TY - JOUR
T1 - Managers and investors responses to media exposure of board ineffectiveness
AU - Joe, Jennifer R.
AU - Louis, Henock
AU - Robinson, Dahlia
PY - 2009/6
Y1 - 2009/6
N2 - We analyze the impact of the press on the behavior of various economic agents by examining how media exposure of board ineffectiveness affects corporate governance, investor trading behavior, and security prices. Our focus on board quality is motivated by the strong media criticism to which corporate boards and corporate America, in general, have been recently subjected. The results indicate that media releases of (noisy) information have significant economic consequences. In particular, media exposure of board ineffectiveness forces the targeted agents to take corrective actions and enhances shareholder wealth. Individual investors appear to react negatively to the media exposure, whereas investment firms act as if they anticipate the targeted firms corrective actions.
AB - We analyze the impact of the press on the behavior of various economic agents by examining how media exposure of board ineffectiveness affects corporate governance, investor trading behavior, and security prices. Our focus on board quality is motivated by the strong media criticism to which corporate boards and corporate America, in general, have been recently subjected. The results indicate that media releases of (noisy) information have significant economic consequences. In particular, media exposure of board ineffectiveness forces the targeted agents to take corrective actions and enhances shareholder wealth. Individual investors appear to react negatively to the media exposure, whereas investment firms act as if they anticipate the targeted firms corrective actions.
UR - http://www.scopus.com/inward/record.url?scp=70350374474&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=70350374474&partnerID=8YFLogxK
U2 - 10.1017/S0022109009990044
DO - 10.1017/S0022109009990044
M3 - Article
AN - SCOPUS:70350374474
SN - 0022-1090
VL - 44
SP - 579
EP - 605
JO - Journal of Financial and Quantitative Analysis
JF - Journal of Financial and Quantitative Analysis
IS - 3
ER -