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The impact of foreign board membership on firm value

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Author

  • Lars Oxelheim
  • T Randoy

Summary, in English

This study examines the effect of foreign (Anglo-American) board membership on corporate performance measured in terms of firm value (Tobin's Q). Using a sample of firms with headquarters in Norway or Sweden the study indicates a significantly higher value for firms that have outsider Anglo-American board member(s), after a variety of firm-specific and corporate governance related factors have been controlled for. We argue that this superior performance reflects the fact that these companies have successfully broken away from a partly segmented domestic capital market by "importing" an Anglo-American corporate governance system. Such an "import" signals a willingness on the part of the firm to expose itself to improved corporate governance and enhances its reputation in the financial market.

Publishing year

2003

Language

English

Pages

2369-2392

Publication/Series

Journal of Banking & Finance

Volume

27

Issue

12

Document type

Journal article

Publisher

Elsevier

Topic

  • Economics and Business
  • Business Administration

Keywords

  • foreign board membership
  • cross-listing
  • board monitoring
  • corporate governance

Status

Published

ISBN/ISSN/Other

  • ISSN: 1872-6372