Shareholder valuations are economically and statistically positively correlated with independent directors? power, gauged by social network power centrality. Powerful independent directors? sudden deaths reduce shareholder value significantly; other independent directors? deaths do not. More powerful independent directors Granger cause higher valuations; the converse is not true.
Further tests associate more powerful independent directors with less value-destroying M&A, less free cash flow retention, more CEO accountability, and less earnings management. We posit that more powerful independent directors better detect and counter CEO missteps because of better access to information, greater credibility in challenging errant top managers, or both.
The moral hazard incentives of the bank safety net predict that distressed banks take on more risk and higher leverage. Since many factors reduce these incentives, including charter value, regulation, and managerial incentives, the net economic...Read more
During the revelation of the Weinstein scandal and the emergence of the #MeToo movement, firms with a culture of ethical behavior toward women, proxied by having women among their five highest paid executives, earned excess returns of close to 1....Read more
We explore whether demand factors contribute to low female board participation. We use timevarying public attention to gender equality as a shock that differentially affects the demand for female directors of firms with different ex ante culture...Read more
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