Activist Rookie Directors

60 Pages Posted: 2 May 2019 Last revised: 25 Aug 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: August 24, 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 firms whose UIDs are appointed by incumbent boards, particularly when Activist UIDs have relevant experience, when they sit on monitoring committees, and when their sponsors hold larger target ownership. These firms also increase dividends, cut overinvestment, and improve corporate governance post-appointment. We further find that the appointments of Activist UIDs are greeted more positively by the market and that they obtain more favorable shareholder votes and more additional directorships, particularly in larger firms.

Keywords: Activist Unseasoned iIndependent Directors, Activist Shareholder, Monitoring, Firm Vvalue, Announcement Return, Director Voting, Director 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 (August 24, 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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