Entrenchment vs long-term benefits: classified boards and CSR
Journal of Global Responsibility
ISSN: 2041-2568
Article publication date: 6 March 2019
Issue publication date: 6 March 2019
Abstract
Purpose
Although most corporate directors face reelection by shareholders each year, directors of companies with classified boards are elected for multiple-year terms. Classified boards may engender managerial entrenchment, which may make directors less responsive to shareholders’ interest in corporate social responsibility (CSR). Alternatively, classified boards may engender a longer-term focus, which could make the board more willing to engage in projects with longer-term benefits, such as CSR. This study aims to assess whether larger boards, with potentially more diverse voices, may be positively related to CSR, and a larger board may change the classified boards/CSR relationship.
Design/method/approach
The authors examine the relationship between board type (companies with and without classified boards), board size and CSR for 4,489 firm-years (1,540 with classified boards and 2,949 without classified boards) from 2013 through 2015.
Findings
The authors find no difference in CSR strengths between companies with and without classified boards, but the authors do find that companies with classified boards have more CSR concerns than companies without classified boards. For all types of boards, a larger board size is associated with more CSR strengths and reduces the negative impact of having a classified board on CSR concerns.
Practical implications
Classified boards may be less responsive to shareholders’ preference for reduced company CSR concerns, but an increase in board size can mitigate this effect.
Social implications
Classified boards may weaken a company’s CSR performance.
Originality/value
This is the first paper to consider the relationship between classified board and CSR.
Keywords
Acknowledgements
The authors gratefully acknowledge helpful comments received from participants at the 2018 Center for Social and Environmental Accounting and Reporting (CSEAR) Conference at the University of Saint Andrews, Scotland.
Citation
Cullinan, C.P., Mahoney, L. and Roush, P.B. (2019), "Entrenchment vs long-term benefits: classified boards and CSR", Journal of Global Responsibility, Vol. 10 No. 1, pp. 69-86. https://doi.org/10.1108/JGR-11-2018-0063
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited