The 250^th Wenlan Financial Forum

Abstract:
Until now the literature has used what boards look like such as board size and composition to proxy for board decision-making. Using a unique dataset of board minutes, we provide new evidence for what boards actually do inside the boardroom including documenting differences in voting behaviors across key proposal characteristics and contrasting independent directors' voting behaviors against other directors'. Importantly, we are the first to link what boards actually do to firm performance. Contrary to the prevailing perception that directors rarely dissent, we find that directors actively dissent on proposals that are not disclosed to the public. We construct a measure of "active board" to capture boards that actively take major actions aiming to improve firm performance. We find that a more active board generates more information, is more efficient in making decisions, and tends to vote in line with the management. Interestingly, a more active board behaves differently from a more independent board, especially when the board is voting on supervisory proposals. Additionally, the economic determinants that explain the fraction of independent directors on the board have little explanatory power for active boards. Lastly, a more active, but not a more independent, board is associated with better firm performance.

Speaker Introduction:
Jigao Zhu, professor and doctoral supervisor of the Department of Financial Management, International Business School, University of International Business and Economics. His main research areas are accounting and capital markets, and he has published more than 20 papers in authoritative journals at home and abroad such as Economic Research Journal and Management World. He presided over 1 major project of the National Social Science Foundation of China and 3 projects of the National Natural Science Foundation of China. He has won the first prize of the 8th Young Teachers Teaching Basic Skills Competition in Beijing Universities; the second prize of the Beijing Philosophy and Social Sciences Outstanding Achievement Award and many other provincial and ministerial-level teaching and scientific research achievements. He was selected as the fourth batch of national "Ten Thousand Talents Program" young top-notch talents, the Ministry of Finance's high-end accounting talents (academic category), and the third session of the Beijing Higher Education Young Teaching Famous Teachers.