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.
Credit rating actions could discipline management to improve asset allocations, but may also trigger corporate responses to alleviate ﬁnancial constraints. We investigate which effect (if any) dominates, using corporate asset sales as a...Read more
The United Kingdom introduced a Stewardship Code in 2010, followed by a slightly revised iteration in 2012 (the “first version” of the SC). It was premised upon the corporate governance advantages of engagement between institutional investors and...Read more
Using U.S. state legislatures’ staggered adoption of constituency statutes over a 24-year period (1984–2007) as a quasi-natural experiment, we show that greater stakeholder orientation significantly increases firms’ inventory efficiency. Further...Read more
Stricter enforcement of manager post-employment restrictions that strengthen trade secrets protections also limits managers’ ability to accept better employment opportunities. We find that heightened managerial career concerns due to these...Read more