Do independent director departures predict future bad events?

Do independent director departures predict future bad events?

Angie Low, René Stulz

Series number :

Serial Number: 

Date posted :

December 01 2015

Last revised :

May 12 2010
SSRN Share


  • Director departures • 
  • reputational concerns • 
  • director monitoring
Following surprise independent director departures, affected firms have worse stock and operating performance, are more likely to restate earnings, face shareholder litigation, suffer from an extreme negative return event, and make worse mergers and acquisitions. The announcement returns to surprise director departures are negative, suggesting that the market infers bad news from surprise departur
es. We use exogenous variation in independent director departures triggered by director deaths to test whether surprise independent director departures cause these negative outcomes or whether an anticipation of negative outcomes is responsible for the surprise director departure. Our evidence is more consistent with the latter.


Real name:
Angie Low