Powerful Independent Directors / Kathy Fogel, Liping Ma, Randall Morck.

Format:

Book

Author/Creator:

Fogel, Kathy.

Contributor:

National Bureau of Economic Research.

Ma, Liping.

Morck, Randall.

Series:

Working Paper Series (National Bureau of Economic Research) no. w19809.

NBER working paper series no. w19809

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2014.

Summary:

Shareholder valuations are economically and statistically positively correlated with independent director power, gauged by a composite of social network power centrality measures. Powerful independent directors' sudden deaths reduce shareholder value significantly; other independent directors' deaths do not, consistent with powerful independent directors increasing firm valuations. Further tests associate more powerful independent directors with less value-destroying M&A, less free cash flow retention, more CEO accountability, and less earnings management. We interpret these findings as more powerful independent directors better detecting and countering CEO missteps because of better access to information, greater credibility in challenging errant top managers, or both.

Notes:

Print version record

January 2014.