Professional backgrounds of the independent directors and the disclosures of firm proprietary information. Evidence from US biotechnology firms

• In Event: Financial Accounting and Reporting 1

Abstract

We examine the differential influence of professional backgrounds of the independent directors on firms’ narrative disclosures that potentially reduce not only agency costs but also reduce their firms’ competitive advantages. Using a sample of US biotechnology firms, we find results consistent with the idea that independent directors who lack business and executive experience are sensitive to the competitive costs of disclosing information on early stage products. We find opposite results for the independent directors who lack business experience but who provide links to the wider social community. We conclude that all independent directors are not equal in their influence on firms’ disclosure policies.

Authors

• Luminita Enache, Victoria University of Wellington

• Antonio Parbonetti, Università degli Studi di Padova

• Anup Srivastava, Northwestern University