The Advisory and Monitoring Roles of the Board - Evidence from Disruptive Events
51 Pages Posted: 23 Apr 2020 Last revised: 29 May 2020
Date Written: April 21, 2020
We study the contribution of directors to firm resilience by assessing the relative importance of their advisory and monitoring roles at times of crisis. Based on manually collected US data, we document that four bord-related variables affect market reactions around disruptive events. Board independence and the presence of directors with industry expertise exacerbate the negative share price effect, whereas the converse is true for director busyness and board size. These reactions imply that, in times of crisis, advice-oriented boards fare better than monitoring-oriented boards.
Keywords: Disruptive events, corporate governance, board of directors
JEL Classification: G32, G34
Suggested Citation: Suggested Citation