Dominant Shareholders, Corporate Boards and Corporate Value: A Cross-Country Analysis
- 1 September 2006
- preprint
- Published by Elsevier in SSRN Electronic Journal
Abstract
We investigate the relation between corporate value and the proportion of the board made up of independent directors in 799 firms with a dominant shareholder across 22 countries. We find a positive relation, especially in countries with weak legal protection for shareholders. The findings suggest that a dominant shareholder, were he so inclined, could offset, at least in part, the documented value discount associated with weak country-level shareholder protection by appointing an 'independent' board. The cost to the dominant shareholder of doing so is the loss in perquisites associated with being a dominant shareholder. Thus, not all dominant shareholders will choose independent boards.Keywords
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