The Impact of a Short-Selling-Friendly Environment on Board Composition

References

• Adams RB, Ferreira D (2007) A theory of friendly boards. J. Finance 62(1):217–250.Crossref, Google Scholar
• Adams RB, Ferreira D (2009) Women in the boardroom and their impact on governance and performance. J. Financial Econom. 94(2):291–309.Crossref, Google Scholar
• Adams RB, Hermalin BE, Weisbach MS (2010) The role of boards of directors in corporate governance: A conceptual framework and survey. J. Econom. Literature 48(1):58–107.Crossref, Google Scholar
• Ahern KR (2017) Information networks: Evidence from illegal insider trading tips. J. Financial Econom. 125(1):26–47.Crossref, Google Scholar
• Akbas F, Meschke F, Wintoki MB (2016) Director networks and informed traders. J. Accounting Econom. 62(1):1–23.Crossref, Google Scholar
• Bennett B, Wang Z (2018) Do short sellers cause CEOs to be fired? Evidence from a randomized experiment. Working Paper Series 2018-06, Ohio State University, Charles A. Dice Center for Research in Financial Economics, Columbus, OH.Google Scholar
• Black BS, Jang H, Kim W (2006) Predicting firms’ corporate governance choices: Evidence from Korea. J. Corporate Finance 12(3):660–691.Crossref, Google Scholar
• Boehmer E, Huszar ZR, Jordan BD (2010) The good news in short interest. J. Financial Econom. 96(1):80–97.Crossref, Google Scholar
• Bruynseels L, Cardinaels E (2014) The audit committee: Management watchdog or personal friend of the CEO? Accounting Rev. 89(1):113–145.Crossref, Google Scholar
• Cai Y, Sevilir M (2012) Board connections and M&A transactions. J. Financial Econom. 103(2):327–349.Crossref, Google Scholar
• Cain MD, McKeon SB, Solomon SD (2017) Do takeover laws matter? Evidence from five decades of hostile takeovers. J. Financial Econom. 124(3):464–485.Crossref, Google Scholar
• Cannella B, Finkelstein S, Hambrick DC (2009) Strategic Leadership: Theory and Research on Executives, Top Management Teams, and Boards, Strategic Management Series (Oxford Academic, New York).Google Scholar
• Carpenter MA, Westphal JD (2001) The strategic context of external network ties: Examining the impact of director appointments on board involvement in strategic decision making. Acad. Management J. 44(4):639–660.Crossref, Google Scholar
• Chatterjee A, Pollock TG (2017) Master of puppets: How narcissistic CEOs construct their professional worlds. Acad. Management Rev. 42(4):703–725.Crossref, Google Scholar
• Chi SS, Pincus M, Teoh SH (2014) Mispricing of book-tax differences and the trading behavior of short sellers and insiders. Accounting Rev. 89(2):511–543.Crossref, Google Scholar
• Clune R, Hermanson DR, Tompkins JG, Ye Z (2014) The nominating committee process: A qualitative examination of board independence and formalization. Contemporary Accounting Res. 31(3):748–786.Crossref, Google Scholar
• Coffee JC, Jackson RJ, Mitts JR, Bishop RE (2019) Activist directors and agency costs: What happens when an activist director goes on the board. Cornell Law Rev. 104(2):381.Google Scholar
• Cohen L, Diether KB, Malloy CJ (2007) Supply and demand shifts in the shorting market. J. Finance 62(5):2061–2096.Crossref, Google Scholar
• Cohen L, Frazzini A, Malloy CJ (2012) Hiring cheerleaders: Board appointments of “independent” directors. Management Sci. 58(6):1039–1058.Link, Google Scholar
• Coles JL, Daniel ND, Naveen L (2014) Co-opted boards. Rev. Financial Stud. 27(6):1751–1796.Crossref, Google Scholar
• Connelly BL, Shi W, Cheng X, Yin C (2021) Short sellers: A screening theory perspective on B2B relationships. J. Bus. Res. 134:393–404.Crossref, Google Scholar
• Core JE, Holthausen RW, Larcker DF (1999) Corporate governance, chief executive officer compensation, and firm performance. J. Financial Econom. 51(3):371–406.Crossref, Google Scholar
• Daily CM, Dalton DR (1994) Bankruptcy and corporate governance: The impact of board composition and structure. Acad. Management J. 37(6):1603–1617.Crossref, Google Scholar
• Dalton DR, Daily CM, Ellstrand AE, Johnson JL (1998) Meta-analytic reviews of board composition, leadership structure, and financial performance. Strategic Management J. 19(3):269–290.Crossref, Google Scholar
