Board of Directors Independence and Firm Value: Empirical Evidence Based on the Bucharest Stock Exchange Listed Companies

Board of Directors Independence and Firm Value: Empirical Evidence Based on the Bucharest Stock Exchange Listed Companies

This paper examines the influence and causal relationship between board of directors independence, CEO duality, and firm value. By estimating multivariate regression models for panel data, unbalanced, for a sample of companies listed on the Bucharest Stock Exchange, there resulted a positive influen...

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Bibliographic Details
Published in:International journal of economics and financial issues Vol. 3; no. 4; p. 885
Main Authors: Vintila, Georgeta, Gherghina, Stefan Cristian
Format: Journal Article
Language:English
Published: Mersin EconJournals 2013
Subjects:
Boards of directors
Causality
Corporate governance
Efficiency
Employment contracts
Hypotheses
Insolvency
Nominations
Privatization
Stock exchanges
Stockholders
Bucharest Romania
Romania
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Summary:This paper examines the influence and causal relationship between board of directors independence, CEO duality, and firm value. By estimating multivariate regression models for panel data, unbalanced, for a sample of companies listed on the Bucharest Stock Exchange, there resulted a positive influence of the percentage of independent directors on firm value, but down to a threshold of their representation of 47.23 percent, whereupon their influence becomes negative. When we employed fixed-effects models, the relationship previously mentioned was not statistically validated. However, the results provide support for a lack of statistically significant relationship between the percentage of non-executive directors and firm value. Besides, by estimating fixed-effects models we found a positive influence of CEO duality on industry-adjusted Tobin's Q ratio, but not statistically significant when estimating models without cross-sectional effects. The causal relationships between board independence and firm value identified based on Granger causality are not robust.
ISSN:2146-4138