Board independence and the variability of firm performance: Evidence from an exogenous regulatory shock

• Published in: Australian journal of management Vol. 43; no. 1; pp. 3 - 26
• Main Authors: Bird, Ron, Huang, Peng, Lu, Yue
• Format: Journal Article
• Language: English
• Published: London, England SAGE Publications 01.02.2018; Sage Publications Ltd
• Subjects: Accrual basis accounting; Boards of directors; Business enterprises; Corporate governance; Evidence; Expenditures, Public; Finance; Independence; Outside directors; Risk management; Social aspects; G34; exogenous regulatory shock; firm performance variability; Board independence

We use the 2003 NYSE and NASDAQ listing rules for board independence as an exogenous shock to estimate the causal relation between board independence and the variability of firm performance. Using a difference-in-difference approach, we find that non-compliant firms without a majority of independent...