Reputation Concerns of Independent Directors : Evidence from Individual Director Voting

Research output: Journal Publications and ReviewsRGC 21 - Publication in refereed journalpeer-review

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Original languageEnglish
Pages (from-to)655-696
Journal / PublicationReview of Financial Studies
Issue number3
Online published3 Dec 2015
Publication statusPublished - Mar 2016
Externally publishedYes


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.