No abstract

PurposeThe purpose of this study is to examine the relationship between independent director military service and monitoring effectiveness, focusing on chief executive officer (CEO) compensation.Design/methodology/approachThe authors identify independent directors with military experience using BoardEx data. The authors focus on the level of CEO compensation. The methods used include panel data estimation, propensity score matching analysis and instrumental variable analysis.FindingsThe authors find more powerful CEOs are more likely to appoint independent directors with past military service to the board. Boards with a larger proportion of independent directors with military experience tend to award higher levels of CEO compensation. Moreover, the positive relationship between independent directors with military experience and executive compensation is stronger when the CEO is more powerful.Originality/valueThis paper examines a relatively unexplored director background, directors with military experience, and finds this type of independent director is associated with weak monitoring. The authors contribute to the literature examining the effect of executive and board member military experience on corporations. The authors identify weak monitoring of powerful CEOs as a potential weakness of directors with military experience. This drawback should be considered before appointing a director with military experience to the board.

No abstract

No abstract

PurposePrevious research found that customer financial distress can spillover to supplier firm decisions. The aim of this paper is to examine the investment decisions of suppliers of financially distressed customers.Design/methodology/approachThe paper uses a US sample of customer-supplier relationships from Compustat Segments between 1980 and 2017. The author uses a linear probability model in the baseline regression analysis. To ensure robustness, a logit regression model and an instrumental variable estimation approach are used, instrumenting for distress at the customer level using a negative shock to customer industry demand.FindingsThis study finds suppliers are more likely to reduce their investment in Capex when a customer is financially distressed. Supplier investment efficiency does not improve when a customer is financially distressed as suppliers with a greater likelihood of under-investment reduce their investment, while suppliers with a greater likelihood of over-investment increase their investment. The effect of customer distress on supplier investment decisions is more pronounced for suppliers of economically distressed customers.Originality/valueThis paper examines how suppliers adjust their investment in response to customer distress, providing an additional channel through which customer distress affects suppliers. Overall, this study finds an important real implication of financial distress in the buyer-supplier relationship.