The management of in-dependent directors: A Praxis Hypothesis

1. The management of in-dependent directors: A Praxis Hypothesis Sven-Olof Yrjö Collin(corresponding author) Elin Smith(PhD)

2. . WHYTHIS PAPER? I • Ideologicalimpregnation (Myrdal, G. [1969] Objectivity in social research, New York: Pantheon Books) in economics • and business administration: Good governance • From a exotic market oriented system to a bank oriented system • From a system with strong CEOs to a system of strong owners • Empirical, archival studies, and experience through interviews • Directed by profit, duty, visions and WILL • Management control studies insights: Control systems create human preferences

3. . WHYTHIS PAPER? II • Ideological irritation • Laughing at annualreports presentation of independent directors • PhD course on ideology • Debatearticlesaboutideologyinfluence • Seminar presentation of one ideological notion: Independent directors • Time pass, more important issues at hand, finding out of reality instead of fighting reality

4. . WHYTHIS PAPER? III • No channel for small ideology complaints • A friend, former PhD student edit a book about board research, wanted wild papers to put wildness in the big book => ask Collin • Old idea. Include Elin so she do not loose orientation

5. . CONCEPTUAL, CRITICAL PAPER I • Is youridea original? Yes => Youareignorent; No => find an angle • How do you get knowledge? Less reading => higher risk, more innovative at the end • Reduce risk: Conceptualpapers in yourcore area, not outside • Develop the idea. & findsystematic arguments. • Be occupied and haveluck. Driving outside a supermarket, the brain gives you a solution

6. . CONCEPTUAL, CRITICAL PAPER II • Write the scelethon. • Collectarticles to • Createliteraturereview • To support or threathenyouridea • To ’salt’ the paper • Letyour co-author ’salt’ and make additions and fix the reference list • Submit

7. List ofpriority • Publishedpapers • Book • Edit books • Book chapters • Conference proocedings • Practical paperspublishedanywhere

8. The paper

9. Independent directors are considered in every society to be of so much importance, that they are included in all national codes of corporate governance • Independent directors have little, if any, significant influence on the corporation’s performance

10. Mixed results? • Definition ofindependence and Operationalizationofindependence • Different countries and corporations (institutionallybound) • Different years (bounded by time) • Different dependentvariable (Stock profit, ROE) • Publication bias: the *** publicationrule • Data dragging, fishing for ***

11. Why independent directors? • Institutionalpressure • Power game: investment fund – capitalists • Politichans interestof action • Researchers actions

12. Independence: The judgement will be performed by an autonomous individual that will use Reason, without any other influence. • Perfect theory • Full information • Perfect preferences

13. Praxis hypothesis, part I • there is a will, • by the individuals and by the social action through the dominant coalition, which • through action of selection of directors in the committee and influencing directors at the board, • is converted into an outcome, the managed in-dependent director.

14. Praxis hypothesis, part II • The management of in-dependence is using the two human conditions of opportunism and bounded rationality, where • opportunism use • material and • social concerns • bounded rationality use • cognitive dependency and • information regulation.

15. Praxis: My socialist origin • Praxis is the human approach of realizing itself in the world through conscious action (Kosík, 1976). • It is the human action where nature and society is transformed through action into social reality. • Praxis is both human objectification and realization of human freedom. Action W-I-L-L Intention

16. An indication of praxis: The categories of dependency related to the board functions

17. An indication of independence avoidance: Counterfactual argument • Randomize the dependency • Non-for-profit organizationappoints directors in random to corporations • Randomselection • The same fee to everyone • No competencedemands • Random social connections

18. Future? J(LI, LT, S, M) ≠ J(I,T) Dependency index= LI + LT + S + M Or Profit = b1*LI + b2*LT + b3*S + b4*M + Control etc