The Value of Outside Directors: Evidence from Corporate Governance Reform in Korea
40 Pages Posted: 27 Dec 2006 Last revised: 20 Apr 2014
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: Suggested Citation