Directors' Decision-Making Involvement on Corporate Boards
Santa Clara University
March 10, 2015
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 discussion and decisions that affect corporate policy. I document substantial variation in directors’ decision-making power both within and across boards, and I provide evidence that this more nuanced yet systematically available measure yields more powerful and better specified tests in examining the link between board composition, accounting performance metrics, and shareholder value. Overall, I argue that incorporating these differences in decision-making power has important implications for studies in corporate governance.
Number of Pages in PDF File: 67
Keywords: committee involvement, board committees, board of directors
JEL Classification: G3, G34, G38
Date posted: December 28, 2009 ; Last revised: March 11, 2015