Integrating agency and resource dependence theory: Firm profitability, industry regulation, and board tasks performance

Boards of directors are key governance mechanisms in organizations and fulfil two main tasks: monitoring managers and firm performance, and providing advice and access to resources. In spite of a wealth of research much remains unknown about how boards attend to the two tasks. This study investigates whether organizational (firm profitability) and environmental factors (industry regulation) affect board tasks performance. The data combine CEOs’ responses to a questionnaire, and archival data from a sample of large Italian firms. Findings show that past firm performance is negatively associated with board monitoring and advice tasks; greater industry regulation enhances perceived board tasks performance; board monitoring and advice tasks tend to reinforce each other, despite their theoretical and practical distinction