Academic Activities
[Research]The Effect of Board Structure on Firm Value: A Multiple Identification Strategies Approach using Kor
2012.04.01 Views 703 경영학연구분석센터
| Journal of Financial Economics Volume 104, Issue 1, April 2012, Pages 203–226 Bernard Black (a), Woochan Kim (b), a Northwestern University, Evanston, USA b Korea University Business School, Seoul, Republic of Korea http://www.sciencedirect.com/science/article/pii/S0304405X11001814 Abstract Outside directors and audit committees are widely considered to be central elements of good corporate governance. We use a 1999 Korean law as an exogenous shock to assess whether and how board structure affects firm market value. The law mandates 50% outside directors and an audit committee for large public firms, but not smaller firms. We study this shock using event study, difference-in-differences, and instrumental variable methods, within an overall regression discontinuity approach. The legal shock produces economically large share price increases for large firms, relative to mid-sized firms; their share prices jump in 1999 when the reforms are announced. Keywords Korea; Outside directors; Audit committee; Corporate governance; Board of directors |