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The effect of board independence on firm performance - new evidence from product market conditions
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Hu, Xiaoyuan, Lin, Danmo and Tosun, Onur (2023) The effect of board independence on firm performance - new evidence from product market conditions. The European Journal of Finance, 29 (4). pp. 363-392. doi:10.1080/1351847X.2022.2049448 ISSN 1351-847X.
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Official URL: https://doi.org/10.1080/1351847X.2022.2049448
Abstract
We study the effect of corporate board independence on firm performance under different product market conditions. Using customer–supplier links to identify exogenous downstream demand shocks, we find that firm performance is positively associated with board independence when the firm-specific product demand drops. The results are stronger for smaller firms and firms with high growth and more volatile stock returns. The findings prevail if the firm faces a medium level of product market competition or a medium level of downstream demand shock. We provide suggestive evidence for the board's monitoring function driving the effectiveness of board independence in bad times of idiosyncratic risks, rather than its advisory function.
Item Type: | Journal Article | ||||||||
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Subjects: | H Social Sciences > HD Industries. Land use. Labor | ||||||||
Divisions: | Faculty of Social Sciences > Warwick Business School > Finance Group Faculty of Social Sciences > Warwick Business School |
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Library of Congress Subject Headings (LCSH): | Corporate governance , Corporations -- Growth, Boards of directors, Organizational effectiveness | ||||||||
Journal or Publication Title: | The European Journal of Finance | ||||||||
Publisher: | Taylor & Francis | ||||||||
ISSN: | 1351-847X | ||||||||
Official Date: | 2023 | ||||||||
Dates: |
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Volume: | 29 | ||||||||
Number: | 4 | ||||||||
Page Range: | pp. 363-392 | ||||||||
DOI: | 10.1080/1351847X.2022.2049448 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||||
Date of first compliant deposit: | 25 February 2022 | ||||||||
Date of first compliant Open Access: | 11 September 2023 | ||||||||
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