Do all inside and affiliated directors hold the same value for shareholders?

Etienne Redor () and Magnus Blomkvist ()
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Etienne Redor: Audencia Business School
Magnus Blomkvist: Audencia Business School

Economics Bulletin, 2021, vol. 41, issue 3, 882-895

Abstract: In this paper, we re-question the value of board independence for shareholders. Instead of studying the relationship between the proportion of independent directors and firm performance (as in previous studies), we analyse how shareholders perceive board independence by examining the relations between director independence and shareholder satisfaction as measured by shareholder voting outcomes in annual director elections. This approach allows us to overcome concerns about omitted firm-level characteristics and to propose a finer analysis of the value of board independence/affiliation for shareholders. We show (1) that independent directors receive significantly more, and inside directors significantly fewer, ‘for' votes in director elections than other board members, (2) that not all inside and affiliated directors hold the same value for shareholders and (3) that the leadership structure matters to shareholders.

Keywords: Inside directors; Outside directors; Affiliated directors; Director independence; Board of directors; Shareholder satisfaction; Leadership structure; Duality; Dual CEO structure; Agency theory; Stewardship theory; Resource dependence theory; Director election (search for similar items in EconPapers)
JEL-codes: G3 (search for similar items in EconPapers)
Date: 2021-07-18
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Citations: View citations in EconPapers (2)

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