The impact of foreign board membership on firm value |
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Authors: | Lars Oxelheim,Trond Rand y |
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Affiliation: | a Lund University, Sweden and Research Institute of Industrial Economics (IUI), Sweden;b School of Business and Economics, Agder University College, Norway and Agder Research, Serviceboks 422, Bygg H., Kristiansand N-4604, Norway |
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Abstract: | This study examines the effect of foreign (Anglo-American) board membership on corporate performance measured in terms of firm value (Tobin’s Q). Using a sample of firms with headquarters in Norway or Sweden the study indicates a significantly higher value for firms that have outsider Anglo-American board member(s), after a variety of firm-specific and corporate governance related factors have been controlled for. We argue that this superior performance reflects the fact that these companies have successfully broken away from a partly segmented domestic capital market by “importing” an Anglo-American corporate governance system. Such an “import” signals a willingness on the part of the firm to expose itself to improved corporate governance and enhances its reputation in the financial market. |
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Keywords: | Foreign board membership Corporate governance Board monitoring Cross-listing |
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