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Does the South African stock market value an independent dual board leadership structure?


  • Collins Gyakari Ntim


We examine the crucial policy question of whether the South African (SA) stock market values a dual board leadership structure (DBLS) using a sample of 169 listed firms from 2002 to 2007. We find a significant positive link between DBLS and market valuation, but only in firms with independent chairpersons, implying that the market values firms with independent DBLS more highly. Our results are robust across a number of econometric models that control for different types of market valuation proxies and endogeneity problems. Our findings offer empirical support for agency theory, which suggests that independent DBLS increases the capacity of the board to effectively advise, monitor and discipline top management, and thereby improving market valuation.

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  • Collins Gyakari Ntim, 2012. "Does the South African stock market value an independent dual board leadership structure?," Economics and Business Letters, Oviedo University Press, vol. 1(1), pages 35-45.
  • Handle: RePEc:ove:journl:aid:9354

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    1. Geoffrey C. Kiel & Gavin J. Nicholson, 2003. "Board Composition and Corporate Performance: how the Australian experience informs contrasting theories of corporate governance," Corporate Governance: An International Review, Wiley Blackwell, vol. 11(3), pages 189-205, July.
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    8. Ntim, Collins G., 2011. "The Impact of Corporate Board Meetings on Corporate Performance in South Africa," MPRA Paper 45814, University Library of Munich, Germany.
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    13. Dawna L. Rhoades & Paula L. Rechner & Chamu Sundaramurthy, 2001. "A Meta-analysis of Board Leadership Structure and Financial Performance: are "two heads better than one"?," Corporate Governance: An International Review, Wiley Blackwell, vol. 9(4), pages 311-319, October.
    14. Ntim, Collins G., 2011. "The King Reports, Independent Non-Executive Directors and Firm Valuation on the Johannesburg Stock Exchange," MPRA Paper 45812, University Library of Munich, Germany.
    15. Charlie Weir & David Laing, 2000. "The Performance-Governance Relationship: The Effects of Cadbury Compliance on UK Quoted Companies," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 4(4), pages 265-281, December.
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