Accounting for Taste: Board Member Preferences and Corporate Policy Choices
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4307-03.pdf
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Author(s)
Richardson, Scott
Tuna, A. Irem
Wysocki, Peter D.
Date Issued
May 23, 2003
Series/Report no.
MIT Sloan School of Management Working Paper;4307-03
Abstract
This paper explores whether firms that share common directors also pursue similar
corporate policies. Using a sample of 885 U.S. firms with common directors, we find
that director fixed effects strongly explain variation in firms' governance, financial,
disclosure, and strategic policy choices. Moreover, the director fixed effects provide
incremental explanatory power over traditional economic determinants of firms'
policies. consistent with our hypotheses, the director effects are less pronounced in
large firms, in firms with more outside board members, and for directors with
numerous outside board appointments. Our evidence is more consistent with directors
and firms "matching" their policy preferences rather than directors "imposing" their
policy preferences on firms
Subjects
Board of Directors
Corporate Governance
Corporate Policies
Disclosure
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