Is regulatory adoption ceremonial? Evidence from lead director appointments

Research Summary: Regulatory bodies often wrestle with the thorny question of whether to mandate a governance practice or allow for organic adoption. While mandates afford rapid diffusion, we theorize that they also result in ceremonial adoptions. Leveraging a quasi‐natural experiment, we compare adoption outcomes for a governance practice—lead director adoption—that was mandated by the NYSE but not the NASDAQ. We find that NYSE firms are more...