Reputation Concerns of Independent Directors: Evidence from Individual Director Voting

TitleReputation Concerns of Independent Directors: Evidence from Individual Director Voting
Publication TypeJournal Article
Year of Publication2016
AuthorsJiang W., Wan H.L, Zhao S.
JournalReview of Financial Studies
Volume29
Issue3
Pagination655-696
Date PublishedMar
ISBN Number0893-9454
Accession NumberWOS:000374225000004
Abstract

This study examines the voting behavior of independent directors of public companies in China from 2004-2012. The unique data at the individual-director level overcome endogeneity in both board formation and proposal selection by allowing analysis based on within-board proposal variation. Career-conscious directors, measured by age and the director's reputation value, are more likely to dissent; dissension is eventually rewarded in the marketplace in the form of more outside directorships and a lower risk of regulatory sanctions. Director dissension improves corporate governance and market transparency primarily through the responses of stakeholders (shareholders, creditors, and regulators), to whom dissension disseminates information.

DOI10.1093/rfs/hhv125