Does the Reputation of Independent Non-Executive Directors Matter: Evidence from Hong Kong

• DOI: 10.2139/ssrn.970527
• Publication Date: 2011-12-28T17:09:43Z
• Authors: Roger King; Qian Peng
• Keywords: Executive director

In response to recent corporate scandals, shareholders and regulators around the world are demanding greater transparency. If indeed, as is often stated, Independent Non-executive Directors (INED) can play an important role in monitoring management enforcement of transparency, then do INEDs' personal reputations matter? This paper examines shareholders' appointments INEDs Hong Kong - a society where ownerships concentrated highly valued. We find that prestigious individuals positively related less risky better performing firms. also associated with smaller IPO underpricing, market reacts new non-replacement less-busy INEDs. However, seems be indifferent reputation replace other These results extend capital literature by providing evidence on certifying signaling quality