The Supply of Corporate Directors and Board Independence
TL;DR: In this article, the authors show that proximity to larger pools of local director talent leads to more independent boards for all but the largest quartile of S&P 1500 companies and that board independence has a positive effect on firm value, operating performance, fraction of CEO incentive-based pay, and CEO turnover.
Abstract: Empirical evidence on the relations between board independence and board decisions and firm performance is generally confounded by serious endogeneity issues. We circumvent these endogeneity problems by demonstrating the strong impact of the local director labor market on board composition. Specifically, we show that proximity to larger pools of local director talent leads to more independent boards for all but the largest quartile of S&P 1500. Using local director pools as an instrument for board independence, we document that board independence has a positive effect on firm value, operating performance, fraction of CEO incentive-based pay, and CEO turnover. The Author 2013. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oup.com., Oxford University Press.
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TL;DR: In this article, the authors show that firms that transition to independent boards focus on more crowded and familiar areas of technology, and that the citation increase comes mainly from incremental patents in the middle of the citation distribution; the numbers of uncited and highly cited patents do not change significantly.
433Â citations
TL;DR: In this paper, the authors study the impact of directors with foreign experience on firm performance in emerging markets and identify the channels through which the emigration of talent may lead to a brain gain.
Abstract: We study the impact of directors with foreign experience on firm performance in emerging markets. Using a unique data set from China, we exploit the introduction of policies to attract talented emigrants and increase the supply of individuals with foreign experience in different provinces at different times. We document that performance increases after firms hire directors with foreign experience and identify the channels through which the emigration of talent may lead to a brain gain. Our findings provide evidence on how directors transmit knowledge about management practices and corporate governance to firms in emerging markets.
401Â citations
TL;DR: In this paper, the effects of diversity in the board of directors on corporate policies and risk were examined using a multidimensional measure, and it was found that greater board diversity leads to lower volatility and better performance.
335Â citations
TL;DR: Wang et al. as mentioned in this paper provided the first comprehensive and robust evidence on the relationship between board independence and firm performance in China. And they found that independent directors play an important role in constraining insider self-dealing and improving investment efficiency.
303Â citations
TL;DR: In this paper, the authors study reputation incentives in the director labor market and find that when directors experience an exogenous increase in a directorship's relative ranking, their board attendance rate increases and subsequent firm performance improves.
300Â citations
References
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TL;DR: The authors argue that the separation of decision and risk-bearing functions observed in large corporations is common to other organizations such as large professional partnerships, financial mutuals, and nonprofits. But they do not consider the role of decision agents in these organizations.
Abstract: ABSENT fiat, the form of organization that survives in an activity is the one that delivers the product demanded by customers at the lowest price while covering costs.1 Our goal is to explain the survival of organizations characterized by separation of "ownership" and "control"-a problem that has bothered students of corporations from Adam Smith to Berle and Means and Jensen and Meckling.2 In more precise language, we are concerned with the survival of organizations in which important decision agents do not bear a substantial share of the wealth effects of their decisions. We argue that the separation of decision and risk-bearing functions observed in large corporations is common to other organizations such as large professional partnerships, financial mutuals, and nonprofits. We contend that separation of decision and risk-bearing functions survives in these organizations in part because of the benefits of specialization of
14,045Â citations
Book•
01 Jan 1983
TL;DR: In this article, the authors present a survey of the use of truncated distributions in the context of unions and wages, and some results on truncated distribution Bibliography Index and references therein.
Abstract: Preface 1. Introduction 2. Discrete regression models 3. Probabilistic-choice models 4. Discriminant analysis 5. Multivariate qualitative variables 6. Censored and truncated regression models 7. Simultaneous-equations models with truncated and censored variables 8. Two-stage estimation methods 9. Models with self-selectivity 10. Disequilibrium models 11. Some applications: unions and wages Appendix: Some results on truncated distributions Bibliography Index.
13,828Â citations
13,118Â citations
TL;DR: In this paper, the authors present evidence consistent with theories that small boards of directors are more effective, using Tobin's Q as an approximation of market valuation, and find an inverse association between board size and firm value in a sample of 452 large U.S. industrial corporations.
6,611Â citations
TL;DR: This article examined the relation between the monitoring of CEOs by inside and outside directors and CEO resignations using stock returns and earnings changes as measures of prior performance, and found that there is a stronger association between prior performance and the probability of a resignation.
4,463Â citations