Managing Reputation: Evidence from Biographies of Corporate Directors

• In Event: Board of Directors: Expertise, Experience and Reputation

Abstract

We examine how corporate directors manage reputation through disclosure choices in biographies in proxy statements filed with the SEC. Directors are more likely to withhold information about directorships at firms that experienced adverse events. Withholding such information is associated with more favorable stock price reactions at appointment and loss of fewer subsequent directorships. Non-disclosure of directorships is significantly reduced following changes to SEC
rules, with the greatest change being for adverse-event directorships. These findings suggest that reputation concerns of corporate directors lead to strategic disclosure choices that have real consequences in both capital and labor markets.

Authors

• Ian Gow, Harvard Business School

• Aida Sijamic Wahid, University of Toronto - Rotman School of Management

• Gwen Yu, Harvard University