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Corporate Governance & Organization Life Cycle: The Changing Role and Composition of ...

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Corporate Governance & Organization Life Cycle:

Introduction

The Rationale Underlying
the Research Questions

The present study examines the role of the board of directors during different phases of the life cycle of an organization, including the decline or exit phase prior to bankruptcy, merger, or acquisition by another organization. The study also examines board composition and how it reflects both the firm’s position in the life cycle and the perceived needs and weaknesses of the organization in regard to its internal and external environment. As an organization changes, the primary role of the board changes, thereby affecting the board selection criteria for each phase of the organization life cycle.

In this study, the role of the board encompasses three main functions: (1) monitoring the organization’s financial performance and disclosure, (2) advising the organization’s top management on strategy and risks, and (3) interfacing with the organization’s environment to help secure resources, including information and contacts.1