Do Multiple Directorships Increase Firm Value? Evidence from Independent Directors in Hong Kong

2014 ◽  
Vol 25 (2) ◽  
pp. 121-181 ◽  
Author(s):  
Adrian C. H. Lei ◽  
Jie Deng
Keyword(s):  
Hong Kong ◽  
Firm Value ◽  
Independent Directors ◽  
Multiple Directorships

Cross-listing, foreign independent directors and firm value

2021 ◽  
Vol 136 ◽  
pp. 695-708
Author(s):  
Seungjoon Oh ◽  
Keli Ding ◽  
Heungju Park
Keyword(s):  
Firm Value ◽  
Independent Directors ◽  
Cross Listing

scholarly journals Board Interlocking no Brasil: A Participacão de Conselheiros em Múltiplas Companhias e seu Efeito sobre o Valor das Empresas

2007 ◽  
Vol 5 (2) ◽  
pp. 125 ◽  
Author(s):  
Rafael Liza Santos ◽  
Alexandre Di Miceli da Silveira
Keyword(s):  
Firm Value ◽  
Operational Performance ◽  
Interlocking Directorates ◽  
Listed Firms ◽  
Ownership Structures ◽  
Multiple Directorships ◽  
Good Corporate Governance ◽  
Governance Practices ◽  
High Level ◽  
Dispersed Ownership

This paper investigates the simultaneous participation of directors in different companies from 320 Brazilian listed firms in 2003 and 2005. We identify which firms are connected through a network of directors, which corporate characteristics contribute to this phenomenon, and if board interlocking influences firm value and operational performance. The results show that interlocking directorates are a common practice in Brazil. Besides, larger boards, more dispersed ownership structures, and larger firm size are factors associated with a high level of board interlocking. Moreover, we find that firm value is, on average, negatively impacted by higher levels of board interlocking, especially on firms with board of directors considered too busy (those in which a majority of directors hold three or more directorships) or on firms where their CEO hold directorships in other companies. Besides being a pioneer work on this field in Latin America, the paper provides subsides for the preparation of good corporate governance practices from regulators regarding the effectiveness of multiple directorships and its consequences for corporate value.

Effect of Board Diversity, Promoter’s Presence and Multiple Directorships on Firm Performance

2019 ◽  
Vol 12 (2) ◽  
pp. 169-186
Author(s):  
Nailesh Limbasiya ◽  
Hitesh Shukla
Keyword(s):  
Financial Performance ◽  
Negative Relationship ◽  
Mediation Effect ◽  
Independent Directors ◽  
Hierarchical Regression ◽  
Board Diversity ◽  
Return On Equity ◽  
Net Worth ◽  
Multiple Directorships ◽  
Age Diversity

Purpose: This article analyses the effect of board diversity on the financial performance of non-financial firms listed in the Nifty Index. Specifically, it examines the mediation effect of the promoter’s presence and multiple directorships on the financial performance of the firm, that is, return on net worth (RONW), return on equity (ROE) and its sales growth. Methodology: The article uses the hierarchical regression model to analyse the effect of board diversity on financial performance. The presence of the promoters on the board and multiple directorships are taken as the control variables. Findings: Empirical results show the significant effect of the promoter’s presence on the board on the firm’s earnings and a significant positive effect of firm age, board size, age diversity and experience diversity on the financial performance. However, we do not find any statistically significant relationship between firm size and financial performance in any model. The results also show that the age and experience of the female directors are significantly less compared to the male directors. However, the age and experience of the non-executive directors and independent directors are found to be higher among the other positions held by the directors. We also find a negative relationship between multiple directorships in other firms and the financial performance of the firm. Value: The article proposes that there should be a greater number of independent directors in a firm that has its promoter on the board. One recommendation for the board is to reduce the number of directorships held in other boards to ensure more constructive contribution towards the firm’s financial performance. The article studies the effect of the promoter’s presence on the board and multiple directorships held by board members on the financial performance of the firm.

Are independent directors’ political connections valuable?

