Board Sub-Committee Effectiveness, Director Attraction and Director Attrition: Do nomination and remuneration committees’ matter?

Sutharson Kanapathippillai, Premkanth Puwanenthiren, Dessalegn Mihret and Man Dang 2024. Board Sub-Committee Effectiveness, Director Attraction and Director Attrition: Do nomination and remuneration committees’ matter? Pacific-Basin Finance Journal. 86 102441. https://doi.org/10.1016/j.pacfin.2024.102441

TitleBoard Sub-Committee Effectiveness, Director Attraction and Director Attrition: Do nomination and remuneration committees’ matter?
TypeJournal article
AuthorsSutharson Kanapathippillai, Premkanth Puwanenthiren, Dessalegn Mihret and Man Dang
Abstract

This study examines whether the effectiveness of board subcommittees is associated with director attrition and the attraction of new directors to boards. Using a sample of firms listed on the Australian Securities Exchange, we find that nomination and remuneration committee effectiveness is inversely associated with director attrition and positively related to new external directors joining boards. The results suggest the contribution of these subcommittees to improve corporate governance by strengthening the board’s human capital through recruitment and retention of suitable talent. Furthermore, the findings show the subcommittees affect director attraction (attrition) by improving the information environment, corporate governance and performance of firms. The results are robust to tests with alternative variables, entropy balanced matching, and additional controls. Overall, our findings show that improved governance through effective subcommittees helps maintain and enhance the human capital of boards.

KeywordsDirector Attraction
Director Attrition
Board Subcommittees
Nomination Committee
Remuneration Committee
Article number102441
JournalPacific-Basin Finance Journal
Journal citation86
ISSN0927-538X
Year2024
PublisherElsevier
Publisher's version
License
CC BY 4.0
File Access Level
Open (open metadata and files)
Digital Object Identifier (DOI)https://doi.org/10.1016/j.pacfin.2024.102441
Publication dates
Published online26 Jun 2024
Published in printSep 2024

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