Year: 2010
Type: report
Abstract: Outside directors have incentives to resign to protect their reputation or to avoid an increase in their workload when they anticipate that the firm on whose board they sit will perform poorly or disclose adverse news.We call these incentives the dark side of outside directors.We find strong support for the existence of this dark side.Following surprise director departures, affected firms have worse stock and operating performance, are more likely to suffer from an extreme negative return event, are more likely to restate earnings, and have a higher likelihood of being named in a federal class action securities fraud lawsuit.
DOI: 10.3386/w15917
Authors: Rüdiger Fahlenbrach, Angie Low, René Stulz
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
Funder: Swiss Finance Institute
OpenAlex ID: W3099475071