Board structure in emerging markets: A simultaneous equation modeling

This paper unravels the board structure of 42,146 firms in China and 21 European emerging markets and empirically examines its determinants. Structural estimation of simultaneous equation models that endogenize board size, outside board chairmanship, and board independence produced evidence supporting our predictions about potential factors that determine these three variables, which are based on previous studies of developed economies. However, we found striking differences in the combination of factors that strongly affect board structure between China and European emerging markets and between public and private companies. Furthermore, the empirical results in this paper suggest that the close interdependence among board components requires analytical consideration. •This paper explores the structure of corporate board in China and 21 European emerging markets and empirically examines its determinants.•We found that emerging market firms likely organize their boards of directors according to an economic logic that has been repeatedly verified in advanced economies.•It is also revealed striking differences in the combination of factors that strongly affect board structure between China and Europe and between listed and unlisted firms.