The association between independent directors and company value. Confronting evidence from two emerging markets
Purpose The purpose of the paper is to advance the understanding of the links between the presence of independent directors (IDs) on boards and the company value in the specific context of concentrated ownership. The authors apply the framework of agency theory to identify the monitoring effect of I...
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| Veröffentlicht in: | Corporate governance (Bradford) 2020-08, Vol.20 (6), p.987-999 |
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| container_title | Corporate governance (Bradford) |
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| creator | Aluchna, Maria Mahadeo, Jyoti Devi Kamiński, Bogumił |
| description | Purpose
The purpose of the paper is to advance the understanding of the links between the presence of independent directors (IDs) on boards and the company value in the specific context of concentrated ownership. The authors apply the framework of agency theory to identify the monitoring effect of IDs in two legal systems – common law and civil law.
Design/methodology/approach
The authors test formulated hypotheses using a unique sample of 50 Mauritian and Polish companies listed during the years 2007 to 2015, amounting to a total of 394 observations adopting the fixed effect panel model.
Findings
The results of the panel model show a negative relationship between independent directors on boards and company value. Specifically, the effect remains negative for companies operating in the civil law system, whereas the stronger protection offered by common law offsets the effect of concentrated ownership, resulting in a non-correlation between independent directors on board and firm value.
Originality/value
This study expands the understanding of the value added by independent directors, addressing their monitoring role in the unfavorable context of concentrated ownership. It also reveals that different legal frameworks of civil law and common law may impact the monitoring performed by independent directors. |
| doi_str_mv | 10.1108/CG-08-2019-0263 |
| format | Article |
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The purpose of the paper is to advance the understanding of the links between the presence of independent directors (IDs) on boards and the company value in the specific context of concentrated ownership. The authors apply the framework of agency theory to identify the monitoring effect of IDs in two legal systems – common law and civil law.
Design/methodology/approach
The authors test formulated hypotheses using a unique sample of 50 Mauritian and Polish companies listed during the years 2007 to 2015, amounting to a total of 394 observations adopting the fixed effect panel model.
Findings
The results of the panel model show a negative relationship between independent directors on boards and company value. Specifically, the effect remains negative for companies operating in the civil law system, whereas the stronger protection offered by common law offsets the effect of concentrated ownership, resulting in a non-correlation between independent directors on board and firm value.
Originality/value
This study expands the understanding of the value added by independent directors, addressing their monitoring role in the unfavorable context of concentrated ownership. It also reveals that different legal frameworks of civil law and common law may impact the monitoring performed by independent directors.</description><identifier>ISSN: 1472-0701</identifier><identifier>EISSN: 1758-6054</identifier><identifier>DOI: 10.1108/CG-08-2019-0263</identifier><language>eng</language><publisher>Bradford: Emerald Publishing Limited</publisher><subject>Civil law ; Conflicts of interest ; Corporate governance ; Decision making ; Developing countries ; Directors ; Emerging markets ; Executives ; International business ; LDCs ; Related party transactions ; Stockholders ; Studies ; Transition economies</subject><ispartof>Corporate governance (Bradford), 2020-08, Vol.20 (6), p.987-999</ispartof><rights>Emerald Publishing Limited</rights><rights>Emerald Publishing Limited 2020</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c354t-4e378f113074740b1dfe14784a80314f05c5440e6ef306b1aa461a8a234761a53</citedby><cites>FETCH-LOGICAL-c354t-4e378f113074740b1dfe14784a80314f05c5440e6ef306b1aa461a8a234761a53</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktohtml>$$Uhttps://www.emerald.com/insight/content/doi/10.1108/CG-08-2019-0263/full/html$$EHTML$$P50$$Gemerald$$H</linktohtml><link.rule.ids>314,776,780,961,11614,21674,27901,27902,52664,53219</link.rule.ids></links><search><creatorcontrib>Aluchna, Maria</creatorcontrib><creatorcontrib>Mahadeo, Jyoti Devi</creatorcontrib><creatorcontrib>Kamiński, Bogumił</creatorcontrib><title>The association between independent directors and company value. Confronting evidence from two emerging markets</title><title>Corporate governance (Bradford)</title><description>Purpose
The purpose of the paper is to advance the understanding of the links between the presence of independent directors (IDs) on boards and the company value in the specific context of concentrated ownership. The authors apply the framework of agency theory to identify the monitoring effect of IDs in two legal systems – common law and civil law.
