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A note on board directors

Author

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  • Donald Fraser
  • Hao Zhang

Abstract

Additional evidence on the importance of independent board directors is provided. A positive and statistically significant link between the shareholder wealth effects of acquisition decisions and the percentage of outside board directors is found. This result is controlled for the possible effects of manager-shareholder interest alignment and synergetic gains. Moreover, the positive wealth effect diminishes as the square of the percentage of outside directors increases, suggesting a critical percentage for outside directors. Also there is evidence that the benefits of outside director monitoring is weakened without a certain level of managerial ownership.

Suggested Citation

  • Donald Fraser & Hao Zhang, 1995. "A note on board directors," Applied Economics Letters, Taylor & Francis Journals, vol. 2(4), pages 103-106.
    • Handle: RePEc:taf:apeclt:v:2:y:1995:i:4:p:103-106
    DOI: 10.1080/758529812
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    Cited by:

    1. McWay, Ryan & Saona, Paolo & Muro, Laura & Jara, Mauricio, 2019. "Contrasting Incentives for Earnings Management: Board Activity and Board Remuneration in Spanish Firms," OSF Preprints xgn3y, Center for Open Science.

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