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Corporate Boards in some OECD countries: Size, composition, functioning and effectiveness

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Abstract

In recent years, the debate about the efficiency of corporate governance mechanisms has focused on the activity of corporate boards of directors. This paper joins this debate by analyzing the effect of board size, composition and structure on firm value in a sample of 450 non-financial companies from ten Western Europe and North American countries. The econometric method combines uniequational regression analysis with simultaneous equations in order to control for the possibility of board size and composition endogeneity. The results show a negative relationship between firm value and the board of directors size. This relation holds when we control for alternative definitions of firm size and for board composition, board structure, country effect and industry effect. We find no significant relationship between outside directors and firm value. These results are consistent, in an international framework, with previous relevant papers.

Suggested Citation

  • Andrés Alonso, Pablo de & Azofra Palenzuela, Valentín & López-Iturriaga, Félix, 2000. "Corporate Boards in some OECD countries: Size, composition, functioning and effectiveness," Working Papers "New Trends on Business Administration". Documentos de Trabajo "Nuevas Tendencias en Dirección de Empresas". 2000-10, Interuniversity Research Master and Doctorate Program (with a quality mention of ANECA) on "Business Economics", Universities of Valladolid, Burgos, Salamanca and León (Spain). Until 2008, Interuniversity Doctorate Program (with a quality mention of ANECA) “New trends in Business Administration”, Universities of Valladolid, Burgos, and Salamanca (Spain). Master en Investigación y Programa de Docto.
    • Handle: RePEc:ntd:wpaper:2000-10
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    More about this item

    Keywords

    Corporate governance; board of directors.;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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