Working Papers

"Director heterogeneity and its impact on board effectiveness"


In this study, I examine whether boards that are heterogeneous along five dimensions—age, gender, tenure, rank, and function—perform their most critical tasks better than boards that are more homogeneous. I find that boards with more heterogeneity in director tenure and rank exhibit significantly higher CEO performance-turnover sensitivity lower excess compensation. Firms with boards that are high in functional heterogeneity perform better on tasks requiring skill-set diversity, such as M&A transactions. However, the study shows that imposing regulatory pressures on firms to increase the level of diversity may not make boards more effective. I show that director heterogeneity improves board effectiveness for the subset of firms that committed to diversity prior to regulatory pressures, but not for the subset of firms that changed the director mix in response to external calls for diversity. This suggests that although director heterogeneity can improve board effectiveness, such improvement may not be achieved if heterogeneity is mandated by regulators, rather than adopted voluntarily. 

"Admitting mistakes: An analysis of restatements by foreign firms listed in the US"

(with Suraj Srinivasan and Gwen Yu)


We examine how restatement frequency of foreign firms listed in the US differs by home country characteristics. We find that foreign firms from countries with weak rule of law are less likely to restate their financials than those from strong rule of law countries, despite having higher levels of earnings management. For firms from weak rule of law countries, we find no relation between restatements and level of earnings managements. This is in contrast to the restatements of firms from strong rule of law countries which show a positive relation with restatement frequency and earnings management. Also, firms from weak rule of law countries are more likely to opt for less visible disclosure methods when restating their financials, after controlling for materiality of the restatement. We interpret this finding as home country enforcement affecting the likelihood of firms to report existing accounting irregularities. These findings suggest that for cross-listed firms, less frequent restatements can be a signal of opportunistic reporting rather than high quality earnings.