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Directors' Decision-Making Involvement on Corporate Boards

Seoyoung Kim

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, G38

working papers series

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Date posted: December 28, 2009 ; Last revised: December 21, 2012

Suggested Citation

Kim, Seoyoung, Directors' Decision-Making Involvement on Corporate Boards (November 1, 2011). Available at SSRN: http://ssrn.com/abstract=1528596 or http://dx.doi.org/10.2139/ssrn.1528596

Contact Information

Seoyoung Kim (Contact Author)
Santa Clara University ( email )
500 El Camino Real
Santa Clara, CA California 95053
United States
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References:  55

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