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    Decoupling Policy From Practice: The Case Of Stock Repurchase Programs

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    DecouplingPolicy.pdf (3.407Mb)
    Date
    2001-06
    Author
    Westphal, J. D.
    Zajac, E. J.
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    Abstract
    This study examines firms' decoupling of informal practices from formally adopted policies through analysis of the implementation of stock repurchase programs by large U.S. corporations in the late 1980s and early 1990s, when firms were experiencing external pressures to adopt policies that demonstrate corporate control over managerial behavior. We develop theory to explain variation in the responses of firms to such pressures, i.e., why some firms acquiesce by actually implementing stock repurchase programs, while others decouple formally adopted repurchase programs from actual corporate investments, so that the plans remain more symbolic than substantive. Results of a longitudinal study of stock repurchase programs over a six-year time period show that decoupling is more likely to occur when top executives have power over boards to avoid institutional pressures for change and when social structural or experiential factors enhance awareness among powerful actors of the potential for organizational decoupling. The study has implications for future research on decoupling, organizational learning, and corporate governance.
    Department
    Management
    Subject
    corporate governance
    ceo compensation
    interorganizational imitation
    golden parachutes
    management
    adoption
    performance
    director
    firm
    embeddedness
    business
    management
    URI
    http://hdl.handle.net/2152/29375
    Citation
    James D. Westphal and Edward J. Zajac. Administrative Science Quarterly, Vol. 46, No. 2 (Jun., 2001), pp. 202-228. DOI: 10.2307/2667086
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