As you know several factors can justify an abnormal return (an asymmetric bias, a measurement bias (for example a further error in estimating the expected return, etc.  Regarding Board, it seems that it can affect at least the risk-taking, the financial performance and therefore the available information that can be used by investor to compute their expectations, so in particular the expected return and therefore it indirectly affects abnormal return. That is, but obviously this effect might vary with the degree of the board independency (strong versus weak).  I have not directly studied this question before, but I think that these three papers would be helpful even they don’t directly focus on this question:

1.      Pearce, J., et Zahra, S. (1992), “Board Composition from a Strategic Contingency Perspective”, Journal of Management Studies, 29(4), 411–438.

2.      Ginglinger, E., Megginson, W., et Waxin, T. (2011), “Employee ownership, board representation, and corporate financial policies”, Journal of Corporate Finance 17, 868-887.

3.      Buch, M.C., et DeLong, G. (2008), “Do weak supervisory systems encourage bank risk-taking?”, Journal of Financial Stability 4, 23-39.

Dear Patrick,

As part of corporate governance mechanisms, board structure including board independence has something to do with equity offerings in general. For seasoned equity offerings, you may want to look at the following paper:

Do corporate governance attributes affect adverse selection costs? Evidence from seasoned equity offerings

JR Becker-Blease, AJ Irani - Review of Quantitative Finance and …, 2008 - Springer

Hi Patrick,

I find your question very interesting. Fredj has pointed out an important argument: "a measurement bias". However, I find that the empirical support of Brown and Warner (1980; 1985) is quite exhaustive.

On the contrary, I believe that Board of Directors impacts on stock market reactions, regardless. As well as the BoD has an impact on financial decisions and risk-taking. The point is the independence of BoD how strong is. 

I also suggest to read: Ferreira, M. and Laux, P. (2016). Corporate Boards and SEOs: The Effect of Certification and Monitoring. Journal of Financial and Quantitative Analysis, 51 (3), pp. 899-927; Alves, Paulo, Eduardo B. Couto, and Paulo Morais Francisco. 2015. “Board of Directors’ Composition and Capital Structure.” Research in International Business and Finance 35: 1–32; Ferreira, Daniel, Miguel A. Ferreira, and Beatriz Mariano. 2012. “Board Structure and Capital Structure"

Hi,

Thanks to all of you for your valuable answers. I found one other paper which can be useful:

M D Walker K Yost, J Zhao, "Credibility and multiple SEs: What happens when firms return to capital market?", Financial Management, Fall 2016, p 675 -703.

Best regards.