Experienced Independent Directors

Kang, Shinwoo

doi:10.2139/ssrn.2240650

Cited by 9 publications

(12 citation statements)

References 36 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Thus, director interlocks, elsewhere used to gauge director or CEO busyness (Ferris et al 2003;Fich & Shivdasani 2006), do not capture the phenomenon we study. Controlling for director business or other characteristicsexperience (Kang 2014) or intense monitoring (Faleye et al 2012) likewise preserves our main results. Fama (1980, p. 294) entrusts self-interested independent directors, valued for their reputations for maximizing shareholder value, with informing and, if necessary, disciplining errant CEOs.…”

Section: Introductionsupporting

confidence: 72%

“…Fich and Shivdasani (2006) define as a board in which a majority of independent directors serve on three or more other boards. Including a measure of independent director experience, defined as in Kang (2014) as the independent directors' mean years of experience on boards of publicly traded companies also leaves our results qualitatively unchanged. Controlling for high independent director share ownership (Bhagat and Bolton 2013) also generates results qualitatively similar to the tables.…”

Section: Robustness Checksmentioning

confidence: 70%

See 1 more Smart Citation

Powerful Independent Directors

Fogel

Mørck

2014

SSRN Journal

View full text Add to dashboard Cite

Shareholder valuations are economically and statistically positively correlated with independent directors' power, gauged by social network power centrality. Powerful independent directors' sudden deaths reduce shareholder value significantly; other independent directors' deaths do not. More powerful independent directors Granger cause higher valuations; the converse is not true. Further tests associate more powerful independent directors with less value-destroying M&A, less free cash flow retention, more CEO accountability, and less earnings management. We posit that more powerful independent directors better detect and counter CEO missteps because of better access to information, greater credibility in challenging errant top managers, or both.

show abstract

Section: Introductionsupporting

confidence: 72%

Section: Robustness Checksmentioning

confidence: 70%

Powerful Independent Directors

Fogel

Mørck

2014

SSRN Journal

View full text Add to dashboard Cite

show abstract

“…2011;Kang 2012). One key aspect examined in this emerging literature is multiple directorships, and in particular the case when non-executive directors also serve as executive directors in other firms, whom we call NXXDs.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The importance of independent directorship experience for firm performance is highlighted by Kang (2012). The author finds that both board independence and the fraction of experienced independent directors, two measures of board quality, are positively associated with firm performance (albeit only for firms that face weak product market competition).…”

Section: Literature Reviewmentioning

confidence: 99%

Performance effects of appointing other firms’ executive directors to corporate boards: an analysis of UK firms

Muravyev

Talavera

Weir

2014

Rev Quant Finan Acc

View full text Add to dashboard Cite

“…Higher valuations are associated with independent directors being less busy (Ferris et al, 2003;Fich and Shivdasani 2006;Hauser 2018), less distracted (Masulis and Zhang 2019), more intense monitors (Faleye et al 2011), more experienced (Kang 2013), and more invested in the firm's equality (Bhagat and Bolton 2013). Including these variables alongside leaves our independent director power measures unaffected, suggesting independent director power is a characteristic of independent importance.…”

mentioning

confidence: 94%

Powerful independent directors

Fogel¹,

Ma²,

Mørck

2021

Financial Management

View full text Add to dashboard Cite

Shareholder valuations are economically and statistically positively correlated with independent director power, gauged by a composite of social network power centrality measures. Powerful independent directors' sudden deaths reduce shareholder value significantly; other independent directors' deaths do not, consistent with powerful independent directors increasing firm valuations. Further tests associate more powerful independent directors with less valuedestroying mergers and acquisitions, less free cash flow retention, more CEO accountability, and less earnings management. We interpret these findings as more powerful independent directors better detecting and countering CEO missteps because of better access to information, greater credibility in challenging errant top managers, or both. INTRODUCTIONThe statistical independence of legally independent directors is an ongoing puzzle in corporate finance (Adams et al.2010; Adams 2017). Early work on independent directors (e.g., Weisbach 1988) justifies mandating more corporate directors be independent-that is, not dependent on the corporation except as directors. Independent directors seemed a sensible check on excessive CEO power, which directors who are employees, contractors, or close relatives of the CEO might be reluctant to provide. However, we find independent directors on corporate boards are unrelated to corporate performance measured by shareholder valuation (Q ratios) in data from 1998 through 2009, a period when shareholder valuation was widely accepted as the core objective of boards.We posit that many independent directors become obedient servants to their CEOs, manifesting reflexive obedience to authority heuristic documented in social psychology (Milgram 1963) and neuroeconomics (Suen et al. 2014;Caspar et al. 2020). Confronted with pressure to make a decision, subjects obey authority figures-even authority fig-ures issuing obviously unsound commands, such as Milgram's instructions to subjects to electrocute people.

show abstract

Experienced Independent Directors

Cited by 9 publications

References 36 publications

Powerful Independent Directors

Powerful Independent Directors

Performance effects of appointing other firms’ executive directors to corporate boards: an analysis of UK firms

Powerful independent directors

Contact Info

Product

Resources

About