Three Essays in Corporate Governance.

Corporate Finance;Governance;Board of Directors;Directors"Experience;Economics;Business;Business Administration

Kang, ShinwooSivadasan, Jagadeesh ;

University of Michigan

关键词: Corporate Finance;    Governance;    Board of Directors;    Directors";    Experience;    Economics;    Business;    Business Administration;   

Others  :  https://deepblue.lib.umich.edu/bitstream/handle/2027.42/102439/kshinwoo_1.pdf?sequence=1&isAllowed=y

瑞士|英语

来源: The Illinois Digital Environment for Access to Learning and Scholarship

【 摘 要 】

In Chapter 1, we find independent directors with CEO experience in a closely-related industry can improve firm value by improving the efficiency of capital expenditures and R&D investments. However, the effectuation of the potential contribution requires sufficient interaction with management. When the interaction is active, the industry-CEO experience has an economically and statistically significant positive impact; otherwise, the impact is insignificant. The interaction is proxied by competitive and dynamic challenges in product markets, the level of new business initiatives, or the frequency of board meetings. All proxies yield consistent evidence. Our findings demonstrate that active management-board interaction is essential to bring out the potential value independent directors can add to the firm. In Chapter 2, I propose fraction of experienced independent directors as an alternative measure of board monitoring. Serving as independent directors requires skills to effectively interact with management, which may be obtained through relevant past experience. Based on a sample of S&P 1500 firms over 2000-2010, I find the fraction of independent directors with at least five years of independent directorship experience proxies monitoring capacity of the board better than board independence. Independent director experience increases firm value when firms operate in non-competitive industry (high need for board monitoring). Board independence does not enhance firm value after controlling for the independent directorship experience. Independent directorship experience also increases CEO turnover-performance sensitivity. Past compensation committee experience may reduce total CEO compensation. In Chapter 3, we investigate performance implications of affiliated directors. Contrary to the view that independent directors may enhance corporate governance, we find affiliated directors may also enhance governance and firm performance: affiliated directors increase CEO pay-for-performance sensitivity, reduce managerial entrenchment, and enhance M&A and operation performance. The affiliation may provide directors better firm-specific information and aligned incentives. Not all affiliated directors are the same: directors affiliated through business relationship lead to subsequently improved performance. However, former employee directors are associated with lower corporate governance and firm performance. Directors that are precedents or descendents of the CEOs are positively associated with improved firm performance, but other types of family-related directors do not show such beneficial relation.