The interaction between board composition and firmperformance – a simultaneous equation approach

• Main Authors: Wei-Chun, Lin, 林韋君
• Other Authors: Tsun-Siou Lee
• Format: Others
• Language: en_US
• Published: 2006
• Online Access: http://ndltd.ncl.edu.tw/handle/40460891311316101854

碩士 === 國立臺灣大學 === 財務金融學研究所 === 94 === This paper employ a simultaneous equation model to explore the cause and effect relationship between board composition (we proxy it by the percentage of the independent members on the board, including directors and supervisors) and firm performance. Our finding reveals that the two variables impact and interact with each other jointly in a positive manner that brings a virtuous circle into companies. In the board composition equation, we find evidence that the percentage of independence of the board correlate positively to firm performance 、cash flow right and electronics-related industry and is negatively impacted by firm size and growth opportunities. In the other equation, firm performance is inversely impacted by equity pledge percentage 、debt ratio and research and development expenditure and positively relates to board independence、cash flow right、divergence percentage and firm size.