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How do global board reforms affect managerial investment decisions?

Author

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  • Lai, Shu-Miao
  • Liu, Chih-Liang

Abstract

This study investigates how global board reforms affect managerial investment decisions. After remedying the biases of staggered difference-in-differences regression estimators, we corroborate that global board reforms significantly improve investment efficiency, reflected in the reduction of both over-investment and under-investment. Importantly, our analysis highlights that the real effects of these reforms occur through improved financial reporting quality. These results are primarily driven by reforms related to increased board and audit committee/auditor independence. Furthermore, global board reforms significantly affect investment efficiency more in comply-or-explain countries than in rule-based countries. Collectively, we provide new insights into how global board reforms improve investment efficiency.

Suggested Citation

  • Lai, Shu-Miao & Liu, Chih-Liang, 2025. "How do global board reforms affect managerial investment decisions?," Research in International Business and Finance, Elsevier, vol. 77(PB).
    • Handle: RePEc:eee:riibaf:v:77:y:2025:i:pb:s0275531925001904
    DOI: 10.1016/j.ribaf.2025.102934
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    More about this item

    Keywords

    Global board reform; Staggered difference-in-differences; Financial reporting; Investment efficiency;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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