How Long Shall We Talk? How Much Shall We Interact? The Impact of Board Room Communication on Board Functioning

Accounting

Speaker:Amedeo Pugliese, Queensland University of Technology
Website: http://www.mendeley.com/profiles/amedeo-pugliese/
Date: Wednesday 21 January 2015
Time: 14:00
Location: Building:One Constantine Leventis

Further details

This study examines boardroom communication patterns and how they affect board functioning. Boards of directors are expected to operate as a ‘group’ – rather than being a sum of directors - hence aggregate their views prior to coming to decisions: research shows that the very nature of boards subject them to process-losses that limit their potential. This paper takes a board-level unit of analysis and explores whether and how the structure of board interactions matter. Video-observations of three board meetings are complemented with interviews with directors and documentary evidence. The rich data allowed an in-depth analysis of boardroom communication during meetings. Findings suggest that high levels of board interactions and evenness in directors’ contribution are associated with high-quality decisions. Qualitative data further clarify that board interactions enable the creation of accountability within the board (e.g. questioning and probing) and strategic decision-making. Our study offers the following contributions to board research: information infrastructure at a board-level matters and it is associated with better board functioning; the boardroom communication patterns revealed that in addition to the information provision activity an information processing activity is required to ensuring board functioning; next, we document that board interactions are the generative mechanism through which boards execute their control and strategy tasks, hence providing a tentative explanation for why theoretically distinct tasks oftentimes overlap in practice.

 

KEYWORDS: Board of Directors; Accountability; Decision-Making; Information Exchange; Video-Observations.