Department of Accountancy and Law
Connected board of directors: A blessing or a curse?
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.
Board structure, Corporate governance, Family ownership, Hong Kong, OECD principles
Source Publication Title
Journal of Banking and Finance
Link to Publisher's Edition
Cheung, Yan-Leung, Cheong-Wing Chung, Weiqiang Tan, and Wenming Wang. "Connected board of directors: A blessing or a curse?." Journal of Banking and Finance 37.8 (2013): 3227-3242.