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Does Board Independence Increase Firm Value? Evidence from Closed-End Funds

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  • Souther, Matthew E.

Abstract

Researchers disagree about the impact of board independence on firm value. The disagreement generally stems from the endogenous nature of board appointments. I add new evidence to this discussion by using a sample of closed-end funds to document the value-enhancing effects of independent boards. Using cross-sectional, difference-in-differences, and instrumental variables techniques, I address these endogeneity concerns and find consistent evidence that board independence is associated with higher firm value.

Suggested Citation

  • Souther, Matthew E., 2021. "Does Board Independence Increase Firm Value? Evidence from Closed-End Funds," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 56(1), pages 313-336, February.
    • Handle: RePEc:cup:jfinqa:v:56:y:2021:i:1:p:313-336_11
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    Cited by:

    1. Majid Jamal Khan & Faiza Saleem & Shahab Ud Din & Muhammad Yar Khan, 2024. "Nexus between boardroom independence and firm financial performance: evidence from South Asian emerging market," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-10, December.
    2. Pamela Brandes & Ravi Dharwadkar & Jonathan F. Ross & Linna Shi, 2022. "Time is of the Essence!: Retired Independent Directors’ Contributions to Board Effectiveness," Journal of Business Ethics, Springer, vol. 179(3), pages 767-793, September.

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