We investigate the relation between corporate value and the fraction of independent directors in 799 firms with a dominant shareholder across 22 countries. We find a positive relation, especially in countries with weak legal protection for shareholders. The findings suggest that a dominant shareholder, were he so inclined, could offset, at least in part, the documented value discount associated with weak country-level shareholder protection by appointing an 'independent' board. The cost to the dominant shareholder of doing so is the loss in perquisites associated with being a dominant shareholder. Thus, not all dominant shareholders will choose independent boards. Dominant Shareholders, Corporate Boards and Corporate Value: A CrossCountry Analysis This paper is an empirical investigation of the relationship between corporate value and board composition in firms with a dominant shareholder. The question addressed is whether a 'strong' board can offset the market value discount in firms domiciled in countries with weak legal protection for shareholders. Such a discount has been documented by Claessens, Djankov, Fan and Lang (CDFL) (2002), Durnev and Kim (DK) (2005), and La Porta, Lopez-de-Salanes, Shleifer, and Vishny (LLSV) (2002). This discount is often attributed to the ability of a dominant shareholder to divert corporate resources from other shareholders to himself for personal consumption, especially in countries with weak legal shareholder protection. In essence, the question that we address is whether a dominant shareholder could, were he so inclined, increase firm value by appointing a 'strong' board with a mandate of assuring minority investors that he will refrain from diversion of the firm's resources and whether the effect of board composition on firm value, if there is any, is different between countries with weak and those with strong legal shareholder protection. The studies most closely related to ours are Durnev and Kim (DK) (2005) and Klapper and Love (KL) (2004). Among other things, these studies empirically investigate the relationship between firm value and the 'quality' of a firm's corporate governance where the proxies for the quality of governance are two firm-specific indices: the Credit Lyonnais Securities Asia (CLSA) corporate governance scores and the Standard & Poor's (S&P) transparency rankings. As do the other studies cited above,

We document a striking positive stock price reaction to the announcement of corporate name changes to Internet-related dotcom names. This "dotcom" effect produces cumulative abnormal returns on the order of 74 percent for the 10 days surrounding the announcement day. The effect does not appear to be transitory; there is no evidence of a postannouncement negative drift. The announcement day effect is also similar across all firms, regardless of the firm's level of involvement with the Internet. A mere association with the Internet seems enough to provide a firm with a large and permanent value increase.The popular financial press has long argued that corporate name changes result in permanent value creation for firms. Analysts claim that investors prefer certain types of names, and that the value of a company's name should be ref lected in the stock price. However, the academic literature has found little evidence that the announcement of a name change results in a positive stock price reaction for the firm. Karpoff and Rankine~1994! find that companies changing their names earn a statistically insignificant excess return of 0.4 percent over a 2-day window around the announcement date. They also find that corporate name changes do not correspond to changes in the covariances of the firm's stock returns with other firms' returns in the same industry nor do they correspond to changes in earnings. Bosch and Hirscheỹ 1989! report that firms announcing name changes earn a statistically insignificant excess return of 1.62 percent in a 21-day period around the announcement date. They find a positive preannouncement effect followed by a negative postannouncement drift, which largely cancels the announcement effect.We investigate the valuation effects of one particular form of corporate name change-those of companies who add ".com" to their names. A number of popular press articles have reported extremely large returns earned

We investigate the relation between corporate value and the fraction of independent directors in 799 firms with a dominant shareholder across 22 countries. We find a positive relation, especially in countries with weak legal protection for shareholders. The findings suggest that a dominant shareholder, were he so inclined, could offset, at least in part, the documented value discount associated with weak country-level shareholder protection by appointing an 'independent' board. The cost to the dominant shareholder of doing so is the loss in perquisites associated with being a dominant shareholder. Thus, not all dominant shareholders will choose independent boards. Dominant Shareholders, Corporate Boards and Corporate Value: A CrossCountry Analysis This paper is an empirical investigation of the relationship between corporate value and board composition in firms with a dominant shareholder. The question addressed is whether a 'strong' board can offset the market value discount in firms domiciled in countries with weak legal protection for shareholders. Such a discount has been documented by Claessens, Djankov, Fan and Lang (CDFL) (2002), Durnev and Kim (DK) (2005), and La Porta, Lopez-de-Salanes, Shleifer, and Vishny (LLSV) (2002). This discount is often attributed to the ability of a dominant shareholder to divert corporate resources from other shareholders to himself for personal consumption, especially in countries with weak legal shareholder protection. In essence, the question that we address is whether a dominant shareholder could, were he so inclined, increase firm value by appointing a 'strong' board with a mandate of assuring minority investors that he will refrain from diversion of the firm's resources and whether the effect of board composition on firm value, if there is any, is different between countries with weak and those with strong legal shareholder protection. The studies most closely related to ours are Durnev and Kim (DK) (2005) and Klapper and Love (KL) (2004). Among other things, these studies empirically investigate the relationship between firm value and the 'quality' of a firm's corporate governance where the proxies for the quality of governance are two firm-specific indices: the Credit Lyonnais Securities Asia (CLSA) corporate governance scores and the Standard & Poor's (S&P) transparency rankings. As do the other studies cited above,

PurposeThe purpose of this paper is to examine the effect of the passage of the Sarbanes‐Oxley Act (SOX) on a number of governance and governance‐related characteristics, such as board structure and committee composition, as well as the effect of those changes (if any) on both accounting performance and company value.Design/methodology/approachThe paper derives its results using a series of statistical analyses performed on the universe of firms comprising the S&P 500 index. To better gauge the effect of governance changes on firm performance, it uses four different performance measures.FindingsThe paper finds that as a direct consequence of the passage of SOX, the fraction of outsiders on corporate boards and all major board committees has gone up significantly. In addition, total chief executive officer compensation relative to sales as well as the amount of illegal insider trading (measured by a proxy based on the abnormal profits derived from insider trades) have declined. Finally, board size has declined marginally. None of these changes, however, is associated with any improvement in corporate performance or value.Originality/valueThe paper contributes to the brewing debate on the usefulness of SOX regulations. It examines several performance and governance‐related variables that have been previously overlooked. In addition, unlike most previous studies that look at the effect of SOX on governance, or valuation, the paper controls for the incremental effect of stock exchange regulations.

A number of studies have reported value discounts for listed companies in countries that provide weak legal protection to minority shareholders. Such studies typically attribute these discounts to the ability, and the well-documented tendency, of controlling shareholders to extract a disproportionate share of corporate resources for "private benefits." This tendency and the resulting discounts create a dilemma for those controlling shareholders intent on maximizing value for not just themselves, but "all" shareholders: How can such controlling shareholders assure their minority shareholders that they will not exploit their power to expropriate resources and so eliminate the discount from their companies' shares? Copyright Copyright (c) 2009 Morgan Stanley.