The effect of board structure on firm value: a multiple identification strategies approach using Korean data

Bernard Black and Woochan Kim ()

MPRA Paper from University Library of Munich, Germany

Abstract: Outside directors and audit committees are widely considered to be central elements of good corporate governance. We use a 1999 Korean law as an exogenous shock to assess how board structure affects firm market value. The law mandates 50% outside directors and an audit committee for large public firms, but not smaller firms. We study how this shock affects firm market value, using event study, difference-in-differences, and instrumental variable methods, within a regression discontinuity approach. The legal shock produces large share price increases for large firms, relative to mid-sized firms; share prices jump in 1999 when the reforms are announced.

Keywords: Korea; outside directors; audit committees; corporate governance; board of directors (search for similar items in EconPapers)
JEL-codes: G32 G34 G38 (search for similar items in EconPapers)
Date: 2011-07-09
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Related works:
Journal Article: The effect of board structure on firm value: A multiple identification strategies approach using Korean data (2012)
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