The Supply of Corporate Directors and Board Independence

• 成果类型: Article
• 署名作者: Knyazeva, Anzhela; Knyazeva, Diana; Masulis, Ronald W.
• 署名单位: University of Rochester; University of New South Wales Sydney
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hht020
• 发表日期: 2013
• 页码: 1561
• 关键词: firm performance; HOME BIAS; governance; determinants; OWNERSHIP; geography; COMPENSATION; incentives; INVESTMENT; location

摘要

Empirical evidence on the relations between board independence and board decisions and firm performance is generally confounded by serious endogeneity issues. We circumvent these endogeneity problems by demonstrating the strong impact of the local director labor market on board composition. Specifically, we show that proximity to larger pools of local director talent leads to more independent boards for all but the largest quartile of S&P 1500. Using local director pools as an instrument for board independence, we document that board independence has a positive effect on firm value, operating performance, fraction of CEO incentive-based pay, and CEO turnover.