Accounting for Taste: Board Member Preferences and Corporate Policy Choices

Scott Richardson, A. Irem Tuna and Peter Wysocki

No 4307-03, Working papers from Massachusetts Institute of Technology (MIT), Sloan School of Management

Abstract: This paper explores whether firms that share common directors also pursue similar corporate policies. Using a sample of 885 U.S. firms with common directors, we find that director fixed effects strongly explain variation in firms' governance, financial, disclosure, and strategic policy choices. Moreover, the director fixed effects provide incremental explanatory power over traditional economic determinants of firms' policies. consistent with our hypotheses, the director effects are less pronounced in large firms, in firms with more outside board members, and for directors with numerous outside board appointments. Our evidence is more consistent with directors and firms "matching" their policy preferences rather than directors "imposing" their policy preferences on firms

Keywords: Board of Directors; Corporate Governance; Corporate Policies; Disclosure (search for similar items in EconPapers)
Date: 2003-05-23
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Citations: View citations in EconPapers (17)

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