Evidence on the value of director monitoring: a natural experiment
Description
I examine the determinants and implications of the level of director monitoring. I use the distance between directors' domiciles and firm headquarters as a proxy for the level of monitoring and the introduction of a new airline route between director domicile and firm HQ as an exogenous shock to the level of monitoring. I find a strong relation between distance and both board meeting attendance and director membership on strategic versus monitoring committees. Increased monitoring, as measured by a reduction in effective distance, by way of addition of a direct flight, is associated with a 3% reduction in firm value. A reduction in effective distance is also associated with less risk-taking, lower stock return volatility, lower accounting return volatility, lower R&D; spending, fewer acquisitions, and fewer patents.
Date Created
The date the item was original created (prior to any relationship with the ASU Digital Repositories.)
2014
Agent
- Author (aut): Bennett, Benjamin
- Thesis advisor (ths): Coles, Jeffrey
- Committee member: Hertzel, Michael
- Committee member: Babenka, Ilona
- Committee member: Custodio, Claudia
- Publisher (pbl): Arizona State University