TY  - JOUR
AU  - Fahlenbrach,Rüdiger
AU  - Low,Angie
AU  - Stulz,René M.
TI  - The dark side of outside directors: Do they quit when they are most needed?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15917
PY  - 2010
Y2  - April 2010
UR  - http://www.nber.org/papers/w15917
L1  - http://www.nber.org/papers/w15917.pdf
N1  - Author contact info:
Rüdiger Fahlenbrach
Ecole Polytechnique Fédérale de Lausanne (EPFL)
Quartier UNIL-Dorigny Bâtiment Extranef, # 211
1015 Lausanne
Switzerland
E-Mail: ruediger.fahlenbrach@epfl.ch

Angie Low
Division of Banking and Finance
S3-B1A-30, Nanyang Avenue
Singapore 639798
E-Mail: AACLow@ntu.edu.sg

Rene M. Stulz
The Ohio State University
Fisher College of Business
806A Fisher Hall
Columbus, OH 43210-1144
Tel: 614/292-1970
Fax: 614/292-2359
E-Mail: stulz_1@cob.osu.edu
AB  - Outside directors have incentives to resign to protect their reputation or to avoid an increase in their workload when they anticipate that the firm on whose board they sit will perform poorly or disclose adverse news. We call these incentives the dark side of outside directors. We find strong support for the existence of this dark side. Following surprise director departures, affected firms have worse stock and operating performance, are more likely to suffer from an extreme negative return event, are more likely to restate earnings, and have a higher likelihood of being named in a federal class action securities fraud lawsuit.
ER  -