Do outside directors with government experience create value?
We examine whether outside directors with government experience add value to their firms. We find that government directors are more likely to miss board meetings and that their appointment announcements are greeted more negatively. Firms with government directors also experience poorer operating pe...
| Main Authors: | , |
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| Other Authors: | |
| Format: | Journal Article |
| Language: | English |
| Published: |
2019
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| Subjects: | |
| Online Access: | https://hdl.handle.net/10356/93614 http://hdl.handle.net/10220/50206 |
| _version_ | 1826127096787763200 |
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| author | Kang, Jun-Koo Zhang, Le |
| author2 | Nanyang Business School |
| author_facet | Nanyang Business School Kang, Jun-Koo Zhang, Le |
| author_sort | Kang, Jun-Koo |
| collection | NTU |
| description | We examine whether outside directors with government experience add value to their firms. We find that government directors are more likely to miss board meetings and that their appointment announcements are greeted more negatively. Firms with government directors also experience poorer operating performance and more negative merger announcement returns, although their mergers are less likely to be challenged by antitrust authorities. These adverse valuation effects are largely alleviated when firms have large government sales, when they operate in regulated industries, or when government directors are politically connected. Using close gubernatorial election outcomes as a natural experiment and an instrumental variables approach to control for endogeneity bias do not change the results. |
| first_indexed | 2024-10-01T07:03:09Z |
| format | Journal Article |
| id | ntu-10356/93614 |
| institution | Nanyang Technological University |
| language | English |
| last_indexed | 2024-10-01T07:03:09Z |
| publishDate | 2019 |
| record_format | dspace |
| spelling | ntu-10356/936142023-05-19T06:44:42Z Do outside directors with government experience create value? Kang, Jun-Koo Zhang, Le Nanyang Business School Firm Value Business::Finance Government Director We examine whether outside directors with government experience add value to their firms. We find that government directors are more likely to miss board meetings and that their appointment announcements are greeted more negatively. Firms with government directors also experience poorer operating performance and more negative merger announcement returns, although their mergers are less likely to be challenged by antitrust authorities. These adverse valuation effects are largely alleviated when firms have large government sales, when they operate in regulated industries, or when government directors are politically connected. Using close gubernatorial election outcomes as a natural experiment and an instrumental variables approach to control for endogeneity bias do not change the results. Accepted version 2019-10-21T06:41:55Z 2019-12-06T18:42:22Z 2019-10-21T06:41:55Z 2019-12-06T18:42:22Z 2018 Journal Article Kang, J.-K., & Zhang, L. (2018). Do outside directors with government experience create value?.Financial Management, 47(2), 209-251. doi:10.1111/fima.12190 0046-3892 https://hdl.handle.net/10356/93614 http://hdl.handle.net/10220/50206 10.1111/fima.12190 en Financial Management © 2018 Financial Management Association International. All rights reserved. This paper was published by Wiley in Financial Management and is made available with permission of Financial Management Association International. 57 p. application/pdf |
| spellingShingle | Firm Value Business::Finance Government Director Kang, Jun-Koo Zhang, Le Do outside directors with government experience create value? |
| title | Do outside directors with government experience create value? |
| title_full | Do outside directors with government experience create value? |
| title_fullStr | Do outside directors with government experience create value? |
| title_full_unstemmed | Do outside directors with government experience create value? |
| title_short | Do outside directors with government experience create value? |
| title_sort | do outside directors with government experience create value |
| topic | Firm Value Business::Finance Government Director |
| url | https://hdl.handle.net/10356/93614 http://hdl.handle.net/10220/50206 |
| work_keys_str_mv | AT kangjunkoo dooutsidedirectorswithgovernmentexperiencecreatevalue AT zhangle dooutsidedirectorswithgovernmentexperiencecreatevalue |