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How does corporate control affect the appointment, auditing expertise and reputation of independent directors? Evidence from Taiwan

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  • Lee, Yung-Chuan
  • Wang, Ming-Chang

Abstract

This study examines the influence of corporate control on the appointment and quality characteristics of independent directors. Our findings, based upon a dataset of related appointments within listed companies in Taiwan, suggest that the preferences of firms to voluntarily appoint independent directors has a positive association with the control right of the controlling shareholder, stemming from the cash flow rights, not from the deviation between ownership and control after decomposing the control. Most importantly, we find that the firms with high control right and cash flow rights of the controlling shareholders are likely to voluntarily appoint independent directors with good auditing expertise and reputation.

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  • Lee, Yung-Chuan & Wang, Ming-Chang, 2017. "How does corporate control affect the appointment, auditing expertise and reputation of independent directors? Evidence from Taiwan," The Quarterly Review of Economics and Finance, Elsevier, vol. 64(C), pages 130-140.
    • Handle: RePEc:eee:quaeco:v:64:y:2017:i:c:p:130-140
    DOI: 10.1016/j.qref.2016.06.010
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    Cited by:

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    More about this item

    Keywords

    Appointment of independent directors; Auditing expertise of independent directors; Reputation of independent directors; Controlling shareholders;
    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
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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