Document Type

Journal Article

Department/Unit

Department of Accountancy and Law

Title

Connected board of directors: A blessing or a curse?

Language

English

Abstract

This study attempts to identify the connection between the board of directors (BoD) and the controlling shareholder. We investigate how this connection affects the corporate governance practice and market performance of Hong Kong listed firms. Our results reveal that close connections between the BoD and the controlling shareholder have a negative effect on corporate governance practice. Our findings also indicate a lower market valuation for firms with a connected BoD. The evidence suggests that the market discounts the value of firms with a connected BoD. The evidence seems to reinforce the importance of the role of independent non-executive directors (INEDs) to enhance the independence of BoD. © 2013 Elsevier B.V.

Keywords

Board structure, Corporate governance, Family ownership, Hong Kong, OECD principles

Publication Date

2013

Source Publication Title

Journal of Banking and Finance

Volume

37

Issue

8

Start Page

3227

End Page

3242

Publisher

Elsevier

DOI

10.1016/j.jbankfin.2013.03.001

ISSN (print)

03784266

ISSN (electronic)

18726372

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