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The Value of Outside Directors: Evidence from Corporate Governance Reform in Korea

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  • Choi, Jongmoo Jay
  • Park, Sae Woon
  • Yoo, Sean Sehyun

Abstract

This paper examines the valuation impacts of outside independent directors in Korea, where a regulation requiring outside directors was instituted after the Asian financial crisis. In contrast to studies of U.S. firms, the effects of independent directors on firm performance are strongly positive. Foreigners also have positive impacts. The effects of indigenous institutions such as chaebol or family control are insignificant or negative. This implies that the effect of outsiders depends on board composition as well as the nature of the market in which the firm operates.

Suggested Citation

  • Choi, Jongmoo Jay & Park, Sae Woon & Yoo, Sean Sehyun, 2007. "The Value of Outside Directors: Evidence from Corporate Governance Reform in Korea," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 42(04), pages 941-962, December.
  • Handle: RePEc:cup:jfinqa:v:42:y:2007:i:04:p:941-962_00
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