Activist Rookie Directors

57 Pages Posted: 2 May 2019

See all articles by Jun-Koo Kang

Jun-Koo Kang

Nanyang Technological University (NTU) - Nanyang Business School

Jungmin Kim

School of Accounting and Finance, Hong Kong Polytechnic University

Hyemin Kim

Nanyang Technological University - Division of Banking & Finance

Angie Low

Nanyang Technological University - Division of Banking & Finance

Date Written: May 1, 2019

Abstract

We examine the value-enhancing role of unseasoned independent directors nominated through shareholder activism events (Activist UIDs). Firms appointing Activist UIDs experience a larger value increase than those appointing Nonactivist UIDs, particularly when Activist UIDs have relevant experience, when they sit on the monitoring committees, and when their sponsors hold large target ownership. These firms also experience a decrease (increase) in investment (CEO compensation delta and dividends) post-appointment. Supporting the view that Activist UIDs add value to firms, the appointments of Activist UIDs are greeted more positively by the market, and they receive more favorable votes and obtain more additional directorships.

Keywords: Activist unseasoned independent directors, Activist shareholder, Monitoring, Firm value, Announcement return, Director voting, Directorial labor market

JEL Classification: G14, G30, G32, G34

Suggested Citation

Kang, Jun-Koo and Kim, Jungmin and Kim, Hyemin and Low, Angie, Activist Rookie Directors (May 1, 2019). Available at SSRN: https://ssrn.com/abstract=3380837 or http://dx.doi.org/10.2139/ssrn.3380837

Jun-Koo Kang (Contact Author)

Nanyang Technological University (NTU) - Nanyang Business School ( email )

Nanyang Avenue, Block S3-01b-54
Singapore, 639798
Singapore
(+65) 6790-5662 (Phone)
(+65) 6791-3697 (Fax)

HOME PAGE: http://www.nbs.ntu.edu.sg/nbs_corporate/divisions/bnf/index.asp

Jungmin Kim

School of Accounting and Finance, Hong Kong Polytechnic University ( email )

M757 Li Ka Shing Tower
Hung Hom, Kowloon
Hong Kong
852 2766 7061 (Phone)

Hyemin Kim

Nanyang Technological University - Division of Banking & Finance ( email )

Singapore, 639798
Singapore

Angie Low

Nanyang Technological University - Division of Banking & Finance ( email )

Singapore, 639798
Singapore

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