Thursday, May 5, 2016 | 12:30pm-1:30pm | Room 331, HSBC Business School Building

Abstract

We find that the occurrence, scope and busyness of busy directors can significantly increase firms’ stock price synchronicity with the market using the data of Chinese publicly listed firms. These effects are more pronounced when busy directors are non-independent and more experienced. Busy directors can increase stock price synchronicity by serving as conduits for information sharing and transferring across firms, rather than by reducing monitoring leading to lower firm-specific information. These results are robust after addressing the endogeneity issues with the dynamic panel GMM estimation and the two-stage estimation with the instrument variable. These findings highlight the importance of corporate leaders’ human capital factors on firms’ systematic risk.