Board Diversity, Director Dissent, and Monitoring Effectiveness

61 Pages Posted: 20 Aug 2019 Last revised: 2 Jan 2020

See all articles by Jun-Koo Kang

Jun-Koo Kang

Nanyang Technological University (NTU) - Nanyang Business School

Seil Kim

Baruch College, City University of New York

Seungjoon Oh

Peking University - HSBC School of Business

Date Written: January 2, 2020

Abstract

Using Korean firms’ unique director voting data, we examine how board diversity affects director dissension and whether proposal rejection resulting from dissension affects firm value and policies. We find that directors on diverse boards are more likely to dissent. The result is robust to using the 2008 political regime change and director resignation as exogenous shocks to board diversity and controlling for proposal fixed effects in the regressions. Following proposal rejection, firms, particularly those with diverse boards, experience improvements in firm value and governance and a decrease in risk, suggesting that board diversity enhances directors’ monitoring effectiveness.

Keywords: Board Diversity, Director Voting, Dissent, Proposal Rejection, Firm Value, Monitoring Effectiveness

JEL Classification: G30, G32, G34

Suggested Citation

Kang, Jun-Koo and Kim, Seil and Oh, Seungjoon, Board Diversity, Director Dissent, and Monitoring Effectiveness (January 2, 2020). Baruch College Zicklin School of Business Research Paper No. 2019-08-01. Available at SSRN: https://ssrn.com/abstract=3438714 or http://dx.doi.org/10.2139/ssrn.3438714

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

Seil Kim

Baruch College, City University of New York ( email )

One Bernard Baruch Way, Box B12-225
New York, NY 10010
United States

Seungjoon Oh

Peking University - HSBC School of Business ( email )

University Town
Shenzhen, 518055
China

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