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Board Reforms and Firm Value: Worldwide Evidence

Authors Fauver, Larry
Hung, Mingyi View this author's profile
Li, Xi View this author's profile
Taboada, Alvaro G.
Issue Date 2017
Source Journal of Financial Economics , v. 125, (1), July 2017, p. 120-142
Summary We examine the impact of corporate board reforms on firm value in 41 countries. Using a difference-in-differences design, we find that board reforms increase firm value. Reforms involving board and audit committee independence, but not reforms involving separation of chairman and chief executive officer positions, drive the valuation increases. In addition, while comply-or-explain reforms result in a greater increase in firm value than rule-based reforms, the effects of reforms are similar across civil law and common law countries. Further investigation shows that the subsequent change in board independence plays an important role in explaining the effectiveness of the reforms. © 2017
ISSN 0304-405X
Language English
Format Article
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