Director attention and firm value
AuthorRenjie, RW; Verwijmeren, P
Source TitleFinancial Management
University of Melbourne Author/sVerwijmeren, Patrick
Document TypeJournal Article
CitationsRenjie, R. W. & Verwijmeren, P. (2020). Director attention and firm value. Financial Management, 49 (2), pp.361-387. https://doi.org/10.1111/fima.12259.
Access StatusThis item is embargoed and will be available on 2021-06-01
In this article, we show that exogenous director distraction affects board monitoring intensity and leads to a higher level of inactivity by management. We construct a firm-level director “distraction” measure by exploiting shocks to unrelated industries in which directors have additional directorships. Directors attend significantly fewer board meetings when they are distracted. Firms with distracted board members tend to be inactive and experience a significant decline in firm value. Overall, this article highlights the impact of limited director attention on the effectiveness of corporate governance and the importance of directors in keeping management active.
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