TY - JOUR
T1 - Directors’ career concerns
T2 - Evidence from proxy contests and board interlocks
AU - Zhang, Shuran
N1 - Funding Information:
I thank Charles C.Y. Wang (the referee) for detailed and constructive feedback. I am also grateful to Ran Duchin, Stuart Gillan, Cong Wang, and seminar participants at the Chinese University of Hong Kong, the 2016 Australasian Finance and Banking Conference (AFBC), and the 2016 Conference on the Theories and Practices of Securities and Financial Markets (SFM) for helpful comments and suggestions.
Publisher Copyright:
© 2021
PY - 2021/6
Y1 - 2021/6
N2 - This paper studies the disciplinary spillover effects of proxy contests on companies that share directors with target firms, that is, interlocked firms. In difference-in-differences tests, I find that interlocked firms reduce excess cash holdings, increase shareholder payouts, cut CEO compensation, and engage in less earnings management in the year after proxy contests. The effects are more pronounced when both the interlocked and target firms have a unitary board and when the interlocking director is up for election, is younger, or has shorter tenure. Overall, the evidence highlights the importance of directors’ career concerns in policy spillovers across firms with board interlocks.
AB - This paper studies the disciplinary spillover effects of proxy contests on companies that share directors with target firms, that is, interlocked firms. In difference-in-differences tests, I find that interlocked firms reduce excess cash holdings, increase shareholder payouts, cut CEO compensation, and engage in less earnings management in the year after proxy contests. The effects are more pronounced when both the interlocked and target firms have a unitary board and when the interlocking director is up for election, is younger, or has shorter tenure. Overall, the evidence highlights the importance of directors’ career concerns in policy spillovers across firms with board interlocks.
KW - Board interlocks
KW - Career concerns
KW - Corporate governance
KW - Proxy contests
UR - http://www.scopus.com/inward/record.url?scp=85101524520&partnerID=8YFLogxK
U2 - 10.1016/j.jfineco.2021.02.001
DO - 10.1016/j.jfineco.2021.02.001
M3 - Journal article
AN - SCOPUS:85101524520
SN - 0304-405X
VL - 140
SP - 894
EP - 915
JO - Journal of Financial Economics
JF - Journal of Financial Economics
IS - 3
ER -