Connected board of directors: A blessing or a curse?

Yan Leung Stephen CHEUNG, Cheong-Wing CHUNG, Weiqiang TAN, Wenming WANG

Research output: Contribution to journalArticles

10 Citations (Scopus)

Abstract

This study attempts to identify the connection between the board of directors (BoD) and the controlling shareholder. We investigate how this connection affects the corporate governance practice and market performance of Hong Kong listed firms. Our results reveal that close connections between the BoD and the controlling shareholder have a negative effect on corporate governance practice. Our findings also indicate a lower market valuation for firms with a connected BoD. The evidence suggests that the market discounts the value of firms with a connected BoD. The evidence seems to reinforce the importance of the role of independent non-executive directors (INEDs) to enhance the independence of BoD. Copyright © 2013 Elsevier B.V. All rights reserved.
Original languageEnglish
Pages (from-to)3227-3242
JournalJournal of Banking & Finance
Volume37
Issue number8
Early online dateMar 2013
DOIs
Publication statusPublished - Aug 2013

Citation

Cheung, Y.-L., Chung, C.-W., Tan, W., & Wang, W. (2013). Connected board of directors: A blessing or a curse? Journal of Banking & Finance, 37(8), 3227-3242.

Keywords

  • Family ownership
  • Board structure
  • Corporate governance
  • Hong Kong
  • OECD principles

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