[2015년 제 3차] Identifying Empirically Robust Board Characteristic
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2015-08-26
We use representative empirical analyses to examine the relations between 25 board characteristics used in prior work and Tobin’s Q (to capture aspects of firm value affected by advising skills) and then CEO compensation (where board monitoring skills are likely important). We find that Board Size, Director Age, CEO Tenure and the presence of Family Directors are robustly related to Tobin’s Q. As regards CEO compensation, we find that Board Size, Director Tenure, and the proportion the board that serve as Outside CEOs are all robustly related. Additionally, these characteristics largely parallel a set of factors derived from principal components analysis (PCA) and have slightly greater explanatory power. We suggest that researchers interested in controlling for board structure in their analyses will likely find the PCA factors useful. In contrast, those more interested in the specific aspects of board structure that are empirically important when examining the board’s role as advisors or monitors should consider controlling for the EBA robust board characteristics that we identify. More generally, our analysis provides a starting point for assessing the empirical importance of new board characteristics as they arise.