Does the Location of Directors Matter? Information Acquisition and Board Decisions

AbstractUsing data on over 4,000 individual residential addresses, we find that geographic distance between directors and corporate headquarters is related to information acquisition and board decisions. The fraction of a board’s unaffiliated directors who live near headquarters is higher when information-gathering needs are greater. When the fraction of unaffiliated directors living near headquarters is lower, nonroutine chief executive officer (CEO) turnover is more sensitive to stock performance. Also, the level, intensity, and sensitivity of CEO equity-based pay increase with board distance. Overall, our results suggest that geographic location is an important dimension of board structure that influences directors’ costs of gathering information.

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Board structure, firm performance and risk: Recent evidence from Greece

Corporate Board role duties and composition ◽

10.22495/cbv16i2art3 ◽

2020 ◽

Vol 16 (2) ◽

pp. 35-46

Author(s):

Gerasimos G. Rompotis

Keyword(s):

Firm Performance ◽

Stock Returns ◽

Positive Impact ◽

Chief Executive ◽

Point Of View ◽

Board Structure ◽

Left Wing ◽

New Finding ◽

Two Measures ◽

Using Data

This paper examines the relationship between the characteristics of the board and the performance and risk of a firm using data from forty-five Greek listed companies over the period 2015-2018. The analysis considers various alternative performance measures, both accounting-based and stock-based, as well as two measures for risk. The board characteristics considered are the size of the board, the number of female members on the board, the number of non-executive members on the board, and the duality regarding the roles of the chief executive officer (CEO) and the president of the board. As far as the board size is concerned, the results show no significant impact on performance. This finding is in line with past studies on Greek companies. On the contrary, the presence of women on the board seems to be negatively related to performance. The same seems to be the case for the non-executive members, especially when the stock returns are taken into consideration. Finally, when it comes to duality, the results indicate the occupation of the president and CEO roles by the same person exerts a positive impact on firm performance decreasing, at the same time, its risk. This study contributes to the literature in various ways. First, it uses the most recent data from the Greek market. Furthermore, from a political point of view, the study covers a very interesting period, given that during 2015-2018 Greece had for a first time a left-wing government, a factor that could possibly affect the conduction of business in Greece. In addition, the finding that the duality in the roles of CEO and president can lower the risk of a firm is a new finding. Finally, in general, the results confirm the conclusions of the previous studies on Greek companies about the poor impact of the board on firm performance.

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Accounting Losses as a Heuristic for Managerial Failure: Evidence from CEO Turnovers

Journal of Financial and Quantitative Analysis ◽

10.1017/s0022109018000728 ◽

2018 ◽

Vol 54 (2) ◽

pp. 877-906 ◽

Cited By ~ 3

Author(s):

Aloke (Al) Ghosh ◽

Jun Wang

Keyword(s):

Performance Measures ◽

Chief Executive Officer ◽

Operating Performance ◽

Chief Executive ◽

Ceo Turnover ◽

Positive Relation ◽

Managerial Ability ◽

Financial Problems ◽

Stock Performance ◽

Incremental Information

We study the effects of accounting losses on chief executive officer (CEO) turnover. If accounting losses provide incremental information about managerial ability, boards can utilize the information in losses to assess CEOs’ stewardship of assets, which is why losses may serve as a heuristic for managerial failure. We find a positive relation between losses and subsequent CEO turnover after controlling for other accounting and stock-performance measures. We also find that losses are associated with an increase in board activity and that losses predict poor operating performance and future financial problems. Our results explain why CEOs manage earnings to avoid losses.

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CEOs Under Fire: The Effects of Competition from Inside Directors on Forced CEO Turnover and CEO Compensation

Journal of Financial and Quantitative Analysis ◽

10.1017/s0022109013000318 ◽

2013 ◽

Vol 48 (3) ◽

pp. 669-698 ◽

Cited By ~ 61

Author(s):

Shawn Mobbs

Keyword(s):

Chief Executive Officer ◽

Ceo Compensation ◽

Chief Executive ◽

Ceo Turnover ◽

Stock Performance ◽

Accounting Performance ◽

Inside Directors ◽

Board Monitoring ◽

Firm Selection ◽

Selection Of

AbstractThis study examines board monitoring when a credible chief executive officer (CEO) replacement is on the board. Inside directors whose talents are in greater demand externally, as reflected by their holding outside directorships, are more likely to become CEOs, and their presence is associated with greater forced CEO turnover sensitivity to accounting performance and CEO compensation sensitivity to stock performance. These results reveal that certain insiders strengthen board monitoring by serving as a readily available CEO replacement and contradict the presumption that all insiders are under CEO control. Furthermore, the results persist when accounting for the endogenous firm selection of talented inside directors.

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APA Names Diaz-Granados Deputy Chief Executive Officer

PsycEXTRA Dataset ◽

10.1037/e500672019-001 ◽

2018 ◽

Keyword(s):

Chief Executive Officer ◽

Chief Executive

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Peregrine—Twenty Years of Fraudulent Cash Balances

Issues in Accounting Education ◽

10.2308/iace-50690 ◽

2013 ◽

Vol 29 (2) ◽

pp. 337-348

Author(s):

Randal J. Elder ◽

Diane J. Janvrin ◽

Paul Caster

Keyword(s):

Information System ◽

Chief Executive Officer ◽

Accounting Information ◽

Chief Executive ◽

Cash Balance ◽

Accounting Information System

ABSTRACT In July 2012, Peregrine Financial Group filed for bankruptcy following the discovery that $215 million in customer balances had been embezzled. Investigation revealed that its Chief Executive Officer, Russell Wasendorf, Sr., fooled auditors and regulators for 20 years by preparing fictitious bank statements and cash balance confirmations to hide the theft of cash. The fraud was uncovered when Peregrine's regulator, the National Futures Association (NFA), demanded that Peregrine participate in an electronic confirmation process for verification of customer accounts. This case discusses how the fraud was allowed to go undetected for 20 years, the importance of auditing cash, and how new electronic confirmation technology improves the ability to authenticate confirmation responses. The case is suitable for use in both auditing and accounting information system courses.

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