Board Composition and Shareholder Wealth: The Case of Management Buyouts

The effect of board size and composition on European bank performance

“…Fama and Jensen (1983b) argue that non-executive directors have an incentive to act as monitors of management because they want to protect their reputation as effective and independent decision-makers. Moreover, non-executive directors may contribute to the value of firms through their evaluation of strategic decisions (Brickley and James 1987;Byrd and Hickman 1992;Lee et al 1992) and through their role in the dismissal of inefficient and poorly performing management (Weisbach 1988). Thus, there is robust evidence that Board composition may significantly influence corporate performance by reducing agency costs (Singh and Davidson 2003).…”

Corporate Goverance Determinants of Earnings Management: Evidence from Nigerian Quoted Companies

“…Also there have been considerable studies supporting that outside directors protect shareholders in specific instances when there is an agency problem (Brickley & James, 1987;Weisbach, 1988;Byrd & Hickman, 1992;and Lee, Rosenstein, Rangan, & Davidson, 1992). According to Bhagat & Black (2000), the relation between the proportion of outside directors and long-term financial performance, however, has not been supported in empirical research.…”

Can Flexibility in Corporate Governance Enhance International Competitiveness? Evidence from Knowledge-Based Industries in India

“…Greater proportion of outside directors helps in monitoring the conflict of interest between shareholders and managers according to the agency theory (Jensen and Meckling 1976;Fama and Jensen 1983;Shleifer and Vishny 1997). Firms with additional outside directors perform better (Baysinger and Butler 1985;Lee et al 1992) and are likely to decrease consumption of perquisites (Brickley and James 1987). Further, outside directors were more likely to be inducted following poor performance or firm exits from industry, indicating that outside guidance is desirable in times of strategic realignment (Weisbach 1988).…”