The Advisory and Monitoring Roles of the Board - Evidence From Disruptive Events

The Advisory and Monitoring Roles of the Board - Evidence From Disruptive Events

Ettore Croci, Gérard Hertig, Layla Khoja, Luh Luh Lan

Series number :

Serial Number: 
673/2020

Date posted :

April 24 2020

Last revised :

April 24 2020
SSRN Share

Keywords

  • Disruptive events • 
  • Corporate governance • 
  • board of directors

We study the contribution of directors to firm resilience by assessing the relative importance of their advisory and monitoring roles at times of crisis. Based on manually collected US data, we document that four bord-related variables affect market reactions around disruptive events.

Board independence and the presence of directors with industry expertise exacerbate the negative share price effect, whereas the converse is true for director busyness and board size. These reactions imply that, in times of crisis, advice-oriented boards fare better than monitoring-oriented boards.

Authors

Professor
Real name:
Ettore Croci
Università Cattolica del Sacro Cuore Milan
Dr.
Real name:
Layla Khoja
Singapore-ETH centre