Corporate governance; Financial performance; Initial public offerings; Institutions; National business systems;
JOURNAL ARTICLE | Journal of World Business | 52 | September 2017
Does Board Independence Influence Financial Performance in IPO Firms? The Moderating Role of the National Business System
Prior evidence suggests that board independence may enhance financial performance, but this relationship has been tested almost exclusively for Anglo-American countries.To explore the boundary conditions of this prominent governance mechanism, the authors examine the impact of the formal and information institutions of 18 national business systems on the board independence-financial performance relationship.The results show that while the direct effect of independence is weak, national-level institutions significantly moderate the independence-performance relationship.Findings suggest that the efficacy of board structures is likely to be contingent on the specific national context, but the type of legal system is insignificant.