How Symbolic Action Affects the Media as a Governance Mechanism

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ProQuest, 2008 - 135 pages
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This dissertation examines the potential for the media to act as a corporate governance mechanism and suggests how corporate leaders, through the use of symbolic action, can influence the media's ability to effectively enact this role. Specifically, I examine how media scrutiny may prompt firms to adopt governance structures that increase the structural independence of the board and thus, according to the prevailing agency logic of corporate governance, are thought to increase the board's ability to monitor and control corporate leaders. However, the adoption of structurally independent boards may be largely symbolic wherein formal structural changes in board independence are made without increases in the social independence of the board. I argue that symbolic responses to scrutiny will meet the media's expectations for proper governance and engender more positive subsequent evaluations in the media of the firm and its leaders. I conclude by showing why the effects of symbolic action on media coverage are important for a range of outcomes relevant to firms and CEOs including the likelihood of strategic change, CEO dismissal and compensation, and subsequent board appointments. By influencing the manner in which they and their firms are portrayed in the media, firm leaders may enhance their reputations in the press and garner personal benefits. Thus, while agency theory focuses on the media's ability to curb agency costs, this study points out that because of the media's susceptibility to symbolic action, the press may actually perpetuate agency costs in some cases. Longitudinal analysis of a sample of S&P 500 firms provides some support for these ideas.
  

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Contents

INTRODUCTION
1
LITERATURE REVIEW
8
THEORY AND HYPOTHESES
22
METHODS
53
RESULTS
67
DISCUSSION AND CONCLUSIONS
75
OVERVIEW OF THEORY
90
DESCRIPTIVE STATISTICS AND CORRELATION TABLE
91
H3 BOARD PRESTIGE CEO
98
H3 BOARD PRESTIGE CEO
99
H4 NEGATIVE MEDIA COVERAGE
100
H5 STRATEGIC CHANGE MGT ISSUES
101
H5 STRATEGIC CHANGE CEO
103
H6 CEO DISSMISSAL MGT ISSUES
105
H6 CEO DISSMISSAL CEO
107
H7 H8 CEO COMPENSATION CEO
109

H1 CHANGE IN INDEPENDENT DIRECTORS
93
H1 CEO CHAIR SEPARATION
94
H2 MEDIA COVERAGE MGT ISSUES
95
H2 MEDIA COVERAGE CEO
96
H3 BOARD PRESTIGE MGT ISSUES
97
H7 H8 CEO COMPENSATION MGT ISSUES
110
H9 CHANGE IN BOARD SEATS
111
SUMMARY OF RESULTS
112
REFERENCES
113
Copyright

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