Board independence, firm performance and ownership concentration: Evidence from Chile |
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Authors: | Fernando Lefort,Francisco Urzú a |
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Affiliation: | a Business School, Pontificia Universidad Católica de Chile, Vicuña Mackenna # 4860, Macul, Santiago, Chile b Bicentennial Science and Technology Program, Conicyt, Bernarda Morín #551, Providencia, Santiago, Chile |
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Abstract: | What determines the composition of companies' boards in the context of high ownership concentration? Are independent directors important as an internal governance mechanism in companies with high ownership concentration? Do markets favor companies whose controlling shareholders use voting rights to elect professional directors?Using a four-year, 160-company panel data, and controlling for endogeneity, this paper addresses these three related questions, finding that an increase in the proportion of outside directors affects company value. The paper also finds that companies that present more exacerbated agency conflicts tend to incorporate professional directors to the boards, in an effort to improve corporate governance and ameliorate the agency problem. |
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Keywords: | Boards Corporate governance Ownership structure Emerging economies Chile |
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