Independent Director Reputation Incentives and Stock Price Informativeness

39 Pages Posted: 10 Sep 2015 Last revised: 7 Dec 2017

See all articles by Vathunyoo Sila

Vathunyoo Sila

University of Edinburgh

Angelica Gonzalez

University of Edinburgh

Jens Hagendorff

University of Edinburgh - Business School

Date Written: September 24, 2017

Abstract

We find that when more independent directors rank a directorship high, the firm-specific information content in a firm’s stock price increases. Further, independent directors with high reputation incentives serve firms that voluntarily disclose more information and display lower crash risk. We find similar results when using plausibly exogenous shocks to the reputation incentives of independent directors. Our results therefore support a causal interpretation of the positive influence that independent directors with reputation incentives exert on corporate transparency.

Keywords: Director reputation; financial reporting quality; information asymmetry

JEL Classification: D82, G10, G34

Suggested Citation

Sila, Vathunyoo and Gonzalez, Angelica and Hagendorff, Jens, Independent Director Reputation Incentives and Stock Price Informativeness (September 24, 2017). Journal of Corporate Finance, 47: 219-235, 2017, Available at SSRN: https://ssrn.com/abstract=2658035 or http://dx.doi.org/10.2139/ssrn.2658035

Vathunyoo Sila (Contact Author)

University of Edinburgh ( email )

29 Buccleuch Place
Edinburgh, Scotland EH8 9JS
United Kingdom
+447428747109 (Phone)

HOME PAGE: http://https://www.business-school.ed.ac.uk/staff/ben-sila

Angelica Gonzalez

University of Edinburgh ( email )

Old College
South Bridge
Edinburgh, Scotland EH8 9JY
United Kingdom

Jens Hagendorff

University of Edinburgh - Business School ( email )

University of Edinburgh
29 Buccleuch Place
Edinburgh, Scotland EH8 9JS
UNITED KINGDOM

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