Boardroom Brawls: An Empirical Analysis of Disputes Involving Directors

Anup Agrawal and Mark A. Chen ()
Additional contact information
Anup Agrawal: Culverhouse College of Business, Tuscaloosa, AL 35487-0224, USA
Mark A. Chen: Robinson College of Business, Department of Finance, Atlanta, GA 30303-3083, USA

Quarterly Journal of Finance (QJF), 2017, vol. 07, issue 03, 1-58

Abstract: We investigate the internal workings of US corporate governance with a hand-collected dataset of director resignations that are related to power struggles within the board. About two-thirds of the conflicts arise because of how board members interact in carrying out their duties, while most of the remaining cases involve disagreements between directors and top management over corporate strategy or financial policy. Conflicts are more likely to occur at companies where the CEO is the founder or is relatively new to the position. Tensions also increase when there are independent directors with large blockholdings. Stock prices decline sharply on average after a director turnover amid dispute, which may indicate that investors expect the firm to continue to have poor operating performance. The aftermath of such a resignation often includes shareholder class-action lawsuits, proxy contests, asset divestitures, and stock market delistings. Our results highlight the importance of a well-functioning board for reducing agency problems and maximizing shareholder value.

Keywords: Boards of directors; boardroom disputes; board disputes; director disputes; director departures (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S2010139217500069
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:qjfxxx:v:07:y:2017:i:03:n:s2010139217500069

Ordering information: This journal article can be ordered from

DOI: 10.1142/S2010139217500069

Access Statistics for this article

Quarterly Journal of Finance (QJF) is currently edited by Fernando Zapatero

More articles in Quarterly Journal of Finance (QJF) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().