Multiple Directorships and Firm Performance Evidence from Firm

Multiple Directorships and Firm Performance: Evidence from Firm Characteristics discussant: Yu, V. School of Accounting Institute of Accounting and Finance Shanghai University of Finance and Economics

a chicken standing among cranes • Attending this high-class conference, I feel like “a chicken standing among cranes”. • If my comments on this paper is amateur, please do not laugh, or laugh in silence.

agency theory & resource dependence theory • The author propose an interesting point: two channels of corporate governance • Agency theory: directors as the control(monitoring) role • Resource dependence theory: directors as the resource acquirer role

an analogy • Suppose you are a junior faculty (with a preliminary draft) intending to find a scholar to coauthor with • option 1: coauthoring a scholar who has no other papers going on • option 2: coauthoring a scholar who has a lot of papers going on

• a scholar with no other papers going on: supposed to have much time helping revising your paper • a scholar who has a lot of papers going on: (1) too busy to help revise your paper, (2) but may have a good record of publication, and therefore, provides value in advising or endorsement

• If your paper covers an interesting topic (idea) but needs substantial improvement: better coauthor with a scholar with no other papers going on • If your paper is already of good quality, and needs endorsement rather than improvement: better coauthor with a scholar with a lot of papers going on • reputation as hostage: coauthoring with a famous scholar gives a strong signal to editors and referees

• A buddha statue in the temple, whether he has done anything is not important, as long as he sits there.

• Since “endorsement” can help improve market perception, but may not affect accounting performance, the relationship in the paper may not be due to “endorsement”.

some suggestions • On page 10, proposing Hypotheses I and III would be enough. • Tobin’s Q, and industry-adjusted Tobin’s Q • accounting profitability and industry-adjusted accounting profitability • As the proxy for agency conflicts, Governance Index may be too widely-covered to be informative • For the proxy of agency conflicts, “CEO centrality”(Bebchuk, Cremers and Peyer, 2007) may be an alternative

future researches • as in the paper, for firms with low growth opportunity and high agency conflicts, to test whether multiple directorship is bad for such firms • In addition to accounting performance……. • (1) performance sensitivity of CEO turnover • (2) stock returns accompanying acquisitions

information asymmetry • A firm with high information asymmetry (or high non-book value) may not need advising, but needs endorsement • possible alternative research orientation • e. g. , dependent variable: Tobin’s Q • interaction variable: (R & D)*(busyness of directors) • Multiple directorship (reputation effect) may help a firm’s non-book value to be credibly perceived by the market