Connected board of directors: A blessing or a curse?

Yan-Leung Cheung, Cheong-Wing Chung, Weiqiang Tan and Wenming Wang

Journal of Banking & Finance, 2013, vol. 37, issue 8, 3227-3242

Abstract: This study attempts to identify the connection between the board of directors (BoD) and the controlling shareholder. We investigate how this connection affects the corporate governance practice and market performance of Hong Kong listed firms. Our results reveal that close connections between the BoD and the controlling shareholder have a negative effect on corporate governance practice. Our findings also indicate a lower market valuation for firms with a connected BoD. The evidence suggests that the market discounts the value of firms with a connected BoD. The evidence seems to reinforce the importance of the role of independent non-executive directors (INEDs) to enhance the independence of BoD.

Keywords: Family ownership; Board structure; Corporate governance; Hong Kong; OECD principles (search for similar items in EconPapers)
JEL-codes: G3 G34 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:37:y:2013:i:8:p:3227-3242

DOI: 10.1016/j.jbankfin.2013.03.001

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