Board Independence and Product Market Competition in Swedish Firms

9 Pages Posted: 9 Jul 2004

See all articles by Trond Randøy

Trond Randøy

University of Agder - School of Management

Jan Inge Jenssen

Adger University College

Abstract

This study suggests that firms in highly competitive industries should have fewer outside board members, whereas companies operating in less competitive industries should have more outside directors. Specifically, we argue that board independence is less relevant or even redundant in highly competitive industries, where the firm is already monitored by a competitive product market. Using publicly traded Swedish firms for empirical testing, this study finds that board independence reduces firm performance in industries with highly competitive product markets. On the other hand, board independence enhances firm performance among companies facing less competitive product markets.

Keywords: Board independence, board monitoring, product market competition, performance, Sweden

Suggested Citation

Randøy, Trond and Jenssen, Jan Inge, Board Independence and Product Market Competition in Swedish Firms. Available at SSRN: https://ssrn.com/abstract=557310

Trond Randøy (Contact Author)

University of Agder - School of Management ( email )

Adger Research Foundation
Serviceboks 422 Bygg H
N-4604 Kristiansand
Norway
47 3814 1027 (Phone)

Jan Inge Jenssen

Adger University College ( email )

Servicebox 422
N-4604 Kristiansand
Norway
+47 38 14 10 00 (Phone)
47 38 14 10 26 (Fax)

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