Review of Financial Studies Vol. 29 No. 3 2016
Reputation Concerns of Independent Directors: Evidence from Individual Director Voting
Abstract
This study examines the voting behavior of independent directors of public companies in China from 2004-2012. The unique data at the individual-director level overcome endogeneity in both board formation and proposal selection by allowing analysis based on within-board proposal variation. Career-conscious directors, measured by age and the director's reputation value, are more likely to dissent; dissension is eventually rewarded in the marketplace in the form of more outside directorships and a lower risk of regulatory sanctions. Director dissension improves corporate governance and market transparency primarily through the responses of stakeholders (shareholders, creditors, and regulators), to whom dissension disseminates information.
- Volume
- 29
- Issue
- 3
- Pages
- 655-696
- Sources
- bibtex:phds-export.bib