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Board independence, CEO duality and firm performance: A quantile regression analysis for Indonesia, Malaysia, South Korea and Thailand

  • RAMDANI, Dendi
  • VAN WITTELOOSTUIJN, Arjen
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    We study the effect of board independence and CEO duality on firm performance for a sample of stock-listed enterprises from Indonesia, Malaysia, South Korea and Thailand, applying Quantile Regression. Quantile Regression is more powerful than standard linear regression, as reflected in the Ordinary Least Square (OLS) regression method, since Quantile Regression can produce estimates for all conditional quantiles of the distribution of a response variable, whereas OLS regression only estimates the conditional mean effects of a response variable. Moreover, Quantile Regression is better able to handle violations of the standard assumptions of normality, homoscedasticity and absence of outliers. Indeed, we find that the relationship between corporate governance and firm performance variables is different across the conditional quantiles of the distribution of firm performance, something OLS would leave unidentified. This finding suggests that estimating the quantile effect of a response variable can well be more insightful than estimating only the mean effect of this response variable, particularly so when the data violate assumptions required to perform OLS regression, as is often the case in corporate governance research.

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    Paper provided by University of Antwerp, Faculty of Applied Economics in its series ACED Working Papers with number 2009003.

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    Length: 36 pages
    Date of creation: May 2009
    Date of revision:
    Handle: RePEc:ant:acedwp:2009003
    Contact details of provider: Postal: Prinsstraat 13, B-2000 Antwerpen
    Web page: https://www.uantwerp.be/en/faculties/applied-economic-sciences/
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