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The Value of Outside Directors: Evidence from Corporate Governance Reform in Korea

Published online by Cambridge University Press:  06 April 2009

Jongmoo Jay Choi ,
Sae Woon Park  and
Sean Sehyun Yoo
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Abstract

This paper examines the valuation impacts of outside independent directors in Korea, where a regulation requiring outside directors was instituted after the Asian financial crisis. In contrast to studies of U.S. firms, the effects of independent directors on firm performance are strongly positive. Foreigners also have positive impacts. The effects of indigenous institutions such as chaebol or family control are insignificant or negative. This implies that the effect of outsiders depends on board composition as well as the nature of the market in which the firm operates.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 42 , Issue 4 , December 2007 , pp. 941 - 962
Copyright
Copyright © School of Business Administration, University of Washington 2007

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