Finance Seminar（2015-13）

Topic: Independent Director Reputation Incentives: Major Board Decisions and Corporate Outcomes

Speaker: Ronald W. Masulis, University of New South Wales

Time: Wednesday, 13May, 10:00-11:30

Location: Room 217, Guanghua Building 2

Abstract: We find a large body of evidence that reputation incentives of independent directors vary across firms and significantly influence important board decisions and firm outcomes. When more independent directors rank the directorship highly, these firms are associated with greater equity based CEO compensation and fewer actions documented to hurt director reputation and more actions shown to benefit shareholder wealth and director reputation. These results are unchanged when accounting for potential endogeneity under multiple approaches. Our evidence supports the conclusion that director reputation affects key board decisions and shareholder value by influencing the allocation of director efforts across their multiple directorships.