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Do Boards Affect Performance? Evidence from Corporate Restructuring

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  • Tod Perry

    (Kelley School of Business, Indiana University)

  • Anil Shivdasani

    (Kenan Flagler Business School, University of North Carolina at Chapel Hill)

Abstract

We examine the effect of board composition on the restructuring activities of a sample of 94 firms that experienced a material decline in performance. We document that firms with a majority of outside directors on the board are more likely to initiate asset restructuring and employee layoffs and that the reduction in the scale of operations is larger for these firms than firms without a majority of outside directors. We also find subsequent improvements in operating performance for firms with a majority of outside directors that restructure and conclude that board composition has a material impact on corporate performance.

Suggested Citation

  • Tod Perry & Anil Shivdasani, 2005. "Do Boards Affect Performance? Evidence from Corporate Restructuring," The Journal of Business, University of Chicago Press, vol. 78(4), pages 1403-1432, July.
    • Handle: RePEc:ucp:jnlbus:v:78:y:2005:i:4:p:1403-1432
    DOI: 10.1086/430864
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