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Industry expertise on corporate boards

Review of quantitative finance and accounting, 2018-02, Vol.50 (2), p.441-479 [Peer Reviewed Journal]

Springer Science+Business Media New York 2017 ;Review of Quantitative Finance and Accounting is a copyright of Springer, (2017). All Rights Reserved. ;ISSN: 0924-865X ;EISSN: 1573-7179 ;DOI: 10.1007/s11156-017-0635-z

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Title:
Industry expertise on corporate boards
Author: Faleye, Olubunmi ; Hoitash, Rani ; Hoitash, Udi
Subjects: Accounting/Auditing ; Boards of directors ; Candidates ; Chief executive officers ; Corporate Finance ; Earnings ; Earnings management ; Econometrics ; Economics and Finance ; Executive compensation ; Expenditures ; Expertise ; Experts ; Finance ; Incentives ; Labor market ; Operations Research/Decision Theory ; Original Research ; R&D ; Research & development ; Research & development expenditures ; Termination
Is Part Of: Review of quantitative finance and accounting, 2018-02, Vol.50 (2), p.441-479
Description: Recent surveys indicate that industry expertise is the most sought-after director qualification. Yet evidence on the value of such expertise is limited. This paper shows that firms that are difficult for non-experts to monitor and advise are more likely to appoint industry expert directors. Such appointments also depend on the supply of industry-experienced candidates in the local director labor market. Board industry expertise reduces R&D-based real earnings management and increases R&D investments. The increase in R&D spending is value-enhancing: firms with industry expert directors receive more patents for the same level of R&D, their R&D spending is associated with lower volatility of future earnings, and their value is higher. Finally, industry expertise is associated with CEO termination and pay incentives that encourage R&D investments.
Publisher: New York: Springer US
Language: English
Identifier: ISSN: 0924-865X
EISSN: 1573-7179
DOI: 10.1007/s11156-017-0635-z
Source: ProQuest Central

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Industry expertise on corporate boards

Springer Science+Business Media New York 2017 ;Review of Quantitative Finance and Accounting is a copyright of Springer, (2017). All Rights Reserved. ;ISSN: 0924-865X ;EISSN: 1573-7179 ;DOI: 10.1007/s11156-017-0635-z

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