What are the determinants of board committees?

Research output: Conference Papers (RGC: 31A, 31B, 32, 33)33_Other conference paperpeer-review

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Detail(s)

Original languageEnglish
Publication statusPresented - 18 Dec 2017

Conference

Title5th Paris Financial Management Conference (PFMC-2017)
LocationIPAG Business School
PlaceFrance
CityParis
Period18 - 20 December 2017

Abstract

This paper examines how firms assign directors with different backgrounds to board committees after the Sarbanes-Oxley Act of 2003. Firms can structure their committees either to maximize the directors' contribution or to avoid strong monitoring. We find that directors with longer tenures and multiple board seats tend to sit on more committees, and this relation is stronger in informationally opaque firms. Our results suggest that firms rely more on directors with within-firm experience and good reputation to make important decisions such as executive turnover and compensation. Closer scrutiny reveals that busy directors are less likely to be assigned to additional committees when they obtain new board seats. This counters the interpretation that firms make busy directors even busier to avoid monitoring. Overall, our findings support the hypothesis that firms structure their committees to minimize the impact of information asymmetry between the managers and the independent directors.

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Citation Format(s)

What are the determinants of board committees? / Lee, Wei-Ming.

2017. 5th Paris Financial Management Conference (PFMC-2017), Paris, France.

Research output: Conference Papers (RGC: 31A, 31B, 32, 33)33_Other conference paperpeer-review