Learning About Directors

57 Pages Posted: 13 Aug 2015 Last revised: 20 Aug 2019

See all articles by Léa H. Stern

Léa H. Stern

University of Washington - Michael G. Foster School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: August 19, 2019


This study investigates the importance of corporate boards by exploiting the predictions from a learning model in which capital markets process information and learn about the quality of incoming directors. The estimates suggest that upon the arrival of a new director, uncertainty about governance quality accounts for 9.5% of return volatility. The learning framework is useful to evaluate the importance of governance attributes and the kinds of directors that are more influential in which circumstances. For instance, women on boards are especially important at times when monitoring is necessary.

Keywords: Boards of Directors, Corporate Governance, Bayesian Learning, Director Turnover

JEL Classification: G30, G34, G39, M12, M51

Suggested Citation

Stern, Lea H., Learning About Directors (August 19, 2019). Available at SSRN: https://ssrn.com/abstract=2642294 or http://dx.doi.org/10.2139/ssrn.2642294

Lea H. Stern (Contact Author)

University of Washington - Michael G. Foster School of Business ( email )

Box 353200
Seattle, WA 98195-3200
United States

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