Do Independent Directors Cause Improvements in Firm Transparency?
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Core_Do independent.pdf
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270.7 KB
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Author(s)
Armstrong, Christopher S.
Core, John E.
Guay, Wayne R.
Date Issued
May 2014
Journal
Journal of Financial Economics
Publisher
Elsevier B.V.
Citation
Armstrong, Christopher S., John E. Core, and Wayne R. Guay. “Do Independent Directors Cause Improvements in Firm Transparency?” Journal of Financial Economics 113 (2014) : p.383-403.
Version
Author's final manuscript
Abstract
Although recent research documents a positive relation between corporate transparency and the proportion of independent directors, the direction of causality is unclear. We examine a regulatory shock that substantially increased board independence for some firms, and find that information asymmetry, and to some extent management disclosure and financial intermediation, changed at firms affected by this shock. We also examine whether these effects vary as a function of management entrenchment, information processing costs, and required changes to audit committee independence. Our results suggest that firms can alter their corporate transparency to suit the informational demands of a particular board structure.
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike
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DOI of Published Version
https://doi.org/10.1016/j.jfineco.2014.05.009
