Problem Directors and Corporate Risk-Taking
dc.citation.volume | Early View | |
dc.contributor.author | Bhuiyan MBU | |
dc.contributor.author | Liu J | |
dc.contributor.author | Alam A | |
dc.contributor.editor | Johan S | |
dc.date.accessioned | 2024-06-10T02:48:20Z | |
dc.date.available | 2024-06-10T02:48:20Z | |
dc.date.issued | 2023-10-20 | |
dc.description.abstract | This study investigates the impact of a ‘problem director’ on the risk-taking propensity of a firm and its consequences for firm value. Analysing a sample of US companies, we find that corporate risk-taking propensity increases when a firm appoints a problem director. Our results are of economic significance, indicating that a one standard deviation increase in problem director's score leads to a 2.33% to 4.17% increase in corporate risk-taking. Mediation analysis reveals that a problem director increases firm risk-taking through reducing financial reporting quality. Further, a firm's risk-taking increases when a new problem director joins the board, and the damaging effect persists even after the problem director has left. Moreover, if a chief executive officer (CEO) is a problem director, s/he displays a greater predisposition for risk-taking. Moreover, when a problem director also sits on a board led by a problem CEO, we determine that the former will have an even greater propensity to take risks. Further analysis determines that the presence of problem directors damages long-term firm value in the aftermath of risk-taking behaviour. Overall, this study provides fresh evidence revealing a web of connections between a problem director, ineffective corporate governance and a decline in firm value. | |
dc.description.confidential | false | |
dc.format.pagination | 1-31 | |
dc.identifier.citation | Bhuiyan MBU, Liu J, Alam A. (2023). Problem Directors and Corporate Risk-Taking. British Journal of Management. Early View. (pp. 1-31). | |
dc.identifier.doi | 10.1111/1467-8551.12770 | |
dc.identifier.eissn | 1467-8551 | |
dc.identifier.elements-type | journal-article | |
dc.identifier.issn | 1045-3172 | |
dc.identifier.uri | https://mro.massey.ac.nz/handle/10179/69761 | |
dc.language | English | |
dc.publisher | John Wiley and Sons Ltd on behalf of British Academy of Management | |
dc.publisher.uri | https://onlinelibrary.wiley.com/doi/10.1111/1467-8551.12770 | |
dc.relation.isPartOf | British Journal of Management | |
dc.rights | (c) 2023 The Author/s | |
dc.rights | CC BY-NC 4.0 | |
dc.rights.uri | https://creativecommons.org/licenses/by-nc/4.0/ | |
dc.title | Problem Directors and Corporate Risk-Taking | |
dc.type | Journal article | |
pubs.elements-id | 483997 | |
pubs.organisational-group | Other |
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