Beyond corporate governance reporting: the usefulness of information on board member profiles
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Beyond corporate governance reporting: the usefulness of information on board member profiles Francesca Rossignoli1 · Andrea Lionzo2 · Bruno Buchetti2
© Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract The literature investigating corporate governance (CG) disclosure has predominantly stressed the monitoring role of the board of directors, analysing the association between information about the board’s independence and firm market performance. Drawing from managerial studies, the governance literature has recently recognized corporate performance is affected by a wider set of directors’ personal traits. However, CG reporting does not currently require disclosure of most of these characteristics. We believe knowledge of directors’ personal traits is valuable for investors if these characteristics are indicators of company performance. Drawing on a sample of listed Italian family firms, we embrace a wide set of hand-collected information that captures directors’ profiles to verify their association with Tobin’s Q. Even if such associations are casual, we infer that information about board members’ profiles beyond CG report disclosures is useful for market participants. The results from the regression analyses show that information about directors’ personal details, educational backgrounds, and work experience in specific professional areas is predictive of market performance, and that the market evaluates board members’ personal information that is currently ignored in CG reports. The study offers practical contributions to standard setters, highlighting the need to extend CG reporting requirements for directors’ personal profiles. Further, the evidence contributes to drawing the attention of preparers and users to board of directors’ profile information that is currently not disclosed in CG reporting. Keywords Reporting · Corporate governance · Disclosure · Usefulness · Board of directors · Personal profile
* Francesca Rossignoli [email protected] Extended author information available on the last page of the article
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1 Introduction The form and content of corporate governance (CG) reporting has been a matter of concern and debate because stakeholders regard this information as a pivotal component in the traditional framework of corporate accountability (Spira and Page 2010; Roberts et al. 2005; Huse 2005). CG reporting ensures accountability since it is the means companies use to disclose their CG to stakeholders. Most regulated codes of best governance practices devote a specific section to the composition of a firm’s board of directors. In particular, to satisfy stakeholder calls, several countries regulate reporting on board composition through a comply or explain governance disclosure regime (Luo and Salterio 2014; Aguilera and Cuerva-Cazurra 2004; Haxhi and van Ees 2010; Renders and Gaeremynck 2012). Such a regime requires companies to either comply with a regulated code of best governance practices or explain why they
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