"We examine the determinants of the size and composition of corporate boards for a sample of 82 US companies that survived during the period 1935-2000. Our hypotheses lead to predictions that firm size, growth opportunities, merger activity, and geographical expansion are important determinants of these board characteristics. We find empirical evidence that the four variables are significant determinants of the size and/or composition of boards. After controlling for these determinants of board characteristics, we find no robust relation between firm performance and either board size or composition". Copyright (c) 2009 Financial Management Association International.

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Investor protection is associated with greater investment sensitivity to q and lower investment sensitivity to cash flow. Finance plays a role in causing these effects; in countries with strong investor protection, external finance increases more strongly with q, and declines more strongly with cash flow. We further find that q and cash flow sensitivities are associated with ex post investment efficiency; investment predicts growth and profits more strongly in countries with greater q sensitivities and lower cash flow sensitivities. The paper's findings are broadly consistent with investor protection promoting accurate share prices, reducing financial constraints, and encouraging efficient investment.IN THIS PAPER, WE study how investor protection affects firm-level resource allocations. Our analyses center on two hypotheses. Our first hypothesis is that stock prices more strongly predict both investment and external finance in countries with stronger investor protection laws. Tobin (1969) shows in a frictionless setting that marginal q predicts real investment. In this framework high marginal q firms should, all else equal, also raise the most capital as these firms invest more. We use average q (q) as a proxy for marginal q, and test whether investment and external finance are more sensitive to q in countries with stronger investor protection laws.We base our first hypothesis on three assumptions. First, we assume that investor protection laws encourage more accurate financial reporting (Leuz, Nanda, and Wysocki (2003)) and more arbitrage (Morck, Yeung, and Yu (2000)), both of which should result in stock prices that more accurately reflect fundamental values. Second, we assume that investor protections improve firms' access to external finance for value-enhancing projects (La Porta et al.

Mengxin-Public governance and corporate finance: Evidence from corruption casesCross-sectional research finds that corporate financing choices are not only affected by firm and industry factors, but also by country institutional factors. This study focuses on the roles of public governance in firm financing patterns. To conduct a natural experiment that avoids endogeneity, we identify 23 corruption scandals involving high-level government bureaucrats in China and a set of publicly traded companies whose senior managers bribed bureaucrats or were connected with bureaucrats through previous job affiliations. We report a significant decline in the leverage and debt maturity ratios of these firms relative to those of other unconnected firms after the arrest of the corrupt bureaucrat in question. These relations persist even if we only focus on the connected firms that were not directly involved in the corruption cases. The relative decline in firm leverage is associated with negative stock price effects. We also examine the possibility that rent seekers are efficient firms and that corruption does not thus result in capital misallocation, but fail to find evidence to substantiate this postulation. Journal of Comparative Economics 36 (3)