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Full-Text Articles in Corporate Finance
Active Independent Directors And Earnings Quality, Yuanto Kusnadi, Bin Srinidhi
Active Independent Directors And Earnings Quality, Yuanto Kusnadi, Bin Srinidhi
Research Collection School Of Accountancy
We examine the relationship between active independent directors and earnings quality for U.S. firms. We construct measures that proxy for activeness of independent directors and find that the proportion of active independent directors is under half on average. Our finding shows that earnings quality increases with the percentage of active independent directors on the board. Once the active independent directors are separated out, the other independent directors do not have any effect on earnings quality. This finding supports the hypothesis that the activeness of independent directors is incrementally significant over just the proportion of independent directors for the quality of …
Initial Public Offering And Optimal Corporate Governance, Albert H. Choi
Initial Public Offering And Optimal Corporate Governance, Albert H. Choi
Law & Economics Working Papers
This paper examines the long-standing debate over whether firms have a market-based incentive to adopt optimal governance provisions at their initial public offering (IPO). Various scholars and practitioners have argued that firms that offer stock to the public with suboptimal governance structure will be penalized by the market through a lower IPO price. At the same time, others have documented empirical evidence that many IPO firms have putatively suboptimal governance provisions, such as anti-takeover provisions and dual class structure, and many, especially those with dual-class structure, enjoy a market premium at their IPO. This paper attempts to bridge this gap. …
Enabling Esg Accountability: Focusing On The Corporate Enterprise, Rachel Brewster
Enabling Esg Accountability: Focusing On The Corporate Enterprise, Rachel Brewster
Faculty Scholarship
Environmental, social, and governance accountability for companies has become an important topic in popular and academic debate in modern society. The idea that corporations should have ESG goals has been embraced by major investment companies, employees, and many corporations themselves. Yet, less attention has been focused on how corporate enterprise law—which governs how corporations structure their relationships between parent corporations and their subsidiaries—creates or contributes to the ESG concerns that the public has with corporations in the first place. Modern enterprise law allows corporations, particularly those operating across national borders, to use their subsidiaries to avoid responsibility for their public …
The Choice Of Peers For Relative Performance Evaluation In Executive Compensation, Zhichuan Li, John Bizjak, Swaminathan Kalpathy, Brian Young
The Choice Of Peers For Relative Performance Evaluation In Executive Compensation, Zhichuan Li, John Bizjak, Swaminathan Kalpathy, Brian Young
Business Publications
Relative performance (RPE) awards have become an important component of executive compensation. We examine whether RPE awards, particularly the peer group, are structured in a manner consistent with economic theory. For RPE awards using a custom peer group, we find that the custom group is significantly more effective than four plausible alternative peer groups at filtering out common shocks, lowering the cost of compensation, and increasing managerial incentives. For RPE awards using a market index, we find some evidence that firms could have selected a custom set of peers with better filtering properties at a lower cost with similar incentives. …