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Outside Directors on Korean Boards: Governance and Institutions

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  • Amon Chizema
  • Jootae Kim

Abstract

Drawing on institutional theory, this study examines the factors that pressured Korean firms to appoint outside directors to their boards. While this practice could be considered to be a management innovation in Korea, in the Anglo-American corporate governance system it has long been used as one of several mechanisms to mitigate agency costs between management and shareholders. As such, this response by Korean firms, following the 1997-98 currency crisis in Asia, could be seen as an example of corporate governance convergence on the Anglo-American model, where higher levels of outside director representation on the board are the norm. We examine the antecedents of having a higher proportion of outside directors on Korean boards. Our findings indicate that larger firms that are under stricter control by the government have higher representation of outside directors on the board. We also find a positive and significant relationship between the proportion of outside directors and business group affiliation, poor prior firm performance, higher levels of debt and foreign ownership. Copyright (c) 2009 Blackwell Publishing Ltd and Society for the Advancement of Management Studies.

Suggested Citation

  • Amon Chizema & Jootae Kim, 2010. "Outside Directors on Korean Boards: Governance and Institutions," Journal of Management Studies, Wiley Blackwell, vol. 47(1), pages 109-129, January.
  • Handle: RePEc:bla:jomstd:v:47:y:2010:i:1:p:109-129
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Weichieh Su & Cheng-Yu Lee, 2013. "Effects of corporate governance on risk taking in Taiwanese family firms during institutional reform," Asia Pacific Journal of Management, Springer, vol. 30(3), pages 809-828, September.
    2. repec:spr:manint:v:52:y:2012:i:6:d:10.1007_s11575-012-0148-x is not listed on IDEAS
    3. Min, Byung S. & Smyth, Russell, 2014. "Corporate governance, globalization and firm productivity," Journal of World Business, Elsevier, vol. 49(3), pages 372-385.
    4. repec:eee:worbus:v:53:y:2018:i:2:p:134-150 is not listed on IDEAS
    5. repec:eee:iburev:v:27:y:2018:i:1:p:269-280 is not listed on IDEAS
    6. Lee, Ji-Hwan & Roberts, Michael J.D., 2015. "International returnees as outside directors: A catalyst for strategic adaptation under institutional pressure," International Business Review, Elsevier, vol. 24(4), pages 594-604.
    7. Sharon Kemp, 2010. "Driving Strategy or Just Going through the Motions: An Empirical Study of Boardrooms in the UK," International Journal of Business Administration, International Journal of Business Administration, Sciedu Press, vol. 1(1), pages 2-18, November.
    8. Munisi, Gibson & Hermes, Niels & Rand√ły, Trond, 2014. "Corporate boards and ownership structure: Evidence from Sub-Saharan Africa," International Business Review, Elsevier, vol. 23(4), pages 785-796.
    9. Shin, Donghoon & Seidle, Russell & Okhmatovskiy, Ilya, 2016. "Making the foreign familiar: The influence of top management team and board of directors characteristics on the adoption of foreign practices," Journal of World Business, Elsevier, vol. 51(6), pages 937-949.

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