Higher market valuation of companies with a small board of directors

Yermack, David

doi:10.1016/0304-405x(95)00844-5

Cited by 5,487 publications

(4,453 citation statements)

References 26 publications

Supporting

402

Mentioning

3,620

Contrasting

Unclassified

188

Order By: Relevance

“…The regression sample includes the latest observation for all ExecuComp CEOs for whom the three-year compensation and stock return variables are not missing; the sample analyzed contains 2,072 observations, the estimated regression has an r-squared of 0.456, and estimated coefficients are 0.41 for the log of sales and 0.14 for the three-year stock return, both highly Table III also tabulates various information about the size and governance of the sample firms included in the analysis. In general, no unusual patterns or significant differences exist for these variables in the overall sample or in the forced vs. voluntary turnover subsamples, except that boards of directors are slightly smaller for firms with forced turnover events, a result in line with Yermack's (1996) finding of a greater performance-turnover sensitivity in companies with small boards.…”

Section: A Sample Selectionsupporting

confidence: 54%

Golden Handshakes: Rewards for CEOs Who Leave

Yermack

2004

SSRN Journal

Self Cite

View full text Add to dashboard Cite

This paper studies separation payments made when CEOs leave their firms. In my sample of Fortune 500 companies these packages are widespread and lucrative. Almost 80 percent of CEOs receive separation pay, and its mean present value exceeds $4.5 million. Severance is positively associated with future pay that CEOs might expect until age 65, and is higher when CEOs depart involuntarily. Shareholders react negatively when separation agreements are disclosed, but only in cases of voluntary CEO turnover. Some evidence suggests that severance pay acts as a bonding device between the board and CEO, while other evidence accords with theories of rent extraction.I appreciate helpful comments from John Core and Kose John.

show abstract

Section: A Sample Selectionsupporting

confidence: 54%

Golden Handshakes: Rewards for CEOs Who Leave

Yermack

2004

SSRN Journal

Self Cite

View full text Add to dashboard Cite

show abstract

“…Unsurprisingly, therefore, evidence on the importance of board size is mixed. Yermack (1996), Guest (2009) and Mak and Kusndadi (2005) report a negative relationship between board size and firm performance for US, UK and Asian firms respectively.…”

Section: Board Compositionmentioning

confidence: 99%

New Zealand Corporate Boards in Transition: Composition, Activity and Incentives between 1995 and 2010

Boyle

Ji²

2012

SSRN Journal

View full text Add to dashboard Cite

We document, describe and interpret changes in New Zealand corporate board characteristics between 1995 and 2010, a period centred around the 2003 introduction of the NZX Corporate Governance Best Practice Code. Unsurprisingly, the representation of non-executive, independent and female directors on NZ boards rose during the period, as did real chair and director fees and the importance of board committees, while average board size fell. Perhaps more surprisingly, much of this movement occurred before 2003. However, the magnitude of these changes frequently varies according to firm size, and there are some intriguing differences between New Zealand board characteristics and those prevailing in other, larger, countries. We use this information to identify a number of unanswered questions about New Zealand corporate boards.JEL classification: G34, G38

show abstract

“…Such a claim is essentially based on the consideration that, when a board has too many members, they inevitably take on a purely symbolic role and their activities become disjointed from the management processes. This theory is also held by Eisenberg et al (1998) and Yermack (1996). The former has identified a negative relationship between a board's size and Tobin's Q ratio 3 , in a representative sample of Finnish companies.…”

Section: The Institutional and Structural Characteristics Of The Bodmentioning

confidence: 59%

“…Core et al (1999) show that, in the absence of these committees, the remuneration of chief executives tends to be higher. According to Yermack (1996), who indicates how by increasing the size of boards the incentive for the senior management also increases, therefore the committees increase the effectiveness of the control and require lower incentives; -a omination Committee, which provides an important assessment of the effectiveness of the BoD's actions and directs membership turnover. Another interesting aspect, in fact, is the one concerning the relation that exists between corporate performance and the appointment or turnover of directors and other senior management positions.…”

Section: The Organizational Characteristics Of Bodsmentioning

confidence: 99%

Evaluating the Board of Directors of Financial Intermediaries: Competencies, Effectiveness and Performance

2009

View full text Add to dashboard Cite

This paper proposes a model for analysing the effectiveness of boards of directors of financial intermediaries. The European Union recommends that companies in the Member States annually evaluate the performance of their boards. The degree of effectiveness of a board should be appreciated taking into account the business structure, ownership and institutional model of the firm, on the one hand, and the characteristics of its board, in terms of its composition, structure and skills, on the other hand. This paper also outlines the specificity of the role played by boards of directors in financial intermediaries, also in the light of the industry standards and regulations, and provides an overview of the board assessment methodologies proposed in literature, or developed by listed companies on the Anglo-saxon markets, with a view to considering their applicability to the financial sector. Lastly, and based on the foregoing, the paper proposes a model for diagnosing the conditions that need to be put into place to ensure the suitability of boards of directors and to evaluate the performance of both the board as a whole and the individual directors.

show abstract

Higher market valuation of companies with a small board of directors

Cited by 5,487 publications

References 26 publications

Golden Handshakes: Rewards for CEOs Who Leave

Golden Handshakes: Rewards for CEOs Who Leave

New Zealand Corporate Boards in Transition: Composition, Activity and Incentives between 1995 and 2010

Evaluating the Board of Directors of Financial Intermediaries: Competencies, Effectiveness and Performance

Contact Info

Product

Resources

About