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Creditor control rights and board independence
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Orientador(es)
Resumo(s)
We find that the number of independent directors on corporate boards increases by approximately 24% following financial covenant violations in credit agreements. Most of these new directors have links to creditors. Firms that appoint new directors after violations are more likely to issue new equity, and to decrease payout, operational risk, and CEO cash compensation, than firms without such appointments. We conclude that a firm's board composition, governance, and policies are shaped by current and past credit agreements.
Descrição
Funding agency: European Research Council
Palavras-chave
Accounting Finance Economics and Econometrics