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Board Advising

Jeffrey L. Coles

Arizona State University (ASU) - Finance Department

Naveen D. Daniel

Drexel University - Department of Finance

Lalitha Naveen

Temple University

February 9, 2012

While the fraction of independent directors has been widely used as a proxy for monitoring effectiveness of the board, there are no clear-cut measures that capture the advising effectiveness of the board. We develop and validate two new measures of board advising: (i) per-outside-director advising quality; and (ii) aggregate board advising capability. These measures, which are based on connections of outside directors to directors on other boards, offer the advantage of being easy to compute from readily available data. We find that as firm demand for advising, as measured by firm complexity, increases: (i) both advising quality and total advising increase; and (ii) the sensitivity of firm value to both advising quality and total advising increase.

Number of Pages in PDF File: 41

Keywords: board advising, advising quality, directors, board characteristics, Corporate Governance, firm complexity

JEL Classification: G32, G34, K22

working papers series

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Date posted: March 14, 2012 ; Last revised: April 22, 2014

Suggested Citation

Coles, Jeffrey L. and Daniel, Naveen D. and Naveen, Lalitha, Board Advising (February 9, 2012). Available at SSRN: http://ssrn.com/abstract=2002250 or http://dx.doi.org/10.2139/ssrn.2002250

Contact Information

Jeffrey L. Coles
Arizona State University (ASU) - Finance Department ( email )
W. P. Carey School of Business
P.O. Box 873906
Tempe, AZ 85287-3906
United States
480-965-4475 (Phone)
480-965-8539 (Fax)
Naveen D. Daniel (Contact Author)
Drexel University - Department of Finance ( email )
LeBow College of Business
Philadelphia, PA 19104
United States
215-895-5858 (Phone)
215-895-2955 (Fax)
HOME PAGE: http://lebow.drexel.edu/Faculty/DanielN
Lalitha Naveen
Temple University ( email )
Fox School of Business and Management
Philadelphia, PA 19122
United States
215-204-6435 (Phone)

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References:  52
Citations:  3

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