The Supply of Corporate Directors and Board Independence

Knyazeva, Anzhela; Knyazeva, Diana; Masulis, Ronald W.
June 2013
Review of Financial Studies;Jun2013, Vol. 26 Issue 6, p1561
Academic Journal
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.


Related Articles

  • Management Forecast Accuracy and CEO Turnover. Lee, Sam Sunghan; Matsunaga, Steven R.; Park, Chul W. // Accounting Review;Nov2012, Vol. 87 Issue 6, p2095 

    We investigate whether management forecast accuracy provides a signal regarding CEOs' ability to anticipate and respond to future events by examining the relation between management forecast errors and CEO turnover. We find that the probability of CEO turnover is positively related to the...

  • It's Unanimous: Prince to Be Citi Chairman. Mazzucca, Tim // American Banker;3/22/2006, Vol. 171 Issue 55, p18 

    This article reports that Citigroup Inc. said that its board has unanimously elected CEO Charles O. Prince to succeed Sanford I. Weill as chairman. The move was expected ever since Weill named Prince CEO in July 2003. Prince will remain CEO and Weill will become chairman emeritus.

  • TRUTH IS LOST AMIDST CHAOS, CORPORATE CONFESSIONALS. Sraeel, Hooly // U.S. Banker;Aug2002, Vol. 112 Issue 8, p8 

    Comments on the need for board members independence from chief executive officers. Compliance of corporations with the law; Accountability of executive teams on corporate operations; Assurance of customer satisfaction by the companies.

  • ADVICE VS. OVERSIGHT. Elson, Charles M. // Conference Board Review;Summer2010, Vol. 47 Issue 4, p49 

    The author emphasizes that the role of a company's board of directors is to monitor the chief executive officer's (CEO) performance, and questions the idea that CEOs should require a board member to perform according to his or her expectations.

  • The Impact of Operational Diversity on Corporate Philanthropy: An Empirical Study of U.S. Companies. Kabongo, Jean; Chang, Kiyoung; Li, Ying // Journal of Business Ethics;Aug2013, Vol. 116 Issue 1, p49 

    This paper investigates the impact of diversity on corporate philanthropy. Compared to previous studies that have considered the influence of board diversity and CEO gender on corporate philanthropy, this study introduces the concept of operational diversity, which is the implementation of...

  • How Much Is Too Much? Board of Director Responses to Shareholder Concerns About CEO Stock Options. Gillis, William E.; Combs, James G. // Academy of Management Perspectives;May2006, Vol. 20 Issue 2, p70 

    The article discusses a study which examined the response of board of directors to shareholder concerns about CEO stock options. The authors studied how shareholders react differently to the announcement of stock option plans and whether negative shareholder votes translate into subsequent...

  • CEO TENURE AS A DETERMINANT OF CEO PAY. Hill, Charles W. L.; Phan, Phillip // Academy of Management Journal;Sep91, Vol. 34 Issue 3, p707 

    Our hypotheses were that the influence of chief executive officers (CEOs) over boards of directors and the likelihood that the CEOs' compensation packages will reflect their preferences increase with CEO company tenure. Results of empirical tests were consistent with this argument, suggesting...

  • Trouble@Twitter. Hempel, Jessi // Fortune;5/2/2011, Vol. 163 Issue 6, p66 

    The article focuses on corporate politics at the microblogging service company Twitter Inc. It states that in March 2011 Twitter co-founder Jack Dorsey was rehired as chief executive officer of Twitter after being demoted by Twitter's board of directors in 2008. It compares Twitter to social...

  • A CHANGING OF THE GUARD: EXECUTIVE AND DIRECTOR TURNOVER FOLLOWING CORPORATE FINANCIAL RESTATEMENTS. Arthaud-Day, Marne L.; Dalton, Catherine M.; Certo, S. Trevis; Dalton, Dan R. // Academy of Management Annual Meeting Proceedings;2005, pA1 

    This study examines the impact of corporate earnings restatements on strategic leaders. We hypothesize that restatement firms will attempt to reestablish organizational legitimacy by removing the leadership associated with the restatement event. As predicted, restatement firms are nearly twice...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics