An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Rhonda L. Ensley
Rensselaer Polytechnic Institute

Abstract: This study was designed to understand the impact of industrial change on the agency actions of executives in regards to the number of governance mechanisms in use by business organizations. Specifically I posit that executives who perceive threat from the rate of unpredicted change in their task environment will enact governance mechanisms which protect the power and position of the executive team. The findings indicate support for the proposition and demonstrate that perceptions of unpredictable change cause “fear” and agency actions on the part of executives. The implications are that executives react to environmental dynamism negatively and make decisions to protect themselves rather than making the best of their respective organization.

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