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    The Wall Street Rule and its Impact on Board Monitoring

    75621.pdf (878.7Kb)
    Access Status
    Open access
    Authors
    Chen, B.
    Duong, Lien
    Truong, T.
    Date
    2018
    Type
    Conference Paper
    
    Metadata
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    Citation
    Chen, B. and Duong, L. and Truong, T. 2018. The Wall Street Rule and its Impact on Board Monitoring. In Financial Market and Corporate Governance (FMCG) annual conference, 5-7 Apr 2018, Melbourne, Australia.
    Source Conference
    Financial Market and Corporate Governance (FMCG) annual conference
    Faculty
    Faculty of Business and Law
    School
    School of Accounting
    URI
    http://hdl.handle.net/20.500.11937/75437
    Collection
    • Curtin Research Publications
    Abstract

    The “Wall Street Rule” (WSR), a form of monitoring by institutional investors, has been viewed as a “cut-and-run” strategy adopted to express dissatisfaction with a company’s management. In this study, we show that WSR, far from being a passive protest, is in fact a potent weapon to improve corporate governance. We present empirical evidence that WSR is positively associated with board monitoring when the firm is endowed with an outsider-dominated board. This suggests that WSR improves stock price informativeness, providing the board with an additional source of information so that it may monitor the company more effectively.

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