Board director disciplinary and cognitive influence on corporate value creation

• Published date: 06 June 2016
• DOI: https://doi.org/10.1108/CG-09-2015-0123
• Date: 06 June 2016
• Pages: 564-578
• Author: Nadia Toumi,Ramzi Benkraiem,Amal Hamrouni
• Subject Matter: Strategy,Corporate governance

Board director disciplinary and cognitive

influence on corporate value creation

Nadia Toumi, Ramzi Benkraiem and Amal Hamrouni

Nadia Toumi is an

Assistant Professor at the

IUT Cannes, Nice Sophia

Antipolis University,

Cannes, France.

Ramzi Benkraiem is an

Associate Professor at

the Audencia Business

School, Nantes, France.

Amal Hamrouni is an

Assistant Professor at the

La Rochelle Business

School, La Rochelle,

France.

Abstract

Purpose –This paper aims to investigate board director disciplinary and cognitive influence on

corporate value creation.

Design/methodology/approach –Fixed-effect regressions are used to check whether gender

diversity, education, independence and size of the board of directors affect measures of corporate

value creation.

Findings –The empirical results show that corporate value creation is positively influenced by the

cross effect of the board independence and the presence of women. They also point out a positive

impact of the cross effect of board independence and management education. They reveal that the

board of directors contributes significantly to corporate value creation, particularly when there is a mix

of independent, female and management-qualified directors.

Originality/value –The evidence presented and discussed in this paper should be of interest to

managers and regulators. The methodological approach and the empirical results extend the existing

literature. They enrich the limited empirical research devoted to this theme, especially in a continental

European context, i.e. France. They shed light on the effect of board of directors’ disciplinary and

cognitive influence on corporate value creation.

Keywords Corporate governance, Board of directors

Paper type Research paper

1. Introduction

Corporate governance literature has shown that the majority of studies that examined the

board composition has largely focused on board independence and size (Dalton et al.,

1998;Jackling and Johl, 2009;Bhagat and Bolton, 2013). Some other factors such as the

gender diversity of the board have been relatively less examined. According to the

resource dependency theory, the effectiveness of the board depends on the provision of its

resources (Pfeffer, 1972;Pfeffer and Salancik, 1978) resulting from board human capital

attributes (gender, education, financial or industrial expertise, management experience,

skills, etc.). The presence of women on boards is considered as one of these resources.

The decision to appoint women on boards may ameliorate firm legitimacy (Hillman et al.,

2007) and improve board effectiveness (Hillman et al., 2002). Hence, the appointment of

women may improve the board’s ability to protect shareholder interests against a potential

opportunistic behavior of corporate managers. The gender diversity is crucial, as it is likely

to improve the monitoring role of the board.

The strict disciplinary vision attributed to corporate governance mechanisms in the agency

theory has been subject to criticism. Indeed, Charreaux (2000, p. 13) suggests that the

board of directors may have a cognitive role in helping “the CEO in constructing his vision –

by confronting it to the mental models of directors – or in detecting and building up growth

opportunities”. In the author’s opinion, the cognitive approach appeals to study corporate

governance mechanisms according to the influence of cognitive dimensions on corporate

Received 17 September 2015

Revised 23 March 2016

Accepted 30 March 2016

PAGE 564 CORPORATE GOVERNANCE VOL. 16 NO. 3 2016, pp. 564-578, © Emerald Group Publishing Limited, ISSN 1472-0701 DOI 10.1108/CG-09-2015-0123