2022/10/21 by Hamdi Driss · 32 citations
Business, Management and Accounting · #Accounting #Business #Corporate Finance and Governance #Corporate Taxation and Avoidance #Corporate governance #Economics #Finance #Incentive #Investment (military) #Islamic Finance and Banking Studies #Law #Market economy #Monetary economics #Political science #Quality (philosophy) #Shock (circulatory) #Stock (firearms) #Stock price
paper · pdf · doi:10.1017/s0022109022001211
published in Journal of Financial and Quantitative Analysis 58(7), 3027-3057 (Cambridge University Press)
openalex publication_date 2022/10/21 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/04
Abstract This article examines the effect of board governance on investment efficiency. I use the staggered enactment of board reforms in 41 countries as a shock to board structure that exogenously improves the quality of board oversight of managers. I find that investment-Q sensitivity improves by roughly half post-reform. This effect is more pronounced for firms that are more exposed to the reforms or when external governance mechanisms are less likely to discipline managers. These findings suggest that increased board oversight strengthens managers’ incentives to make investment decisions that are more in line with their firms’ growth opportunities.