Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
11029779 | Journal of Banking & Finance | 2018 | 41 Pages |
Abstract
By examining board appointments of outside directors who have previously fired a CEO, we study how directors' willingness to take disciplinary actions is related to a firm's performance and risk-taking. Such directors ('disciplinary directors') appear to benefit firms with weak monitoring, but hurt firms in innovative industries. Firms appointing a disciplinary director subsequently exhibit lower idiosyncratic risk, leverage, and R&D expense, make fewer acquisitions, and are more likely to replace poorly performing CEOs. Overall, disciplinary directors appear to influence managerial behavior and shareholder wealth.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Jay Cai, Tu Nguyen,