Director Connectedness: Monitoring Efficacy and Career Prospects

Vincent J. Intintoli, Kathleen M. Kahle, Wanli Zhao

Research output: Contribution to journalArticlepeer-review

10 Scopus citations

Abstract

We examine a specific channel through which director connectedness may improve monitoring: financial reporting quality. We find that the connectedness of independent, non-co-opted audit committee members has a positive effect on financial reporting quality and accounting conservatism. The effect is not significant for non-audit committee or co-opted audit committee members. Our results are robust to tests designed to mitigate self-selection. Consistent with connected directors being valuable, the market reacts more negatively to the deaths of highly connected directors than to the deaths of less connected directors. Better connected directors also have better career prospects, suggesting they have greater incentives to monitor.

Original languageEnglish (US)
Pages (from-to)65-108
Number of pages44
JournalJournal of Financial and Quantitative Analysis
Volume53
Issue number1
DOIs
StatePublished - Feb 1 2018

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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