Independent director reputation incentives and stock price informativeness

Vathunyoo Sila, Angelica Gonzalez and Jens Hagendorff

Journal of Corporate Finance, 2017, vol. 47, issue C, 219-235

Abstract: We link the reputation incentives of independent directors to the informativeness of stock prices. We show that when more independent directors rank a directorship high, the firm-specific information content in a firm's stock price increases. Further, independent directors with high reputation incentives serve firms that voluntarily disclose more information and display lower crash risk. We find similar results when using plausibly exogenous shocks to the reputation incentives of independent directors. Our results therefore support a causal interpretation of the positive influence that independent directors with reputation incentives exert on corporate transparency.

Keywords: Director reputation; Financial reporting quality; Information asymmetry (search for similar items in EconPapers)
JEL-codes: D82 G10 G34 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (49)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:47:y:2017:i:c:p:219-235

DOI: 10.1016/j.jcorpfin.2017.09.018

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