corporate governance in the profit-based organizations
There has been tremendous research into corporate governance in the profit-based organizations since the early 1990s and is fundamentally a factor of the ‘bust’ and ‘boom’ cycles in the economy. In the article, Inside the Black Box of the Board: Towards a Global Comparative Model of Board Effectiveness for Listed Companies, Donald Neubaum and Shaker Zahra uses the theory of stakeholder salience to suggest that the institutional developers’ investment horizons as well as coordination and frequency of institutional owners’ activism moderate business ownership. The research hypotheses aimed at determining the long-term effects of institutional ownership of CSP. Neubaum and colleagues further sought to determine the positive relationship between long-term ownership of instructions’ holding and growth of CSP due to an increased increase of activities from the investors. Lastly, the researchers tested the hypothesis related to long-term institutional owners” holdings and CSP active development with increased coordination.
Neubaum and Zahra employed survey research and used a sample of 500 populations to collect secondary data needed to test the hypotheses. The independent measures included activism, institution ownership, and coordination, while the control variables were data collected from 1990-1992. The dependent variables of the study were the CSP measured over the 1998-2000 period. Statistical analysis of the survey data provided significant results relating to the power of corporate business owners over the company, along with their executives. The results showed that institutional activism serves as a significant moderator of the volume of lasting institutional ownership-CSP association. The results support the hypothesis and theoretical underpins of the shareholders’ salience. Naubaum also found that activism among institutional owners has a positive and significant impact on future investments in research and development.
Despite the positive results, the results are suggestive as opposed to confirming the relationship between CSP and institutional ownership. The longitudinal design aspect of the research, along with the use of secondary data, represents an improvement of finding in previous studies. There is a need to use primary research subjects to validate the relationship. Overall, the research article highlights important information on understanding corporate governance power and control, especially concerning investment and effects of CSP.