Board of Directors Independence and Firm Value: Empirical Evidence Based on the Bucharest Stock Exchange Listed Companies


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Authors

  • Georgeta Vintila The Bucharest University of Economic Studies
  • Stefan Cristian Gherghina The Bucharest University of Economic Studies

Abstract

This paper examines the influence and causal relationship between board of directors independence, CEO duality, and firm value. By estimating multivariate regression models for panel data, unbalanced, for a sample of companies listed on the Bucharest Stock Exchange, there resulted a positive influence of the percentage of independent directors on firm value, but down to a threshold of their representation of 47.23 percent, whereupon their influence becomes negative. When we employed fixed-effects models, the relationship previously mentioned was not statistically validated. However, the results provide support for a lack of statistically significant relationship between the percentage of non-executive directors and firm value. Besides, by estimating fixed-effects models we found a positive influence of CEO duality on industry-adjusted Tobin’s Q ratio, but not statistically significant when estimating models without cross-sectional effects. The causal relationships between board independence and firm value identified based on Granger causality are not robust. Keywords: independent directors; non-executive directors; firm value; panel data regression models; Granger causality; vector autoregression JEL Classifications: G32; G34

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Author Biography

Stefan Cristian Gherghina, The Bucharest University of Economic Studies

Department of Finance

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Published

2013-09-26

How to Cite

Vintila, G., & Gherghina, S. C. (2013). Board of Directors Independence and Firm Value: Empirical Evidence Based on the Bucharest Stock Exchange Listed Companies. International Journal of Economics and Financial Issues, 3(4), 885–900. Retrieved from https://econjournals.com/index.php/ijefi/article/view/598

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