Board Expertise: Do Directors from Related Industries Help Bridge the Information Gap?

• 成果类型: Article
• 署名作者: Dass, Nishant; Kini, Omesh; Nanda, Vikram; Onal, Bunyamin; Wang, Jun
• 署名单位: University System of Georgia; Georgia Institute of Technology; University System of Georgia; Georgia State University; Rutgers University System; Rutgers University New Brunswick; Rutgers University Newark; Aalto University; City University of New York (CUNY) System; Baruch College (CUNY)
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hht071
• 发表日期: 2014
• 页码: 1533
• 关键词: POLITICALLY CONNECTED BOARDS; CORPORATE EQUITY OWNERSHIP; VERTICAL MERGERS; capital structure; governance; INVESTMENT; sensitivity; integration; allocation; Suppliers

摘要

We analyze the role of directors from related industries (DRIs) on a firm's board. DRIs are officers and/or directors of companies in the upstream/downstream industries of the firm. DRIs are more likely when the information gap vis-a-vis related industries is more severe or the firm has greater market power. DRIs have a significant impact on firm value/performance, especially when information problems are worse. Furthermore, DRIs help firms handle industry shocks and shorten their cash conversion cycles. Overall, our evidence suggests that firms choose DRIs when the adverse effects due to conflicts of interest are dominated by the benefits due to DRIs' information and expertise.