Board Restructuring in Government-Linked Companies: Control Driven or Performance Driven?

30 Pages Posted: 8 Mar 2009

See all articles by Tai Ma

Tai Ma

National Sun Yat-sen University

Hsin-Yi Yu

University of Edinburgh - Organisation Studies; National University of Kaohsiung; University of Edinburgh - Accounting and Finance

Date Written: March 7, 2009

Abstract

We study the effect of government transition on firm performance and the board composition of government-linked companies (GLCs) and explore the motivation for board restructuring of GLCs. Specifically, we examine two questions: (1) what the motivation is for board restructuring, and (2) whether the change in board composition affects subsequent firm performance. The empirical results indicate that the policy factor is the key determinant in board re-election of GLCs. The motivation of board restructuring after a powershift is mainly for control purposes rather than performance enhancement, which may explain why the market reacts negatively in the beginning to board restructuring announcements in GLCs. Furthermore, board restructuring after a powershift does not enhance subsequent firm performance.

Keywords: Power Transition, Corporate Governance, Board Structure, Spoil System, Government-Linked Companies, Powershift

Suggested Citation

Ma, Tai and Yu, Hsin-Yi, Board Restructuring in Government-Linked Companies: Control Driven or Performance Driven? (March 7, 2009). Available at SSRN: https://ssrn.com/abstract=1354982 or http://dx.doi.org/10.2139/ssrn.1354982

Tai Ma

National Sun Yat-sen University ( email )

70 Lien-hai Rd.
Kaohsiung, 80743
Taiwan
886-7-525-2000 ext. 4810 (Phone)
886-7-525-4899 (Fax)

HOME PAGE: http://www.finance.nsysu.edu.tw/teachers/matai/e-index.htm

Hsin-Yi Yu (Contact Author)

University of Edinburgh - Organisation Studies ( email )

50 George Square
William Robertson Building
Edinburgh EH8 9JY
UNITED KINGDOM

National University of Kaohsiung ( email )

Kaohsiung, 803
Taiwan

University of Edinburgh - Accounting and Finance ( email )

William Robertson Building
Edinburgh EH8 9JY
United Kingdom

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