Board Incentive, Director Experience, and Outcomes of Joint Venture Investment Jung-Ho Lai National Taipei College of Business I-Ju Chen Yuan-Ze University Discussed by Keng-Yu Ho National Taiwan University December 11, 2010 NTU International Conference on Finance

Board of Director and Joint Venture 2010 NTU International Conference on Finance 2 Summary of the Paper Joint venture is a complex corporate decision which involves the resource fitness and trustworthiness of partners. Specific knowledge and experience are crucial. Previous studies examine the announcement effect of joint ventures based on their characteristics and motivations. Very few studies address the influence of expertise and experience of board members on firm performance. None of them is linked to joint venture.

Board of Director and Joint Venture 2010 NTU International Conference on Finance 3 Summary of the Paper This paper seeks to fill the gap in the literature by examining the effect of board experience and expertise on joint ventures. Boards which are rich in joint venture experience are associated with superior announcement effect. –Past joint venture decisions in general. –Past joint venture decisions in the partners’ industry. Larger board ownership further strengthens such relationship.

Board of Director and Joint Venture 2010 NTU International Conference on Finance 4 Major Comments A very interesting research topic and a well-motivated study. The data could be described in more details, especially for the measures of joint venture expertise and prior experience in the specific industry. Data source and measure construction. –The history of major positions taken by the board members in the past. –Control for the focal firm managers’ experience on joint venture. –Choice of experience window.

Board of Director and Joint Venture 2010 NTU International Conference on Finance 5 Major Comments The current measures capture whether the past joint venture experience exists frequently. How about other proxies? –Amount of joint venture investment may be a possible alternative, since board members may gain more knowledge on large deals. With so many robustness checks being done, it would be interesting to report some of the results in the tables. Any story by assessing the joint venture performance in the long run?

Board of Director and Joint Venture 2010 NTU International Conference on Finance 6 Minor Comments A table reporting the univariate results of the announcement effect could still be helpful. Should a subscript, d, be included in the formulae on Page 23. A brief summary of the empirical results could be mentioned in the “Introduction Section”. The “Discussion and Conclusion Section” is too long.