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Board Composition in New Zealand: An Agency Perspective

Author

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  • Andrew K. Prevost

    (Ohio University, Athens, USA,)

  • Ramesh P. Rao
  • Mahmud Hossain

Abstract

This paper looks at board composition determinants in New Zealand. We document that the proportion of outside board members is inversely related to insider equity ownership supporting the notion that these variables are substitute mechanisms in controlling agency problems. We also find that board composition is directly related to debt, ownership concentration, and profitability and inversely related to growth and firm size. There is evidence that firms with influential CEOs have lower outside board representation. Finally, we document that the passage of the legislation reforming company and securities laws in 1993 was associated with increased outside members on the board. Copyright Blackwell Publishers Ltd 2002.

Suggested Citation

  • Andrew K. Prevost & Ramesh P. Rao & Mahmud Hossain, 2002. "Board Composition in New Zealand: An Agency Perspective," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 29(5&6), pages 731-760.
  • Handle: RePEc:bla:jbfnac:v:29:y:2002:i:5&6:p:731-760
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    Citations

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    Cited by:

    1. Garen Markarian & Antonio Parbonetti, 2007. "Firm Complexity and Board of Director Composition," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(6), pages 1224-1243, November.
    2. Muniandy, Balachandran & Hillier, John, 2015. "Board independence, investment opportunity set and performance of South African firms," Pacific-Basin Finance Journal, Elsevier, vol. 35(PA), pages 108-124.
    3. Yves Bozec & Richard Bozec & Mohamed Dia, 2010. "Overall governance, firm value and deviation from one share: one vote principle," International Journal of Managerial Finance, Emerald Group Publishing, vol. 6(4), pages 305-328, September.
    4. Jaana Lappalainen & Mervi Niskanen, 2009. "Does Board Composition and Ownership Structure Affect Firm Growth? Evidence from Finnish SMEs," Research in Economics and Business: Central and Eastern Europe, Tallinn School of Economics and Business Administration, Tallinn University of Technology, vol. 1(1).
    5. Bozec, Richard & Dia, Mohamed, 2007. "Board structure and firm technical efficiency: Evidence from Canadian state-owned enterprises," European Journal of Operational Research, Elsevier, vol. 177(3), pages 1734-1750, March.
    6. Chaur-Shiuh Young & Liu-Ching Tsai & Pei-Gin Hsieh, 2008. "Voluntary Appointment of Independent Directors in Taiwan: Motives and Consequences," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 35(9-10), pages 1103-1137.
    7. Chahine, Salim & Goergen, Marc, 2011. "The two sides of CEO option grants at the IPO," Journal of Corporate Finance, Elsevier, vol. 17(4), pages 1116-1131, September.

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