Zombie Board: Board Tenure and Firm Performance
We show that board tenure exhibits an inverted U-shaped relation with firm value and accounting performance. The quality of corporate decisions, such as M&A, financial reporting quality, and CEO compensation, also has a quadratic relation with board tenure. Our results are consistent with the in...
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sg-smu-ink.soa_research-23282018-02-12T03:26:30Z Zombie Board: Board Tenure and Firm Performance HUANG, Sterling HILARY, Gilles We show that board tenure exhibits an inverted U-shaped relation with firm value and accounting performance. The quality of corporate decisions, such as M&A, financial reporting quality, and CEO compensation, also has a quadratic relation with board tenure. Our results are consistent with the interpretation that directors’ on-the-job learning improves firm value up to a threshold, at which point entrenchment dominates and firm performance suffers. To address endogeneity concerns, we use a sample of firms in which an outside director suffered a sudden death, and find that sudden deaths that move board tenure away from (toward) the empirically observed optimum level in the cross-section are associated with negative (positive) announcement returns. The quality of corporate decisions also follows an inverted U-shaped pattern in a sample of firms affected by the death of a director. 2017-11-01T07:00:00Z text application/pdf https://ink.library.smu.edu.sg/soa_research/1329 https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=2328&context=soa_research http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection School Of Accountancy eng Institutional Knowledge at Singapore Management University Board Tenure Firm Value Corporate Policies Learning Entrenchment Accounting Corporate Finance Strategic Management Policy |
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Board Tenure Firm Value Corporate Policies Learning Entrenchment Accounting Corporate Finance Strategic Management Policy HUANG, Sterling HILARY, Gilles Zombie Board: Board Tenure and Firm Performance |
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We show that board tenure exhibits an inverted U-shaped relation with firm value and accounting performance. The quality of corporate decisions, such as M&A, financial reporting quality, and CEO compensation, also has a quadratic relation with board tenure. Our results are consistent with the interpretation that directors’ on-the-job learning improves firm value up to a threshold, at which point entrenchment dominates and firm performance suffers. To address endogeneity concerns, we use a sample of firms in which an outside director suffered a sudden death, and find that sudden deaths that move board tenure away from (toward) the empirically observed optimum level in the cross-section are associated with negative (positive) announcement returns. The quality of corporate decisions also follows an inverted U-shaped pattern in a sample of firms affected by the death of a director. |
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HUANG, Sterling HILARY, Gilles |
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HUANG, Sterling HILARY, Gilles |
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HUANG, Sterling |
title |
Zombie Board: Board Tenure and Firm Performance |
title_short |
Zombie Board: Board Tenure and Firm Performance |
title_full |
Zombie Board: Board Tenure and Firm Performance |
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Zombie Board: Board Tenure and Firm Performance |
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Zombie Board: Board Tenure and Firm Performance |
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zombie board: board tenure and firm performance |
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Institutional Knowledge at Singapore Management University |
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2017 |
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https://ink.library.smu.edu.sg/soa_research/1329 https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=2328&context=soa_research |
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