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http://hdl.handle.net/10397/94404
Title: | Independent director attention and the cost of equity capital | Authors: | Huang, HH Wang, C Xie, H Zhou, J |
Issue Date: | Jul-2021 | Source: | Contemporary accounting research, July 2021, v. 48, no. 7-8, p. 1468-1493 | Abstract: | We study the relation between independent director attention and the cost of equity capital. Masulis and Mobbs find that a director with multiple directorships distributes her time and effort (i.e., attention) unequally according to the relative prestige of each directorship. We investigate whether a firm's cost of equity capital reflects such unequal distribution of attention by its directors. We find that firms receiving more director attention are associated with a lower cost of equity capital. These firms also have higher accounting information quality. Moreover, the attention from audit committee directors matters more than that from other directors in reducing the cost of equity capital. Robustness checks show that the results are not driven by firm size. Overall, our evidence is consistent with director attention reducing the cost of equity capital through effective monitoring that increases accounting information quality. | Keywords: | Board monitoring Cost of equity capital Director attention Independent director |
Publisher: | Wiley-Blackwell | Journal: | Contemporary accounting research | ISSN: | 0823-9150 | DOI: | 10.1111/jbfa.12522 | Rights: | © 2021 John Wiley & Sons Ltd This is the peer reviewed version of the following article: Huang, H. H., Wang, C., Xie, H., & Zhou, J. (2021). Independent director attention and the cost of equity capital. Journal of Business Finance & Accounting, 48(7-8), 1468-1493, which has been published in final form at https://doi.org/10.1111/jbfa.12522 . This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited. |
Appears in Collections: | Journal/Magazine Article |
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