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

Journal of Business Finance and Accounting 37, 2010, 1281-1307.

34 Pages Posted: 30 Apr 2013 Last revised: 10 Aug 2017

See all articles by Øyvind Bøhren

Øyvind Bøhren

BI Norwegian Business School; European Corporate Governance Institute (ECGI)

R. Øystein Strøm

OsloMet - Oslo Metropolitan University

Date Written: January 18, 2010

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

JEL Classification: G34, G38

Suggested Citation

Bøhren, Øyvind and Strøm, Reidar Øystein, Governance and Politics: Regulating Independence and Diversity in the Board Room (January 18, 2010). Journal of Business Finance and Accounting 37, 2010, 1281-1307., Available at SSRN: https://ssrn.com/abstract=2257734

Øyvind Bøhren (Contact Author)

BI Norwegian Business School ( email )

Nydalsveien 37
Oslo, 0442
Norway
46410503 (Phone)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Reidar Øystein Strøm

OsloMet - Oslo Metropolitan University ( email )

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

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