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Effects of outside directors on firms’ investments and performance: Evidence from a quasi-natural experiment in Japan

Masayuki Morikawa

Journal of the Japanese and International Economies, 2020, vol. 56, issue C

Abstract: This study presents evidence on the impact of outside directors on firms’ investment behavior and performance with a focus on the recent quasi-natural experiment that rapidly increased the number of outside directors in listed firms. Using a panel of Japanese firms, we compare listed and unlisted firms and conduct instrumental variable estimations to examine causal relationships. The results indicate that the rapid increase in the number of outside directors among listed firms did not promote active investments or risk-taking behavior. In addition, it had no significant impacts on the profitability and productivity of the firms.

Keywords: Outside director; Corporate governance; Investment; R&D; ROA; TFP (search for similar items in EconPapers)
JEL-codes: D22 G34 K22 (search for similar items in EconPapers)
Date: 2020
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Working Paper: Effects of Outside Directors on Firms' Investments and Performance: Evidence from a Quasi-Natural Experiment in Japan (2019) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jjieco:v:56:y:2020:i:c:s0889158320300113

DOI: 10.1016/j.jjie.2020.101074

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