Document Type

Article

Language

eng

Format of Original

19 p.

Publication Date

12-2014

Publisher

Elsevier

Source Publication

Journal of Corporate Finance

Source ISSN

0929-1199

Abstract

Within the nexus of contracts that makes up the firm, relatively little is known about the relationship between firms and their directors. Using a unique dataset comprising director compensation and activity, I find that firms use meeting fees and equity-based compensation as substitutes. In addition, paying directors for attending board/committee meetings is associated with more active boards and more active monitoring and advising committees. In contrast, a higher proportion of equity-based compensation is positively associated with monitoring activity but negatively associated with advising activity. Furthermore, more active boards and committees are paid more. Finally, I find that the variation in director compensation and activity generally reflects trade-offs between the costs and benefits of director effort, consistent with prior work.

Comments

Accepted version. Journal of Corporate Finance, Vol. 29 (December 2014): 1-19. DOI. © 2014 Elsevier. Used with permission.

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