 Foreign ownership, appointment of independent directors, and firm value: Evidence from Japanese firmsAnwer S. Ahmed and Takuya Iwasaki Journal of International Accounting, Auditing and Taxation, 2021, vol. 43, issue C Abstract: We investigate the effects of foreign ownership on a key monitoring mechanism, the appointment of independent directors. We use a sample of Japanese firms after the Tokyo Stock Exchange passed rules requiring appointment of at least one independent director or an independent statutory auditor. We find that foreign ownership is significantly positively associated with the appointment of independent directors and firm value, respectively. We also find, using path analysis, that foreign ownership affects firm value via the appointment of independent directors. In robustness tests, we also examine whether foreign ownership affects a monitoring outcome (earnings management). We find that foreign ownership is significantly negatively related to benchmark beating using both accrual and real earnings management. Overall, our evidence suggests that despite their smaller shareholdings, foreign investors enhance firm value by improving the monitoring of managers. Keywords: Foreign ownership; Corporate governance; Independent directors; Japan (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jiaata:v:43:y:2021:i:c:s1061951821000264 DOI: 10.1016/j.intaccaudtax.2021.100401 Access Statistics for this article Journal of International Accounting, Auditing and Taxation is currently edited by R. Larson More articles in Journal of International Accounting, Auditing and Taxation from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.