IDEAS home Printed from https://ideas.repec.org/a/taf/eurjfi/v29y2023i4p363-392.html
   My bibliography  Save this article

The effect of board independence on firm performance – new evidence from product market conditions

Author

Listed:
  • Xiaoyuan Hu
  • Danmo Lin
  • Onur Kemal Tosun

Abstract

We study the effect of corporate board independence on firm performance under different product market conditions. Using customer–supplier links to identify exogenous downstream demand shocks, we find that firm performance is positively associated with board independence when the firm-specific product demand drops. The results are stronger for smaller firms and firms with high growth and more volatile stock returns. The findings prevail if the firm faces a medium level of product market competition or a medium level of downstream demand shock. We provide suggestive evidence for the board's monitoring function driving the effectiveness of board independence in bad times of idiosyncratic risks, rather than its advisory function.

Suggested Citation

  • Xiaoyuan Hu & Danmo Lin & Onur Kemal Tosun, 2023. "The effect of board independence on firm performance – new evidence from product market conditions," The European Journal of Finance, Taylor & Francis Journals, vol. 29(4), pages 363-392, March.
    • Handle: RePEc:taf:eurjfi:v:29:y:2023:i:4:p:363-392
    DOI: 10.1080/1351847X.2022.2049448
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/1351847X.2022.2049448
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/1351847X.2022.2049448?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:eurjfi:v:29:y:2023:i:4:p:363-392. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/REJF20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.