Managing Reputation: Evidence from Biographies of Corporate Directors

Abstract

We examine how directors’ reputations are managed through disclosure choices. We focus on disclosures in the director biographies in proxy statements filed with the SEC. We find that a directorship on another board is more likely to be undisclosed when the other firm experienced an adverse event during the director’s tenure. Withholding such information is associated with a more favorable stock price reaction to the director’s appointment and the loss of fewer subsequent directorships. These findings suggest that the concerns about the reputations of corporate directors lead to strategic disclosure choices that have real consequences in capital and labor markets.

Keywords: Director monitoring, reputational concerns, strategic disclosure

JEL Classification: M4, G3, G14