Are independent directors good monitors of public utilities ? Evidence from Europe (original) (raw)
Related papers
Corporate Governance - Independent Directors and Financial Performance: An Empirical Analysis
SSRN Electronic Journal, 2006
Many commentators and institutional investors believe that independent directors are particularly effective in monitoring CEO and in avoiding managerial opportunistic behaviors. The role of independent directors may be particularly important in the case of public utilities where the government relations and the private-public ownership may divert CEO decisions from the maximization of firm performance. We conduct a study of whether independent directors and other board variables influence the performance, the growth and the dividend policy of European energy utilities. We find evidence that the relationship between firm performance and independent directors is negative and statistically significant. Using different econometric techniques and controlling for the type of control, our results show that independent directors are less concerned with the improvement of the shareholders' value. This suggests that in the public utilities they may be a corporate mechanism that enhances stakeholders' protection and social welfare rather than financial performance.
The Independent Directors in the Energy Utilities: An Empirical Analysis
International Journal of Business and Social Science, 2019
Many commentators and institutional investors believe that independent directors are particularly effective in monitoring CEO and in avoiding managerial opportunistic behaviors. The role of independent directors may be particularly important in the case of public utilities where the government relations and the private-public ownership may divert CEO decisions from the maximization of firm performance. We conduct a study of whether independent directors and other board variables influence the performance, the growth and the dividend policy of European energy utilities. We find evidence that the relationship between firm performance and independent directors is negative and statistically significant. Using different econometric techniques and controlling for the type of control, our results show that independent directors are less concerned with the improvement of the shareholders' value. This suggests that in the public utilities they may be a corporate mechanism that enhances stakeholders' protection and social welfare rather than financial performance.
International Journal of Public Administration, 2010
Despite a lively research commitment, convergent results on the relationship between corporate governance and performance are still missing in the literature to date. This is particularly true for those firms which, either fully or partially, changed their nature from public to private in the last few years. Thus, this article aims at contributing to fill this gap by presenting the findings of a multiple case study analysis conducted on the Italian local public utilities listed at the Milan Stock Exchange in the years between 2000 and 2008. The ongoing privatization process of these firms allows this sample to be considered as a particularly interesting research vehicle. From our analysis, the main results are not wholly conclusive. This seems to support those theses that argue that understanding the real impact of corporate governance practices on the performance of firms still needs further improvement. The article is primarily intended for board members, managers, and scholars who want to enhance public governance, strategy, and decision making by improving the comprehension of the possible relationships among the boards' structure and composition, governance practices and corporate performance.
Board Independence and Long-Term Firm Performance
2000
The boards of directors of American public companies are dominated by independent directors. Moreover, many commentators and institutional investors believe that independent directors should be even more numerically dominant on public company boards than they are today. We conduct the first large sample, long-horizon study of whether board independence (proxied by proportion of independent directors minus proportion of inside directors)
Board independence and operating performance: analysis on (French) company and individual data
Applied Economics, 2016
While often criticized, independence remains the ultimate criterion for evaluating board composition, whether for regulators or shareholder activists. In this study, we examine the relationship between board independence and firm operating performance in a panel of French listed companies, paying particular attention to heterogeneity and endogeneity concerns. We take advantage of an original database, with a time-series dimension that can be used to mitigate heterogeneity and dynamic endogeneity issues through GMM estimators. In addition, this database can be disaggregated at the individual (director) level. This design enables us to introduce firm fixed effects and individual fixed effects in (firm) performance equations, thereby controlling for heterogeneity at the firm and individual levels. To our knowledge, this is the first paper so far to provide a systematic account on this issue for France. Our main result is to document a significant negative relationship between accounting performance and the independence status (irrespective of the person). This result supports the argument of an information gap suffered by independent board members, as developed by Adams and Ferreira (2007).
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 inde...
The Non-Correlation Between Board Independence and Long-Term Firm Performance
SSRN Electronic Journal, 2000
The boards of directors of American public companies are dominated by independent directors. Moreover, many commentators and institutional investors believe that independent directors should be even more numerically dominant on public company boards than they are today. We conduct the first large sample, long-horizon study of whether board independence (proxied by proportion of independent directors minus proportion of inside directors) correlates with the long-term performance of large American firms. We find evidence that firms suffering from low profitability respond by increasing the independence of their board of directors, but no evidence that this strategy works that firms
CEO incentives in European energy utilities: evidence from regulated versus unregulated firms
Economia e Politica Industriale, 2016
This paper studies the effect of incentive mechanisms provided by economic regulation and CEO compensation in European energy firms. We investigate the differences in CEO pay-for-performance sensitivity across regulated and unregulated firms on CEO monetary incentives. Using various measures of firm performance, we find that CEO pay-for-performance sensitivity is lower in regulated companies. These results hold when we control for national corporate governance variables (investor protection, legal origin, disclosure requirements and contract enforcement). Our findings suggest that incentive compensation is a weaker incentive mechanism for firms operating in regulated and less-competitive markets.