How Important Is Corporate Governance? Evidence from Machine Learning

Imagine a world without corporate governance, where firms do not have independent boards of directors to watch over such issues as environmental awareness, ethical behavior, corporate strategy, compensation, and risk management. In such a world, would firms perform worse? That is, would firms’ profits suffer, would their growth prospects shrink, would it be harder to get a loan, and would other firm characteristics deteriorate?

[1]  Fariha Sohil,et al.  An introduction to statistical learning with applications in R , 2021, Statistical Theory and Related Fields.

[2]  Matthew J. Salganik,et al.  Integrating explanation and prediction in computational social science , 2021, Nature.

[3]  Charles C. Y. Wang,et al.  Can Staggered Boards Improve Value? Causal Evidence from Massachusetts , 2021 .

[4]  Vladimir A. Atanasov,et al.  The Trouble with Instruments: The Need for Pretreatment Balance in Shock-Based Instrumental Variable Designs , 2020, Manag. Sci..

[5]  Joshua C. Peterson,et al.  Scaling up psychology via Scientific Regret Minimization , 2020, Proceedings of the National Academy of Sciences.

[6]  Joseph D. Piotroski,et al.  Accounting Fundamentals and Systematic Risk: Corporate Failure over the Business Cycle , 2019, The Accounting Review.

[7]  D. Fudenberg,et al.  Measuring the Completeness of Economic Models , 2019, Journal of Political Economy.

[8]  M. Goergen,et al.  Firms’ Rationales for CEO Duality: Evidence from a Mandatory Disclosure Regulation , 2019, SSRN Electronic Journal.

[9]  Toni M. Whited,et al.  Information versus Investment , 2018, SSRN Electronic Journal.

[10]  T. Yarkoni,et al.  Choosing Prediction Over Explanation in Psychology: Lessons From Machine Learning , 2017, Perspectives on psychological science : a journal of the Association for Psychological Science.

[11]  Campbell R. Harvey,et al.  Presidential Address: The Scientific Outlook in Financial Economics , 2017 .

[12]  X. Gabaix,et al.  Executive Compensation: A Survey of Theory and Evidence , 2017, SSRN Electronic Journal.

[13]  Renée B. Adams Boards, and the Directors Who Sit on Them , 2017 .

[14]  Y. Amihud,et al.  Do Staggered Boards Affect Firm Value , 2017 .

[15]  Alma Cohen,et al.  Reexamining Staggered Boards and Shareholder Value , 2017 .

[16]  Anastasia A. Zakolyukina How Common Are Intentional GAAP Violations? Estimates from a Dynamic Model , 2017 .

[17]  D. Larcker,et al.  Chairman and CEO: The Controversy Over Board Leadership Structure , 2016 .

[18]  David F. Larcker,et al.  Causal Inference in Accounting Research , 2016 .

[19]  Y. Amihud,et al.  Do Staggered Boards Harm Shareholders? , 2016 .

[20]  Weili Ge,et al.  What are the consequences of board destaggering? , 2016, Review of Accounting Studies.

[21]  D. Rubin,et al.  Causal Inference for Statistics, Social, and Biomedical Sciences: An Introduction , 2016 .

[22]  Henrik Cronqvist,et al.  Corporate Governance and the Creation of the SEC , 2015 .

[23]  Alexander Peysakhovich,et al.  Using Methods from Machine Learning to Evaluate Behavioral Models of Choice Under Risk and Ambiguity , 2015 .

[24]  E. Fama,et al.  A Five-Factor Asset Pricing Model , 2014 .

[25]  Lubomir P. Litov,et al.  Staggered Boards and Long-Term Firm Value, Revisited , 2013 .

[26]  Alma Cohen,et al.  How Do Staggered Boards Affect Shareholder Value? Evidence from a Natural Experiment , 2013 .

[27]  Max Kuhn,et al.  Applied Predictive Modeling , 2013 .

[28]  A. Wright,et al.  The Effect of Audit Committee Industry Expertise on Monitoring the Financial Reporting Process , 2013 .

[29]  Ronald W. Masulis,et al.  The Supply of Corporate Directors and Board Independence , 2013 .

[30]  T. Dunning Natural Experiments in the Social Sciences: A Design-Based Approach , 2012 .

[31]  I. Hasan,et al.  Do Corporate Boards Matter During the Current Financial Crisis? , 2012 .

[32]  Cesare Fracassi,et al.  External Networking and Internal Firm Governance , 2012 .

[33]  David F. Larcker,et al.  Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences , 2011 .

[34]  Bang Dang Nguyen,et al.  Does the Rolodex Matter? Corporate Elite's Small World and the Effectiveness of Boards of Directors , 2011, Manag. Sci..

[35]  Galit Shmueli,et al.  To Explain or To Predict? , 2010, 1101.0891.

[36]  Ian D. Gow,et al.  Rating the Ratings: How Good are Commercial Governance Ratings? , 2010 .

[37]  Gaizka Ormazabal,et al.  The Market Reaction to Corporate Governance Regulation , 2010 .

[38]  Patricia M. Dechow,et al.  Predicting Material Accounting Misstatements , 2010 .

[39]  Aiyesha Dey,et al.  CEO and Board Chair Roles: To Split or Not to Split , 2009 .

[40]  John G. Matsusaka,et al.  When Are Outside Directors Effective? , 2009 .

