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Korean Academic Society of Business Administration
[ Article ]
korean management review - Vol. 51, No. 6, pp.1703-1737
ISSN: 1226-1874 (Print)
Print publication date 31 Dec 2022
Received 11 Jul 2022 Accepted 23 Aug 2022
DOI: https://doi.org/10.17287/kmr.2022.51.6.1703

이사 후보에 대한 의결권 반대 사유와 이사회 효율성 및 기업가치와의 관계

Yoona Lee ; Jiyoon Lee
(First Author) Korea Institute of Corporate Governance and Sustainability(KCGS) yoonalee@cgs.or.kr
(Corresponding Author) Yonsei University jiyoonlee@yonsei.ac.kr
Dissent in Director Elections, Board Effectiveness, and Firm Value


Copyright 2011 THE KOREAN ACADEMIC SOCIETY OF BUSINESS ADMINISTRATION
This is an open access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

We examine the relationship between dissent in director elections and board effectiveness. In our analysis, we categorize reasons for dissenting in board votes into prior irresponsible behavior, lack of independence, lack of past attendance, and serving on multiple board seats. We find that having a director who faced dissent on a board of directors reduces board effectiveness, especially in cases involving inside directors who have prior irresponsible behavior on their records, inside directors who serve on multiple boards, and outside directors who lack independence. Moreover, having a director who faced dissent on a board is negatively associated with corporate value. We also find that having a nominating committee that is composed only of outside directors has a moderating effect on this negative association between dissent in director elections and board effectiveness(firm value). We find similar results in an analysis of proxy-voting advice offered by an advisory firm. Our results suggest the importance of incorporating a wider range of board-member characteristics beyond such commonly used measures as outside director ratios and gender diversity.

Keywords:

Director elections, Board of directors, Board effectiveness, Firm value

Acknowledgments

This research is supported by Yonsei Business Research Institute(YBRI) Research Fund (in 2021).

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∙ The author Yoona Lee is an Assistant Research Fellow at Policy Research Division, Korea Institue of Corporate Governance and Sustainability(KCGS). She graduated MS and PhD of Finance from Yonsei University. Her research interests include shareholder activism, corporate social responsibility, and corporate governance, and ESG reporting.

∙ The author Jiyoon Lee is an Assistant Professor at School of Business, Yonsei University. Professor Lee received her MS in Finance from Yonsei University, and PhD in Finance from University of Illinois, Urbana Champaign. Her research interests include empirical corporate finance, corporate social responsibility, corporate governance, and R&D.