How valuable are independent directors? Evidence from external distractions

Ronald Masulis, Emma Jincheng Zhang

Research output: Contribution to journalArticleResearchpeer-review

9 Citations (Scopus)


We provide new evidence on the value of independent directors by exploiting exogenous events that seriously distract independent directors. Approximately 20% of independent directors are significantly distracted in a typical year. They attend fewer meetings, trade less frequently in the firm's stock, and resign from the board more frequently, indicating declining firm-specific knowledge and a reduced board commitment. Firms with more preoccupied independent directors have declining firm valuation and operating performance and exhibit weaker merger and acquisition (M&A) profitability and accounting quality. These effects are stronger when distracted independent directors play key board monitoring roles and when firms require greater director attention.

Original languageEnglish
Pages (from-to)226-256
Number of pages31
JournalJournal of Financial Economics
Issue number3
Publication statusPublished - 1 Jun 2019


  • Corporate performance
  • Director distraction
  • Director incentives
  • Independent directors

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