Hedge Fund Boards and the Market for Independent Directors

Clifford, Christopher P.; Ellis, Jesse A.; Gerken, William Christopher

doi:10.1017/s0022109018000352

Cited by 6 publications

(5 citation statements)

References 61 publications

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“…This, in turn, leads to high market valuations. Our finding is consistent with prior literature within the industrial sector settings (e.g., Ammann et al 2011;Field et al 2013;Clifford et al 2017). The absence of market valuations for IBs can be justified through the signalling theory.…”

Section: Market Valuations Of Busy Boards Of Directors In Islamic and Conventional Bankssupporting

confidence: 92%

“…Busy directors thus can be assessed as valuable assets for their firms given their extensive and updated industry-specific knowledge. This board can, hence, offer a vital supportive role to inside directors (Clifford et al 2017) as well as have established outside networks that could facilitate access to market sources and other strategic benefits. These reputational benefits can be positively priced by investors, and board busyness can be perceived as value-enhancing for a firm (Muravyev et al 2016).…”

Section: Background and Theoretical Frameworkmentioning

confidence: 99%

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Differential market valuations of board busyness across alternative banking models

Elnahass

Omoteso

Salama

et al. 2019

Rev Quant Finan Acc

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This study comparatively assesses the influence of board busyness (i.e., multiple directorships of outside directors) on stock market valuations of both Islamic and conventional banks. For a sample of listed banks from 11 countries for the period 2010-2015, results show that board busyness is differentially priced by investors depending on the bank type. In conventional banks, board busyness is significantly and positively valued by the stock market. This result suggests that investors perceive some reputational benefits arising from a busy board (e.g., extended industry knowledge, established external networks or facilitation of external market sources). In contrast, we find no supporting evidence on the market valuations of board busyness in Islamic banks. This result might be attributed to, both, the complex governance structure and the uniqueness of the business model which require additional effective monitoring, relative to that employed in conventional banking. Our results also show that investors provide significantly low market valuations for busy Shari'ah advisory board which acts as an additional layer of governance in Islamic banks. Findings in this study offer important policy implications to international banking studies and regulations governing countries with dual-banking systems.

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Section: Market Valuations Of Busy Boards Of Directors In Islamic and Conventional Bankssupporting

confidence: 92%

Section: Background and Theoretical Frameworkmentioning

confidence: 99%

Differential market valuations of board busyness across alternative banking models

Elnahass

Omoteso

Salama

et al. 2019

Rev Quant Finan Acc

View full text Add to dashboard Cite

show abstract

“…Independent directors aim to supervise the business decisions of enterprises to ensure an independent director system (Napitupulu et al, 2020;Taghavi Moghaddam et al, 2018). The independence that comes with their identities and their characteristics as outsiders helps them exercise their supervisory and decision-making functions objectively and impartially (Clifford et al, 2018;Pucheta-Martínez et al, 2019;Yu et al, 2018). Independent directors can make objective and fair decisions when weighing the interests of shareholders and other stakeholders, as they do not have close ties with the parties involved.…”

Section: Corporate Social Responsibilitymentioning

confidence: 99%

Corporate social responsibility, brand value and corporate governance: new evidence from a 3SLS model

Jia

Wang

2023

CMS

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Purpose Taking a dynamic endogenous perspective, this study aims to examine neglected endogeneity issues in the relationship between corporate social responsibility (CSR) and brand value and the relationship’s moderation by corporate governance. Design/methodology/approach The study uses the three-stage least squares (3SLS) method on 990 samples of the 110 most valuable listed companies published by the World Brand Lab for 2013–2021 to empirically test the two-way interactive endogenous relationship between CSR and brand value. Findings The findings reveal that increasing investment in CSR increases brand value in the current period, which prompts companies to reduce investment in social responsibility, resulting in a decline in future brand value. Concerning the moderating effect of corporate governance variables, the size of the board of directors and the board’s proportion of independent directors positively regulate the relationship between CSR and brand value. By contrast, the proportion of executive shareholdings has a negative impact. Originality/value This study’s findings complement previous studies on endogeneity in the relationship between CSR and brand value, and enrich the literature on corporate governance, CSR and brand value as a whole. In addition, the study uses the 3SLS method, which avoids endogeneity problems and eliminates the one-sidedness of the subjective selection of instrumental variables.

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“…Coville and Kleinman (2015), based on a set of US firms, during the period 1999 to 2006 found that board characteristics, including the proportion of independent directors, positively impacted dividend pay-out of the sample firms. Clifford et al (2017), for a set of hedge funds registered with the securities and exchanges commission, during the period 2009 to 2013, concluded, that the funds with independent directors were linked to the reduction in fraud activity. Shawtari et al (2017) assessed a set of Malaysian firms for the period 2002-2011 and established that board independence (measured through the PNED) positively influenced the real performance measured through operating income.…”

Section: Literature Review Theoretical Framework and Development Of Hypothesismentioning

confidence: 99%

Influence of independent directors on the market risks of Indian banks

Shukla

Narayanasamy

Ayyalusamy

et al. 2020

JABS

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Purpose The purpose of this paper is to empirically explore the influence of independent directors (non-executive directors) on the market risks of the Indian banks. Design/methodology/approach This paper is based on the data collected over a period of seven years (2009-2016) for a set of 29 Indian banks that are the constituents of the National Stock Exchange 500 Index. The data for independent directors of the sample banks are extracted from the annual reports of the banks, whereas the data relating to the dependent and control variables are compiled from the Ace equity and the Reserve Bank of India databases. The study uses the panel data method for analysis of the collected data for the sample banks. Findings This study concludes that independent directors increase the market risks for Indian banks (measured through equity beta). Originality/value This is, perhaps, the first paper to look into the impact of independent directors on the market risks of Indian banks. The policymakers and banks may need to be aware of the risk implications of the findings of the study in the Indian context, such that the independent directors enable their banks in reducing the market risks.

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Hedge Fund Boards and the Market for Independent Directors

Cited by 6 publications

References 61 publications

Differential market valuations of board busyness across alternative banking models

Differential market valuations of board busyness across alternative banking models

Corporate social responsibility, brand value and corporate governance: new evidence from a 3SLS model

Influence of independent directors on the market risks of Indian banks

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