Do board characteristics influence the shareholders' assessment of risk for small and large firms?

Christy, Jonathan A., Matolcsy, Zoltan P., Wright, Anna and Wyatt, Anne (2013) Do board characteristics influence the shareholders' assessment of risk for small and large firms?. Abacus, 49 2: 161-196. doi:10.1111/abac.12005

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Author Christy, Jonathan A.
Matolcsy, Zoltan P.
Wright, Anna
Wyatt, Anne
Title Do board characteristics influence the shareholders' assessment of risk for small and large firms?
Journal name Abacus   Check publisher's open access policy
ISSN 0001-3072
Publication date 2013-06-01
Year available 2013
Sub-type Article (original research)
DOI 10.1111/abac.12005
Open Access Status Not yet assessed
Volume 49
Issue 2
Start page 161
End page 196
Total pages 36
Place of publication Richmond, VIC, Australia
Publisher Wiley-Blackwell
Language eng
Formatted abstract
This paper investigates the association between board characteristics and shareholders’ assessment of their exposure to economic and agency risks as reflected in the volatility of stock returns. Our hypotheses incorporate prior evidence that small and large firms have ‘dramatically’ different board structures, reflecting the firms’ different monitoring and advising needs. We hypothesize and find evidence that only the shareholders of well-established large firms are able to generate positive net benefits, in the form of lower equity risk, from independent boards and well connected independent directors with multiple directorships.We also find professional and formal industry degree qualifications on the board are associated with shareholders’ risk assessment for some small firms consistent with the focus of small firms on building growth and scale. While we find evidence that formal industry professional affiliations (weak evidence) and MBAs provide benefits for the shareholders of large firms, there is limited evidence that financial expertise on the board systematically influences shareholders’ risk assessments for small or large companies. The key conclusion from the evidence in this paper is that a ‘one size fits all’ approach to governance in relation to the board of directors may not meet the diverse needs of companies at different stages of economic development.
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2014 Collection
UQ Business School Publications
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Citation counts: TR Web of Science Citation Count  Cited 3 times in Thomson Reuters Web of Science Article | Citations
Scopus Citation Count Cited 5 times in Scopus Article | Citations
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Created: Tue, 04 Jun 2013, 23:45:29 EST by Karen Morgan on behalf of UQ Business School