演講者簡介 : Professor Lee received his Ph.D. in Finance from University of Washington, Seattle. He is currently an Assistant Professor at City University of Hong Kong. His research fields are Corporate Governance and Corporate Finance.
演講摘要 : While previous literature on corporate board focuses on the board's impact on firm performance, this paper takes a different angle and studies volatility. Using a sample with S&P 1500 firms from 2000 to 2015, we document a negative relation between average director tenure and return volatility. A one standard deviation increase in board tenure from the mean is associated with a 2.06% proportional decrease in annualized return volatility and a 2.64% proportional decrease in idiosyncratic risk. We also examine return behavior after director deaths and corporate news announcements to mitigate the reverse causality concern. Furthermore, we provide two mechanisms on why board tenure affects volatility. First, long-tenured boards tend to make predictable decisions. Firms with long-tenured boards have smoother capital expenditure pattern and are more likely to promote internal candidates as CEOs. Second, long-tenured boards help mitigate the information asymmetry between firm managers and outside investors. We find evidence that analysts forecasts are more precise for firms with long-tenured directors. We contribute to the literature by showing that board characteristics affects not only the first moment, but also the second moment.
