We study the impact of director tolerance on firm risk taking and board monitoring by examining new board appointments of outside directors who have previously fired a CEO. Firms with inadequate monitoring benefit from appointing such directors, as evidenced by improved performance and higher valuation when compared to matching firms. Further, these firms exhibit lower idiosyncratic risk, make less risky acquisitions, experience higher acquisition returns, and are more likely to withdraw bad deals and to replace poorly performing CEOs. They, however, tend to manage earnings when performance deteriorates. Taken together, director tolerance appears to influence managerial behavior and shareholder wealth.
Keywords: Board of directors, Tolerance, Risk Taking, CEO turnover, Director Reputation
JEL Classifications: G34, M12
자료실
자료실
[2014년 제 4차] Director Tolerance: Evidence from the appointments
작성자 : 관리자
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게시일 :
2014-12-12