Board independence and firm performance in China

Yu Liu, Mihail K. Miletkov, Zuobao Wei and Tina Yang

Journal of Corporate Finance, 2015, vol. 30, issue C, 223-244

Abstract: We provide the first comprehensive and robust evidence on the relationship between board independence and firm performance in China. We find that independent directors have an overall positive effect on firm operating performance in China. Our findings are robust to a battery of tests, including endogeneity checks using instrumental variables, the dynamic generalized method of moments estimator, and the difference-in-differences method. The positive relationship between board independence and firm performance is stronger in government-controlled firms and in firms with lower information acquisition costs. We also document that Chinese independent directors play an important role in constraining insider self-dealing and improving investment efficiency.

Keywords: Independent directors; Firm performance; Monitoring costs; Tunneling; Investment efficiency; China (search for similar items in EconPapers)
JEL-codes: G34 G38 K22 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (165)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:30:y:2015:i:c:p:223-244

DOI: 10.1016/j.jcorpfin.2014.12.004

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