• De Angelis D, Grullon G, Michenaud S (2017) The effects of short-selling threats on incentive contracts: Evidence from an experiment. Rev. Financial Stud. 30(5):1627–1659.Crossref, Google Scholar
• De Maere J, Jorissen A, Uhlaner LM (2014) Board capital and the downward spiral: Antecedents of bankruptcy in a sample of unlisted firms. Corporate Governance 22(5):387–407.Crossref, Google Scholar
• Dechow PM, Hutton AP, Meulbroek L, Sloan RG (2001) Short-sellers, fundamental analysis, and stock returns. J. Financial Econom. 61(1):77–106.Crossref, Google Scholar
• Desai H, Ramesh K, Thiagarajan SR, Balachandran BV (2002) An investigation of the informational role of short interest in the Nasdaq market. J. Finance 57(5):2263–2287.Crossref, Google Scholar
• DesJardine MR, Durand R (2020) Disentangling the effects of hedge fund activism on firm financial and social performance. Strategic Management J. 41(6):1054–1082.Crossref, Google Scholar
• DesJardine MR, Marti E, Durand R (2021) Why activist hedge funds target socially responsible firms: The reaction costs of signaling corporate social responsibility. Acad. Management J. 64(3):851–872.Crossref, Google Scholar
• DesJardine MR, Shi W, Sun Z (2022) Different horizons: The effects of hedge fund activism vs. corporate shareholder activism on strategic actions. J. Management 48(7):1858–1887.Crossref, Google Scholar
• Diether KB, Lee KH, Werner IM (2009) It’s SHO time! Short‐sale price tests and market quality. J. Finance 64(1):37–73.Crossref, Google Scholar
• Drake MS, Rees L, Swanson EP (2011) Should investors follow the prophets or the bears? Evidence on the use of public information by analysts and short sellers. Accounting Rev. 86(1):101–130.Crossref, Google Scholar
• Duchin R, Matsusaka JG, Ozbas O (2010) When are outside directors effective? J. Financial Econom. 96(2):195–214.Crossref, Google Scholar
• Eckbo BE, Thorburn KS (2003) Control benefits and CEO discipline in automatic bankruptcy auctions. J. Financial Econom. 69(1):227–258.Crossref, Google Scholar
• Ellias JA, Stark RJ (2020) Bankruptcy hardball. Calif. Law Rev. 108(3):745–787.Google Scholar
• Ellstrand AE, Tihanyi L, Johnson JL (2002) Board structure and international political risk. Acad. Management J. 45(4):769–777.Crossref, Google Scholar
• Faleye O, Hoitash R, Hoitash U (2011) The costs of intense board monitoring. J. Financial Econom. 101(1):160–181.Crossref, Google Scholar
• Fang VW, Huang AH, Karpoff JM (2016) Short selling and earnings management: A controlled experiment. J. Finance 71(3):1251–1294.Crossref, Google Scholar
• Ferris SP, Jagannathan M, Pritchard AC (2003) Too busy to mind the business? Monitoring by directors with multiple board appointments. J. Finance 58(3):1087–1111.Crossref, Google Scholar
• Fich EM, Shivdasani A (2006) Are busy boards effective monitors? J. Finance 61(2):689–724.Crossref, Google Scholar
• Field L, Lowry M, Mkrtchyan A (2013) Are busy boards detrimental? J. Financial Econom. 109(1):63–82.Crossref, Google Scholar
• Foldy B (2021) Nikola internal review confirms some claims in short seller’s report. Wall Street Journal (February 26), https://www.wsj.com/articles/nikola-internal-review-confirms-some-claims-in-short-sellers-report-11614350745.Google Scholar
• Fracassi C, Tate G (2012) External networking and internal firm governance. J. Finance 67(1):153–194.Crossref, Google Scholar
• Franks J, Mayer C (1996) Hostile takeovers and the correction of managerial failure. J. Financial Econom. 40(1):163–181.Crossref, Google Scholar
• Gales LM, Kesner IF (1994) An analysis of board of director size and composition in bankrupt organizations. J. Bus. Res. 30(3):271–282.Crossref, Google Scholar
• Gilson SC (1990) Bankruptcy, boards, banks, and blockholders: Evidence on changes in corporate ownership and control when firms default. J. Financial Econom. 27(2):355–387.Crossref, Google Scholar
• Grullon G, Michenaud S, Weston JP (2015) The real effects of short-selling constraints. Rev. Financial Stud. 28(6):1737–1767.Crossref, Google Scholar
• Harris M, Raviv A (2008) A theory of board control and size. Rev. Financial Stud. 21(4):1797–1832.Crossref, Google Scholar
• Haw IM, Song BY, Tan W, Wang W (2021) Bankruptcy, overlapping directors, and bank loan pricing. J. Corporate Finance 71:102097.Crossref, Google Scholar
• Haynes KT, Hillman A (2010) The effect of board capital and CEO power on strategic change. Strategic Management J. 31(11):1145–1163.Crossref, Google Scholar
• He J, Tian X (2016) Do short sellers exacerbate or mitigate managerial myopia? Evidence from patenting activities. 2016 Amer. Finance Assoc. Meetings Paper, 27th Annual Conf. Financial Economics Accounting Paper.Google Scholar
• Hermalin BE, Weisbach MS (1988) The determinants of board composition. RAND J. Econom. 19(4):589–606.Crossref, Google Scholar
• Hermalin BE, Weisbach MS (1991) The effects of board composition and direct incentives on firm performance. Financial Management 20(4):101–112.Crossref, Google Scholar
• Hermalin BE, Weisbach MS (1998) Endogenously chosen boards of directors and their monitoring of the CEO. Amer. Econom. Rev. 88(1):96–118.Google Scholar
• Hillman AJ, Cannella AA, Paetzold RL (2000) The resource dependence role of corporate directors: Strategic adaptation of board composition in response to environmental change. J. Management Stud. 37(2):235–256.Crossref, Google Scholar
• Hirshleifer D, Thakor AV (1994) Managerial performance, boards of directors and takeover bidding. J. Corporate Finance 1(1):63–90.Crossref, Google Scholar
• Horstmeyer D (2019) Beyond independence: CEO influence and the internal operations of the board. Quart. J. Finance 9(02):1950006.Crossref, Google Scholar
• Jia Y, Gao X, Julian S (2020) Do firms use corporate social responsibility to insure against stock price risk? Evidence from a natural experiment. Strategic Management J. 41(2):290–307.Crossref, Google Scholar
• Jiraporn P, Singh M, Lee CI (2009a) Ineffective corporate governance: Director busyness and board committee memberships. J. Banking Finance 33(5):819–828.Crossref, Google Scholar
• Jiraporn P, Davidson WN III, DaDalt P, Ning Y (2009b) Too busy to show up? An analysis of directors’ absences. Quart. Rev. Econom. Finance 49(3):1159–1171.Crossref, Google Scholar
• Jones CM, Lamont OA (2002) Short-sale constraints and stock returns. J. Financial Econom. 66(2–3):207–239.Crossref, Google Scholar
• Joseph J, Ocasio W (2005) And then there were none: Political settlements of insider board membership. Acad. Management Proc. 2005(1):R1–R6.Crossref, Google Scholar
• Kaczmarek S, Kimino S, Pye A (2012) Board task-related faultlines and firm performance: A decade of evidence. Corporate Governance 20(4):337–351.Crossref, Google Scholar
• Karpoff JM, Lou X (2010) Short sellers and financial misconduct. J. Finance 65(5):1879–1913.Crossref, Google Scholar
• Katz DA, McIntosh LA (2014) Boardroom confidentiality under focus. New York Law J. 5:1–9.Google Scholar
• Keys PY, Li J (2005) Evidence on the market for professional directors. J. Financial Res. 28(4):575–589.Crossref, Google Scholar
• Kolev KD, Wangrow DB, Barker VL III, Schepker DJ (2019) Board committees in corporate governance: A cross-disciplinary review and agenda for the future. J. Management Stud. 56(6):1138–1193.Crossref, Google Scholar
• Kor YY (2006) Direct and interaction effects of top management team and board compositions on R&D investment strategy. Strategic Management J. 27(11):1081–1099.Crossref, Google Scholar
• Krause R, Semadeni M, Cannella AA (2014) CEO duality: A review and research agenda. J. Management 40(1):256–286.Crossref, Google Scholar
• Kunzmann A, Meier K (2018) A real threat? Short selling and CEO turnover. Preprint, submitted November 2, https://dx.doi.org/10.2139/ssrn.2980450.Google Scholar
• Lamont OA (2012) Go down fighting: Short sellers vs. firms. Rev. Asset Pricing Stud. 2(1):1–30.Crossref, Google Scholar
• Larcker DF, So EC, Wang CC (2013) Boardroom centrality and firm performance. J. Accounting Econom. 55(2–3):225–250.Crossref, Google Scholar
• Linck JS, Netter JM, Yang T (2008) The determinants of board structure. J. Financial Econom. 87(2):308–328.Crossref, Google Scholar
• Lorsch JW, Maciver E (1989) Pawns or Potentates: The Reality of America’s Corporate Boards (Harvard Business School Press, Cambridge, MA).Google Scholar
• Lynall MD, Golden BR, Hillman AJ (2003) Board composition from adolescence to maturity: A multitheoretic view. Acad. Management Rev. 28(3):416–431.Crossref, Google Scholar
• Massa M, Zhang B, Zhang H (2015) The invisible hand of short selling: Does short selling discipline earnings management? Rev. Financial Stud. 28(6):1701–1736.Crossref, Google Scholar
