Directors’ career concerns: Evidence from proxy contests and board interlocks

Shuran Zhang

Journal of Financial Economics, 2021, vol. 140, issue 3, 894-915

Abstract: This paper studies the disciplinary spillover effects of proxy contests on companies that share directors with target firms, that is, interlocked firms. In difference-in-differences tests, I find that interlocked firms reduce excess cash holdings, increase shareholder payouts, cut CEO compensation, and engage in less earnings management in the year after proxy contests. The effects are more pronounced when both the interlocked and target firms have a unitary board and when the interlocking director is up for election, is younger, or has shorter tenure. Overall, the evidence highlights the importance of directors’ career concerns in policy spillovers across firms with board interlocks.

Keywords: Proxy contests; Board interlocks; Career concerns; Corporate governance (search for similar items in EconPapers)
JEL-codes: G30 G34 G35 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:140:y:2021:i:3:p:894-915

DOI: 10.1016/j.jfineco.2021.02.001

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