Topic：The Value of Academic Independent Directors:

　　Evidence from China

　　Time: 14:00 PM, October 25, 2019 

Location: 1610, Rear Main Building 

Host: Professor Hu Haifeng 

Speaker: Wei Wei

About the Speaker:

　　Wei wei is a fifth-grade direct doctoral student in Finance from Tsinghua University's Wudaokou School of Finance. She holds a bachelor's degree in applied Economics and a double major in statistics from Beijing Normal University.  Her research interests lie in empirical corporate finance, focusing on corporate governance, corporate innovation and entrepreneurial finance.

　Abstract：

　　This paper investigates the value of academic independent directors’ (ADs’) services in corporate boards by exploring an unexpected policy shock that forces ADs to resign in firms listed in Chinese Stock markets. Our empirical study shows that around the announcement of this policy, the stock prices of firms on whose board ADs sit drop by 2.2%, which can be translated to a 135M RMB loss in firm value. These results suggest a causal relation between AD presence and firm value. ADs with academic backgrounds related to the firms’ industry orientation, with connections to an industry association, and holding top positions in a prestigious university are more valuable to firms. For ADs with business backgrounds, their services are more valuable when sitting on some specific board subcommittees. Moreover, ADs also display better board meeting attendance records. Consistent with the market reactions, the effectiveness of independent director monitoring and advising, and firm fundamentals deteriorate significantly after ADs actually resign.