TY - JOUR
T1 - Corporate boards and SEOs
T2 - The effect of certification and monitoring
AU - Ferreira, Miguel A.
AU - Laux, Paul
PY - 2016/6/1
Y1 - 2016/6/1
N2 - In a sample of underwritten seasoned equity offerings (SEOs), issuers with boards dominated by independent directors experience higher abnormal announcement returns than issuers with boards dominated by insiders. Firm size, transparency, and other governance characteristics do not explain the effect of board independence. The positive relation between board independence and SEO returns is more pronounced for firms with lower monitoring costs and more severe financial constraints. The evidence suggests that independent directors have a positive effect because of their role in controlling both shareholder-manager conflicts (monitoring the use of funds) and current-new shareholder conflicts (certification of the issue's value).
AB - In a sample of underwritten seasoned equity offerings (SEOs), issuers with boards dominated by independent directors experience higher abnormal announcement returns than issuers with boards dominated by insiders. Firm size, transparency, and other governance characteristics do not explain the effect of board independence. The positive relation between board independence and SEO returns is more pronounced for firms with lower monitoring costs and more severe financial constraints. The evidence suggests that independent directors have a positive effect because of their role in controlling both shareholder-manager conflicts (monitoring the use of funds) and current-new shareholder conflicts (certification of the issue's value).
UR - http://www.scopus.com/inward/record.url?scp=84980335343&partnerID=8YFLogxK
U2 - 10.1017/S0022109016000405
DO - 10.1017/S0022109016000405
M3 - Article
AN - SCOPUS:84980335343
VL - 51
SP - 899
EP - 927
JO - Journal of Financial and Quantitative Analysis
JF - Journal of Financial and Quantitative Analysis
SN - 0022-1090
IS - 3
ER -