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Post by fireopal on Jun 30, 2009 7:17:46 GMT 4
The Value of Independent Directors: Evidence from Sudden Deaths Bang Dang Nguyen The Chinese University of Hong Kong - Department of Finance, and Center for Economics and Finance Kasper Meisner Nielsen Chinese University of Hong Kong (CUHK) - Department of Finance May 19, 2009 Abstract: We investigate the contributions of independent directors to shareholder value by examining the stock price reaction to sudden deaths in the United States from 1994 to 2007. We have four key findings. First, following the death of an independent director, the firm’s stock price drops by almost 1 percent on average. Second, the degree of independence and the power structure of the board determine the marginal value of independent directors. Third, independence is more valuable in crucial board functions, such as the audit committee. Finally, controlling for director-invariant heterogeneity using a fixed-effects approach, we identify the value of independence over and above the value of individual skills and competences. Overall, our results suggest that independent directors provide a valuable service to shareholders. papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1406903_code451382.pdf?abstractid=1406903&mirid=5
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