Disclosing Directors

Is there a correlation between the composition of the board of directors and the quantity and quality of information disclosed to the market, and in particular with respect to the disclosure of privileged, price-sensitive information? Our work examines this question with respect to the Italian Stock Exchange, considering also the role of minority-appointed directors in light of the Italian rules on slate voting that facilitate the election of directors by institutional investors and other minority shareholders. Based on a unique data-set of hand-picked data, we answer the basic research question in the affirmative. Independent directors and minority-appointed directors appear to have a positive impact on the amount and, to some extent, quality of disclosure, in particular if their have specific professional and educational qualifications (“high-skilled directors”). We also tested if the market reacts to the information that is made public, in order to consider the possible objection that outside directors simply require more disclosure of unimportant information. The event studies we conducted, however, indicate abnormal return in correspondence of the announcements we considered. The study sheds light on the role of independent and minority-appointed directors suggesting that they foster corporate transparency.