Journal of Financial and Quantitative Analysis (JFQA), Forthcoming
52 Pages Posted: 2 May 2019 Last revised: 8 Oct 2020
Date Written: April 21, 2020
We examine the value impact of independent directors nominated by activists (Activist IDs). Firms appointing Activist IDs experience larger value increases than firms appointing other directors, particularly when Activist IDs have private firm experience and when their nominators remain as shareholders. This value increase persists over a long period and is greater than that of activism events without director appointments. The increase is also higher among firms with greater monitoring needs and entrenched boards. Moreover, the appointments of Activist IDs are greeted more positively by the market, and Activist IDs obtain more favorable shareholder votes and additional future directorships.
Keywords: Activist independent directors, Activist shareholder, Monitoring, Firm value, Announcement return, Director voting, Director labor market
JEL Classification: G14, G30, G32, G34
Suggested Citation: Suggested Citation