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Does board independence influence financial performance in IPO firms? The moderating role of the national business system

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  • Zattoni, Alessandro
  • Witt, Michael A.
  • Judge, William Q.
  • Talaulicar, Till
  • Chen, Jean Jinghan
  • Lewellyn, Krista
  • Hu, Helen Wei
  • Gabrielsson, Jonas
  • Rivas, Jose Luis
  • Puffer, Sheila
  • Shukla, Dhirendra
  • Lopez, Felix
  • Adegbite, Emmanuel
  • Fassin, Yves
  • Yamak, Sibel
  • Fainshmidt, Stav
  • van Ees, Hans

Abstract

Prior evidence suggests that board independence may enhance financial performance, but this relationship has been tested almost exclusively for Anglo-American countries. To explore the boundary conditions of this prominent governance mechanism, we examine the impact of the formal and information institutions of 18 national business systems on the board independence-financial performance relationship. Our results show that while the direct effect of independence is weak, national-level institutions significantly moderate the independence-performance relationship. Our findings suggest that the efficacy of board structures is likely to be contingent on the specific national context, but the type of legal system is insignificant.

Suggested Citation

  • Zattoni, Alessandro & Witt, Michael A. & Judge, William Q. & Talaulicar, Till & Chen, Jean Jinghan & Lewellyn, Krista & Hu, Helen Wei & Gabrielsson, Jonas & Rivas, Jose Luis & Puffer, Sheila & Shukla,, 2017. "Does board independence influence financial performance in IPO firms? The moderating role of the national business system," Journal of World Business, Elsevier, vol. 52(5), pages 628-639.
  • Handle: RePEc:eee:worbus:v:52:y:2017:i:5:p:628-639
    DOI: 10.1016/j.jwb.2017.04.002
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    1. Hezun Li & Siri Terjesen & Timurs Umans, 2020. "Corporate governance in entrepreneurial firms: a systematic review and research agenda," Small Business Economics, Springer, vol. 54(1), pages 43-74, January.
    2. Lai, Jung-Ho & Chen, Li-Yu & Song, Sangcheol, 2019. "How outside directors’ human and social capital create value for corporate international investments," Journal of World Business, Elsevier, vol. 54(2), pages 93-106.
    3. Dowling, Michael & O’Gorman, Colm & Puncheva, Petya & Vanwalleghem, Dieter, 2019. "Trust and SME attitudes towards equity financing across Europe," Journal of World Business, Elsevier, vol. 54(6), pages 1-1.
    4. Ozili, Peterson K, 2020. "Corporate governance research in Nigeria: a review," MPRA Paper 98217, University Library of Munich, Germany.
    5. Lehmann, Erik E. & Vismara, Silvio, 2020. "Corporate Governance in IPO Firms," Annals of Corporate Governance, now publishers, vol. 5(1), pages 1-100, February.
    6. Song Xu & Hui Lv & Heng Liu & Aijing Liu, 2019. "Robust Control of Disturbed Fractional-Order Economical Chaotic Systems with Uncertain Parameters," Complexity, Hindawi, vol. 2019, pages 1-13, October.

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