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- Publisher Website: 10.1007/s11142-021-09586-9
- Scopus: eid_2-s2.0-85105387964
- WOS: WOS:000647554500001
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Article: The Value of Board Commitment
Title | The Value of Board Commitment |
---|---|
Authors | |
Keywords | Corporate governance Board of Directors Strategic communication |
Issue Date | 2021 |
Publisher | Springer New York LLC. The Journal's web site is located at http://springerlink.metapress.com/openurl.asp?genre=journal&issn=1380-6653 |
Citation | Review of Accounting Studies, 2021, Epub 2021-05-01 How to Cite? |
Abstract | Boards can learn about the environment of their firms through information gathering and communicating with the CEO. In the post-Sarbanes-Oxley environment, some boards have taken steps to shape the communication more proactively by committing to decision rules, such as spending limits, before eliciting a report from the CEO. All else equal, such commitment power on the part of the board improves its communication with the CEO. However, taking into consideration the endogeneity of board composition/bias, we show that the board’s commitment power may in fact impede such communication, in equilibrium, by prompting the shareholders to appoint a more antagonistic board. We identify other cases where, in equilibrium, the board’s commitment power does foster communication, but ultimately reduces shareholder value, because the improved information flow dampens the board’s effort incentives. We discuss applications of our model to board staggering. |
Persistent Identifier | http://hdl.handle.net/10722/299706 |
ISSN | 2023 Impact Factor: 4.8 2023 SCImago Journal Rankings: 5.481 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Baldenius, T | - |
dc.contributor.author | Meng, X | - |
dc.contributor.author | Qiu, L | - |
dc.date.accessioned | 2021-05-26T03:27:55Z | - |
dc.date.available | 2021-05-26T03:27:55Z | - |
dc.date.issued | 2021 | - |
dc.identifier.citation | Review of Accounting Studies, 2021, Epub 2021-05-01 | - |
dc.identifier.issn | 1380-6653 | - |
dc.identifier.uri | http://hdl.handle.net/10722/299706 | - |
dc.description.abstract | Boards can learn about the environment of their firms through information gathering and communicating with the CEO. In the post-Sarbanes-Oxley environment, some boards have taken steps to shape the communication more proactively by committing to decision rules, such as spending limits, before eliciting a report from the CEO. All else equal, such commitment power on the part of the board improves its communication with the CEO. However, taking into consideration the endogeneity of board composition/bias, we show that the board’s commitment power may in fact impede such communication, in equilibrium, by prompting the shareholders to appoint a more antagonistic board. We identify other cases where, in equilibrium, the board’s commitment power does foster communication, but ultimately reduces shareholder value, because the improved information flow dampens the board’s effort incentives. We discuss applications of our model to board staggering. | - |
dc.language | eng | - |
dc.publisher | Springer New York LLC. The Journal's web site is located at http://springerlink.metapress.com/openurl.asp?genre=journal&issn=1380-6653 | - |
dc.relation.ispartof | Review of Accounting Studies | - |
dc.rights | This is a post-peer-review, pre-copyedit version of an article published in [insert journal title]. The final authenticated version is available online at: https://doi.org/[insert DOI] | - |
dc.subject | Corporate governance | - |
dc.subject | Board of Directors | - |
dc.subject | Strategic communication | - |
dc.title | The Value of Board Commitment | - |
dc.type | Article | - |
dc.identifier.email | Qiu, L: lqiu@hku.hk | - |
dc.identifier.authority | Qiu, L=rp02591 | - |
dc.description.nature | link_to_subscribed_fulltext | - |
dc.identifier.doi | 10.1007/s11142-021-09586-9 | - |
dc.identifier.scopus | eid_2-s2.0-85105387964 | - |
dc.identifier.hkuros | 322524 | - |
dc.identifier.volume | Epub 2021-05-01 | - |
dc.identifier.isi | WOS:000647554500001 | - |
dc.publisher.place | United States | - |