Activist-appointed Directors

Journal of Financial and Quantitative Analysis (JFQA), Forthcoming

52 Pages Posted: 2 May 2019 Last revised: 8 Oct 2020

See all articles by Jun-Koo Kang

Jun-Koo Kang

Nanyang Technological University (NTU) - Nanyang Business School

Hyemin Kim

Monash University - Division of Banking & Finance

Jungmin Kim

School of Accounting and Finance, Hong Kong Polytechnic University

Angie Low

Nanyang Technological University - Division of Banking & Finance

Date Written: April 21, 2020

Abstract

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

Kang, Jun-Koo and Kim, Hyemin and Kim, Jungmin and Low, Angie, Activist-appointed Directors (April 21, 2020). Journal of Financial and Quantitative Analysis (JFQA), Forthcoming, 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

Hyemin Kim

Monash University - Division of Banking & Finance ( email )

Melbourne, 3149
Australia

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)

Angie Low

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

Singapore, 639798
Singapore

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