Tenure Track Seminar - Yang Cao

Yang Cao (Grenoble Ecole de Management) will present his paper “Director appointments from shareholder connections: Evidence from common ownership.” Please find the abstract below.

The invited speaker is interested in a job tenure track in the department (Area: Finance/Accounting)

Abstract

I examine the role of shareholder connections in the appointment of new directors. Using common ownership as a proxy of shareholder connections between the director and the dual-holding investors, I find that shareholder connection increases the likelihood of the director candidate being appointed. In particular, firms with governance problems tend to hire directors with shareholder connections. Shareholders regard such director appointments as good news and experience an increase in their stock wealth. In addition, directors with stronger shareholder connection receive more voting support from shareholders. Appointments of directors with shareholder connections lead to improvements in the firm’s corporate governance rather than improvements in operational and financial performance. Directors also benefit from the appointments with more external job opportunities and internal compensation increases.