Journal of Financial Economics Vol. 32 No. 2 1992
Do outside directors monitor managers?
Abstract
Examining 128 tender offer bids made from 1980 through 1987, we categorize outside directors as either independent of or having some affiliation with managers, and find that bidding firms on which independent outside directors hold at least 50% of the seats have significantly higher announcement-date abnormal returns than other bidders. However, the relationship between bidding firms' abnormal stock returns and the proportion of board seats held by independent outside directors is nonlinear, suggesting it is possible to have too many independent outside directors. All results are lost if the traditional inside-outside board classification method is used.
- DOI
- 10.1016/0304-405x(92)90018-s
- Volume
- 32
- Issue
- 2
- Pages
- 195-221
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref