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La réputation des administrateurs indépendants | Facteur-clé pour une meilleure supervision des activités de gestion

12 janvier 2016

Voici un article très pertinent publié, par Wei Jiang* de l’Université Columbia et paru sur le blogue du Harvard Law School Forum on Corporate Governance, qui porte sur les motivations des administrateurs indépendants à bien jouer leur rôle de surveillance des activités de gestion du management.

L’article évoque le fait que plus de 80 % des administrateurs du S&P 1500 sont indépendants, ce qui semble confirmer que les administrateurs indépendants sont perçus comme étant efficaces dans leur rôle de supervision des actions des gestionnaires, notamment en raison de l’absence de relations d’affaires avec les dirigeants de l’entreprise.

Les auteurs de l’étude chinoise cherchent à découvrir les vraies motivations derrière les dissensions des administrateurs indépendants eu égard aux décisions des dirigeants, puisque la rémunération n’est pas basée sur les résultats financiers et que ceux-ci sont souvent « redevables » envers la direction qui propose leur nomination.

L’étude montre que la réputation des administrateurs est le facteur principal qui les amène à être plus attentifs aux intérêts des actionnaires, car leur comportement de dissension est généralement bien accueilli par les marchés, notamment par l’obtention de futurs postes d’administrateurs.

Également, l’étude montre que les plus jeunes administrateurs ainsi que ceux bénéficiant d’une solide réputation, sont plus susceptibles de poser des gestes courageux en s’opposant à certaines propositions majeures de la direction.

Puisqu’en Chine, le nombre de mandats est limité à deux termes, les auteurs ont constaté plus de dissension lors du deuxième terme, ce qui indique que les administrateurs sont encore plus indépendants des dirigeants, car ceux-ci ont moins de marge de manœuvre eu égard à la nomination.

L’extrait suivant résume assez bien les conclusions de l’étude. Celle-ci montre que la réputation des administrateurs indépendants joue un rôle très important dans la saine gouvernance des entreprises.

The combined ex ante and ex post results demonstrate that independent directors with stronger reputational concerns dissent more and dissension indeed brings reputation enhancement or protection. Finally, we show that director dissention does discipline management effectively. A dissenting vote attracts media scrutiny, leads to significant stock price changes, and invites intervention by creditors and regulators.

Je vous invite à lire le sommaire qui suit et, éventuellement, à lire l’article au complet.

 

Bonne lecture !

 

Reputation Concerns of Independent Directors

 

 

Across the major world markets, institutional investors, stock exchanges and regulators have pushed publically listed firms to increase the number of independent directors on their boards. By 2013, 80% of directors of the S&P 1500 firms are independent, according to RiskMetric. Such a trend reflects a common belief that independent directors are effective monitors of management since they are not formally connected to firm insiders nor do they have material business relationship with the firm. However, it is unclear what incentivizes independent directors to monitor and potentially confront management, given that they are not significant shareholders, do not receive performance-sensitive compensation, and often owe their appointment to the managers they monitor.

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In our paper, Reputation Concerns of Independent Directors: Evidence from Individual Director Voting, forthcoming in the Review of Financial Studies, we identify the incentives for independent directors to dissent against management. We then examine if dissention is effective as a monitoring tool. We use a unique and comprehensive proposal-level dataset of the votes cast by individual directors of public companies in China. The data was made available by the Chinese Securities Regulatory Commission (CSRC, the regulatory authority of China’s stock market) as the result of a 2004 reform, which mandated public disclosure of director voting in board meetings. Our study is mainly based on manually collected voting records on 859 board proposals involving dissension over 2004–2012. Since almost all board proposals that require director voting are sponsored by management or controlling shareholders, dissension reflects a director’s willingness to confront the management on behalf of the outside shareholders. On average, about 4% of public firms incurred at least one dissension event in a given year.

Director voting data of similar granularity—allowing us to observe the actions of individual directors on each proposal—are not available in the U.S. or any other major economy. Thus, a crucial empirical advantage of our dataset is that it allows for identification from variation within a board proposal (i.e., variations in actions and outcomes for directors who vote on the same proposal) by allowing for the inclusion of board- or proposal-level fixed effects in the regressions. Such a design filters out any potentially time-varying firm- or board-level unobserved heterogeneity that reflects the endogenous composition of a board or the endogenous inclusion of a proposal—the most important sources of endogeneity that have challenged empirical research on boards and directors.

We find that independent directors’ reputation concerns lead them to be more aligned with investors than with management because their dissenting behavior is eventually rewarded in the marketplace. Specifically, we find that younger and more reputed directors (as measured by their past positive media mentioning and the prestige of the colleges they attended) are more likely to cast dissenting votes, suggesting a strong motivation from career concerns. Indeed, dissension is rewarded in the long run by more board seats at other companies and avoidance of regulatory sanctions associated with firms’ wrongdoing. However, we find that management does exert short-term influence over independent directors, weakening their incentives to represent shareholder interests. We exploit the two-term limit for directors in China and find that directors in their first term are less likely to dissent than the second-termers on the same board, likely due to the first-termers’ stronger incentives to please management in order to be reappointed.

The combined ex ante and ex post results demonstrate that independent directors with stronger reputational concerns dissent more and dissension indeed brings reputation enhancement or protection. Finally, we show that director dissention does discipline management effectively. A dissenting vote attracts media scrutiny, leads to significant stock price changes, and invites intervention by creditors and regulators.

The full paper is available for download here.

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*Wei Jiang is Professor of Finance at Columbia University. This post is based on an article authored by Professor Jiang; Hualin Wan, Associate Professor of Accounting at Shanghai Lixin University of Commerce; and Shan Zhao, Assistant Professor of Finance at Grenoble Ecole de Management.

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