Design/methodology/approach
The authors test formulated hypotheses using a unique sample of 50 Mauritian and Polish companies listed during the years 2007 to 2015, amounting to a total of 394 observations adopting the fixed effect panel model.
Findings
The results of the panel model show a negative relationship between independent directors on boards and company value. Specifically, the effect remains negative for companies operating in the civil law system, whereas the stronger protection offered by common law offsets the effect of concentrated ownership, resulting in a non-correlation between independent directors on board and firm value.
Originality/value
This study expands the understanding of the value added by independent directors, addressing their monitoring role in the unfavorable context of concentrated ownership. It also reveals that different legal frameworks of civil law and common law may impact the monitoring performed by independent directors.</description><subject>Civil law</subject><subject>Conflicts of interest</subject><subject>Corporate governance</subject><subject>Decision making</subject><subject>Developing countries</subject><subject>Directors</subject><subject>Emerging markets</subject><subject>Executives</subject><subject>International business</subject><subject>LDCs</subject><subject>Related party transactions</subject><subject>Stockholders</subject><subject>Studies</subject><subject>Transition economies</subject><issn>1472-0701</issn><issn>1758-6054</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2020</creationdate><recordtype>article</recordtype><sourceid>BENPR</sourceid><recordid>eNptUU1PwzAMjRBIjMGZayTO2ZyPNuWIKhhIk7iMc5W17uhYk5Jkm_bvSTUuSFxsy37PH8-E3HOYcQ7FvFwwKJgA_shA5PKCTLjOCpZDpi5TrLRgoIFfk5sQtgBCCC0nxK0-kZoQXN2Z2DlL1xiPiJZ2tsEBk7GRNp3HOjofqLENrV0_GHuiB7Pb44yWzrbe2djZDcVDlwg10pTpaTw6ij36zVjqjf_CGG7JVWt2Ae9-_ZR8vDyvyle2fF-8lU9LVstMRaZQ6qLlXIJWWsGaNy2mEwplCpBctZDVmVKAObYS8jU3RuXcFEZIpVOQySl5OPcdvPveY4jV1u29TSMroWSmRSZlnlDzM6r2LgSPbTX4Lm16qjhUo6pVuaiSHVWtRlUTY3ZmjIeZXfMP4c8b5A8aVXhD</recordid><startdate>20200825</startdate><enddate>20200825</enddate><creator>Aluchna, Maria</creator><creator>Mahadeo, Jyoti Devi</creator><creator>Kamiński, Bogumił</creator><general>Emerald Publishing Limited</general><general>Emerald Group Publishing Limited</general><scope>AAYXX</scope><scope>CITATION</scope><scope>0U~</scope><scope>1-H</scope><scope>7WY</scope><scope>7WZ</scope><scope>7X1</scope><scope>7XB</scope><scope>8AO</scope><scope>AFKRA</scope><scope>ANIOZ</scope><scope>BENPR</scope><scope>BEZIV</scope><scope>CCPQU</scope><scope>DWQXO</scope><scope>F~G</scope><scope>K6~</scope><scope>K8~</scope><scope>L.-</scope><scope>L.0</scope><scope>M0C</scope><scope>PQBIZ</scope><scope>PQEST</scope><scope>PQQKQ</scope><scope>PQUKI</scope><scope>Q9U</scope></search><sort><creationdate>20200825</creationdate><title>The association between independent directors and company value. Confronting evidence from two emerging markets</title><author>Aluchna, Maria ; Mahadeo, Jyoti Devi ; Kamiński, Bogumił</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c354t-4e378f113074740b1dfe14784a80314f05c5440e6ef306b1aa461a8a234761a53</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2020</creationdate><topic>Civil law</topic><topic>Conflicts of interest</topic><topic>Corporate governance</topic><topic>Decision making</topic><topic>Developing countries</topic><topic>Directors</topic><topic>Emerging markets</topic><topic>Executives</topic><topic>International business</topic><topic>LDCs</topic><topic>Related party transactions</topic><topic>Stockholders</topic><topic>Studies</topic><topic>Transition economies</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Aluchna, Maria</creatorcontrib><creatorcontrib>Mahadeo, Jyoti Devi</creatorcontrib><creatorcontrib>Kamiński, Bogumił</creatorcontrib><collection>CrossRef</collection><collection>Global News & ABI/Inform Professional</collection><collection>Trade