The Value of Outside Directors: Evidence from Corporate Governance Reform in Korea

40 Pages Posted: 27 Dec 2006 Last revised: 20 Apr 2014

See all articles by Sae Woon Park

Sae Woon Park

Changwon National University

Jongmoo Jay Choi

Temple University; National Bureau of Economic Research (NBER); Temple University - International Business

Sean Sehyun Yoo

Belmont University - College of Business Administration

Abstract

This paper examines the valuation impacts of outside independent directors in Korea, where a regulation requiring outside directors was instituted after the Asian financial crisis. In contrast to studies of U.S. firms, the effects of independent directors on firm performance are strongly positive. Foreigners also have positive impacts. The effects of indigenous institutions such as chaebol or family control are insignificant or negative. This implies that the effect of outsiders depends on board composition as well as the nature of market in which the firm operates.

Keywords: board independence, board composition, outside directors, foreign institutional investors, Korean corporate governance, emerging market finance

JEL Classification: G3

Suggested Citation

Park, Sae Woon and Choi, Jongmoo Jay and Yoo, Sean Sehyun, The Value of Outside Directors: Evidence from Corporate Governance Reform in Korea. Journal of Financial and Quantitative Analysis, Vol., 42, No. 4, December 2007, pp. 941-962. Available at SSRN: https://ssrn.com/abstract=953732

Sae Woon Park

Changwon National University ( email )

Changwon
Korea, Republic of (South Korea)

Jongmoo Jay Choi (Contact Author)

Temple University ( email )

Fox School of Business
Temple University
Philadelphia, PA 19122
United States
215-204-5084 (Phone)
215-204-1697 (Fax)

HOME PAGE: http://astro.temple.edu/~jjchoi

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Temple University - International Business ( email )

Philadelphia, PA 19122
United States

Sean Sehyun Yoo

Belmont University - College of Business Administration ( email )

United States

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