Independent Directors and Firm Value: Evidence from a Natural Experiment

2010 ◽  
Author(s):  
Krishnamurthy Subramanian ◽  
Rajesh Chakrabarti
Keyword(s):  
Firm Value ◽  
Natural Experiment ◽  
Independent Directors

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

How Do Independent Directors View Powerful CEOS? Evidence from a Quasi-Natural Experiment

2015 ◽  
Author(s):  
Pornsit Jiraporn ◽  
Seksak Jumreonwong ◽  
Napatsorn Jiraporn ◽  
Simran Singh
Keyword(s):  
Natural Experiment ◽  
Independent Directors

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.

scholarly journals Board independence and firm value: A quasi-natural experiment using Taiwanese data

2020 ◽  
Vol 57 ◽  
pp. 71-88 ◽  
Author(s):  
Yaoyao Fan ◽  
Yuxiang Jiang ◽  
Mao-Feng Kao ◽  
Frank Hong Liu
Keyword(s):  
Firm Value ◽  
Natural Experiment ◽  
Board Independence

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 Do Bureaucratic Checks Improve Firm Value? Evidence from a Natural Experiment

2020 ◽  
Author(s):  
Jiafu An ◽  
Seth Armitage ◽  
Wenxuan Hou ◽  
Xianda Liu
Keyword(s):  
Firm Value ◽  
Natural Experiment
Sign in / Sign up

Export Citation Format

Share Document