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The main objective of this chapter is to investigate the effects of advisory directors’ presence on the board’s overall effectiveness in value creation. To achieve this purpose, we first explore the channels through which this advisory measure influences firm value. Thus, the results suggest that the presence of at least one independent director principally committed to advising duties on the board leads to an increase in corporate innovation and a better acquisition performance. We then examine the effect of this measure on firm value. Our findings highlight that the presence of advisory directors on the board is associated with a significant increase in firm value, especially for highly innovative firms and those with high advising needs and less powerful CEOs.
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- The Monitoring and Advisory Functions of Corporate Boards
- Chapter 3
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