We conclude that the mandatory regulation for Taiwan listed firms to have a minimum number and ratio of independent directors on their boards appears to be a sound policy.
📌 3 Key Takeaways
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Objective & Hypothesis:In this paper, we use a unique natural experimental setting to examine the market value of both voluntary and mandatory independent director appointments using a sample of Taiwanese listed firms.
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Key Findings & Data:We find a significantly positive stock price reaction when a firm announces it is appointing independent directors to its board.
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Conclusion & Impact:We conclude that the mandatory regulation for Taiwan listed firms to have a minimum number and ratio of independent directors on their boards appears to be a sound policy.
🔬Design:Makale
📍Scope:Comprehensive Sample
⚙️Variables:Corporate Governance · Board Independence · Independent Director
Abstract
In this paper, we use a unique natural experimental setting to examine the market value of both voluntary and mandatory independent director appointments using a sample of Taiwanese listed firms. We find a significantly positive stock price reaction when a firm announces it is appointing independent directors to its board. Particularly, poor corporate performance and a higher degree of information asymmetry significantly benefit from the mandatory appointment. We conclude that the mandatory regulation for Taiwan listed firms to have a minimum number and ratio of independent directors on their boards appears to be a sound policy.
Lin, H., Huang, C., Yang, J. J. W. (2015). Market Reaction to Voluntary and Mandatory Announcements of Independent Director Appointments. International Journal of Economics and Financial Issues, Cilt: 5 Sayı: 1, 125–135. https://ajindex.com/articles/1652523