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| Tekijä: | Rosenstein, S. Wyatt, J. G. |
| Otsikko: | Inside directors, board effectiveness, and shareholder wealth |
| Lehti: | Journal of Financial Economics
1997 : MAY, VOL. 44:2, p. 229-250 |
| Asiasana: | BOARD OF DIRECTORS EFFECTIVENESS COMPANY OWNERSHIP SHAREHOLDERS WEALTH |
| Kieli: | eng |
| Tiivistelmä: | This study examines the stock-market reaction to appointments of inside managers to corporate boards. The examination of noncontaminated inside director announcements finds that the average stock-market reaction is close to zero. The result is in contrast to evidence on outside director announcements. Using similar event-study methods and sampling director announcements over the same period, a positive stock-market reaction to outside director appointments were found. The results suggest that managerial ownership dominates board composition as an effective tool for aligning shareholder and managerial interests. The benefits from the expert knowledge supplied by a new inside director outweigh the costs associated with managerial entrenchment only when managerial and outside shareholder interests are aligned. |
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