Abstract

http://ssrn.com/abstract=1102498
 
 

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How Do Public Companies Adjust Their Board Structures?


David C. Cicero


University of Alabama - Culverhouse College of Commerce & Business Administration

M. Babajide Wintoki


University of Kansas - School of Business

Tina Yang


Villanova University - School of Business

February 10, 2010

Journal of Corporate Finance, Forthcoming

Abstract:     
We show that public companies frequently changed their board structures before implementation of the Sarbanes-Oxley Act, with two-thirds of firms changing board size or independence during an average two-year period. Board changes were associated with changes in firm-specific fundamentals, but the rate of change toward predicted structures was negatively associated with the level of CEO influence. Companies changed board structures in either direction as underlying firm fundamentals changed, consistent with the pursuit of economically efficient board structures. However, board changes have become less frequent since the Sarbanes-Oxley Act was enacted. We provide some evidence that companies became less likely to decrease board independence when changes in fundamentals suggested they should, which may reflect a loss of economic efficiency.

Number of Pages in PDF File: 44

Keywords: board independence, board size, board structure, board reform, corporate governance, regulation, endogeneity, dynamic adjustment

JEL Classification: D23, G34, G38, K22, M14

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Date posted: March 9, 2008 ; Last revised: April 12, 2014

Suggested Citation

Cicero, David C. and Wintoki, M. Babajide and Yang, Tina, How Do Public Companies Adjust Their Board Structures? (February 10, 2010). Journal of Corporate Finance, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1102498 or http://dx.doi.org/10.2139/ssrn.1102498

Contact Information

David C. Cicero (Contact Author)
University of Alabama - Culverhouse College of Commerce & Business Administration ( email )
Culverhouse College of Business
Tuscaloosa, AL 35487-0223
United States
Modupe Babajide Wintoki
University of Kansas - School of Business ( email )
1300 Sunnyside Avenue
Lawrence, KS 66045
United States
Tina Yang
Villanova University - School of Business ( email )
800 Lancaster Avenue
Villanova, PA 19085-1678
United States
610-519-5460 (Phone)
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