Influence of governance regime on controller roles - supervisory board members' perspectives on business unit controller roles and role conflict

Purpose: The plethora of changes in the corporate governance landscape over the past two decades has the potential to tighten governance regimes and influence the preference of supervisory board members vis-à-vis the involved decision-making role of business unit (BU) controllers and their independent fiduciary role. Stricter financial reporting and compliance requirements may lead organizations to prioritize the latter role. However, recent studies support the need to balance these roles, inducing the potential for role conflict. The purpose of this study is to shed light on the influence of a tight and loose governance regime on this balance as preferred by supervisory board members. Design/methodology/approach: This study uses a unique data set from an experiment among 73 supervisory board members. The authors take their perspective because compliance with governance codes and corporate policies are relevant topics for their function. Findings: The authors find evidence for the preference of supervisory board members for “all-round” BU controllers who, irrespective of the governance regime, demonstrate substantial levels of fiduciary and decision-making qualities and deal with the resulting role conflict. Originality/value: The outcomes of the experiment among supervisory board members provide evidence for their preferences concerning the balance of the two primary controller roles and for the potential of role conflict. The authors have not found studies that provide such empirical evidence