2020 ◽  
Vol 11 (2) ◽  
pp. 299-315 ◽  
Author(s):  
Yanyu Chen ◽  
Wenzhe Zheng ◽  
Yimiao Huang
Keyword(s):  
Firm Value ◽  
Negative Impact ◽  
Listed Companies ◽  
Political Connections ◽  
Independent Directors ◽  
The Political ◽  
Political Connection ◽  
Exogenous Shock ◽  
Content Type ◽  
Negative Effect

Purpose The purpose of this paper is to use difference-in-difference method (DID) to study the influences of independent directors’ political connection on firm value. Design/methodology/approach File No. 18 by the Organization Department of the Communist Party of China Central Committee requires that the leading cadres in party and government offices are not allowed to act as independent directors; this restriction applies to retired officials as well. As a result, many listed companies lose the political connections of officers as independent directors. This paper takes it as an exogenous shock to evaluate the influence of the political connection of independent directors on firm value, effectively alleviating the endogeneity problem existing in previous studies. Findings The research finds the following: under the policy of compelled resignation, the loss of political connection of independent directors has a prominent negative impact on firm value; and compared to state-owned enterprises, the firm value of private enterprises receives a greater negative impact. However, the political advantage of state-owned enterprises is not obviously influenced. In the regions with worse external market environments, due to a greater reliance on resources brought about by political connection, the policy has a much greater influence on their listed companies. Research limitations/implications The study faces several limitations, each of which represents a potential research direction. First, our analysis is based on the policy effects on the firm’s current Tobin’s Q and finds a negative effect of losing political connections. However, the long-term effects are still unclear, as some studies find a negative effect of political connections. Second, the paper focuses on one channel in which political connections may affect firm value. Other channels, such as subsidies and loans from state-owned banks, which need more granular data, should be explored in the future. Practical implications The use of DID model can better objectively evaluate the implementation effects of ban policies and alleviate endogenous problems, which is also enlightening for further perfection of the system of independent directors in the A-share market. Social implications It enriches existing researches of the value of independent directors from the perspective of political connection, which is conducive to understanding the influence and channel on the firm value after the loss of political connection and the value of independent directors in the corporate governance in a more comprehensive and accurate manner. Originality/value This paper extends the relevant research on the value of the political connection of independent directors from the perspective of political connection and enlightens the evaluation of the effect of ban policies.

Independent directors and firm value of group-affiliated firms

2017 ◽  
Vol 25 (2) ◽  
pp. 217-236 ◽  
Author(s):  
Amrinder Khosa
Keyword(s):  
Ownership Structure ◽  
Firm Value ◽  
Value Relevance ◽  
Institutional Setting ◽  
Independent Directors ◽  
Board Independence ◽  
Outside Directors ◽  
Content Type ◽  
Listed Firms ◽  
Indian Setting

Purpose This study aims to examine the effect of board independence on firm valuation of group-affiliated firms in distinct Indian setting. Design/methodology/approach This study uses a sample of 317 listed firms comprising 1,350 firm-year observations for the period 2008-2012. The value-relevance model is used to examine the effect of board independence on market value of equity. Findings The distinct finding of an inverse relationship between board independence and firm value of group-affiliated firms in India illustrates that effective monitoring by outside directors is largely influenced by the institutional setting and ownership structure. This study does not find any evidence of different valuation when comparing non-family CEOs and family CEOs. Practical implications Independent directors play an important role to stop abusive use of related-party transactions in an environment where principal–principal conflict exists. The study’s findings will prove useful in determining whether one should rely merely on the independent status of outside directors or the influence of institutional setting on effective governance. Originality/value This paper contributes to the existing literature in the following ways: it helps to gain a better understanding of business groups which are characterised by unique governance structures and the dominance of controlling families on the board, which makes the external governance mechanisms (i.e. independent directors and non-family CEOs) ineffective and it illustrates that effective monitoring by outside directors is largely influenced by the institutional setting and ownership structure.

scholarly journals Ownership monitoring mechanism and corporate performance: evidence from banking firms in Asian emerging markets

2008 ◽  
Vol 5 (3) ◽  
pp. 349-357
Author(s):  
Abdul Hadi Zulkafli ◽  
Fazilah Abdul Samad ◽  
Izani Ibrahim
Keyword(s):  
Corporate Governance ◽  
Hong Kong ◽  
Financial Crisis ◽  
Emerging Markets ◽  
Firm Value ◽  
Financial Firms ◽  
Monitoring Mechanism ◽  
Asian Emerging Markets ◽  
Corporate Governance Reforms ◽  
Governance Reforms

Corporate governance is regarded as a major issue during the post-financial crisis period in Asia. These countries have implemented corporate governance reforms to enhance the protection of their shareholders and stakeholders interests. Such reforms may affect the conduct of business of all corporations in the region as it allows for greater monitoring especially by the shareholders. Unlike earlier studies which focused on non-financial firms, this study analyzes the corporate governance involving ownership monitoring mechanism of listed banking firms in nine Asian emerging markets which are Malaysia, Thailand, Philippines, Indonesia, Korea, Singapore, Hong Kong, Taiwan and India. It is found that ownership monitoring mechanisms of the banking firms in Asian emerging markets are negatively related with firm value measured by Tobin’s Q

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