Does Board Independence Increase Firm Value? Evidence from Closed-End Funds

Forthcoming, Journal of Financial and Quantitative Analysis

40 Pages Posted: 25 Sep 2019

See all articles by Matthew E. Souther

Matthew E. Souther

University of South Carolina - Darla Moore School of Business

Date Written: August 15, 2019

Abstract

Previous literature disagrees on the impact of board independence on firm value. The disagreement generally stems from the endogenous nature of board appointments. I add new evidence to this discussion by using a sample of closed-end funds to document the value-enhancing effects of independent boards. Using cross-sectional, difference-in-difference, and instrumental variable techniques, I address these endogeneity concerns and find consistent evidence that board independence is associated with higher firm value.

Keywords: Board independence, Boards of directors, Closed-end funds

JEL Classification: G30, G34, G39

Suggested Citation

Souther, Matthew, Does Board Independence Increase Firm Value? Evidence from Closed-End Funds (August 15, 2019). Forthcoming, Journal of Financial and Quantitative Analysis. Available at SSRN: https://ssrn.com/abstract=3454618

Matthew Souther (Contact Author)

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States

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