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SUMMARY:The Economics of Independent Director Exit and Voice
DTSTART:20231103T114500
DTEND:20231103T130000
DTSTAMP:20260916T012405Z
UID:4671b8b36b28fc16dc9a795b46bb9a9ac6ac396762fe73f3a1267dc9
CATEGORIES:Conferences - Seminars
DESCRIPTION:Jun Yang - Indiana University\nWe jointly examine the economic
  determinants of directors’ exit and dissent decisions using the enactme
 nt of China’s New Securities Law (NSL) as a laboratory.  NSL substanti
 ally raises monetary penalties for failing to detect financial misreportin
 g\, and our findings suggest that directors’ decisions are informative a
 bout misreporting risk. We show that NSL leads to more frequent resignati
 ons\, particularly in firms that have a higher ex-ante likelihood of fin
 ancial misreporting and among directors with greater reputational concerns
 . We find that dissensions on proposals involving financial reporting issu
 es frequently precede resignations\, suggesting that voice and exit are co
 mplementary signals of misreporting risk. We find negative stock market re
 actions to director resignations and the effect is stronger among firms wi
 th higher misreporting risk. We also find that post NSL\, replacement dir
 ectors have characteristics consistent with lower monitoring ability. Oste
 nsibly to alleviate this unintended consequence\, three times as many firm
 s purchase D&O insurance post NSL despite significantly higher premia\, 
 and two years after NSL passed\, new regulation exempted independent direc
 tors from penalties under various circumstances.
LOCATION:UniL Campus\, Room Extra 126
STATUS:CONFIRMED
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