How do global board reforms affect managerial investment decisions?

Shu-Miao Lai and Chih-Liang Liu

Research in International Business and Finance, 2025, vol. 77, issue PB

Abstract: This study investigates how global board reforms affect managerial investment decisions. After remedying the biases of staggered difference-in-differences regression estimators, we corroborate that global board reforms significantly improve investment efficiency, reflected in the reduction of both over-investment and under-investment. Importantly, our analysis highlights that the real effects of these reforms occur through improved financial reporting quality. These results are primarily driven by reforms related to increased board and audit committee/auditor independence. Furthermore, global board reforms significantly affect investment efficiency more in comply-or-explain countries than in rule-based countries. Collectively, we provide new insights into how global board reforms improve investment efficiency.

Keywords: Global board reform; Staggered difference-in-differences; Financial reporting; Investment efficiency (search for similar items in EconPapers)
JEL-codes: G31 G38 M48 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:77:y:2025:i:pb:s0275531925001904

DOI: 10.1016/j.ribaf.2025.102934

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