It pays to have friends

• 成果类型: Article
• 署名作者: Hwang, Byoung-Hyoun; Kim, Seoyoung
• 署名单位: Purdue University System; Purdue University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2008.07.005
• 发表日期: 2009
• 页码: 138-158
• 关键词: Board independence; social ties; Executive compensation

摘要

Currently. a director is classified as independent if he or she has neither financial nor familial ties to the CEO or to the firm. We add another dimension: social ties. Using a unique data set, we find that 87% of boards are conventionally independent but that only 62% are conventionally and socially independent. Furthermore, firms whose boards are conventionally and socially independent award a significantly lower level of compensation. exhibit stronger pay-performance sensitivity, and exhibit stronger turnover-performance sensitivity than firms whose boards are only conventionally independent. Our results suggest that social ties do matter and that, consequently, a considerable percentage of the conventionally independent boards are substantively not. (C) 2009 Elsevier B.V. All rights reserved.