The Supply of Corporate Directors and Board Independence

Knyazeva, Anzhela; Knyazeva, Diana; Masulis, Ronald W.

doi:10.1093/rfs/hht020

Cited by 573 publications

(354 citation statements)

References 77 publications

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“…First, Knyazeva et al (2013) show that director labor market is highly localized. As industries tend to be geographically localized, we measure the supply of EEDs by identifying and summing all EEDs in every 2-digit SIC codes.…”

Section: Endogenous Eed Appointment and Network Formationmentioning

confidence: 99%

Do Board Expertise and Networked Boards Affect Environmental Performance?

2017

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We examine the resource provision role of the board of directors in ensuring substantive corporate sustainability practices. Specifically, we examine two channels of resource provision (i.e., the presence of non-executive directors with previous experience in environmental issues-EEDs-and network connections of EEDs) that can affect a firm's ethical and environmental behavior. Using greenhouse gas (GHG) emissions data from FTSE 350 firms, as a measure of environmental performance, we show that the presence of EEDs on the board is associated with lower GHG emissions. Further, firms with better-networked EEDs have better environmental performance. A possible mechanism is that firms with EEDs invest more in environmental technology. These results suggest that, in addition to the traditional role of shareholder value maximization, the board of directors also caters to the interests of wider stakeholders of the firm by facilitating substantive ethical practices.

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Section: Endogenous Eed Appointment and Network Formationmentioning

confidence: 99%

Do Board Expertise and Networked Boards Affect Environmental Performance?

2017

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“…Specifically, for each firm, the instrumental variable is specified as the number of other companies with which the firm shares the same first 3 digits of the zip code of the corporate headquarters location and the same 2-digit Standard Industrial Classification (SIC) code but not the same 4-digit SIC code. This variable is intended to capture the potential supply of local director candidates with relevant industry experience and is based on the following stylized facts about the director-firm matching process: i) there is a strong local component to the director labor market, in the sense that director candidates are more likely to join geographically proximate firms (Knyazeva, Knyazeva, and Masulis (2013)); ii) executive experience is a typical background for outside directors (Linck, Netter, and Yang (2008)); and iii) firms are unlikely to invite executives from direct competitors to serve on their boards. We expect that firms located close to a larger number of noncompeting industry peers are more likely to have a greater presence of independent directors with relevant industry experience.…”

Section: Introductionmentioning

confidence: 99%

Industry Expertise of Independent Directors and Board Monitoring

Wang¹,

Xie²,

Zhu³

2015

J. Financ. Quant. Anal.

235

137

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We examine whether the industry expertise of independent directors affects board monitoring effectiveness. We find that the presence of independent directors with industry experience on a firm's audit committee significantly curtails firms' earnings management. In addition, a greater representation of independent directors with industry expertise on a firm's compensation committee reduces chief executive officer (CEO) excess compensation, and a greater presence of such directors on the full board increases the CEO turnoverperformance sensitivity and improves acquirer returns from diversifying acquisitions. Overall, the evidence is consistent with the hypothesis that having relevant industry expertise enhances independent directors' ability to perform their monitoring function.

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“…In general, the research evidence on the effectiveness of independent directors is not a clear cut, indicating both positive and negative aspects of this role in regards to firm's financial performance (e.g. Bhagat and Black [66], Knyazeva et al [67], etc). Also, the percentage of serving independent directors varies greatly across various states.…”

Section: Modelling Resultsmentioning

confidence: 98%

Understanding the Relationships between Environmental and Social Risk Factors and Financial Performance of Global Infrastructure Projects

Kiose¹,

Keen²

2017

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This study analyses the link between environmental and social risk (ESR) factors and the risk-return profile of infrastructure bonds. We provide support for the hypothesis that credit standing of infrastructure bonds is associated with ESR factors. Considering these factors along with bond and issuer specific information we discovered that several environmental and social risk covariates are strongly related to 1) expected risk-return profile of infrastructure bonds; and 2) the balance of risk around the expectation. Thus along with traditional drivers of bond risks (e.g. time to maturity, base interest rate, etc.) we find that also CO 2 emission and percentage of independent directors emerge as important predictors. This study benefits from thoroughly developed, justified and validated non-parametric regression model used to derive key insights into the research question. This work makes a methodological contribution by applying non-parametric modelling techniques to study the financial risk of infrastructure projects. Moreover, it provides bond investors as well as policy makers with the guidance on where to focus their attention.

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The Supply of Corporate Directors and Board Independence

Cited by 573 publications

References 77 publications

Do Board Expertise and Networked Boards Affect Environmental Performance?

Do Board Expertise and Networked Boards Affect Environmental Performance?

Industry Expertise of Independent Directors and Board Monitoring

Understanding the Relationships between Environmental and Social Risk Factors and Financial Performance of Global Infrastructure Projects

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