Abstract
We investigate the relation between corporate value and the fraction of independent directors in 799 firms with a dominant shareholder across 22 countries. We find a positive relation, especially in countries with weak legal protection for shareholders. The findings suggest that a dominant shareholder, were he so inclined, could offset, at least in part, the documented value discount associated with weak country-level shareholder protection by appointing an ‘independent’ board. The cost to the dominant shareholder of doing so is the loss in perquisites associated with being a dominant shareholder. Thus, not all dominant shareholders will choose independent boards.
Tech Report Number
2006-001
Date of this Version
1-1-2006
Recommended Citation
Dahya, Jay; Dimitrov, Orlin; and McConnell, John J., "Dominant
Shareholders, Corporate Boards and Corporate Value: A Cross-Country
Analysis" (2006). Purdue CIBER Working Papers. Paper 41.
https://docs.lib.purdue.edu/ciberwp/41