Board capital implications in early-stage firms
- Publication Type:
- Thesis
- Issue Date:
- 2023
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Board functions is a key research area within the corporate governance literature. This thesis investigates how boards discharge their duties using a homogeneous sample of Australian early-stage mining exploration entities (MEEs). The setting is ideal for identifying firm-relevant board capital and examining how such board capital is applied to facilitate boards’ duties at resource-constrained and high information-asymmetry firms. Findings in this thesis show that board members can strengthen their social capital by building director networks to obtain valuable information to advise management on strategic exploration investments. Such investments improve firms’ future prospects, which in turn increase investor willingness to provide financial resources. This thesis also examines board human capital, particularly the expertise of directors who have sufficiently long experience in technical roles. These technical directors are found to facilitate both investment and financing advice. The advice is enhanced when directors participate in industry associations to extend their social connections. Finally, this thesis finds that well-connected boards are better monitors of financial reporting quality, as evidenced by a lower probability of MEEs receiving a modified audit opinion (MAO). However, the enhanced public exposure associated with high-centrality boards increases specialist auditors’ reputational risk, resulting in an increased likelihood of MAO being issued.
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