Voluntary appointment of independent directors in taiwan

Motives and consequences

Chaur-Shiuh Young, Liu Ching Tsai, Pei Gin Hsieh

Research output: Contribution to journalArticle

25 Citations (Scopus)

Abstract

This study explores factors that motivate firms to increase board independence in the absence of legal requirements to do so. In addition, we examine the impact of voluntary enhancement of board independence on firm performance. Using a sample of listed companies in Taiwan, we show that voluntary appointment of independent directors is associated with both economic factors and managerial power. Specifically, we find that board independence increases with the weaknesses of alternative corporate governance mechanisms and the severity of agency problems. However, board independence decreases with managerial ownership and family control. In addition, by employing a simultaneous equations model with selectivity, we provide evidence supporting the positive performance impact of voluntary appointment of independent directors in Taiwan.

Original languageEnglish
Pages (from-to)1103-1137
Number of pages35
JournalJournal of Business Finance and Accounting
Volume35
Issue number9-10
DOIs
Publication statusPublished - 2008 Nov 1

Fingerprint

Board independence
Taiwan
Independent directors
Simultaneous equations model
Selectivity
Enhancement
Family control
Managerial ownership
Listed companies
Corporate governance mechanisms
Factors
Agency problems
Managerial power
Severity
Firm performance
Economic factors

All Science Journal Classification (ASJC) codes

  • Accounting
  • Business, Management and Accounting (miscellaneous)
  • Finance

Cite this

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Voluntary appointment of independent directors in taiwan : Motives and consequences. / Young, Chaur-Shiuh; Tsai, Liu Ching; Hsieh, Pei Gin.

In: Journal of Business Finance and Accounting, Vol. 35, No. 9-10, 01.11.2008, p. 1103-1137.

Research output: Contribution to journalArticle

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