Corporate board for innovative managerial control: implications of corporate governance deviance perspective

Irfan Saleem, Mujtaba Nasir Ali Khan, Rashedul Hasan, Muhammad Ashfaq

Research output: Contribution to journalArticlepeer-review

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Abstract

Purpose: Drawing from the firm’s entrepreneurial identity and ecology perspectives, this study aims to explain why the firms deviate from standard corporate governance practices and apply innovative management control. Design/methodology/approach: The authors used a panel of 2,538 public companies listed with the New York Stock Exchange to explain the impact of corporate governance deviance on firm’s performance. The authors relied on unique governance variables extracted from the Bloomberg database to develop the governance deviance index. Findings: Study unveils that deviance from governance practices influences firm’s performance. Consequently, it can be said that the firms which use innovative governance mechanisms, usually stay ahead of the market by leading the governance trends. The findings also generalise the firm’s entrepreneurial identity and organisational ecology perspectives. Research limitations/implications: Research implies that the firm’s entrepreneurial identity demands innovative managerial control. This study is focused on the US financial market, but in future, researchers could revalidate the deviance index. Scholars can also use mixed methods to test the need for innovative governance mechanisms in emerging markets. Practical implications: The firms should focus on innovative governance practices not only to safeguard the firm’s entrepreneurial identity but also to pursue the growth objectives. Such innovative mechanisms and managerial controls are helpful to deal with industrial transformations to satisfy key stakeholders. Originality/value: The study contributed to governance and management control research by sharing insights and catering the potential endogeneity problem faced to measure corporate governance measures. The study also proposes an alternative testing tool to measure governance deviance to add methodological uniqueness and reduce knowledge gap.

Original languageEnglish
Pages (from-to)450-462
Number of pages13
JournalCorporate Governance
Volume21
Issue number3
Early online date31 Dec 2020
DOIs
Publication statusPublished - 8 Jun 2021

Bibliographical note

Publisher Copyright:
© 2020, Emerald Publishing Limited.

Keywords

  • Corporate governance deviance
  • Entrepreneurial identity
  • Management control

ASJC Scopus subject areas

  • Business, Management and Accounting (miscellaneous)

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