• Massoud N, Nandy D, Saunders A, Song K (2011) Do hedge funds trade on private information? Evidence from syndicated lending and short-selling. J. Financial Econom. 99(3):477–499.Crossref, Google Scholar
• Masulis RW, Mobbs S (2014) Independent director incentives: Where do talented directors spend their limited time and energy? J. Financial Econom. 111(2):406–429.Crossref, Google Scholar
• Ocasio W (1994) Political dynamics and the circulation of power: CEO succession in U.S. industrial corporations, 1960–1990. Admin. Sci. Quart. 39(2):285–312.Crossref, Google Scholar
• Ofek E, Richardson M (2003) Dotcom mania: The rise and fall of internet stock prices. J. Finance 58(3):1113–1137.Crossref, Google Scholar
• Pearce JA, Zahra SA (1992) Board composition from a strategic contingency perspective. J. Management Stud. 29(4):411–438.Crossref, Google Scholar
• Pfeffer J, Salancik GR (1978) The External Control of Organizations: A Resource Dependence Perspective (Harper & Row, New York).Google Scholar
• Purnanandam A, Seyhun HN (2018) Do short sellers trade on private information or false information? J. Financial Quant. Anal. 53(3):997–1023.Crossref, Google Scholar
• Rahman A, Talukdar B, Bhuyan R (2021) Board independence and short selling. Finance Res. Lett. 39:101616.Crossref, Google Scholar
• Shi W, DesJardine MR (2022) Under attack! CEO implicit motives and firm competitive responses following short seller activism. Organ. Sci. 33(3):991–1017.Link, Google Scholar
• Shi W, Connelly BL, Cirik K (2018) Short seller influence on firm growth: A threat rigidity perspective. Acad. Management J. 61(5):1892–1919.Crossref, Google Scholar
• Shi W, Ndofor HA, Hoskisson RE (2021) Disciplining role of short sellers: Evidence from M&A activity. J. Management 47(5):1103–1133.Crossref, Google Scholar
• Shivdasani A (1993) Board composition, ownership structure, and hostile takeovers. J. Accounting Econom. 16(1–3):167–198.Crossref, Google Scholar
• Shivdasani A, Yermack D (1999) CEO involvement in the selection of new board members: An empirical analysis. J. Finance 54(5):1829–1853.Crossref, Google Scholar
• Steele JM (1989) Models for managing secrets. Management Sci. 35(2):240–248.Link, Google Scholar
• Westphal JD, Bednar MK (2008) The pacification of institutional investors. Admin. Sci. Quart. 53(1):29–72.Crossref, Google Scholar
• Westphal JD, Graebner ME (2010) A matter of appearances: How corporate leaders manage the impressions of financial analysts about the conduct of their boards. Acad. Management J. 53(1):15–44.Crossref, Google Scholar
• Westphal JD, Stern I (2006) The other pathway to the boardroom: Interpersonal influence behavior as a substitute for elite credentials and majority status in obtaining board appointments. Admin. Sci. Quart. 51(2):169–204.Crossref, Google Scholar
• Westphal JD, Zajac EJ (1995) Who shall govern? CEO/Board power, demographic similarity, and new director selection. Admin. Sci. Quart. 40(1):60–83.Crossref, Google Scholar
• Westphal JD, Zajac EJ (2013) A behavioral theory of corporate governance: Explicating the mechanisms of socially situated and socially constituted agency. Acad. Management Ann. 7(1):607–661.Crossref, Google Scholar
• Westphal JD, Zhu DH (2019) Under the radar: How firms manage competitive uncertainty by appointing friends of other chief executive officers to their boards. Strategic Management J. 40(1):79–107.Crossref, Google Scholar
• Wintoki MB, Linck JS, Netter JM (2012) Endogeneity and the dynamics of internal corporate governance. J. Financial Econom. 105(3):581–606.Crossref, Google Scholar
• Withers MC, Hillman AJ, Cannella AA (2012) A multidisciplinary review of the director selection literature. J. Management 38(1):243–277.Crossref, Google Scholar
• Yang J, Chung J, Steinberg J (2020) Coffee’s for closers: How a short seller’s warning helped take down Luckin Coffee. Wall Street Journal (June 29), https://www.wsj.com/articles/coffees-for-closers-how-a-short-sellers-warning-helped-take-down-luckin-coffee-11593423002.Google Scholar
• Zhu DH, Chen G (2015) Narcissism, director selection, and risk-taking spending. Strategic Management J. 36(13):2075–2098.Crossref, Google Scholar