THREE ESSAYS ON CORPORATE BOARDS        Public

Abstract

My purpose is to examine the composition and structure of corporate boards, and their implications for firm performance and monitoring and disciplinary effectiveness. In my first essay, I explore the nature and extent of financially affiliated directors' involvement within the board. I find that affiliated directors are given substantially greater committee involvement when the CEO is directly involved in apportioning committee assignments, and their involvement is negatively associated with firm value and subsequent operating performance. In my second essay, I examine how social ties affect a director's capacity to objectively monitor and discipline the CEO. I find that CEOs enjoy higher compensation packages that are less sensitive to performance when they share social ties with members of the board. In my third essay, I examine how social ties affect the financial-reporting process, as well as how firms respond to increased regulatory constraints concerning board and committee composition. I find that social ties between the CEO and members of the audit committee contribute to higher levels of earnings management. Moreover, I find that audit committees appointing socially affiliated replacements (for the departing conventionally affiliated members) in the post Sarbanes Oxley period manage earnings more than those that do not, suggesting the growing importance of social ties as an alternate, unregulated attempt by which CEOs capture the financial reporting process.

Table of Contents

Table of Contents Introduction 1

First essay: Affiliated directors: advisors or rubber stamps? 1. Introduction 4 2. Motivation and hypotheses 7 3. Data description and discussion of measures 9 4. CEO, committee, board, and firm characteristics 15 5. Empirical results 23 6. Conclusion 33

Second essay: It pays to have friends 1. Introduction 35 2. Motivation, hypotheses, and identification of social ties 39 3. Data description 45 4. Empirical results 54 5. Contribution and discussion 71 6. Conclusion 74

Third essay: Earnings management and social ties 1. Introduction 75 2. Motivation, identification, and hypotheses 78 3. Data description 82 4. Empirical results 88 5. Conclusion 99

Conclusion 100

Appendices 101

References 120

Tables 129

Figures 168

About this Dissertation

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School	Laney Graduate School
Department	Business
Degree	PhD
Submission	Dissertation
Language	English
Research Field	Economics, Finance
Mot-clé	boards of directors board independence earnings management social ties board committees committee involvement
Committee Chair / Thesis Advisor	Jegadeesh, Narasimhan, Emory University
Committee Members	Chordia, Tarun, Emory University Shanken, Jay, Emory University Mian, Shehzad, Emory University

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