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Does Board Independence Matter in Companies with a Controlling Shareholder?


  • Jay Dahya
  • Orlin Dimitrov
  • John J. McConnell


A number of studies have reported value discounts for listed companies in countries that provide weak legal protection to minority shareholders. Such studies typically attribute these discounts to the ability, and the well-documented tendency, of controlling shareholders to extract a disproportionate share of corporate resources for "private benefits." This tendency and the resulting discounts create a dilemma for those controlling shareholders intent on maximizing value for not just themselves, but "all" shareholders: How can such controlling shareholders assure their minority shareholders that they will not exploit their power to expropriate resources and so eliminate the discount from their companies' shares? Copyright Copyright (c) 2009 Morgan Stanley.

Suggested Citation

  • Jay Dahya & Orlin Dimitrov & John J. McConnell, 2009. "Does Board Independence Matter in Companies with a Controlling Shareholder?," Journal of Applied Corporate Finance, Morgan Stanley, vol. 21(1), pages 67-78.
  • Handle: RePEc:bla:jacrfn:v:21:y:2009:i:1:p:67-78

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    References listed on IDEAS

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    Cited by:

    1. Bell, R. Greg & Moore, Curt B. & Filatotchev, Igor, 2012. "Strategic and institutional effects on foreign IPO performance: Examining the impact of country of origin, corporate governance, and host country effects," Journal of Business Venturing, Elsevier, vol. 27(2), pages 197-216.
    2. Yu Chen & Zabihollah Rezaee, 2012. "The role of corporate governance in convergence with IFRS: evidence from China," International Journal of Accounting and Information Management, Emerald Group Publishing, vol. 20(2), pages 171-188.
    3. Poutziouris, Panikkos & Savva, Christos S. & Hadjielias, Elias, 2015. "Family involvement and firm performance: Evidence from UK listed firms," Journal of Family Business Strategy, Elsevier, vol. 6(1), pages 14-32.
    4. Rahimah Mohamed Yunos Author_Email: & Malcolm Smith & Zubaidah Ismail & Syahrul Ahmar Ahmad, 2011. "Inside Concentrated Owners, Board Of Directors And Accounting Conservatism," Annual Summit on Business and Entrepreneurial Studies (ASBES 2011) Proceeding 2011-053-178, Conference Master Resources.

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