory (sociology) -- groups/group processes/dynamics; Management -- Periodicals; 658.005
• DOI: 10.1177/0149206313484515
• Languages: English
• ISSNs: 0149-2063

Abstract

We study how New York Stock Exchange (NYSE) firms adopted governance committees on their boards of directors. The drive to adopt started as a social movement but was facilitated greatly by the collapse of Enron Corporation and a subsequent mandate by the NYSE that all of its traded firms must have governance committees. Using institutional theory and a sample of NYSE firms, we develop and test hypotheses about the speed of governance committee adoption, the likelihood of committee adoption by the NYSE deadline, and the types of directors that were placed on the inaugural governance committee. Our study adds to theory about how organizations respond to external pressures when responding is contrary to the interests of executives.