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Impact of board independence during the crisis period

Vrenken, Erik (2014) Impact of board independence during the crisis period.

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Abstract:Corporate governance is seen as great importance for firm performance. It is said that poor corporate governance could be the cause of the latest credit crisis. The board of directors is a key mechanismof corporate governance, so the board failed to do it job properly due to its lack of independence? The agency theory states that this could be the problem. This research studies the impact of board independence on firm performance and specifically using top ranked USA firms during the period 2007-2010. A regression analysis is used to measure the impact of board independence on firm performance. With Tobin’s Q and Return on Assets as measurements of firm performance, in addition firm size and leverage are used as control variables. The results show a negative relationship between board independence and firm performance. As this study has focused on the specific time period of last crisis, it is therefore difficult to say that in other time periods the impact would be the same. In addition the sample has only used USA firms, so the impact could be more or less similar to firms with a 1-tier board structure.
Item Type:Essay (Bachelor)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:International Business Administration BSc (50952)
Link to this item:http://purl.utwente.nl/essays/66183
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