TITLE

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

AUTHOR(S)
Alam, Zinat S.; Chen, Mark A.; Ciccotello, Conrad S.; Ryan, Harley E.
PUB. DATE
February 2014
SOURCE
Journal of Financial & Quantitative Analysis;Feb2014, Vol. 49 Issue 1, p131
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
Using 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.
ACCESSION #
97129803

 

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