Do Independent Directors Add Value?

Matolcsy, Zoltan; Stokes, Donald J.; Wright, Anna

doi:10.1111/j.1835-2561.2004.tb00281.x

Cited by 62 publications

(63 citation statements)

References 25 publications

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“…However, Hossain et al do not look at how the relation between the investment opportunity set and board composition directly affects fi rm value. Third, our study provides more generalisable results than prior research, in particular the study by Matolcsy et al (2004), whose methodology we follow closely. Matolcsy et al carry out their analysis using a sample of the largest companies listed on the Australian Stock Exchange whereas the sample in our study consists of randomly chosen listed companies on the New Zealand Exchange.…”

Section: (1) Introductionmentioning

confidence: 86%

“…However, Lasfer (2002) fi nds contradictory results to Matolcsy et al (2004). Lasfer hypothesises that the extent to which the board of directors is value-relevant depends upon the problems faced by high and low growth option fi rms.…”

Section: Prior Researchmentioning

confidence: 99%

“…This observation is also confi rmed in Hutchison's results, where she fi nds that a negative association between the fi rm's investment opportunity set and fi rm performance is weaker for fi rms with a higher proportion of outside directors on the board. Matolcsy et al (2004) fi nd the proportion of outside directors on the board to be value enhancing for a sample of the largest fi rms listed on the Australian Stock Exchange facing high growth opportunities. They attribute this to the monitoring role played by outside directors in ensuring that management are executing and undertaking their growth opportunities at the appropriate time in order to maximise fi rm value and not for alternative reasons, such as opportunistically increasing their own utility.…”

Section: Prior Researchmentioning

confidence: 99%

“…Outside directors can also be valuable to fi rms in that they usually come from a diverse range of backgrounds and can have considerable business experience (Matolcsy et al, 2004). These attributes ensure that the fi rm's investments in growth options are exercised at the optimal time so as to maximize fi rm value.…”

Section: Hypothesis Developmentmentioning

confidence: 99%

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Board Composition and the Value of New Zealand Companies

Orr

Emanuel²,

Wong³

2005

Pacific Accounting Review

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This study examines the relationship between board composition and fi rm value, and the extent to which this relationship may be affected by a company's investment opportunity set. There is little research that examines this issue, particularly for the New Zealand market. Of the research that exists, and generally for the research that examines how board composition affects fi rm performance, the fi ndings have been mixed. Using a randomly chosen sample, which improves the external validity of results from prior studies, we fi nd that board composition of high growth option fi rms is positively related to fi rm value, and this relationship is maintained when more refi ned measures that proxy the characteristics of outside directors (such as tenure of outside directors, the level of outside director equity ownership, the number of other board positions held by outside directors, and the total proportion of nonexecutive directors, including grey directors) are recognised.

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Section: (1) Introductionmentioning

confidence: 86%

Section: Prior Researchmentioning

confidence: 99%

Section: Prior Researchmentioning

confidence: 99%

Section: Hypothesis Developmentmentioning

confidence: 99%

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Board Composition and the Value of New Zealand Companies

Orr

Emanuel²,

Wong³

2005

Pacific Accounting Review

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“…In case of an independent Chairman, Jensen [14] highlighted that the board will be more effective and the Chairman will have no conflicts of interest. Further, a high quality monitoring will be ensured in case of an independent Chairman, showing a lesser likelihood of organizational failure [15].…”

Section: Related Literature and Hypotheses Designmentioning

confidence: 99%

Approaches on Correlation between Board of Directors and Risk Management in Resilient Economies

et al. 2017

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Abstract:The recent financial crisis highlighted the need for a strong emphasis on the effectiveness of board risk oversight practices. Good corporate governance upholds effective risk management, which in turn ensures the flexibility to reply to unpredicted threats and take benefit of opportunities. Thus, risk management affords corporate resilience that engenders competitive advantage due to the capacity to circumvent, deter, defend, react, and adjust to any kind of disturbance, besides recovering quickly. Guaranteeing that the board is prepared and adequately resilient to deal with a crisis circumstance is a crucial part of good governance. By employing a data set of companies listed in Romania, this paper analyzes whether boards of directors influence risk management. We measure boards by means of size, independence, diversity, establishment of Consultative Committees, as well as CEO duality, gender, age, and tenure. Based on ten financial ratios, we develop two risk indicators regarding shareholders' wealth and short-term risk, alongside a global business failure risk tool, by means of principal component analysis. Furthermore, the output of the multivariate regression analysis show that CEO gender, the size of the board, and Audit Committee negatively influence business failure risk.

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Board competence and green innovation—Does external governance matter?

Yousaf,

Tauni,

Yousaf

et al. 2023

Bus Strat Env

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Previous research examining the link between board attributes and ecological strategies such as green innovation has primarily focused on structural board attributes, yielding mixed findings. Moreover, the critical contextual grounds that shape the relationship between board attributes and green innovation have often been overlooked, leading to potential biases in empirical investigations. Considering that competence drives outstanding performance, we developed a unique measure of board competence that represents the board's intrinsic ability to perform in corporate strategies. Drawing on a holistic perspective of agency, resource dependence, and stakeholder theories, we posit a strong relationship between board competence and green innovation. Furthermore, we contend that this association is moderated by external governance mechanisms, namely audit quality, media coverage, and imitative pressure. Through our analysis of publicly traded Chinese companies, we found compelling evidence to support our assertions. These findings have important implications for policymakers, practitioners, and managers.

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Do Independent Directors Add Value?

Cited by 62 publications

References 25 publications

Board Composition and the Value of New Zealand Companies

Board Composition and the Value of New Zealand Companies

Approaches on Correlation between Board of Directors and Risk Management in Resilient Economies

Board competence and green innovation—Does external governance matter?

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