Corporate governance, debt, and investment policy during the great depression / John R. Graham in Management science, Vol. 57 N° 12 (Décembre 2011)  

Public ISBD [article]  inManagement science > Vol. 57 N° 12 (Décembre 2011) . - pp. 2083-2100 Titre : Corporate governance, debt, and investment policy during the great depression Type de document : texte imprimé Auteurs : John R. Graham, Auteur ; Sonali Hazarika, Auteur ; Krishnamoorthy Narasimhan, Auteur Année de publication : 2012 Article en page(s) : pp. 2083-2100 Note générale : Management Langues : Anglais (eng) Mots-clés : Corporate governance Capital structure Investment policy Great depression Stock market value Résumé : We study a period of severe disequilibrium to investigate whether board characteristics are related to corporate investment, debt usage, and firm value. During the 1930–1938 Depression era, when the corporate sector was shocked by an unprecedented downturn, we document a relation between board characteristics and firm performance that varies in economically sensible ways: Complex firms (that would benefit more from board advice) exhibit a positive relation between board size and firm value, and simple firms exhibit a negative relation between board size and firm value. Moreover, simple firms with large boards do not downsize adequately in response to the severe economic contraction: they invest more (or shrink less) and use more debt during the 1930s. We document similar effects for the number of outside directors on the board. Finally, we also find that companies with properly aligned governance structures are more likely to replace the company president following poor performance. DEWEY : 658 ISSN : 0025-1909 En ligne : http://mansci.journal.informs.org/content/57/12.toc [article] Corporate governance, debt, and investment policy during the great depression [texte imprimé] / John R. Graham, Auteur ; Sonali Hazarika, Auteur ; Krishnamoorthy Narasimhan, Auteur . - 2012 . - pp. 2083-2100. Management Langues : Anglais (eng) in Management science > Vol. 57 N° 12 (Décembre 2011) . - pp. 2083-2100 Mots-clés : Corporate governance Capital structure Investment policy Great depression Stock market value Résumé : We study a period of severe disequilibrium to investigate whether board characteristics are related to corporate investment, debt usage, and firm value. During the 1930–1938 Depression era, when the corporate sector was shocked by an unprecedented downturn, we document a relation between board characteristics and firm performance that varies in economically sensible ways: Complex firms (that would benefit more from board advice) exhibit a positive relation between board size and firm value, and simple firms exhibit a negative relation between board size and firm value. Moreover, simple firms with large boards do not downsize adequately in response to the severe economic contraction: they invest more (or shrink less) and use more debt during the 1930s. We document similar effects for the number of outside directors on the board. Finally, we also find that companies with properly aligned governance structures are more likely to replace the company president following poor performance. DEWEY : 658 ISSN : 0025-1909 En ligne : http://mansci.journal.informs.org/content/57/12.toc

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