[41]  Alan D. Jagolinzer,et al.  Chief Executive Officer Equity Incentives and Accounting Irregularities , 2009 .

[42]  Bang Dang Nguyen,et al.  The Value of Independent Directors: Evidence from Sudden Deaths , 2009 .

[43]  Joshua D. Angrist,et al.  Mostly Harmless Econometrics: An Empiricist's Companion , 2008 .

[44]  Andrew J. Leone,et al.  The Importance of Distinguishing Errors from Irregularities in Restatement Research: The Case of Restatements and CEO/CFO Turnover , 2008 .

[45]  Christopher J. Malloy,et al.  Hiring Cheerleaders: Board Appointments of "Independent" Directors , 2008, Manag. Sci..

[46]  Byoung-Hyoun Hwang,et al.  It Pays to Have Friends , 2008 .

[47]  Thomas J. Harris,et al.  The use of simplified or misspecified models : Linear case , 2008 .

[48]  Charles F. Manski,et al.  Identification for Prediction and Decision , 2008 .

[49]  D. Larcker,et al.  Corporate Governance, Accounting Outcomes, and Organizational Performance , 2007 .

[50]  Olubunmi Faleye,et al.  Classified Boards, Firm Value, and Managerial Entrenchment , 2007 .

[51]  Peter L. Bartlett,et al.  AdaBoost is Consistent , 2006, J. Mach. Learn. Res..

[52]  T. Kruse,et al.  Undoing the Powerful Anti-Takeover Force of Staggered Boards , 2006 .

[53]  J. Campbell,et al.  In Search of Distress Risk , 2006, SSRN Electronic Journal.

[54]  Richard G. Sloan,et al.  Accrual Reliability, Earnings Persistence and Stock Prices , 2005 .

[55]  Bin Yu,et al.  Boosting with early stopping: Convergence and consistency , 2005, math/0508276.

[56]  Paul R. Rosenbaum,et al.  Robust, accurate confidence intervals with a weak instrument: quarter of birth and education , 2005 .

[57]  Mihir A. Desai,et al.  Theft and Taxes , 2004 .

[58]  Alma Cohen,et al.  What Matters in Corporate Governance? , 2004 .

[59]  R. Tibshirani,et al.  The Elements of Statistical Learning: Data Mining, Inference, and Prediction , 2004 .

[60]  Hollis Ashbaugh-Skaife,et al.  The Effects of Corporate Governance on Firms' Credit Ratings , 2004 .

[61]  Wenxin Jiang Process consistency for AdaBoost , 2003 .

[62]  P. Sengupta,et al.  Effect of Corporate Governance on Bond Ratings and Yields: The Role of Institutional Investors and Outside Directors , 2001 .

[63]  J. Friedman Greedy function approximation: A gradient boosting machine. , 2001 .

[64]  Benjamin E. Hermalin,et al.  Boards of Directors as an Endogenously Determined Institution: A Survey of the Economic Literature , 2000 .

[65]  Sanjai Bhagat,et al.  The Non-Correlation between Board Independence And Long-Term Firm Performance , 1998 .

[66]  Dale Schuurmans,et al.  Boosting in the Limit: Maximizing the Margin of Learned Ensembles , 1998, AAAI/IAAI.

[67]  Jonathan L. Johnson,et al.  META-ANALYTIC REVIEWS OF BOARD COMPOSITION, LEADERSHIP STRUCTURE, AND FINANCIAL PERFORMANCE , 1998 .

[68]  Yoav Freund,et al.  A decision-theoretic generalization of on-line learning and an application to boosting , 1997, EuroCOLT.

[69]  James A. Brickley,et al.  Leadership Structure: Separating the CEO and Chairman of the Board , 1997 .

[70]  Anup Agrawal,et al.  Firm Performance and Mechanisms to Control Agency Problems between Managers and Shareholders , 1995, Journal of Financial and Quantitative Analysis.

[71]  Michael R. Hagerty,et al.  Comparing the predictive powers of alternative multiple regression models , 1991 .

[72]  Benjamin E. Hermalin,et al.  The Effects of Board Composition and Direct Incentives on Firm Performance , 1991 .

[73]  Stuart Rosenstein,et al.  Outside directors, board independence, and shareholder wealth☆ , 1990 .

[74]  D. Freedman Statistical models and shoe leather , 1989 .

[75]  C. Hempel,et al.  Studies in the Logic of Explanation , 1948, Philosophy of Science.

[76]  S. Kruger Design Of Observational Studies , 2016 .

[77]  A. Andrew Boosting: Foundations and Algorithms , 2013, Kybernetes.

[78]  Phillip C. Stocken,et al.  Credibility of Management Forecasts , 2003 .

[79]  R. Charles Moyer,et al.  CEO DUALITY AND FIRM PERFORMANCE: WHAT'S THE FUSS? , 1996 .

[80]  Brian K. Boyd,et al.  CEO DUALITY AND FIRM PERFORMANCE: A CONTINGENCY MODEL , 1995 .

[81]  David A. Jaeger,et al.  Problems with Instrumental Variables Estimation when the Correlation between the Instruments and the Endogenous Explanatory Variable is Weak , 1995 .

[82]  J. Ioannidis Essay Modeling the Framework for False Positive Findings Why Most Published Research Findings Are False , 2022 .