Independent directors, information costs and foreign ownership in Chinese companies
Michael Clements and
Journal of International Financial Markets, Institutions and Money, 2018, vol. 53, issue C, 139-157
This paper takes advantage of recent regulatory changes to estimate the effects of independent directors on company performance, taking into account information cost. Our data sample consists of 2371 firm–year observations for China over the period 1999–2005. Independent directors have a significantly negative impact on return on assets (ROA) and earnings per share (EPS), and this negative effect is more pronounced when the ability of the directors to perform their monitoring and advisory activities is curtailed by high information costs. We also find that foreign ownership may contribute to an increased willingness of firms to appoint independent directors.
Keywords: Corporate governance; Independent directors; Information costs; Foreign ownership; Emerging market (search for similar items in EconPapers)
JEL-codes: G34 G38 K22 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:53:y:2018:i:c:p:139-157
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