<p>This study examines whether
directors appointed after a Chief Executive Officer (CEO) assumed office
(“co-opted” directors) affect corporate voluntary disclosure. I find evidence
that firms issue management earnings forecasts less frequently when directors
are co-opted. These results hold even when these directors are considered
independent by regulatory definitions. Cross-sectional tests indicate that my
results are stronger when firms disclose bad news, provide higher pay to
co-opted directors, CEOs have greater ability to withhold disclosure, and
co-opt directors early in the CEO’s tenure. I use NASDAQ/NYSE listing requirements
as an exogenous shock to board co-option and find that director co-option has a
causal link to less voluntary disclosure. I further show that the effect was
robust to the effect of CEOs’ disclosure preferences and experience inside the
firm. This study suggests that boards that appear independent using the
conventional measures may fail to elicit adequate voluntary disclosure to
monitor managers. </p>
| Identifer | oai:union.ndltd.org:purdue.edu/oai:figshare.com:article/15078444 |
| Date | 29 July 2021 |
| Creators | Ha Yoon Yee (11205408) |
| Source Sets | Purdue University |
| Detected Language | English |
| Type | Text, Thesis |
| Rights | CC BY 4.0 |
| Relation | https://figshare.com/articles/thesis/Co-opted_boards_and_voluntary_disclosure/15078444 |
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