Open AccessDirectors’ Decision-Making Involvement on Corporate Boards
Author(s) -
Seoyoung Kim
Publication year - 2020
Publication title -
international journal of economics and finance
Language(s) - English
Resource type - Journals
eISSN - 1916-9728
pISSN - 1916-971X
DOI - 10.5539/ijef.v12n7p72
Subject(s) - corporate governance , proxy (statistics) , accounting , shareholder , shareholder value , business , value creation , affect (linguistics) , marketing , finance , sociology , computer science , industrial organization , communication , machine learning
Using the full set of committee memberships for the directors of Fortune 100 firms (which I collect from annual proxy statements), I introduce a measure to capture the extent of a director’s involvement in discussion and decisions that affect corporate strategy. I document substantial variation in directors’ decision-making involvement both within and across boards, and I provide evidence that this more nuanced yet systematically available measure yields more powerful and better specified tests in examining the link between board composition, accounting performance metrics, and shareholder value. Overall, I argue that incorporating these differences in decision-making power has important implications for studies in corporate governance.