An empirical analysis of top management team strategic cognition, managerial attributes, audit committee effectiveness and their implications for corporate risk and performance

Attah-Boakye, Rexford

Abstract

The events of the global financial crisis have hastened the refinement of existing corporate governance regulations and the development of new ones to strengthen corporate governance mechanisms. However, critics of this approach argue that strengthening the corporate governance system by itself cannot guarantee better organizational outcomes. Rather, understanding the cognitive footprints of the top management team (top management strategic cognition) and its implications on organizational outcomes represent a better alternative. Currently, empirical research that examines the effects of top management team (TMT) strategic cognition on firm outcomes is scarce and sparse. Therefore, our knowledge and understanding of how TMT cognitive structures (mental models) influence organizational outcomes is limited and scattered. This study uses a sample of balanced panel data from 311 UK FTSE companies from 2007 to 2016 to examine the effects of TMT strategic cognition on organizational outcomes. Since TMT members differ in their cognitive structures, both researchers and policy makers find it difficult to identify specific cognitive elements that can secure optimum organizational outcomes. The motivation for this thesis is to contribute to the corporate governance literature by presenting a unique decision making framework that examines six different top management strategic cognition pathways and how the elements in each pathway influences firm outcomes. This thesis uses the partial least squares- structural equation modelling (PLS-SEM) and fixed effects estimation methods. The findings based on this thesis provide three original contributions to the literature. First, the results show that a TMT strategic cognition that combines innovativeness and high risk preference can secure better organizational outcomes. Second, the analyses further show that firms that have experienced accounting and finance experts and communicate more about their corporate sustainability to their stakeholders perform better in both crisis periods and stable periods. Third, a bankruptcy model that combines managerial attributes, accounting data and market data can provide a better prediction of a firm’s bankruptcy probability and the variability in its market returns.

Citation

Attah-Boakye, R. (2018). An empirical analysis of top management team strategic cognition, managerial attributes, audit committee effectiveness and their implications for corporate risk and performance. (Thesis). University of Hull. Retrieved from https://hull-repository.worktribe.com/output/4223366

• Thesis Type: Thesis
• Deposit Date: Aug 11, 2021
• Publicly Available Date: Feb 23, 2023
• Keywords: Business
• Public URL: https://hull-repository.worktribe.com/output/4223366
• Additional Information: Business School, The University of Hull
• Award Date: Nov 1, 2018