Independent director tenure and corporate transparency

Hui Liang James, Thanh Ngo and Hongxia Wang

The North American Journal of Economics and Finance, 2021, vol. 57, issue C

Abstract: We examine the impact of independent director tenure on corporate transparency. Using a sample of 12,423 firm-year observations from 1997 to 2017, we find that corporate transparency increases in independent director tenure. The results are robust to various variable definitions and model specifications, providing strong evidence supporting the Expertise hypothesis that long-tenured independent directors are better monitors and advisors. We conclude that long-tenured directors benefit firms and their investors by enhancing firm transparency and reducing information risk. Capping independent director tenure is not always beneficial.

Keywords: Independent director tenure; Expertise hypothesis; Management friendly hypothesis; Firm transparency; Information asymmetry; Information environment (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:57:y:2021:i:c:s1062940821000474

DOI: 10.1016/j.najef.2021.101413

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