Voluntary Appointment of Independent Directors in Taiwan: Motives and Consequences
AbstractThis study explores factors that motivate firms to increase board independence in the absence of legal requirements to do so. In addition, we examine the impact of voluntary enhancement of board independence on firm performance. Using a sample of listed companies in Taiwan, we show that voluntary appointment of independent directors is associated with both economic factors and managerial power. Specifically, we find that board independence increases with the weaknesses of alternative corporate governance mechanisms and the severity of agency problems. However, board independence decreases with managerial ownership and family control. In addition, by employing a simultaneous equations model with selectivity, we provide evidence supporting the positive performance impact of voluntary appointment of independent directors in Taiwan. Copyright (c) 2008 The Authors Journal compilation (c) 2008 Blackwell Publishing Ltd.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Journal of Business Finance & Accounting.
Volume (Year): 35 (2008-11)
Issue (Month): 9-10 ()
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0306-686X
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- Lee, Shih-Cheng & Lin, Chien-Ting & Chang, Pei-Ting, 2011. "An Ohlson valuation framework for valuing corporate governance: The case of Taiwan," Pacific-Basin Finance Journal, Elsevier, vol. 19(4), pages 420-434, September.
- Xiaoxiang Zhang & Jo-Ting Wei & Hsin-Hung Wu, 2013. "Forced financial information restatements and management turnover: Market discipline and large family shareholders’ intervention in an emerging economy," Asia Pacific Journal of Management, Springer, vol. 30(4), pages 1005-1029, December.
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