Independent Director Reputation Incentives and Stock Price Informativeness
39 Pages Posted: 10 Sep 2015 Last revised: 7 Dec 2017
Date Written: September 24, 2017
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: Suggested Citation