Abstract

http://ssrn.com/abstract=1585192
 
 

References (47)



 
 

Citations (15)



 


 



Do Independent Director Departures Predict Future Bad Events?


Rüdiger Fahlenbrach


Ecole Polytechnique Fédérale de Lausanne; Ecole Polytechnique Fédérale de Lausanne - Swiss Finance Institute

Angie Low


Nanyang Technological University - Division of Banking & Finance

René M. Stulz


Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

December 17, 2015

Fisher College of Business Working Paper No. 2010-03-007
Charles A. Dice Center Working Paper No. 2010-7
Swiss Finance Institute Research Paper No. 10-17
ECGI - Finance Working Paper No. 281/2010

Abstract:     
Following surprise independent director departures, affected firms have worse stock and operating performance, are more likely to restate earnings, face shareholder litigation, suffer from an extreme negative return event, and make worse mergers and acquisitions. The announcement returns to surprise director departures are negative, suggesting that the market infers bad news from surprise departures. We use exogenous variation in independent director departures triggered by director deaths to test whether surprise independent director departures cause these negative outcomes or whether an anticipation of negative outcomes is responsible for the surprise director departure. Our evidence is more consistent with the latter.

Number of Pages in PDF File: 52

Keywords: Director departures, reputational concerns, director monitoring

JEL Classification: G30, G34


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Date posted: April 12, 2010 ; Last revised: December 18, 2015

Suggested Citation

Fahlenbrach, Rüdiger and Low, Angie and Stulz, René M., Do Independent Director Departures Predict Future Bad Events? (December 17, 2015). Fisher College of Business Working Paper No. 2010-03-007; Charles A. Dice Center Working Paper No. 2010-7; Swiss Finance Institute Research Paper No. 10-17; ECGI - Finance Working Paper No. 281/2010. Available at SSRN: http://ssrn.com/abstract=1585192 or http://dx.doi.org/10.2139/ssrn.1585192

Contact Information

Rüdiger Fahlenbrach
Ecole Polytechnique Fédérale de Lausanne ( email )
Quartier UNIL-Dorigny
Extranef 211
1015 Lausanne, CH-1015
Switzerland
++41-21-693-0098 (Phone)
++41-21-693-3010 (Fax)
HOME PAGE: http://sfi.epfl.ch/fahlenbrach.html
Ecole Polytechnique Fédérale de Lausanne - Swiss Finance Institute ( email )
c/o University of Geneve
40, Bd du Pont-d'Arve
1211 Geneva, CH-6900
Switzerland

Angie Low
Nanyang Technological University - Division of Banking & Finance ( email )
Singapore, 639798
Singapore
Rene M. Stulz (Contact Author)
Ohio State University (OSU) - Department of Finance ( email )
2100 Neil Avenue
Columbus, OH 43210-1144
United States
HOME PAGE: http://www.cob.ohio-state.edu/fin/faculty/stulz

National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
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