Shareholder valuations are economically and statistically positively correlated with independent directors? power, gauged by social network power centrality. Powerful independent directors? sudden deaths reduce shareholder value significantly; other independent directors? deaths do not. More powerful independent directors Granger cause higher valuations; the converse is not true.
Further tests associate more powerful independent directors with less value-destroying M&A, less free cash flow retention, more CEO accountability, and less earnings management. We posit that more powerful independent directors better detect and counter CEO missteps because of better access to information, greater credibility in challenging errant top managers, or both.
We propose a theory of subtle discrimination, defined as biased acts that cannot be objectively ascertained as discriminatory. We present a model in...
This study examines the effect of outside director tenure length on firms’ market valuation and the voting behavior of outside directors. We make use...