Directors' Decision-Making Involvement on Corporate Boards
Santa Clara University
November 1, 2011
Using the full set of committee memberships for the directors of Fortune 100 firms (which I collect from annual proxy statements), I introduce a measure to capture the extent of a director’s involvement in making decisions that affect corporate policy, and I provide evidence of substantial variation in directors’ decision-making power both within and across boards. I also show that considering the entire range of decision-making involvement can alter the implications of tests examining the link between board composition and corporate performance. Specifically, I find that the extent of affiliated directors’ committee involvement is substantially and negatively associated with firm value and subsequent operating performance, and I argue that incorporating these differences in decision-making power has important implications for studies in corporate governance.
Number of Pages in PDF File: 52
Keywords: committee involvement, board committees, board of directors
JEL Classification: G3, G34, G38working papers series
Date posted: December 28, 2009 ; Last revised: December 21, 2012
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