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We propose that independent directors are likely to play a political role in an institutional setting featuring weak investor protection and strong government intervention. Using Chinese data for 2001-2014, we investigate whether the stock price reaction to an independent director's death is related to his or her political connection. We find a stronger negative reaction to the death announcements of politically connected than politically unconnected independent directors. The magnitude of the reaction is positively related to directors' political rank, and cannot be offset by their firms' political capital. However, we document no evidence of politically connected independent directors exhibiting superior monitoring or consulting performance. Additional analyses show that firms are more inclined to appoint a politically connected independent director as a successor if his or her predecessor also had political connections. Our study broadens scholarly understanding of independent directors' role in a non-Anglo-American setting.

AbstractManuscript TypeEmpiricalResearch Question/IssueUsing the US setting from 1996 to 2006, we examine how the market for independent directors responds to increasingly stringent scrutiny.Research Findings/InsightsDespite the unambiguous increase in the demand for independent directors (with financial expertise) since 2000, independent directors (with financial expertise) have not expanded their board seats but reduced them. Incumbents are more likely to depart from firms that are costly to advise and monitor, but only post‐2000. Meanwhile, we document an influx of new directors to the labor market. These new directors are more likely to be hired by firms that are costly to advise and monitor post‐2000 and are more likely to be financial experts so that the increased demand can be satisfied.Theoretical/Academic ImplicationsWe provide evidence that the demand–supply framework adequately captures the market for independent directors. In particular, rather than the demand effect simply dominating the supply effect for a particular group of directors, the demand is fulfilled by opposing supply effects of different types of directors, specifically incumbents versus new entrants.Practitioner/Policy ImplicationsPolicy makers should not underestimate the (dis)incentives that directors have to provide services to the market when initiating future governance reforms (e.g. writing the limit on the number of directorships held by directors into best practice/law). Firms, especially ones that are costly for directors to advise and monitor, are encouraged to explore effective ways to retain valuable directors and prepare thorough succession plans whenever the supply of directors is expected to shrink.

The current study has attempted to assess whether the Indian independent directors are, in a true sense, independent. Extant Corporate Governance literature has postulated that independent directors protect non-controlling minority shareholders, and defend their interests by lending their expertise to strategy. In practice, they seldom reject any strategy proposed by the executive directors who represent the dominant shareholders' viewpoints. Thus, the independent directors perform advisory roles rather than supervisory roles. The study has assayed that independent directors must cease being subservient to the executive directors and has concluded that mere regulatory changes are insufficient; motivational changes must also accrue to the cause. JEL Classifications: G34, G38

AbstractIn this article, we examine the relation between independent directors with past military service and merger activity. We find that firms with a greater proportion of independent directors with military experience complete fewer mergers, and the deals are of smaller value. Our results are robust to instrumental variable estimation. The reduction in merger and acquisition activity is concentrated in firms with weak CEOs, suggesting independent directors with military service do not improve firm agency problems.

AbstractThis paper extends research on how the background of independent directors may affect the way in which their companies disclose information about corporate social responsibility (CSR). Using a sample of 83 Spanish‐listed firms over the period 2009–2014, the findings of a random effects probit model suggest that, in addition to board independence, having independent directors with political backgrounds and diverse education has a positive impact on their firm's probability of issuing a CSR report following the standards of the Global Reporting Initiative.