Governance and Politics: Regulating Independence and Diversity in the Board Room

28 Pages Posted: 1 Jan 2011

See all articles by Øyvind Bøhren

Øyvind Bøhren

BI Norwegian Business School

R. Øystein Strøm

Oslo and Akershus University College; OsloMet - Oslo Metropolitan University


This paper analyzes the economic rationale for board regulation in place and for introducing new regulation in the future. We relate the value of the firm to the use of employee directors, board independence, directors with multiple seats, and to gender diversity. Our evidence shows that the firm creates more value for its owners when the board has no employee directors, when its directors have strong links to other boards, and when gender diversity is low. We find no relationship between firm performance and board independence. These characteristics of value-creating boards support neither popular opinion nor the current politics of corporate governance.

Keywords: corporate governance, board composition, regulation

Suggested Citation

Bøhren, Øyvind and Strøm, Reidar Øystein, Governance and Politics: Regulating Independence and Diversity in the Board Room. Journal of Business Finance & Accounting, Vol. 37, Issue 9-10, pp. 1281-1308, 2010. Available at SSRN: or

Øyvind Bøhren (Contact Author)

BI Norwegian Business School ( email )

Nydalsveien 37
Oslo, 0442
46410503 (Phone)

Reidar Øystein Strøm

Oslo and Akershus University College ( email )

Pilestredet 35
Oslo, 0130
+4722453596 (Phone)

OsloMet - Oslo Metropolitan University ( email )

P.O. Box 4
Oslo, 0130
+47 97968500 (Phone)

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