Does Accountability Deter Individuals from Serving as Independent Directors? Evidence from a Corporate Governance Reform in India

This study examines whether accountability deters individuals from serving as independent directors. We exploit a quasi-natural experiment in the form of a recent corporate governance reform in India, which introduced accountability for independent directors. We find that accountability deters individuals from serving on corporate boards, and find stronger deterrence among firms where the monetary incentive to serve as an independent director is weak and in firms that are subject to greater litigation and regulatory risk. Overall, our study documents that accountability deters individuals from serving on corporate boards