Does the Location of Directors Matter? Information Acquisition and Board Decisions

Alam, Zinat S.; Chen, Mark A.; Ciccotello, Conrad S.; Ryan, Harley E.

doi:10.2139/ssrn.1571862

Cited by 35 publications

(37 citation statements)

References 90 publications

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“…Boone et al (2007) found that a number of variables related to the development of the business of firms that have made an initial public offering have a systematic impact on board size and composition. A more recent paper by Alam et al (2014) also found that the optimal characteristics of independent board members will differ depending on the business that the firm is operating. They found " .…”

Section: Unbiased Information Dissemination As a Challenge For Corpormentioning

confidence: 99%

Liquidity and Corporate Governance

Berglund

2020

JRFM

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This paper discusses the relationship between stock market liquidity and corporate governance. Both concepts are widely investigated from different angles in the literature. It is generally agreed that they are related so that better corporate governance implies higher liquidity for shares of listed companies. However, the importance of good corporate governance for the market liquidity of the share will differ depending on the characteristics of the firm’s business. Good corporate governance will be particularly important in reducing agency problems in firms where the business is subject to a high degree of uncertainty. Proper corporate governance, in other words, matters most for firms where external assessment of the firm’s business prospects is difficult, while it is less important for value creation in firms where the business is easier to understand.

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Section: Unbiased Information Dissemination As a Challenge For Corpormentioning

confidence: 99%

Liquidity and Corporate Governance

Berglund

2020

JRFM

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“…Finally, firms may wish to appoint academics from geographically close universities to lower the cost of gathering information (Alam et al, 2013).…”

Section: Motives For Academic Director Appointmentsmentioning

confidence: 99%

Appointments of academic directors

White

Woidtke

Black

et al. 2014

Journal of Corporate Finance

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We examine the outside director selection process using unique data on appointments of academic directors. Overall, we find academic directors tend to be appointed by small-and midcap firms expanding their boards. However, we find important differences in both the factors influencing academic appointments and the market's reaction when allowing for heterogeneity.Academics in science, medicine and engineering appear to be appointed for their expertise, and the market reacts favorably. Academic administrators appear to be appointed for their networks, and the market reacts favorably when the administrator is affiliated with a business school but negatively when the administrator is not within close geographic proximity. Business and law professors appear to be appointed for general expertise and prestige, but we find little evidence of any significant market reaction.

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“…For example, anecdotal evidence suggests that directors who oppose the CEO during the board meeting without support from other directors are likely to face retaliation and feel the pressure to resign. 4 These frictions introduce ine¢ ciencies into directors' decision-making behavior. Biased directors may try to skew the board's decisions in the direction of their preferred alternative, while realizing that such decisions are not optimal from shareholders'perspective.…”

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confidence: 99%

“…In the model, the board is contemplating a decision whose 4 Mace (1986) describes a case study where an outside director was excluded from the company's proxy statement after openly criticizing the manager's press releases during a board meeting. "Don't raise questions with the president unless you can, for sure, count on the support of others on the board," commented the director afterwards.…”

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confidence: 99%

Communication and Decision-Making in Corporate Boards

Malenko

2013

Rev. Financ. Stud.

100

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This paper develops a model of communication and decision-making in corporate boards. The key element of the paper is that the quality of board communication is endogenous, because it depends on the e¤ort directors put into trying to communicate their information to others. In the model, directors may have biases regarding board decisions and may also be reluctant to disagree with other directors. If the only interaction between directors is at the decision-making stage, when decisions are made but discussion is limited, these frictions impede e¤ective decision-making because directors' decisions are not fully based on their information. However, if in addition directors can communicate their information more e¤ectively at a cost, then both stronger biases and stronger concerns for conformity at the decision-making stage might improve the board's decisions, because directors have a stronger motivation to convince others of their position. The paper provides implications for the design of board policies, including the use of open vs. secret ballot voting, the frequency of executive sessions of directors, board structure, and the role of committees.

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Does the Location of Directors Matter? Information Acquisition and Board Decisions

Cited by 35 publications

References 90 publications

Liquidity and Corporate Governance

Liquidity and Corporate Governance

Appointments of academic directors

Communication and Decision-Making in Corporate Boards

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