PRO</collection><collection>ABI/INFORM Complete</collection><collection>ABI/INFORM Global (PDF only)</collection><collection>Accounting & Tax Database</collection><collection>ProQuest Central (purchase pre-March 2016)</collection><collection>ProQuest Pharma Collection</collection><collection>ProQuest Central UK/Ireland</collection><collection>Accounting, Tax & Banking Collection</collection><collection>ProQuest Central</collection><collection>Business Premium Collection</collection><collection>ProQuest One Community College</collection><collection>ProQuest Central Korea</collection><collection>ABI/INFORM Global (Corporate)</collection><collection>ProQuest Business Collection</collection><collection>DELNET Management Collection</collection><collection>ABI/INFORM Professional Advanced</collection><collection>ABI/INFORM Professional Standard</collection><collection>ABI/INFORM Global</collection><collection>One Business (ProQuest)</collection><collection>ProQuest One Academic Eastern Edition (DO NOT USE)</collection><collection>ProQuest One Academic</collection><collection>ProQuest One Academic UKI Edition</collection><collection>ProQuest Central Basic</collection><jtitle>Corporate governance (Bradford)</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Aluchna, Maria</au><au>Mahadeo, Jyoti Devi</au><au>Kamiński, Bogumił</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>The association between independent directors and company value. Confronting evidence from two emerging markets</atitle><jtitle>Corporate governance (Bradford)</jtitle><date>2020-08-25</date><risdate>2020</risdate><volume>20</volume><issue>6</issue><spage>987</spage><epage>999</epage><pages>987-999</pages><issn>1472-0701</issn><eissn>1758-6054</eissn><abstract>Purpose
The purpose of the paper is to advance the understanding of the links between the presence of independent directors (IDs) on boards and the company value in the specific context of concentrated ownership. The authors apply the framework of agency theory to identify the monitoring effect of IDs in two legal systems – common law and civil law.
Design/methodology/approach
The authors test formulated hypotheses using a unique sample of 50 Mauritian and Polish companies listed during the years 2007 to 2015, amounting to a total of 394 observations adopting the fixed effect panel model.
Findings
The results of the panel model show a negative relationship between independent directors on boards and company value. Specifically, the effect remains negative for companies operating in the civil law system, whereas the stronger protection offered by common law offsets the effect of concentrated ownership, resulting in a non-correlation between independent directors on board and firm value.
Originality/value
This study expands the understanding of the value added by independent directors, addressing their monitoring role in the unfavorable context of concentrated ownership. It also reveals that different legal frameworks of civil law and common law may impact the monitoring performed by independent directors.</abstract><cop>Bradford</cop><pub>Emerald Publishing Limited</pub><doi>10.1108/CG-08-2019-0263</doi><tpages>13</tpages></addata></record> |
| fulltext | fulltext |
| identifier | ISSN: 1472-0701 |
| ispartof | Corporate governance (Bradford), 2020-08, Vol.20 (6), p.987-999 |
| issn | 1472-0701 1758-6054 |
| language | eng |
| recordid | cdi_emerald_primary_10_1108_CG-08-2019-0263 |
| source | Emerald Journals; Standard: Emerald eJournal Premier Collection |
| subjects | Civil law Conflicts of interest Corporate governance Decision making Developing countries Directors Emerging markets Executives International business LDCs Related party transactions Stockholders Studies Transition economies |
| title | The association between independent directors and company value. Confronting evidence from two emerging markets |
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