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

28 Pages Posted: 1 Jan 2011  

Øyvind Bøhren

affiliation not provided to SSRN

R. Øystein Strøm

Oslo and Akershus University College

Abstract

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, R. 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: https://ssrn.com/abstract=1733385 or http://dx.doi.org/10.1111/j.1468-5957.2010.02222.x

Øyvind Bøhren (Contact Author)

affiliation not provided to SSRN

No Address Available

Reidar Øystein Strøm

Oslo and Akershus University College ( email )

Pilestredet 35
Oslo, 0130
Norway
+4722453596 (Phone)

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