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Board of Directors Independence and Firm Value: Empirical Evidence Based on the Bucharest Stock Exchange Listed Companies

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  • Georgeta Vintila

    (The Bucharest University of Economic Studies, Department of Finance, Romania)

  • Stefan Cristian Gherghina

    (The Bucharest University of Economic Studies, Department of Finance Romania)

Abstract

This paper examines the influence and causal relationship between board of directors independence, CEO duality, and firm value. By estimating multivariate regression models for panel data, unbalanced, for a sample of companies listed on the Bucharest Stock Exchange, there resulted a positive influence of the percentage of independent directors on firm value, but down to a threshold of their representation of 47.23 percent, whereupon their influence becomes negative. When we employed fixed-effects models, the relationship previously mentioned was not statistically validated. However, the results provide support for a lack of statistically significant relationship between the percentage of non-executive directors and firm value. Besides, by estimating fixed-effects models we found a positive influence of CEO duality on industry-adjusted Tobin's Q ratio, but not statistically significant when estimating models without cross-sectional effects. The causal relationships between board independence and firm value identified based on Granger causality are not robust.

Suggested Citation

  • Georgeta Vintila & Stefan Cristian Gherghina, 2013. "Board of Directors Independence and Firm Value: Empirical Evidence Based on the Bucharest Stock Exchange Listed Companies," International Journal of Economics and Financial Issues, Econjournals, vol. 3(4), pages 885-900.
    • Handle: RePEc:eco:journ1:2013-04-10
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    Cited by:

    1. Aymen Ammari & Mohamad Kadria & Abderrazak Ellouze, 2014. "Board Structure and Firm Performance: Evidence from French Firms Listed in SBF 120," International Journal of Economics and Financial Issues, Econjournals, vol. 4(3).
    2. Sumedrea Silvia, 2017. "Are Cultural and Gender Diversity Drivers of Firm Performance in Post- Crises Emergent Economies?," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 62(1), pages 61-75, April.
    3. Shivan Sarpal, 2018. "Does Endogeneity in Causal Relationships Matter: A Case of Board Independence and Firm’s Market Valuation," Emerging Economy Studies, International Management Institute, vol. 4(1), pages 19-39, May.
    4. Raluca Georgiana MOSCU, 2015. "Study On Correlation Between Ceo Duality And Corporate Performance Of Companies Listed On The Bucharest Stock Exchange," Journal of Social and Economic Statistics, Bucharest University of Economic Studies, vol. 4(1), pages 47-53, JULY.
    5. Michel Sayumwe, 2019. "Corporate Governance: An Overview. From Creation of Value for Shareholders by the Board to the Duality Role of Its Chairperson," Journal of Business Administration Research, Journal of Business Administration Research, Sciedu Press, vol. 8(1), pages 40-51, April.
    6. Georgeta VINTILA & Raluca-Georgiana MOSCU, 2014. "Compliance With The Romanian Corporate Governance Code. Evidences From The Companies Listed On Bucharest Stock Exchange," Journal of Public Administration, Finance and Law, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 6(6), pages 235-248, December.

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    More about this item

    Keywords

    independent directors; non-executive directors; firm value; panel data regression models; Granger causality; vector autoregression;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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