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Abstract
Research on corporate governance reforms has typically focused on whether the reforms accomplish their stated objectives; however, reforms of any kind can bring unintended consequences, both positive and negative. This study explores the unintended consequences of the Sarbanes-Oxley Act of 2002 that was put in place to address corporate malfeasance and agency issues. The precepts of institutional theory suggest that boards of directors experience more uncertainty, additional pressures of accountability and changing relationships with the CEO as they struggle to define norms of behavior under a variety of new mandates from different sources. The assumptions of the institutionalization process are explored to advance theory regarding how reforms become legitimized and diffused, and how this can break down in the absence of institutional logics. Using data from 138 directors in 54 firms, this dissertation answers the call for more research into board behaviors by examining the relationship between institutional changes, board reactions, board behaviors, and board performance. In addition, this dissertation develops a new construct of fingerpointing under scapegoat theory that is generalizable to other contexts. The findings of this study provide partial support for model predictions, suggesting that the pressures of accountability for board members lead to increased cognitive conflict, less cohesiveness and fingerpointing. Cohesiveness is also show to have a direct affect on board performance. Thus, the findings suggest that the diffusion of new reforms may be challenged by the unintended consequences of new board level behaviors, when the pressures of accountability lead to changing group behaviors, with negative ramifications for board performance.