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Star academicians: Gimmicks or game-changers?

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  • Li, Conggang
  • Xu, Rong
  • Zhou, Yifan

Abstract

This paper examines the benefits of having an executive or director elected as a fellow of the Chinese Academies of Sciences and Engineering (i.e., a star academician). Evidence indicates that markets react positively to news of company executives/directors being elected. We further document that having a fellow spurs innovation, brings additional government subsidy, increases Tobin's q, lowers costs of capital, attracts analyst attention, and suppresses audit fees in the years following successful elections. These outcomes appear to be largely driven by fellows who (i) are executives rather than non-executive directors, and (ii) have held no government office.

Suggested Citation

  • Li, Conggang & Xu, Rong & Zhou, Yifan, 2023. "Star academicians: Gimmicks or game-changers?," Journal of Corporate Finance, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:corfin:v:82:y:2023:i:c:s0929119923001013
    DOI: 10.1016/j.jcorpfin.2023.102452
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    References listed on IDEAS

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    1. Eliezer M. Fich, 2005. "Are Some Outside Directors Better than Others? Evidence from Director Appointments by Fortune 1000 Firms," The Journal of Business, University of Chicago Press, vol. 78(5), pages 1943-1972, September.
    2. Lucian Bebchuk & Alma Cohen & Allen Ferrell, 2009. "What Matters in Corporate Governance?," The Review of Financial Studies, Society for Financial Studies, vol. 22(2), pages 783-827, February.
    3. Pat Akey, 2015. "Valuing Changes in Political Networks: Evidence from Campaign Contributions to Close Congressional Elections," The Review of Financial Studies, Society for Financial Studies, vol. 28(11), pages 3188-3223.
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    Cited by:

    1. Huang, Zijie & Cao, June & Pan, Lei, 2024. "Greening your way to profits: Green strategies and green revenues," Finance Research Letters, Elsevier, vol. 61(C).

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    More about this item

    Keywords

    Chinese science; Board of directors; Social connections; Matthew effect; Certification effect;
    All these keywords.

    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G3 - Financial Economics - - Corporate Finance and Governance
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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