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The Impact of Foreign Board Membership on Firm Value

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  • Oxelheim, Lars

    ()
    (The Research Institute of Industrial Economics)

  • Randøy, Trond

    ()
    (Agder University College)

Abstract

This study examines the effect of foreign (Anglo-American) board membership on corporate performance measured in terms of firm value (Tobin’s Q). On a basis of firms with headquarters in Norway or Sweden the study indicates a significantly higher value for firms that have outsider Anglo-American board member(s), after a variety of firm-specific and corporate governance related factors have been controlled for. We argue that this superior performance reflects the fact that these companies have successfully broken away from a partly segmented domestic capital market by “importing” an Anglo-American corporate governance system. Such an “import” signals a willingness on the part of the firm to expose itself to improved corporate governance and enhances its reputation in the financial market.

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Bibliographic Info

Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 567.

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Length: 37 pages
Date of creation: 10 Dec 2001
Date of revision:
Publication status: Published in Journal of Banking and Finance, 2003, pages 2369-2392.
Handle: RePEc:hhs:iuiwop:0567

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Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Phone: +46 8 665 4500
Fax: +46 8 665 4599
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Web page: http://www.ifn.se/
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Keywords: Foreign Board Membership; Corporate Governance; Board Monitoring; Cross-Listing;

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References

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