Integrating Agency and Resource Dependence Theory: Firm Profitability, Industry Regulation, and Board Tasks Performance

Abstract

This study explores board tasks performance. Boards of directors fulfil two main tasks: (i) monitoring managers and firm performance, and (ii) providing advice and access to resources. A growing stream of research endeavours to understand what enhances (constrains) boards’ engagement into monitoring and advice tasks. This study seeks to increase our current knowledge into ways: first by looking at monitoring and advice concurrently – rather than in isolation – and, second by analysing how firm profitability and industry regulation affect board tasks performance. We rely upon survey and archival data from a sample of 264 Italian firms. Results show that: (i) highly performing firms are associated with lower levels of boards’ engagement into monitoring or advice tasks, and (ii) highly regulated industry increases board tasks performance.