Wang Y.-CLin H.-W.WTSUN-SIOU LEETsai J.-J.2021-08-312021-08-31201910181687https://www.scopus.com/inward/record.uri?eid=2-s2.0-85067682024&doi=10.6552%2fJOAR.201901_%2868%29.0003&partnerID=40&md5=ae5434ad0b3d8f200bd3866f1dbc3a01https://scholars.lib.ntu.edu.tw/handle/123456789/579984This study examines how firm characteristics, governance regulations, and CEO-director social ties affect the dual roles of directors as advisors and monitors and, in turn, influence corporate governance. We find that the effectiveness of outside directors as advisors is particularly significant in firms with more external uncertainty and dependence, whereas inside directors' advising effectiveness increases when firms rely more heavily on firm-specific expertise or on short-lived innovation profits. The effectiveness of outside directors as monitors diminishes in firms with high monitoring costs such as firms with less persistent earnings. Firm performance after the implementation of the Sarbanes-Oxley Act of 2002 and related exchange rules further supports our findings. We document that the regulations, which mandate uniformly high levels of outside director monitoring on all firms, are detrimental to firms that have a greater need for inside directors to pursue competitive advantage. Such regulations also neglect social links between CEO and directors, which may influence directors' responsibility in monitoring firms. Copyright ? 2019 Journal of Accounting Review. All rights reserved.journal article10.6552/JOAR.201901_(68).00032-s2.0-85067682024