Product Markets Offer New Evidence on How Board Structure Affects Firm Performance

In a new paper, we discuss our findings on how corporate board structure affects firm performance under different product market conditions. Though many studies have examined the relationship between corporate board structure and firm performance, some have found that board independence has a positive effect on performance while others have found that it has a negative effect and still others have found a statistically insignificant correlation. More recent studies, though, have taken a new perspective, examining whether the association between board independence and firm performance depends on product market demands.

Changing product market conditions can affect the need for monitoring … Read more

Changes in Corporate Governance: Externally Dictated vs. Organically Determined

Several major corporate scandals in the United States during the early 2000s brought attention to corporate governance of large U.S. companies. As a result, Congress passed the Sarbanes-Oxley Act (SOX), and the Securities and Exchange Commission (SEC) announced several regulations aimed at restoring public confidence in the governance of public corporations. While significant research has been conducted on the relation between corporate governance and firm performance, there is no agreement yet on whether changes in governance structure are beneficial for companies and improve firm performance, especially when the changes are dictated by regulation.

The main question is whether mandatory rather … Read more